JETRO Invest Japan Report 2023
Chapter3. Recent Government Measures Section1. Basic Policy on Economic and Fiscal Management and Reform 2023

Japan is facing a number of simultaneous and compounded challenges at home and abroad. For example, it is exposed to structural changes in the international environment, such as Russia's invasion of Ukraine, infections of COVID-19, and climate change issues, while suffering domestically from soaring prices of imported resources, low birthrate and aging population/declining population, stagnant potential growth, and more frequent and severe disasters.

Under these circumstances, it is necessary to overcome difficulties while making the efforts to solve social issues themselves an engine of growth. In order to further vigorously expand the current positive trends, such as the first high level of wage increase in 30 years and the high appetite for investment in the corporate sector, Japan will accelerate our efforts to realize the "New Form of Capitalism" and aim to create an economic society suitable for the new era. Against this backdrop, the "Basic Policy on Economic and Fiscal Management and Reform 2023" was approved by the Cabinet on June 16, 2023.

The "Basic Policy on Economic and Fiscal Management and Reform 2023" shows the basic policies for the government's economic and fiscal management and reform. In particular, in terms of accelerating the realization of the "New Form of Capitalism," it states that the government will carry out "Trinity Labor Market Reforms" of "support for skill improvement through reskilling," "introduction of job-based pay on the reality of individual companies," and "facilitating labor transfer into growth areas," and strengthen "investment in people" and create a substantial middle class. It also mentions drastic strengthening of measures to cope with the declining birthrate and child policy and realizing of an inclusive society.

In particular, the following initiatives are cited as measures to "expand investment and implement economic and social reforms."

Chart 3-1: Initiatives in "Expansion of Investment and Implementation of Economic and Social Reforms"
No.	Outline	Main plans
1	Increasing investment in Japan and strengthening supply chains through public–private partnerships	Quickly realizing 115 trillion yen in private capital investment and creating quality jobs in the regions with various measures: budget and tax, and regulatory, institutional reforms. Aim to become the core of the global supply chain, such as in next-generation semiconductors, and work to expand investment.
2	Acceleration of Green Transformation (GX), Digital Transformation (DX), etc.	Promotion of thorough energy conservation, utilization of nuclear power, early establishment of hydrogen/ammonia supply chains, realization of public–private GX investment of 150 trillion yen over 10 years, upfront investment using "GX Economic Transition Bonds," and prompt realization and implementation of "Growth-Oriented Carbon Pricing Initiative"
3	Driving startups and converting to a new industrial structure	"Startup Development Five-year Plan" "Global Startup Campus" based on the above plan Strengthen the supply of funds and diversify exit strategies.
4	Promoting science, technology and innovation through public–private partnerships	Drastic expansion of science and technology investments through public–private partnerships in the fields of AI, quantum technology, health and medicine, fusion energy, and biotechnology Strengthening of initiatives in the fields of space and ocean, etc.
5	Developing strategies for inbound tourists (foreign visitors to Japan)	Recovery of international exchanges in Japan Establishment of the global knowledge exchange Acceptance of highly-skilled foreign professionals Set-up of an international financial center in Japan as a nation facilitating asset management