Press Conference by Minister Nishimura (Excerpt)

*Note: This is a provisional translation for reference purposes only.

9:30-9:42 a.m.
Tuesday, December 6, 2022
Press Conference Room, METI Main Building

Question-and-Answer Session

Russian Crude Oil

Q: This is about the price cap on Russian oil. It was put into place yesterday, and there are some questions whether it will function well. Please tell us your thoughts on how its effectiveness will be ensured.

A: A price cap on Russian crude oil has now been set at 60 dollars per barrel following the agreement reached at the G7 Finance Ministers' Meeting in September. Given that the goal is to reduce Russia’s revenue from crude oil exports and stabilize the international crude oil market, I understand that this price level was agreed upon after thorough discussions between the countries concerned.

Although it is difficult to predict the effects of the measure at this point in time, I understand that it is expected to lower the price of Russian crude oil even in countries that do not directly implement it, which will reduce Russia’s overall revenue from crude oil exports.

We will continue to make every effort to ensure a stable energy supply and respond appropriately in cooperation with the rest of the G7 and international community. 　

Economic Measures

Q: The second supplementary budget was passed at last Friday's session of the Diet. It focuses on growth areas such as support for startups, scientific and technical innovations, and support for GX. On the other hand, in terms of revenue, government bonds worth 22.9 trillion yen will be issued, adding to the national debt.

The UK announced a large-scale tax cut without financial resources, leading to a triple depreciation in government bonds, currency, and stocks. Please tell us your thoughts on whether trust in Japan's finances will still be maintained or whether there are any concerns.

A: I understand that your question is concerning the macroeconomic policy. Japan must grow out of deflation toward an economic growth trajectory, but there are some voices pointing out its low growth capability. Achieving this growth trajectory has been a challenge for some time. For that reason, we have maintained the bold, monetary easing policy while boldly implementing a stimulus package to support the economy as part of the three arrows of Abenomics. In this way, Japan has implemented a consistent macroeconomic policy. Furthermore, although there are comparisons between the two countries, unlike the UK, Japan maintains a current account surplus and has sufficient net external assets. I think that the environments are very different between the two.

In addition, I understand that the UK had a rapid increase in inflation and tried to raise interest rates to curb the overheated economy. At the same time, it had plans to implement tax cuts as well as bold financial expenditures. The directions of these policies were misaligned, which undermined the market's trust. Since the market's trust is very important in Japan as well, we must not make such a mistake.

I mentioned that Japan is different from the UK. Now that there is a basis for economic recovery from the pandemic, bold fiscal spending is needed to stimulate the private sector’s willingness to invest.

The economic measures supported by the supplementary budget will turn on the switch to stimulate investment in Japan for ensuring and strengthening mid- to long-term growth, leading to increased wages and incomes.

Keidanren and other organizations have shown a positive attitude toward wage increases, and I have heard that RENGO will also demand a high level of wage increases. I expect active investments and the highest levels of wage increases from companies and their management.

In other words, everyone should press the switch to start a positive cycle of investment, innovation, and increased income.

Of course, from a long-term perspective, it is necessary to implement measures with a view to achieving fiscal soundness, but this is not the time to raise taxes. If we raise taxes now, it will put a damper on everyone's efforts to switch on the positive cycle of investment, innovation, and increased income.

As the Minister responsible for economic and industrial policy, I will address this cautiously.

Tax System Reform/Advanced Semiconductors

Q: I have two brief questions.
First, there are currently voices in the Tax Commission calling for a reduction in tax incentives for EVs. What are your thoughts on this from the viewpoint of fostering the industry? Second, there is talk that the semiconductor company Rapidus will partner with the European research institute IMEC and sign a memorandum of cooperation on new manufacturing technologies. Please tell us the facts. And if it is true, please tell us its implications for the recovery of Japan's semiconductor industry.

A: First, regarding the discussions on reducing tax incentives for EVs, METI is requesting the commission to extend its review of automobile tax incentives for eco-friendly cars from the viewpoint of promoting the spread of EVs and other automobiles with outstanding environmental performance in consideration of the domestic automobile market.

I am aware that there are various opinions, but the basic policy is to address the tax system based on discussions by the Tax Commission of the ruling party.

In any case, the automotive industry, which is a key industry of Japan, must grow as a more widespread mobility industry while addressing carbon neutrality, and continue to lead the world. To this end, we will continue to have meaningful discussions between the public and private sectors.

To answer your second question, I will have a meeting today with Mr. Van den hove, the CEO of IMEC, an international organization for semiconductors based in Belgium. As you know, IMEC is one of Europe's leading international research institutions in the field of semiconductors. Japan is aiming to establish bases for designing and manufacturing next-generation semiconductors with Rapidus at the core. Rapidus partnering with IMEC in the field of semiconductor manufacturing processes, including UV lithography technology, is extremely significant.

The administrative staff will explain more in a briefing later, so please ask them for the details.