Prime Minister of Japan and His Cabinet  
Speeches and Statements by Prime Minister TOP

Japan's Future Development Strategy and
Growth Initiative towards Doubling the Size of Asia's Economy

April 9, 2009
(speech of approximately 30 minutes)
Japan National Press Club

(Provisional Translation)

Photograph of the Prime Minister
(Photograph courtesy of Mr. Itaru Kurita)


1. Introduction

2. Future of the Japanese Economy - "Future Development Strategy"

  (1) Leading the World in the Low-Carbon Emission Revolution
      (i) The Number One Solar Power Nation in the World
      (ii) The First Nation that Popularizes Eco-Cars

  (2) A Healthy, Long-Lived Society in which People Feel Secure and Strong
      (i) Create Employment for 300,000 People in Nursing Care
      (ii) Revitalize Regional Health Care Systems

  (3) Promoting the Attractiveness of Japan
      (i) An Attractive Major Tourist Destination
      (ii) Extending the Soft Power of Japan

3. Growth in Asia - "Growth Initiative towards Doubling the Size of Asia's Economy"

  (1) Strengthening Asia's Growth Potential
      (i) Specific Examples
      (ii) Formulation of the Comprehensive Asian Development Plan

  (2) Expansion of Domestic Demand in Asia

4. Conclusion

1. Introduction

Good afternoon, I am Taro Aso. It has been roughly six months since I took office as the Prime Minister. Looking back, it has been a period in which I have been occupied with responding to the economic crisis, said to be on a scale that occurs "once in a hundred years."

Amidst this major crisis, citizens and companies alike are filled with a sense of uncertainty and helplessness with regards to the future.

Meanwhile, the current crisis has the potential to change the structure of competition in the world's economies and industries.

The nations that are able to transform tough situations into opportunities during this worldwide period of transition will be prosperous in the future. In this sense as well, we stand at a crossroad that comes "once in a hundred years."

What kind of future will today's Japanese economy lead to? I would like to present to you my new growth strategy called the "Future Development Strategy." It is a roadmap for the image of sectors that should grow and for the realization of that image, and covers the period until 2020.

Furthermore, new growth frontiers are not limited to Japan. I would also like to discuss an Asia-wide growth strategy that aims to double the size of the Asian economy by 2020.

2. Future of the Japanese Economy - New Growth Strategy

First, I will discuss the "future" of the Japanese economy.

In a situation in which major worldwide adjustments have become necessary, it is no longer realistic for Japan alone to return to a growth trajectory that relies on export of traditional goods. I propose the following three pillars in order to take quick action toward a new growth model.

These are:

(i) "Leading the World in the Low-Carbon Emission Revolution"
(ii) "A Healthy, Long-Lived Society in which People Feel Secure and Strong"
(iii) "Promoting the Attractiveness of Japan"

These three pillars are fields in which we can capitalize on Japan's strengths and characteristics.

With these three pillars, we will make concentrated public and private investments and implement bold systematic reforms that will promote those investments.

I believe that with such bold actions by both the public and private sectors, we will be able to increase real GDP by 120 trillion yen by 2020 and create employment opportunities for 4 million people.

In particular, over the next three years we expect to create demand totaling 40-60 trillion yen and realize job creation for 1.4 to 2 million people.

(1) Leading the World in the Low-Carbon Emission Revolution

First and foremost, I would like to talk about the "Low-carbon Emission Revolution."

Overcoming global warming is the greatest challenge of the 21st century. The Low-carbon Emission Revolution is one in which we overcome this challenge with new technologies and reforms of social systems.

The rapid post-war growth greatly changed the way of life in Japan.

The spread of household appliances such as the washing machine and television, etc., called "the three sacred appliances," reduced the burden of performing household chores, and promoted family togetherness. Furthermore, the spread of automobiles changed our lifestyles dramatically.

The realization of the "Low-carbon Emission Revolution" requires an equally large reform of lifestyles and urban development.

In the "low-carbon emission society" of the 21st century, solar batteries, electric cars, and energy-saving appliances will become the new "three sacred appliances." In addition, just as during the period of rapid economic growth, I believe these new technologies will allow us to experience the greatness of a low-carbon emission society and to formulate our dreams.

