Ministry of Economy, Trade and Industry
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New Year Greetings 2014
Toshimitsu Motegi, Minister of Economy, Trade and Industry

Introduction

To begin, I would like to wish you all a Happy New Year for 2014.

One year has passed since the inauguration of the Abe Cabinet. Encouraged by the successful "three arrows approach" of Abenomics, Japan is just about to break free from deflation and the excessive appreciation of the yen has been corrected. Since the inauguration of the Abe Cabinet, Japan's GDP recorded four consecutive quarters of positive growth, representing a shift from a period of negative economic growth to one of positive growth.

However, the benefits of positive growth are only being felt by certain companies and regions. At the beginning of this year, I am reaffirming my resolve to disseminate the benefits of the economic recovery driven by Abenomics equally throughout the country as quickly as possible.

Acceleration of the reconstruction following the Great East Japan Earthquake

First, we will do our utmost to realize the recovery and revival of Fukushima and other disaster-stricken areas. In December 2013, the "Policy for Accelerating Fukushima's Reconstruction from the Nuclear Disaster" was approved by the Cabinet as the Government's policy for the recovery of Fukushima, based on the results of the discussions by the Nuclear Emergency Response Headquarters.

At Unit 4 of TEPCO's Fukushima Daiichi Nuclear Power Station, the removal of spent nuclear fuel from the spent fuel pool began last November and measures for decommissioning TEPCO's Fukushima Daiichi Nuclear Power Station Units 1-4 and countermeasures against contaminated water have entered a new phase. The Government will steadily bring the accident at TEPCO's Fukushima Daiichi Nuclear Power Station under control by leading the implementation of various measures on the front line, including preventive and multi-layered measures for decommissioning and contaminated water management, unifying the national headquarters functions and establishing a new support system that brings together both national and international experts to resolve any issues.

In addition, in order to enable the affected residents to return home at an early stage and rebuild their livelihoods, under the policy of supporting Fukushima, the Government will gradually flesh out the path to the recovery of Fukushima through sufficient consultations with local governments and residents. At the same time, the Government will promote business location, job creation and the revitalization of businesses in the disaster-stricken areas.

Realization of Virtuous Economic Cycles

We will create "virtuous economic cycles" in which a rise in corporate profits leads to an increase in employees' wages and incomes, which, in turn, boosts consumption and fresh corporate investment.

As a first step, the Cabinet approved the FY 2013 Supplementary Budget as a new package of economic stimulus measures worth a total of 5.5 trillion yen last December. In addition, under the draft budget for the next fiscal year, which was approved by the Cabinet at the end of last year, 1.2137 trillion yen will be allocated to measures related to the Ministry of Economy, Trade and Industry (METI). This is the first time that the budget for METI-related measures has exceeded 1.2 trillion yen since the beginning of the global financial crisis in 2008. The budget for the next fiscal year also represents an increase of more than 100 billion yen over the previous year, the largest increase since the establishment of METI in 2001. We will consolidate the path for Japan to exit deflation and achieve economic revival by making effective use of these budgetary measures.

Second, we will introduce tax system reform measures for the next fiscal year, some of which we decided on October 1 last year, moving up the usual end-of-year decision by more than two months. To promote capital expenditures for the replacement of obsolete equipment with advanced equipment with higher productivity and energy efficiency, we will implement such measures as tax deductions, along with immediate depreciation for introducing such equipment.

Third, the Industrial Competitiveness Enhancement Act was enacted in the extraordinary Diet session last year as the key driver of the initiatives to correct three distortions in the Japanese economy, namely, investment shortage, excessive regulation and delay in business consolidation. Under the framework of the law, the Government will establish an implementation protocol to systematically advance this economic growth strategy by uniting the efforts of related ministries and agencies. At the same time, the Government is introducing new programs in a broad range of fields, including fields beyond the jurisdiction of METI, such as the promotion of regulatory reform to correct excessive regulation, and the promotion of renovation of industries, which will help to correct investment shortage and delay in business consolidation.

Moreover, in order to develop new growth fields by promoting state-of-the-art Japanese technologies and products in the global market, we will we will accelerate R&D activities, make strategic use of international standards and create the highest quality and quickest IP examination system in the world to move to the forefront of global competition.

Rebuilding Energy Policy

In the aftermath of the Great East Japan Earthquake, Japan faces new energy constraints. As a result of increased demand and the surge of fossil fuel prices, Japan recorded a trade deficit in 2011 for the first time in 31 years, since the second oil crisis. Japan's trade deficit of 2013 is estimated to surpass 10 trillion yen and reach a record high. Just as Japan overcame the two oil crises in the 1970s through a variety of measures, we will overcome the current energy constraints and step up efforts to ensure a stable supply of electricity at low cost and will also promote energy conservation to the greatest extent possible.

