I am pleased to celebrate the New Year with you. I really hope 2012 will be a very meaningful year to all of you.

Last year, we came to a deep realization of how horrible natural disasters are because of the experience of the Great East Japan Earthquake, several typhoons in the autumn and severe flooding in Thailand. In addition, the accident at Tokyo Electric Power Company's (TEPCO's) Fukushima Daiichi Nuclear Power Station has resulted in significant damage over an extensive area, and particularly in Fukushima Prefecture, causing serious trouble to the nation. We also saw a prolonged tight electricity supply-demand balance because rolling blackouts were implemented immediately after the Great East Japan Earthquake. As the Chief Cabinet Secretary at first, and then Minister of Economy, Trade and Industry (METI Minister), I have been coping with these problems and have become keenly aware that securing the safety of nuclear power stations as well as a stable energy supply are of critical importance for the nation.

Looking at the global economy, the situation has become progressively more uncertain. The Japanese yen has been appreciating rapidly in the face of European economic crises and stagnant U.S. economy. While the Doha Development Round is making little progress, bilateral or intra-regional economic partnerships and free trade agreements are spreading. In the domestic economy, since a declining birthrate and aging population are emerging as notable issues, we will soon face difficulty in providing stable social security services, improving our fiscal balance, and thereby maintaining a vigorous society if we do nothing. To solve these problems that we faced even before the Great East Japan Earthquake, I would like to take a "proactive" stance this year, rather than taking a "defensive" attitude.

To coping with the aforementioned issues, first of all, it is essential to steadily solve the problems that we are facing now. Last December, because all reactors at TEPCO's Fukushima Daiichi Nuclear Power Station achieved the status of "cold shutdown," the so-called Step 2 has been completed. However, our battle will never be over until local residents who were forced to evacuate due to the nuclear accident will be able to return to vibrant and rich lives. At TEPCO's Fukushima Daiichi Nuclear Power Station, staff workers will start their tasks to decommission reactors in accordance with the "Mid-and-long-Term Roadmap." It is a very long process, but we will make our best efforts to complete the roadmap as soon as possible, while putting top priority on safety and security. In parallel with this, we will work on returning to normal living conditions and business activities, health management, monitoring and decontamination tasks, aiming to gradually lift the evacuation zones. In addition, by making use of the Nuclear Damage Liability Facilitation Fund, we will make efforts so that affected residents will quickly receive compensation from TEPCO. We will push ahead with these efforts, always keeping in mind the hardships and anxieties of affected residents due to the nuclear disaster.

Based on lessons we have learned from the nuclear accident, it is also urgently necessary to enhance safety at nuclear power stations all over Japan. We will set out a roadmap for strengthening nuclear safety regulations and steadily hand over related tasks to the Nuclear Safety Agency (tentative name), which is scheduled to formally assume its responsibilities in April 2012. Stress tests will be appropriately conducted in collaboration with the Nuclear Safety Commission of Japan and the IAEA. I would like to emphasize that the government will not alter our basic stance that nuclear power stations that have completed their checkup process will not resume operations without the consensus of local residents. On the other hand, we will probably face a tight electricity supply-demand balance this winter and this summer as well. To avoid rolling blackouts, we will increase the electricity supply capacity as much as possible. In addition, we will ask you to strengthen your energy saving and electricity saving efforts with a focus put on consumer or commercial products. We would appreciate your understanding and cooperation.

For recovery from damage caused by the Great East Japan Earthquake, we will put emphasis on providing fund-raising support and eliminating double loan problems so that business owners will hopefully work on reconstructing their disaster-affected business operations. We have raised necessary funds with supplementary budgets so far. We will work with local governments and financial institutions to provide support to individual business owners in a courteous manner. In addition, to assist business reconstruction based on human ties in local communities, we will continue to assist recovery/enhancement of facilities and equipment by making use of group subsidies for small and medium enterprises (SMEs). As creating new businesses in quake-hit areas is also important for job creation purposes, we will enhance medical- or renewable energy-related R&D bases in the Tohoku area, in particular Fukushima Prefecture, aiming to expand existing industrial clusters.

While pushing ahead with reconstruction from damage caused by the Great East Japan Earthquake, we will take up "proactive" economic and industrial policies to eliminate problems that Japan is facing in the medium and long term. The first pillar for this purpose is reviewing our energy policies from a zero base. Last year, we set up the Fundamental Issues Subcommittee, the Advisory Committee for Natural Resources and Energy, consisting of subcommittee members with a wide variety of perspectives in order to identify and sort out debatable issues at the year-end. Based on these issues, we will deepen nationwide discussions in collaboration with the Energy and Environment Council and develop a new "Basic Energy Plan" by this summer. In particular, as for the reform of electric power systems, we will focus on review the electricity rate system that we are already examining. In addition, we will also focus on examining the feasibility of establishing an "open electric power market" based on lessons learned from the Great East Japan Earthquake.

To improve the electricity supply-demand balance as soon as possible, rationalization of our energy usage will play important roles. If we hear the phrase "energy saving," we tend to think that we have to exercise our patience. However, I think it important to increase value added while using the same amount of energy without strain. In other words, we should have positive thinking that we should improve our energy productivity. We will introduce new programs to push ahead with peak-cut (i.e., reducing peak-time electricity demand) by making use of storage batteries, private power generation, energy management systems and other related technologies as well as improve energy saving performance in housing and buildings. This year, the feed-in-tariff scheme for renewable energy will finally become operational. We will encourage expanded use of new energies by mobilizing all supportive measures, such as significantly expanding the subsidy program for disseminating geothermal power generation projects.