Japan's energy efficiency is twice that of the United States and 1.7 times that of Europe. As this shows, we have a foundation that is well-suited to make such reforms possible, in particular our world-class energy-saving technologies.

By 2020, I call for the percentage of our total energy consumption accounted for by renewable energy to double, and to increase to 20%, the highest level in the world.

By 2020, we will create a new 50 trillion yen market and employment opportunities for 1.4 million people in this Low-carbon Emission Revolution field.

<<(i) The Number One Solar Power Nation in the World>>

As the initial step, the project I would like to place the most focus on is the "Plan to be the Number One Solar Power Nation in the World." This will increase the electrical output from solar power to 20 times the current level by 2020.

Solar power generation is taking steps toward worldwide diffusion. The next few years will be a crucial period for assuming the world's number one position. The question is, how do we become number one in the world in terms of solar power generation?

In order to achieve this, we must put an end to the following vicious cycle:

(i) Costs are high because of lack of demand.
(ii) Demand remains stagnant due to high costs.

Above all else, I think a strong political will to create "demand through policies," is necessary.

We will establish a "new purchasing system" in which electric companies purchase solar power generated in households at about twice the current price. Because of this system, households with solar panels will see profits in about 10 years with the support measures of the national government and local governments.

Moreover, we will install solar power generation units in 36,000 public elementary, junior high, and high schools nationwide on a targeted basis over the next 3 years, thereby transforming these schools into "green schools" that educate our children while using solar energy.

With these measures, we will aim for the reduction of the cost of solar power systems by one half over the next 3 to 5 years.

I have a dream that one day Japanese solar panels will cover the homes and deserts of the world to help reduce global carbon emission. I would like to put into practice bold approaches to realize this vision.

<<(ii) The First Nation that Popularizes Eco-Cars>>

Another plan is "The First Nation that Popularizes Eco-Cars." We will be the first nation in the world to popularize so-called "eco-cars" such as electric cars and hybrid cars, etc. We will begin mass production and mass sales of electric cars in 3 years, and attempt to make 1 out of every 2 new cars an eco-car by 2020.

In order to achieve this, exemption of the Automobile Weight Tax and the Vehicle Excise Tax began this month. Besides, the Japanese Government will introduce new subsidy scheme so that replacement for Eco-cars could be further facilitated. Through these supporting measures, we aim at creating new demand for around 1 million Eco-cars over the next year. We will create an age in which each citizen chooses cars based on environmental performance.

Moreover, we will select 10 cutting-edge model cities, and implement a demonstration project that gives us an image of a motorized society in the future. Based on the knowledge we will have gained, we will collaborate with other countries to create a global standard.

In conjunction with this goal, we will also support the spread of over 20 million energy saving appliances by utilizing the "eco point system" to reward persons that purchase energy saving appliances.

(2) A Healthy, Long-Lived Society in which People Feel Secure and Strong

The second pillar of the growth strategy is "A Healthy, Long-Lived Society in which People Feel Secure and Strong."

In Japan, aging is progressing at a speed unmatched by any other country in the world.

However, Japan's elderly are strongly motivated to work.

In Japan, about 30% of males aged 65 years or older are working. The percentage is 20% for the United States and roughly 10% for Europe.

In Japan, over 80% of elderly persons aged 60 years or older want to continue working until at least 70 years of age.

If we can provide solid health care and nursing care services, we can create an active aging society that can lead the world.

Building a society of health and long life before any other nation in the world will lead to the creation of broad domestic demand-oriented industries.

We will create a new market of 35 trillion yen and employment for 2.1 million people in this field by 2020.

<<(i) Plan to Create Jobs for 300,000 People Employed in Nursing Care>>

First, we will approach the "Plan to Create Employment for 300,000 People in Nursing Care." We will aim to increase the current figure of 1.3 million nursing care employees by 300,000 employees in the next 3 years and to 2.2 million employees by 2020.

Even in a time when many people are losing their jobs, the field of nursing care still suffers from a severe lack of manpower.

