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One Year has Passed Since the Enforcement of the Industrial Competitiveness Enhancement Act–Introduction of Case Examples as a Series of Successful Effects of the Abenomics Policy–

On January 20, 2014, the Industrial Competitiveness Enhancement Act (the “Act”) was enforced to revitalize the Japanese economy and enhance Japan’s industrial competitiveness. The Ministry of Economy, Trade and Industry (METI) hereby announces that it has compiled the achievements of the businesses that have utilized the related measures under the Act and the successful case examples, celebrating one year since the enforcement of the Act.

1. Tax measures for promoting investment in facilities to improve productivity (as of December 31, 2014)

Number of certificates and confirmations issued
Cutting-edge facilities (Category A) 115,470
Facilities contributing to the improvement of production lines and operation (Category B) 4,767 (total value of the investments: about 3.0401 trillion yen)

As of the end of December 2014, METI estimates that more than 120,000 high-quality business investments have been conducted under the new tax measures. In particular, more than 100,000 investments were conducted during the six months from July to December 2014, showing a significant increase.

The new tax measures have encouraged many companies to decide to shift their overseas bases back to Japan. For example, Takemoto Oil and Fat Co., Ltd., a manufacturer of chemical products, e.g., an oil solution for rayon fibers, decided to shift its production base from the previous overseas plant to a newly established plant in Aichi Prefecture so as to secure profitability by enjoying the effects derived from the depreciation of the yen and the new tax measures. By doing so, the company is able to deal with increased production to meet the needs in emerging countries. For another example, Nihon Asparagus Co., Ltd., a company engaged in original equipment manufacturing (OEM) and bottling in the soft drink field, determined to reject offers of business collaboration in overseas production from overseas companies and to introduce a cutting-edge manufacturing system into the new plant in Japan by making use of the new tax measures, aiming to deal with small-lot items with a variety of bottles and to enhance its business competitiveness.

Furthermore, some regionally-based SMEs have also been proactively utilizing the new tax measures. For example, Koto Kyoto Co., Ltd., a company developing agricultural business exclusively for the production of Kujo leeks, set up a new plant for the vegetable four times as large as the previous plant, and also introduced new, highly-efficient production facilities. By doing so, the company enhanced its earning power and realized stable agriculture business management, and it also plans to hire new 20 employees in line with the increased investment in the new plant. Furthermore, Takagi Kogyo Co., Ltd., an SME engaged in manufacturing fiber ropes for ships, also utilized the new tax measures and started producing new, high-value-added products amid the intensifying global competition due to the inflow of cheaper products from overseas companies. Upon setting up a new plant, the company created a dozen or so local jobs.

References

  • The Japan Revitalization Strategy set a goal of enhancing private capital investment to the level of 70 trillion yen per year during the three-year period starting from FY2012.
  • Since the inauguration of the Abe administration, private capital investment has shifted to a tendency to increase, and the value of the nominal capital investment during the 2014 July to September period reached a level of 68.5 trillion yen per year on an annualized basis.

2. Business restructuring (as of January 20, 2015)

Number of plans approved
Business restructuring plan 10
Specified business restructuring plan 5

To date, 15 plans submitted by businesses have been authorized as business restructuring plans or specified business restructuring plans under the Act.

Looking at case examples, Mitsubishi Heavy Industries, Ltd. has conducted an authorized specified business restructuring plan to integrate its business in the thermal power generation sector with Hitachi Ltd. It has also conducted business restructuring in the aircraft engine sector with IHI Corporation based on an authorized plan, aiming to establish an efficient production system and advance into high-value-added fields while taking advantage of the two companies’ respective strong points, thereby improving international competitiveness and achieving sustainable growth.

For another example, Laguna Ten Bosch Co., Ltd. succeeded to a theme park and other businesses that were split off from another company and changed the theme park into a more attractive one by utilizing the know-how and sales channels of H.I.S. Co., Ltd., a company with experience in the successful reconstruction of theme parks, as leverage to gain a synergetic effect. The restructuring effort also aimed to create new local employment and vitalize the economy in collaboration with local communities.