Under these circumstances, it is important to compile a feasible, well-balanced new "Basic Energy Plan" that accounts for the characteristics of various energy sources. We will aim to establish a practical, multi-layered energy supply structure and a flexible and efficient energy supply-demand structure in which the market mechanism functions appropriately. In addition, we plan to continue to recognize nuclear power as an important base-load power source that should continue to be utilized, with the underlying premise that public safety is ensured. To avoid passing the burden on to future generations, on the matter of the final disposal of high-level radioactive waste, the Government as a whole will launch and lead a new initiative to make steady progress in selecting a site for disposal.

To maximize the installed capacity for renewable energy, we will manage the feed-in tariff program in a steady and stable manner and promote the introduction of large-scale storage batteries, for which Japan has the world's most advanced technology, as well as the development of smart electricity grids, in order to ensure the stability of renewable energy as a power source.

Simultaneously, we will promote the first electricity system reform in 60 years, which will establish a fully liberalized electricity market. As the first step of the reform, the Amended Electricity Business Act was enacted last November. We will steadily promote this drastic reform by such measures as submitting a second relevant bill to the ordinary Diet session this year. We will also begin gas system reform this year.

In addition, we will make further efforts to reduce fuel procurement costs. Japan as a whole will seek to reduce energy costs through such measures as importing LNG from North America, where the gas price is declining due to the expansion of shale gas production, and promoting the introduction of highly efficient coal-fired thermal power generation.

Implementation of the Strategy of Global Outreach

The "Strategy of Global Outreach," which seeks to take advantage of overseas economic growth, is another important pillar of the growth strategy. Therefore, we will deploy a global "network of economic partnerships" by promoting negotiations on economic partnerships, including the TPP (Trans-Pacific Partnership), the Japan-EU EPA (Economic Partnership Agreement), the RCEP (Regional Comprehensive Economic Partnership) and the FTA (Free Trade Agreement) among Japan, China and the Republic of Korea. The WTO Agreement on Trade Facilitation that was concluded last December will support the international expansion of Japanese companies through the simplification of customs procedures. We will continue to actively promote trade liberalization under multilateral frameworks like these.

Last year, I visited 17 countries to internationally promote the Cool Japan initiative and support exports of Japanese infrastructure systems and an expansion of Japan's market shares in fast-growing emerging countries. This year, we will continue to make strategic efforts to explore new markets, including sales promotion activities by top government officials.

Support for SMEs and Micro Enterprises

Regarding the implementation of the growth strategy, I am placing great hopes on the active role to be played by small and medium-sized enterprises (SMEs) and micro enterprises across Japan. Aiming to achieve specific objectives, such as increasing the new business opening rate to 10%, doubling the number of companies in the black and promoting the new expansion of 10,000 companies overseas, we will implement measures to drastically strengthen the system supporting business startups and to support capital expenditures. To that end, we will take all possible measures, including budgetary measures such as increasing the amount of the Monodzukuri Subsidy (subsidy supporting innovation in SMEs and micro enterprises) to 140 billion yen, tax system measures and additional support for financing.

In particular, micro enterprises, which account for 90% of SMEs, play an extremely important role in supporting regional economies and employment. We will submit a basic legislative bill on the promotion of micro enterprises to the ordinary Diet session this year.

Measures in Preparation for the Rise in Consumption Tax

The consumption tax rate is scheduled to be raised on April 1 this year. We must make sure that this measure, which is intended to secure stable revenues to finance the social security system, will not cloud the prospects for the incipient momentum toward an exit from deflation. We will use all available measures, including the Economic Measures for Realization of Virtuous Cycles, approved by the Cabinet last December, 5.5 trillion yen's worth of budgetary measures based thereon, and tax measures such as investment tax breaks and reduction of the automobile acquisition tax rate.

At the same time, we will make thorough efforts to ensure smooth transfer of the burden of consumption tax hike to sales prices. To prevent SMEs and micro enterprises, whose bargaining power is relatively weak, from suffering undue disadvantage, we will dispatch 474 inspectors across the country, to provide full support for a smooth transfer of the consumption tax.

Conclusion

2014 is the year of the horse. The horse has traditionally been regarded as a lucky animal that brings happiness. All of us at METI will work as one to ensure that the benefits of the economic recovery will be brought to the people in all regions. We appreciate your continued support and understanding.

January 1, 2014
Toshimitsu Motegi
Minister of Economy, Trade and Industry

 
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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