As Japan is heavily dependent on import of natural resources, it is extremely important to ensure them stably. In accordance with the "Priority Measures to Ensure Stable Supply of Natural Resources and Fuel" compiled at the end of 2011, we will work on enhancing risk money supply capabilities of the Japan Oil, Gas and Metals National Corporation (JOGMEC) for natural resources development projects as well as on stably supplying oil products in a time of disaster. We will also actively work on international negotiations on global warming issues, and also examine the feasibility of our energy policies in parallel.

The second pillar of our "proactive" policies is to restore a vibrant economy. To overcome a sharp rise in the yen's value and resultant concerns of industrial hollowing-out, we incorporated subsidies for domestic locations of approximately \500 billion in the FY2011 third supplementary budget. We will accelerate budget expenditures in order to prevent overseas outflow of unsubstitutable parts/materials sectors that are playing core roles in the supply chain. In addition, to keep vitality of the domestic automobile market, we created an Eco-car Subsidy program of \300 billion in the fourth supplementary budget. As the end of a fiscal year is coming closer, we will take thoroughgoing fund-raising support policies for SMEs.

(1) Cultivating potential domestic demand

These "defensive" policies are, however, insufficient. The Japanese economy has now turned into "an economy with a false culture of endurance" through shrinking equilibrium and gradual decline, hasn't it? I think it is necessary to get out of such situations and create new value added in order to boost the economy. In this context, the key factor is "cultivating the potential of domestic demand." From different perspectives, the fact that we are facing restrictions of a declining birthrate and aging population as well as energy/environmental problems means that we have needs for new businesses that would solve these problems. According to METI's estimates, these problem solving industries are estimated to increase overall consumption by \15 trillion. To encourage creation of new businesses suitable to potential demand without constraints and bring about creation of new job opportunities, METI will expand supportive measures, including proposals on new legislation.

We will also make efforts to improve the business environment that will support active business operations. Although a fixed-term additional tax will be levied as revenue sources for reconstruction projects, we have successfully reduced the effective corporate tax rate. We have also successfully incorporated in the FY 2012 Tax Reform the motor vehicle taxation and special tax exemption for material-use goods closer to international standards. We will steadily put these proposals into practice. We will push ahead with enhancing innovation, which will yield Japan's competitive edge, without loosening our grasp. In the FY 2012 budget, we have incorporated future-looking R&D projects for 10 years later or 20 years later. In addition, we will continue to support private sector R&D through R&D taxation, quickly get acknowledged Japanese-originated international standards and enhance intellectual property-related international infrastructures.

(2) Drawing on global demand

To revitalize Japan's economy, it is also important to draw on global demand, including strong demand in high-growth emerging economies, and make use of overseas wealth to revitalize the domestic economy. Japan is no longer able to engage in price competition with foreign nations through mass production of standardized products. We have to cultivate overseas markets with our products or services that are only available in Japan and are attractive because they are made in Japan. In this sense, we would like to push ahead with the "Cool Japan" campaign in many fields.

We will also encourage expansion of overseas sales of infrastructures/systems and environment-friendly technologies/products in which Japan has a competitive edge.

As the basis for enhancing exports in this way, high-level economic partnerships with major trade partners and investment partners are very important. We will push ahead with Japan-Korea and Japan-Australia EPA negotiations. We will, strategically and from various perspectives, proceed with economic partnerships, such as a China-Japan-Korea FTA, a Japan-EU EPA, and ASEAN+3 and ASEAN+6. As for the Trans-Pacific Partnership (TPP), we will work on dialogues with the relevant nations to participate in TPP negotiations in accordance with the government's basic stance as decided in November 2011. Some are concerned about negative impacts of the liberalization of trade and investment, but METI will concretely explain possible effects in its responsible negotiation fields for each of these economic partnership programs. If there is any possible negative impact, we will make proposals on how to mitigate such negative impacts.

In addition, we will also push ahead with improving and eliminating programs that would prevent financial back-flow. To encourage global firms to set up their Asian headquarters or their R&D sites in Japan, we will make efforts so that the "Bill on Special Measures for the Promotion of Research and Development by Certified Multinational Enterprises" will be passed in the Diet as soon as possible.

(3) Providing support to SMEs

Needless to say, SMEs are playing major roles in revitalizing the Japanese economy. At the end of the last year, the Small and Medium Enterprise Policy Making Council suggested specific policy actions to maximize the potential and underlying strengths of SMEs. In this process, we expect local financial institutions and tax accountants to take more active roles in assisting corporate management of SMEs. For this purpose, new legislation will be prepared for the next Diet session.  We will also provide support to expand overseas sales of SME’s products that make use of their manufacturing techniques or wisdom/techniques/sensitivity unique to Japan. As we are seeing an epoch-making turning point, it is SMEs that contain the seeds to create new industries or new businesses that will play important roles in the future. Finding and fostering such seeds is the most important factor for promoting “proactive” economic policies.

In line with the aforementioned policy pillars, all staff members at METI will work together to take a "proactive" stance in economic and industrial policies so that Japanese citizens will be able to lead their daily life vividly and have "hopes" for their future. We would be very grateful if you could help and cooperate with us.

January 1, 2012
Yukio Edano
Minister of Economy, Trade and Industry