Council of New Form of Capitalism Realization

On February 27, 2025, Prime Minister Ishiba held the 31st meeting of the Council of New Form of Capitalism Realization at the Prime Minister’s Office.

At the meeting, the participants engaged in discussions on domestic investment and promotion of exports.

Based on today’s discussion, Prime Minister Ishiba stated:

“The Japanese economy is currently at a turning point regarding whether it can shift to a growth-oriented economy driven by wage increases and investment. To achieve this, it is necessary to overcome challenges, such as leveraging Japan’s strengths in manufacturing to capture growing markets primarily in Asia, pursuing a measure to ensure the competitive edge of its advanced manufacturing sector, and realizing productivity improvements in service industries and other sectors in regional areas.

Last month, on January 27, Mr. Tokura, Chairman of KEIDANREN (Japan Business Federation), announced ambitious domestic investment targets of 135 trillion yen for FY2030 and 200 trillion yen for FY2040. We are committed to achieving these new targets through collaboration between the public and private sectors.

The Government, for its part, will ensure that domestic investments are more predictable and promote them with regulatory systems and support measures put in place in an integrated manner, without being bothered by policy changes in other countries. These efforts primarily focus on institutionalizing growth-oriented carbon pricing exceeding 150 trillion yen in the GX (Green Transformation) sector, establishing an AI (Artificial Intelligence) and semiconductor industry base framework exceeding 50 trillion yen in the DX (Digital Transformation) sector, and implementing measures to reshore supply chains in the economic security sector.

Based on today’s discussion, we will embark on the following four new initiatives.

Firstly, we will accelerate the creation and growth of medium enterprises.

Some 9,000 medium enterprises in Japan play significant roles in capital investment, wage increases and Regional Revitalization 2.0. In addition to supporting capital investment that will lead to wage increases, we will materialize measures to boldly promote exports and research and development. Based on the Growth Vison for Medium Enterprises, we will introduce a seamless and effective support system that enables small and medium-sized enterprises to grow into medium enterprises and medium enterprises into large-scale entities.

Secondly, we will support bold initiatives in sectors where Japan can have a competitive edge.

Facing an ultra-aging society ahead of the rest of the world with so many disasters occurring frequently, we will turn Japan’s such disadvantages into opportunities. To capture growing overseas demand, especially in Asia, we will work to develop products and services that solve social issues and expand exports in sectors such as healthcare and disaster prevention.

We will also target sectors with high potential and significant room for expansion, including by developing cold chains in emerging countries to further promote exports of agricultural, forestry and fishery products and foods; supporting the fostering of creators, ensuring fair transactions, and supporting the expansion of overseas channels in the entertainment and content industries; and urging the growth of the tourism industry by expanding inbound tourism in regional areas.

Thirdly, we are committed to addressing the shortage of industrial land and human resources, which is part of bottlenecks for domestic investment.

With a cross-ministerial approach in place to secure industrial land and other items in view of progress to be made in the GX sector, I instruct that the direction for institutional responses be set by June.

I would therefore like to instruct the Minister of Education, Culture, Sports, Science and Technology and the Minister of Economy, Trade and Industry to take leading roles in formulating by June specific plans for fostering industrial human resources, including by conducting flexible reorganization of faculties and departments at educational institutions and encouraging private enterprises to provide funds. In doing so, we will ensure that demand from the industry and what regional universities and colleges of technology have to offer are dealt with in a comprehensive manner.

Fourthly, it is necessary for Japan to establish leadership in the game-changing environment with industrial structures transformed due to AI and digital technologies, among other things. We need to come up with measures that leverage Japan’s strengths in manufacturing, primarily in sectors that require high reliability.

I would like to instruct the Minister of Economy, Trade and Industry to take the lead in outlining a future vision for the new industrial structure brought about by the innovation of AI and digital technology, and to develop countermeasures. In particular, I request that related policies be strengthened for the Japanese automobile industry so that it can survive in international competition even amid these changes.

I hope to see measures strengthened so that the outcome of research and development in cutting-edge sectors will be transformed into Japan’s earning power through the promotion of their industrialization.

In addition, reforms in corporate governance and capital market should also be promoted to encourage private companies to actively invest.

In order to develop an environment for growth investment and wage increases in regional areas, we will revise Action Plan for a New Form of Capitalism in June of this year. In doing so, we will ensure to further develop details of today’s discussion by sequentially deepening discussions on productivity improvement in small and medium-sized enterprises, the passing on of prices, business succession and M&A (mergers and acquisitions), maintenance and strengthening of regional basic services, human resources policy, and support for startups.

Based on the above, I sincerely ask both labor and management to cooperate in realizing significant wage increases in this year’s spring labor-management negotiations, with a focus on base pay increases by building on the momentum of last year’s 33-year high.”