Currently, the field of nursing care offers annual compensation that is more than 1 million yen less than the average income of all industries. Beyond this, there is little opportunity for career advancement after being employed in the field. In order to create better nursing care services, there must be hopes and dreams in the nursing care workplace.

First, conditions in the field of nursing care must urgently be improved.

In order to achieve this, we will enrich funds for nursing care. In addition, we will use this money to raise the wages of persons working in nursing care over the next 3 years.

In addition, we will change the current compensation structure to one which allows an improvement in wages and conditions, similar to that of people working in companies and factories.

Also, with respect to urban areas, we can see that the greatest challenge comes from a lack of sufficient long-term care facilities.

In the next 3 years, we will develop long-term care facilities on a targeted basis.

(ii) Plan to Revitalize Regional Health Care Systems>>

Another focus project I would like to focus on is the "Plan to Revitalize Regional Health Care Systems."

Healthcare in certain regions suffers from serious problems such as lack of doctors and patients being sent from one hospital to another. Meanwhile, there are doctors and nurses who work day and night even on holidays.

It is necessary to overcome this situation and rebuild regional health care systems.

These problems cannot be solved simply by individual cities, towns, villages, and hospitals. Rather, it is necessary to change our way of thinking to one that calls upon regional hospitals, private practice doctors, and long-term care facilities to cooperate and collaborate with neighboring cities, towns, and villages in providing comprehensive services for residents.

Moreover, it is important to reallocate functions keeping in mind the perspectives of patients. For example, by creating core bases for emergency and obstetric services, patients will no longer be "sent from one hospital to another."

The government will make targeted investment to build health care and long-term care structures in which regions act in concert.

Specifically, we would like to reapportion roles among hospitals or among hospitals and clinics in multiple cities, towns, and villages in a wide scope.

Such arrangements will allow for the following to be achieved:

(i) Increase of administrative medical assistants that support doctors
(ii) Development of better health care facilities and IT facilities
(iii) Bus operations that allow all residents to visit hospitals

We will use all our power to support the building of health care structures at the regional level.

First, we will select advanced regions from each prefecture and implement the plan. Afterwards, we will expand successful models to about 350 regions nationwide within 10 years. We will engage in this rebuilding of regional healthcare system as a major 10-year project.

(3) Promoting the Attractiveness of Japan

The third pillar of the growth strategy is "Promoting the Attractiveness of Japan."

Japan possesses soft power rooted in the culture and sensibilities that have developed over many years. This includes rural landscapes that charm foreign tourists as well as such cultural fields as animation and fashion that gain worldwide attention. Utilizing this soft power, we will create a broad range of new industries. We will reinvigorate regions so as to increase the employment of young people.

<<(i) An Attractive Major Tourist Nation>>

First, we will aim to become "An Attractive Major Tourist Nation." We aim to increase the number of foreign visitors to Japan to 20 million, which is more than double the current figure. This will likely translate to a consumer market of 4.3 trillion yen.

Unfortunately, Japan is ranked 28th in the world in terms of the number of visiting foreign tourists. As we make appeals of our charm and make the necessary preparations, the number of foreign tourists will almost certainly increase.

First, we will improve the access to Japan. We will cut the waiting times for immigration checks at Narita International Airport by one half from 28 minutes at the longest, to 15 minutes at the longest. We will reduce the connection times from Narita International Airport to domestic carriers at Haneda Airport by one half, from about 100 minutes to about 50 minutes.

Also, I would like to thoroughly improve the scenery and townscapes of tourist attractions.

We will restore the traditional townscapes which the people of those regions are proud of. It is possible for any part of Japan to be reborn as an attractive tourist area. There are examples such as that of Ouchijuku, Aizu where the elimination of telephone poles led to a dramatic increase in tourists.

From this perspective, we will choose about 30 tourist areas over the next 3 years, promote the improvement of scenery with the elimination of telephone poles, etc., and develop attractive townscapes and scenery.

<<(ii) Transmitting the Soft Power of Japan>>

Another project is "Transmitting the Soft Power of Japan."

