Cabinet Decision on the Bill for the Act for Partially Amending the Act on Strengthening Industrial Competitiveness and Other Acts for the Sustainable Development of Corporate Business Activities in Light of Changes in Economic and Social Conditions

1. Purpose of the Bill

Amid shifts in international economic conditions, ongoing inflation due to fluctuations in resource prices and other factors, and changes in economic and social conditions driven by population decline, a falling birthrate, and an aging society, the sustainable development of corporate activities is crucial for further strengthening Japan’s industrial competitiveness.
To this end, comprehensive measures will be taken to support the following objectives: enhancing the added value of business operations by promoting domestic investment; further strengthening supply chains by developing overseas markets and securing a stable supply of raw materials; developing industrial sites that serve as the foundation for business activities; and maintaining the essential services that helps secure the industrial human resource and workforce.

2. Outline of the Bill

(1) Partial Amendment to the Act on Strengthening Industrial Competitiveness

(a) Promotion of Domestic Growth Investment Through the Bold Tax Investment Incentives for Promoting

Initiatives to promote domestic growth investment will be implemented by establishing the necessary provisions as follows: defining “specified productivity improving equipment, etc.” that satisfies requirements such as (i) an ROI of 15% or higher and (ii) an investment amount of at least ¥3.5 billion (¥500 million for SMEs, etc.) under the bold tax investment incentives for promoting, included in the FY 2026 Tax Reform , which allows immediate depreciation or a 7% tax credit for all(in principle) industries; and establishing a category* of Business Adaptation Plans eligible for the carry-forward of tax credits.

*Refers to the category of Business Adaptation Plans in response to drastic changes in international economic conditions, as described below.

(b) Establishment of New Categories under the Approval System for Business Adaptation Plans

The following two categories of business adaptation will be added under the Act on Strengthening Industrial Competitiveness: (i) “business adaptation in response to drastic changes in international economic conditions,” to address rapid and unforeseeable changes in international economic conditions, and (ii) “business adaptation in response to increases in business costs,” to address changes in the business environment caused by rising operational costs. Capital investment undertaken in accordance with approved business adaptation plans will be eligible for financial support, including the Japan Finance Corporation’s two-step loans and debt guarantees provided by the Organization for Small & Medium Enterprises and Regional Innovation, JAPAN. These measures will facilitate the supply of funds necessary for companies’ domestic investment.

(c) Establishment of the Plan Approval System for Ensuring the Sustainability of Essential Daily Life Services Supply to Secure the Industrial Human Resource and Workforce

A new category, “business adaptation to balance demand and supply of essential services” will be established for the purpose of streamlining business operations to address declining demand for, and shortages in the supply of, goods and services necessary to maintain daily life. Projects carried out in accordance with approved plans under this category will be eligible for financial support and special provisions for organizational change procedures. In addition, a system will be established to certify supporting organizations that provide information and other assistance for the formulation and implementation of such plans, and prefectures and municipalities will be enabled to organize councils comprising these supporting organizations.

(2) Partial Amendment to the Act on Strengthening a Framework for Regional Growth and Development by Promoting Regional Economy Advancement Projects

(a) Improvement of Factory Location Conditions for Existing Sites to Secure Land for Industrial Use

Regional Economy Advancement Projects will be promoted through measures such as regulatory exemptions from green space-area ratios, etc., for factories and other facilities under the Factory Location Act, on the premise of harmony with the living environment and the understanding of local residents, and the mandatory supply of industrial water to data centers.

(b) Establishment of the Plan Approval System for Industrial Site Development

A plan approval system for industrial site development by prefectures or municipalities will be established, and projects carried out in accordance with approved plans will be made eligible, where development is carried out through public-private partnerships, for measures such as reductions in income tax and inhabitant tax on land transfers imposed on landowners.

(3) Partial Amendment to the International Trade and Investment Insurance Act

(a) Establishment of Specific Underwriting Business Operations Within Nippon Export and Investment Insurance

Among the business operations of Nippon Export and Investment Insurance, those related to arrangements between the Government of Japan and a foreign government that are designated by the Minister of Economy, Trade and Industry as being particularly necessary for strengthening the supply chains of Japanese companies will be defined as “specific underwriting business operations,” and the necessary provisions concerning such business operations will be established.

(b) Establishment of Measures Related to a Special Account and the Delivery of Japanese Government Bonds

The accounting for the specific underwriting business operations will be organized by establishing a special account, and measures related to the delivery of Japanese government bonds will be implemented to ensure the soundness of the special account.

3. Related Materials (in Japanese)

• Summary of the bill for the Act(PDF:550KB)
• Outline of the bill for the Act(PDF:155KB)
• Bill for the Act and reasons therefor(PDF:348KB)
• Comparison of the prior and revised provisions(PDF:516KB)
• Referential provisions(PDF:71,981KB)

Divisions in Charge

• Office of the Deputy Director-General for Regional Revitalization Policy, Economic and Industrial Policy Bureau

• Industry Creation Policy Division, Economic and Industrial Policy Bureau

• Regional Economic and Industrial Policy Division, Economic and Industrial Policy Bureau

• Trade Finance Division, Trade Policy Bureau