It is expected that these business restructuring efforts will contribute to enhancing Japanese companies’ competitiveness for survival in the global market and to improving their productivity through the vitalization of regional economies.

3. Regulatory reform for individual enterprises (as of January 20, 2015)

Number of received requests Number of requests for which entities have been notified of the results
System to Remove Gray Zone Areas 25 (27 entities, including 14 SMEs) 24
System of Special Arrangements for Corporate Field Tests 7 (11 entities, including 5 SMEs) 7

Regarding the System to Remove Gray Zone Areas, METI has received 25 requests from entities and sent notices of the results of the examination to 24 of them.

For example, if a business entity provides customers with a simplified blood test service at drug stores or other non-medical facilities by performing a simplified test on blood samples that customers took themselves and notifying them of the results, the customers’ act of taking their own blood sample and the business entity's act of notifying the customers of the test results may conflict with related laws. However, upon request from the related entities, METI confirmed that such acts do not fall under the scope of “medical practice” stipulated by the laws. This clarification is expected to provide people with more opportunities to smoothly access self-health management and discover any illness at an early stage, thereby contributing to the realization of a society of health and longevity.

Regarding the System of Special Arrangements for Corporate Field Tests, METI has received seven requests from entities and sent notices of the results of the examination to all seven entities.

For example, a special arrangement was created to allow a distribution business to utilize electric-motor-assisted bicycles with delivery carts with higher power than those permitted under the standards of the current regulations. Following this, METI received and approved a plan for new business activities from the business that requested the special arrangement. Now, the approved business is conducting a project as a field test on the premise of observing alternative measures for the related regulations, such as providing riders involved in the services with road safety education and developing frameworks under which staff are able to appropriately conduct certain services required for safe riding. This initiative is expected to contribute to the expansion of employment opportunities for women and the elderly, the realization of a low-carbon society, and the invigoration of the distribution industry.

4. Compensation program for promoting enterprises’ investment in cutting-edge facilities using lease methods (as of December 31, 2014)

Number of support contracts concluded
From March to December 2014 138 contracts (7 leasing businesses; 55 business corporations) (estimated value of the leased facilities: about 26.8 billion yen)

A variety of companies in all fields and scales have been utilizing the program to invest in cutting-edge facilities, ranging from large enterprises, to euglena Co., Ltd., a venture that develops food and cosmetics using Euglenophyceae, to DMG Mori Seiki Co., Ltd., a company showing its presence to the world in the field of expertise, such as with its pride-inspiring ultra-high precision machine tools with the world’s highest precision, and to Nippon Medical School, which has been proactively introducing cutting-edge medical equipment.

5. Authorization of venture funds (as of December 31, 2014)

Number of approved plans
Plans for investment in specified new business ventures 1

Under this measure, METI authorized the plan of a venture fund created mainly by Lead Capital Management Co., Ltd., enabling the companies that have invested in the fund to enjoy the tax benefits designed to promote corporate investment in ventures.

6. Investment in venture capitals by national universities (as of December 31, 2014)

Number of approved plans
Plans for supporting the utilization of specified research results 3

METI has approved requests for approving the plans for supporting the utilization of specified research results, which were submitted by Osaka University Venture Capital Co., Ltd., Kyoto University Innovation Capital Co., Ltd. and Tohoku University Venture Partners Co., Ltd.

7. Plans for supporting business startups (as of October 31, 2014)

Number of approved plans
First approval (March 20, 2014) 87 (94 municipalities)
Second approval (June 20, 2014) 81 (83 municipalities)
Third approval (October 31, 2014) 45 (57 municipalities)
Total 213 (234 municipalities)

This measure aims to encourage people to start new businesses in local regions, and METI has approved 213 plans for supporting business startups prepared by 234 municipalities in 43 prefectures in cooperation with business-startup-supporting entities and submitted by the municipalities.

References:

For an outline of the Industrial Competitiveness Enhancement Act, see the following websites:

Release date

January 29, 2015

Divisions in charge

Industrial Revitalization Division, Economic and Industrial Policy Bureau

Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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