Japan is a prime source of to "content" and fashion, etc. such as animation and computer games which have been labeled as "Japan Cool," and have gained the attention of consumers worldwide.

"Manga" is now an international word. Many Japanese magazines are among the most popular women's fashion magazines in China. Are you familiar with "Ayumi, Ebichan, and Karina?" These women appear in magazines read by Chinese female office workers and in television commercials.

Akihabara and Uraharajuku, Mecca for funs of animation and fashion, have become regular places for sightseeing in Tokyo.

However, unfortunately, this soft power of Japan has not resulted in business overseas. The percentage of overseas sales for Japan's contents industry is slightly less than 2% of its overall sales, a figure one-tenth that of the United States.

By turning the popularity of Japan's soft power into business, we can develop a major industry of 20-30 trillion yen by 2020, and create new jobs for 500,000 people.

It is important to develop the works and talents of creators as well as the contents of producers into business through the internet and mobile phones, etc.

In order to achieve this, we will create an organization that will purchase the licenses to scripts, etc. of popular creators in a bundle, develop sales channels and provide capital for the creation of works overseas, all in an integrated manner.

I have explained my thoughts on major projects in accordance with the three aforementioned pillars. I am also focusing on other projects in addition to these. The details are written in the documents that have been distributed, so please refer to them.

3. Growth in Asia - "Growth Initiative towards Doubling the Size of Asia's Economy"

Next, I would like to address another theme, growth in Asia.

Asia is the "center of growth in the 21st century." A great strength of Japan is its location in Asia. It is important to take full advantage of this strength in considering Japan's new growth strategy.

Japan faces the issue of declining population. The Asian market will expand substantially in comparison with the markets of Europe and North America.

East Asia alone has a population of 3.2 billion. This is roughly half of the world's population. In the past 4 years, the East Asia's population increased by 130 million, roughly equivalent to population of Japan. In addition, a massive middle-class is emerging in Asia.

It is said that consumer durables boom occurs when the GDP per capita exceeds 3,000 dollars. China's GDP per capita has already exceeded 3,000 dollars while that of ASEAN nations has exceeded 2,200 dollars in average.

It is important for Japan to take the viewpoint of "trans-border growth in Asia as a whole."

"We should (i) create wealth in a growing Asia as a whole, and (ii) link that wealth to employment and innovation in Japan through strengthening economic partnerships and promoting people to people exchanges. (iii) This will lead to the further development of Asia." It is extremely important to create such a favorable cycle.

Rather than persisting in expanding domestic production, Japan will put importance on increasing wealth of people. In other words, it is necessary to convert way of thinking from "gross domestic product (GDP) to gross national income (GNI)".

I tasked the Special Envoys of the Prime Minister whom I appointed in November last year, to listen to the voices of the Asian nations, and to discuss specific measures. Having received the report of the Special Envoys who held discussions with dignitaries of these nations, I would like to propose the following two points.

(1) Strengthening Asia's Growth Potential

First, in order to strengthen the growth potential of Asia, it is necessary to promote sub-regional infrastructure development, industrial development and institutional improvement in a coherent and systematic manner. By doing so, we can expect drastic growth of the sub-region and a wide range of industries. We will support such projects.

<<(i) Specific Examples>>

For instance, it takes two weeks by ship from Ho Chi Minh, Vietnam to Chennai, India through the Strait of Malacca.

If a road from Ho Chi Minh to the Andaman Sea is developed, goods can be transported in ten days by shipping them from Thailand to Chennai. If the time spent in crossing borders such as customs clearance, etc. is shortened, the goods can be shipped in eight days.

By constructing such a route and developing the relevant infrastructure such as industrial complexes in the surrounding area, the Mekong region can substantially develop as a supply base of automobiles and electronics including faraway India and the Middle-East in its scope.

Furthermore, the role of the Strait of Malacca as a sea lane is essential. Supporting the development of the coasts of the Strait of Malacca will stabilize the vital artery of energy transport that connects Japan, China, and South Korea with the Middle-East. This will also greatly contribute to the development of the Southeast Asian nations such as Indonesia, Malaysia and the Philippines.

There are quite a few candidates for such projects.

