Chapter 4
Reviving Vigorous and Competitive Industries

On the other side of the non-performing claims of financial institutions, large-scale excess liabilities, excess facilities, and excess employment in industries still remain. To maintain a national sense of well-being and to continue to achieve a high-quality labor force in the 21st century, it is essential to significantly increase the productivity of capital and labor, and to revive an industrial base full of vigor and international competitiveness. Showing a road map toward revived and developed industry helps to lessen the uneasiness of the Japanese people for the future. Revitalization of industry and drastic improvement in the profitability of capital are also necessary for the revitalization of the financial system.
In recognition of this, excess liabilities and facilities in the industries should be promptly disposed of. At the same time, in a competitive society with soundness and creativity, management resources should be focused on growing industry areas and on promoting the speedy development of those areas. New business creation should be aggressively promoted, and strategic research and development should be enhanced to promote new industries.

1. A Framework Toward Industrial Revitalization

The biggest reason behind the productivity of capital declines is the deterioration of asset efficiency as a result of excess liabilities and facilities. It is essential to dispose of excess facilities in a short period of time. At the same time, fixed investment in the area of growing industries should be enhanced. An environment that enables companies to innovate their management organization system to efficiently and effectively utilize the management resources such as capital must be fostered.

(1) Supporting the Disposal of Excess Facilities

To facilitate the intensive disposal of excess facilities in the next two years, the following measures should be implemented: (2) Promotion of Fixed Investment in Growing Areas

An incentive system of fixed investment by tax policy, such as allowing accelerated depreciation within three years, should be introduced and incorporated in growing areas, such as information and telecommunications, biotechnology, environment, and new energy development.

(3) Enhanced Utilization of Information Technologies (4) Innovation of Management Organization

2. Assisting Establishment of New Businesses and Strategic Technological Development

The creation of new businesses, which will offer new employment opportunities and new bases of economic vigor, is the key element for Japanese industries to regain new vigor. It is important to aggressively support entrepreneurs, and to create a society full of innovations.
To assist entrepreneurs, it is necessary to intensively eliminate various obstacles that hinder entrepreneurship. Currently, technological development in Japan does not have long-term perspectives and the goals tend to be unclear. It goes without saying that the key factor of technological development rests on efforts in the private sector. However, both the private sector and the government should jointly work to find out clear and strategic directions. The government should take the necessary policy actions that require budgeting.

(1) Assisting Entrepreneurs

It is important to take assisting measures for entrepreneurs comprehensively and effectively in the field of funding, human resources, technologies, management resources, and cultivation of sales network. Especially it is important to pay due regard to software assistance. It is also desired to establish a system which enables the entrepreneurs to challenge to start business more than twice.

1. Assistance in the Tax System 2. Reform of Over-the-counter (OTC) Market 3. Out-source of the Public Service to Private Sector 4. Fostering Micro-businesses 5. Fulfillment of SBIR 6. Deregulation (2) Promotion of Strategic Technological Development

3. Consolidating Human Resource Infrastructure

To enhance productivity of the labor force -- an important management resource together with capital -- various measures need to be taken to promote aggressively human resource development in a self-initiative manner. These measures should include:1) issuing "training vouchers" that enable those who wish to change jobs to acquire the necessary capabilities efficiently that were outlined in Chapter 2.II.1,"Policies to Enhance Employability and to Ensure Job Security"; and 2) liberalization, in principle, of the temporary staff offering and job-offering businesses. Also important is to cast the right person for the right position. Educational reform is necessary to foster high-quality human resources. It is important to provide education that matches flexibly the needs of the economy and society, such as the importance of information technology, internationalization, and entrepreneurship.


4. Consolidating Intellectual Infrastructure

Consolidating intellectual infrastructure so as to supply information and knowledge on creative activities like starting new businesses and strategic technological development.

(1) A standard and examination assessment method - a common foundation of technological development -- should be improved. Laboratory materials such as chemical and biological products should be provided fully, and databases focusing on these materials needs to be collected.

(2) The government should promote businesses by developing databases commercially viable enough to be sold.

(3) It is decisively important for an industry to meet international standards to maintain competitiveness. The government and the private sector must systematically collaborate and earnestly propose new technologies invented in Japan to be adopted as international standards.


5. Creation of Leading Industries for the 21st Century

It is necessary for Japan to foster new industries that would lead the Japanese economy for the 21st century as national projects. Especially information telecommunications, environment, medical services, welfare, biotechnology, distribution, and finance are expected to be important strategic areas that will grow rapidly and will provide high-quality employment opportunities in the growing mobilization of the labor force. It is clear from the experience of other advanced countries that the government takes initiatives in the development of those strategic areas, and the outcome of these initiatives is that those industries are becoming important sources of vigor in the national economy. Unfortunately, the ratio of research and development in the front running areas to GDP is low in Japan. Moreover, Japan is behind the world in the industrialization of these front running areas. It is urgently requested that Japan takes positive initiative in these strategic areas, and that Japan becomes a world-class competitor in these areas. These activities will promote the reviving of the Japanese economy, through which Japan contributes to the world.

(1) Setting National Strategies

Concrete national strategies should be set by a committee established jointly by the government and the private sector within the next year to develop promptly the important strategic areas. In doing so, a thorough examination of both successful and unsuccessful experiences of the countries should be made. Based on this examination, strategies that realize the efficient development of each area should be established. The strategies could differ depending on area. There could be one area where the government and the private sector jointly establish intensive research development projects, and another area where prompt and thorough deregulation and lifting of the regulations are necessary to maximize the utility of private-sector vitality. The strategies should be as concrete and effective as possible. The strategies need to be assessed regularly afterwards, and the result of these assessments should be fed back to the policies to maximize the policy effect.

(2) Execution of Strategic Deregulation (3) Intensive Incorporation of Resources (4) Fostering Human Resources and Smooth Mobility of Labor (5) Assuring International Standards (6) Execution of Leading National Projects
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