The Japanese Government announced today the adoption of an "Action Plan for New Economic Growth". It contains a wide range of policy measures to promote continuing economic reform and deregulation in Japan. This report builds on initiatives introduced as a result of Japan's first "Action Plan for Economic Structural Reform" which was adopted in 1997 to sustain Japan's long-term competitiveness. A complete outline of this report can be viewed here. A summary is posted below.

The Action Plan for New Economic Growth

I. Improving the Environment for Creative Corporate Economic Activities and New Business Fields

The Action Plan seeks to promote continuous innovation and intellectual production, in order to break through the organizational rigidities and closed nature of Japanese corporations and universities. It is designed to improve the quality of human resources, boost labor flexibility and facilitate the mobility of labor. This includes changes to Japan's corporate, legal and employment systems and measures to upgrade the foundation for creative research and development. Initiatives will also be introduced to maximize the utilization of IT and to induce demand and capital investment, especially in IT-related fields.

II. Improving the Business Environment to Maintain International Competitiveness

The Action Plan moves to improve Japan's business environment in order to maintain international competitiveness through market-oriented restructuring in a range of industrial sectors. Regulatory reform will enhance corporate restructuring conducted through "government administration in accordance with transparent rules" and a movement from "monopoly to competition." This will serve to boost productivity and to rectify Japan's high-cost structure, promoting a more internationally competitive business environment.

III. Establishing a Socioeconomic System to Overcome an Aging Society and Environmental Constraints

The Action Plan aims to establish a socioeconomic system that can overcome the difficulties presented by an aging society. It also seeks to address a range of environmental problems. Measures will be introduced to improve the level, and efficiency, of services, giving due consideration to the division of work between public and private sectors. In addition to a more effective utilization of resources in Japan's health care and nursing systems, measures will be introduced to facilitate employment of women and the elderly. Japan will also introduce market mechanisms that internalize the environmental load and other external diseconomies to enhance conservation and promote innovation and new business creation. Japan hopes to transform growing environmental limitations and the accelerated trend toward an aging society -- which have long been viewed as restrictions -- into dynamic new industries that serve as engines for future economic growth.

IV. Improving Efficiency and the Ability of the Public Sector to Maintain and Enhance Economic Vitality

The Action Plan is designed to rationalize and improve the efficiency of Japan's public sector and its ability to enhance economic vitality. Studies will be undertaken to verify the extent to which existing systems have served to redistribute resources from high- to low-productivity sectors, from the center to outlying regions, and from youth to the elderly. This will help Japan to develop new measures that allow a more appropriate division of burdens and benefits.

Japan's new Action Plan does not intend to endanger the social equity that has been developed in a society that possesses one of the lowest income disparities in the world. Nor does it seek to engender a clear distinction between economic "winners" and "losers." Rather, the Action Plan seeks to develop an enabling environment that will allow Japan to realize its vast underlying potential.

The Japanese Government's new Action Plan introduces measures that will guide Japanese reform initiatives until 2005. In addition to the initiatives presented in the main body of this report, the Japanese government will address other relevant items and issues as necessary to achieve the best possible results.

This material is published and disseminated by JETRO New York, 1221 Avenue of the Americas, New York, NY 10020 in coordination with KWR International, Inc. 461 Park Avenue South, New York, NY 10016, Tel: 212-432-3005, Fax: 212-532-3345, E-mail: kwrintl@kwrintl.com . JETRO New York is registered as an agent of the Japan External Trade Organization, Tokyo, Japan and KWR International, Inc. is registered on behalf of JETRO New York. This material is filed with the Department of Justice where the required registration statement is available for public viewing.

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