Principles of the Policy Measures for Economic Rebirth (Explanatory Statement by Minister Taichi Sakaiya)

(Provisional translation)

I. Current Situation

  1. The economy is recovering gradually, but private-sector demand remains weak.

    The Japanese economy has emerged from five consecutive quarters of negative growth to register two consecutive quarters of positive growth. This is largely due to effects of various government policies; private-sector demand remains weak.

  2. Structural reforms are already underway in some sectors; socio-economic changes still have a long way to go.

    Reorganization of the financial and industrial sectors has started; however, a new socio-economic conceptual framework commensurate with the knowledge-based age and a basis for this framework are yet to be created.

II. Objectives

  1. Economic Recovery
    • To put the Japanese economy back on the path of full-fledged recovery at the earliest possible date

      Although the economy is recovering, this is in large part due to the effects of various government policies. The new package is designed to achieve a smooth transition from public-sector-led growth to private-sector-led growth, and to put the Japanese economy back on the path of full-fledged recovery.
  2. Structural Reform
    • To solidify the direction of Japan?fs socio-economic structural reform to meet the requirements commensurate with the knowledge-based age

      Japan has initiated bidding farewell to a standardized mass production structure. (Efforts include financial reorganization, strengthening of industrial competitiveness, and improvement of corporate health.) These positive developments should be actively appraised, and we will solidify the transformation of socio-economic concepts by increasing labor mobility, fostering the start-up of companies, and promoting information technologies.

III. Roadmap of Economic Rebirth

Economic recovery and structural reform (change in conceptual framework) shall be promoted simultaneously.

  • FY 1999 : Achieve positive real growth of approximately 0.5%
  • FY 2000 : Restore economy on a full-fledged recovery track during second half of fiscal year
  • FY 2001 : Put economy on a new growth trajectory

Diagram 1: Roadmap of Rebirth of Japanese Economy

IV. Measures for Economic Recovery

  • (1) Quantitative expansion of demand
    • (Second supplementary budget)
    • Public Works : 6.8 trillion yen
    • Additional Budget : 3.5 trillion yen
    • Total Projects : 17 -18 trillion yen
  • (2)Promotion of small and medium enterprises and venture firms
    • (Approximately doubling the number of firms started up)
    • Number of firms started up annually: 140,000 ==> 240,000
    • Creative small and medium enterprises: 5,000 ==> 15,000
    • To achieve this,
    • (a)Expansion of modalities of direct financing (credit guarantees scheme for bonds offered through private placement, ample provision of start-up funds)
    • (b)Revision in areas pertaining to human resources development and organizational aspects
      (Expansion of stock options and development of support centers throughout the nation)
  • (3) Expansion of the modalities of the special guarantees scheme for small and medium enterprises: 10 trillion yen, 1-year extension
  • (4) Employment measures: Job creation and employment stability
    • (a) Establishment of the "Special Subsidy System for Regional Employment Creation by Small and Medium Enterprises": 51 billion yen
    • (b) Establishment of the "Subsidy System for Employment Creation in Designated Regions and Workers Dismissed by Sub-Contracting Enterprises": 32.1 billion yen
    • (c) Enhancement of the social safety net (Revision of the Employment Insurance Law)
    • (d) Revision of the Law Concerning Stabilization of Employment of the Elderly Citizen
  • (5) Tax system
    Undertake studies and reach conclusions on the following:
    • (a) Measures to support small and medium enterprises and venture firms
    • (b) Measures to promote private investment

Measures for Structural Reform

  1. Creation and Upgrading of Social Infrastructure
    • (1) Reconstruction of urban and regional infrastructure
      • (a) "Towns where one can get around on foot safe and sound"
      • (b) Urban beautification projects, including the installation of 5,000 street lights (FY 1999) and the underground installation of 3,000 km of power lines (by FY 2003)
      • (c) Alleviation of congestion in 100 traffic bottlenecks (projects to be completed by FY 2000)
      • (d) Installation of about 900 electronic toll collection (ETC) facilities (by FY 2002)
    • (2) Adoption of information technologies
      • (a) Development of peta-bit network trunk lines and nationwide development of optical fiber network to achieve nationwide coverage by around FY 2005)
      • (b) Adoption of information technologies in education (link all public schools to the Internet by FY 2001)
        Computer courses to be made compulsory in teacher training programs(from FY 2000)
      • (c) Introduction of information technologies in regional areas (establishment of high-speed LANs in each regional area, etc.)
      • (d) Realization of an electronic government administration (electronic declaration of tax returns and electronic administrative procedures: FY 2003)
      • (e) Electronic issuance of securities statements (to be introduced from FY 2001)
      • (f) Promotion of the introduction of low-priced, fixed-rate Internet access fees by setting up new rules for interconnection
    • (3) Promotion of deregulation
      • (a) Front-loading the schedule of the Three-Year Program for Promoting Deregulation
      • (b) Opening of the Internet access network
      • (c) Revision of systems governing corporations (framework for the division of corporations) and enactment of the "Minji Saisei Hou" (new bankruptcy-related law)
      • (d) Promotion of entry into nursing care services
  2. Changes in Economic Structures and Market Concepts
    • (1) Support for entrepreneurship and venture firms
      • (a) Expansion of the options of financing modalities; ample provision of start-up funds; introduction of systems to secure suitable human capitals and to change organizational structures
      • (b) Studies on tax measures supporting small and medium enterprises and venture firms
    • (2) Revitalization of the financial markets
      • (a) Reform of the over-the-counter (OTC) market
      • (b) New market for venture firms and to establish system for new investment trust listing.
    • (3) Securitization of real estate
      • (a) Promotion of financial innovation by, say, reviewing the Special Purpose Company (SPC) Law
      • (b) Promotion of investment fund-type special joint activities in real estate
      • (c) Introduction of fixed-time house rentals
      • (d) Securitization of the loan assets of the Housing Loan Corporation
  3. Development of Technology and Knowledge Value and Events to Mark the New Millennium
    • (1) Development and spread of information technologies
      • (a) Creation of a super-high-speed Internet environment (by FY 2005) Realization of 10,000 times faster processing speed and of 30,000 times the current connection capacity
      • (b) Development of peta-bit network information technology
    • (2) Development of technology and knowledge value which fits well to the rapidly aging society
      • (a) Research on the overall picture for the socio-economy of the rapidly aging society
      • (b) Development of biotechnology to achieve order-made medical provision
    • (3) Development of technology and knowledge to address environmental concerns
      • (a) Research on the overall framework for society-wide recycling structure
      • (b) Development of technology that prevents global warming, including next-generation fuel batteries
      • (c) Development of technologies to properly dispose dioxins, etc.
    • (4) Establishment of a foundation for creative R&D
      • (a) Establishment of frameworks for researcher, initiatives
      • (b) Creation of a solid knowledge base
      • (c) Research on appropriate restrictions on the appointment of national university professors to part-time directorships in private corporations
    • (5) Holding of events to mark the new millennium
      • Holding congratulatory events using the Internet to celebrate the millennium through 2001
      • While seeking the active participation from local governments and private sectors, we will strive to spread the Internet throughout Japan and to stimulate unique local culture nationwide

Structural Reform (Concepts and stereotypes will change in various fields

Vision for Expected Livelyhood prevailing in Japan between 2003 and 2005