<<(ii) Formulation of the Comprehensive Asian Development Plan>>

In order to concretize this initiative, it is necessary to formulate a comprehensive development plan regarding the following:

a) Arterial infrastructure such as rail and roads
b) Relevant infrastructure that should be developed in the surroundings such as power plants, industrial parks
c) Plans of industry development
d) Structures for finance
e) Systems that need to be improved, such as customs clearance.

I would like to propose that Economic Research Institute for ASEAN and East Asia (ERIA), ADB, and ASEAN Secretariat, in cooperation with related countries, will work together to make a comprehensive Asian development plan.

It is predicted that there will be an infrastructure demand of 70 trillion yen in 5 years in ASEAN and India. Projects already in the conceptualization and planning stages account for 10 trillion yen of this.

Japan will not only propose, but support these projects by mobilizing financial resources from ODA and other public sector funds as well as private funds.

In order to attract private investment in infrastructure development in Asia, Japan will newly establish a 2 trillion yen trade insurance credit line. We will contribute to the infrastructure development of Asia by utilizing, amongst others, the recently announced ODA of up to 2 trillion yen and the Leading Investment to Future Environment Initiative (LIFE Initiative) of roughly 500 billion yen from Japan Bank for International Cooperation.

Also, we must not forget to address environmental problems when considering sustainable growth of Asia. Utilizing Japan's excellent environmental technologies as well as new-energy and energy-saving technologies, we will promote projects for the dissemination of resource recycling systems and high-level water circulation systems and others, throughout Asia.

(2) Expansion of Domestic Demand in Asia

Second, expansion of domestic demand in Asia is important. In addition to stimulating investment, it is also extremely important to increase consumption in Asia.

In the future, in order for Asia's middle class to expand consumption without worry, it is necessary to develop safety nets such as social insurance, etc. Furthermore, it is also necessary to expand the middle class by enhancing education.

These are the challenges which individual nations need to address with their own initiatives. It is important for Asia as a whole to cooperate in sharing best practices and developing common indexes, etc. I would like to propose that ERIA make policy recommendations.

In 1960, the Ikeda Cabinet formulated the "Income Doubling Plan" and Japan entered an age of rapid growth.

Today, the middle class of Asia as a whole is growing, and we are entering a new age of substantial growth led by domestic demand.

The initiative I have discussed today can be called the "Growth Initiative towards Doubling the Size of Asia's Economy."

I would like to see that Asian nations work together with mutual respect and on equal footing towards the aim of doubling the size of the Asia's economy in 2020.

I will propose this at the East Asia Summit (EAS) scheduled on April 12, and take steps forward together with other Asian nations.

4. Conclusion

Many times throughout history, growth models with continuous rapid growth have collapsed, giving way to major adjustments to search for a new equilibrium.

The city-states of Italy during the middle-ages, the Netherlands during the 16th century, and Great Britain during the 19th century have ruled the world. Why is it that these nations had succeeded in ruling the world but later ceded their dominant positions to other countries?

In my opinion, one point they had in common is that at the time, they prospered in manufacturing and trade, but fell into excessive financial capitalism.

To work up a sweat. To produce great results as a team with organizational power. These traditions have contributed to the "manufacturing" sector of Japan. If these strengths can be utilized, the Japanese economy still has great potential.

Recently, looking at families and looking at schools, I get the impression that individualism is progressing and as a result, the organizational power of Japan is declining.

However, I think it is necessary to once again acknowledge this strength of Japan.

For example, Great Britain invented railroads. However, Japan's system of railroad networks is far more advanced.

In the 23 wards of Tokyo, 76% of commuters use the railroads. The percentage is 19% in London, even though use of railroads is relatively popular in that city.

Because of this, heavy traffic and pollution of the atmosphere can be avoided in Japan. This can be done because of the precise operations of the railroads. It is the human resources and organizational power of Japan that makes this possible.

The "growth strategy" is one that does not lose sight of Japan's strengths and is built on that foundation. I would like to realize this strategy with new goals and strategies involving everyone.

The future of Japan and Asia is bright.

It is my hope that everyone will share this feeling through the growth strategy.