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ABENOMICS For future growth, for future generations, and for a future Japan.

“I will break down any and all walls looming ahead of the Japanese economy and map out a new trajectory for growth. This is precisely the mission of Abenomics.” —Prime Minister Shinzo Abe

Published in January 2019

https://www.japan.go.jp/abenomics About Abenomics keeps boosting Japan’s economy1 Abenomics Setting the economy on course to overcome deflation and continue steady growth CO

Since coming to power in late 2012, Number of Employed Nominal GDP Prime Minister Shinzo Abe and his 53.7 JPY tn Persons (Female) 2.5 mn (2.0 mn) government unveiled a comprehen- (JPY tn) Corp 493 JPY tn ▶ 547 JPY tn 62.7 mn (26.6 mn) ▶ 65.2 mn (28.6 mn) sive policy package to revive the 80 Japanese economy from two decades Corporate 70 of deflation, all while maintaining Unemployment Rate 60 Pre-Tax Profit JPY tn % 50 fiscal discipline. This program 41.3 ▶ 2.4 4.5 % 2.4 % became known as Abenomics. 39.7 JPY tn ▶ 81.0 JPY tn Record high 40 36.4 30 Private 20 While Abenomics started as a Non-Residential Tax Revenue 10 JPY tn JPY tn 0 14.3 ▶ 16.7 42.3 JPY tn 59.1 JPY tn stimulus measure based on three Investment FY20

arrows, over the years it has 71.9 JPY tn ▶ 86.2 JPY tn

evolved into a broader blueprint for 2 pro-growth socioeconomic change (JPY tn) Nominal GDP 700 that aims to lead Japan in tackling BEFORE ABENOMICS today's challenges head-on. (JPY tn) Priv 90 The changes are designed to benefit 88 86 all parts of Japan's economy— 600 84 600 82 the people, companies, investors, 564 80 78 and the country as a whole. 547 76 533 537 74 518 507 72 70.4 70 Aggressive monetary policy 500 68 494 494 66 FY20

Flexible fiscal policy 400 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 TARGET (Forecast as of January 2018) Growth strategy * Average exchange rate for November 2018: USD = JPY 113 3. Source: Ministry of F ** The Japanese fiscal year starts in April and concludes in March of the following year. 4. Source: Cabinet Offi 1. Pre-Abenomics vs. Post-Abenomics; nominal GDP = 3Q FY2012 vs. 2Q FY2018, seasonally adjusted series [Annualized]; corporate pre-tax profit = FY2012 vs. FY2017; private non-residential 5. Source: Ministry of I investment = FY2012 vs. FY2017; number of employed persons (detailed tabulation) = 2012 avg. vs. 2017 avg.; unemployment rate = January 2012 vs. October 2018; tax revenue = FY2012 vs. FY2018 6. Source: Ministry of H 2. Source: Cabinet Office “National Accounts,” “Fiscal 2018 Economic Outlook and Basic Stance for Economic and Fiscal Management” 7. Source: Ministry of F 01 CORPORATE PERFORMANCE JOB MARKET FISCAL CONDITION

2.0 mn) (JPY tn) Corporate pre-tax profit3 (mn pers.) Number of employed persons5 (JPY tn) Tax revenue 7 81.0 68 70 66.9 80 67 60 57.6 57.7 59.1 70 67.8 66 54.5 60.3 60.6 65 50.0 60 56.5 50 64 42.3 43.1 62.8 40.9 50 63 40 39.7 62 40 36.4 30 29.7 30 30 29 20 28 20 26.4 27 10 10 26 Y tn 0 0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2012 2013 2014 2015 2016 2017 2018 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Total Female

Ratio of effective job offers Dependency ratio on (JPY tn) Private non-residential investment4 (Times) and unemployment rate6 (%) (JPY tn)Japanese government bonds7 (%) 90 1.75 5.0 60 50 1.62 88 4.5 47.9 47.6 43.0 86.2 46.3 86 1.50 4.5 50 38.3 44.3 44.2 35.6 600 84 82.8 42.9 41.3 35.3 34.5 81.7 1.25 4.0 82 81.1 1.13 40 36.9 34.4 34.4 80 3.5 33.7 77.5 1.00 78 0.74 30 25 76 0.75 3.0 74 2.4 20 71.9 0.50 2.5 72 70.4 0.44 70 0.25 2.0 10 68 66 0.00 1.5 0 0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2012 2013 2014 2015 2016 2017 2018 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Ratio of effective job offers to applications (left scale) Amount of JGBs issued (left scale) Ratio of effective job offers to applications (regular staff) Level of dependence on JGBs (right scale) (left scale) Unemployment rate (right scale) TARGET

3. Source: Ministry of Finance “Financial Statements Statistics of Corporations by Industry,” all industries, all (firm) sizes, seasonally adjusted figures 4. Source: Cabinet Office “National Accounts,” private non-residential investment 5. Source: Ministry of International Affairs and Communications “Labour Force Survey,” seasonally adjusted figures 6. Source: Ministry of Health, Labour and Welfare “Statistics on Employment Referrals for General Workers,” seasonally adjusted figures; Ministry of Internal Affairs and Communications “Labour force survey,” seasonally adjusted figures 7. Source: Ministry of Finance “Public Finance Statistics Book,” initial budget 02 How Abenomics Works

Context Goal 1: Achieving Sustainable Growth Aim to reach The greatest structural issue facing Implement comprehensive reform to accelerate an economic virtuous cycle, which will help grow GDP to 600 trillion yen. 600 the Japanese economy is the aging trillion yen GDP of society and shrinking of the population. However, we see this challenge as an opportunity.

Demographic change is a social challenge that will soon be shared by most developed countries. Japan is committed to achieving Creation of new demand sustainable growth and becoming a Shrinking & Rise in pioneer in the establishment of a Aging Population consumption new social model. We call this Society 5.0, Japan’s vision for the next step in human evolution. Abenomics

Productive Individuals & Society

Smart Regulations & Laws Higher income Increased Attractive International Opportunities production More Competitive Business

03 Goal 2: Realizing Society 5.0 Solutions in Progress

Solve social problems by utilizing Japan's vast volume of real data in tandem with cutting-edge industrial technologies. 1 Productive Individuals & Society

Population may become smaller, yet it can also become smarter.

(Overloaded ▶ Organized) (Limited ▶ Empowered) Raising productivity will help us offset changes in the labor force.

Society Hunter-Gather Society

NEXT Smart Regulations & Laws GENERATION 2

Society As markets evolve to reflect changing social needs, we should move quickly, Agrarian and with an open mind, to help create new businesses and new demand.

Society Attractive International Opportunities Society Industrial 3 Information Society

Core issues, like growing sustainably, are faced by all nations. We believe in innovating together, opening our markets and offering our best products and services abroad.

(Isolated ▶ Connected) (All by Oneself ▶ Network Assisted) Society 5.0 is Japan’s vision for the next step in human evolution after hunter-gather, More Competitive Business agrarian, industrial and information society stages. It will enhance industrial competi- 4 tiveness and help with the establishment of a society more attuned to individual needs. The focus is on the vast potential of accumulating data, and new technologies of the Unlocking economic opportunities means opening up all of our potential, from strength in fourth industrial revolution, in order to find solutions to social issues such as the local regions and the SME sector, to creating an ever more friendly business environment. declining birth rate, an aging population, and environmental and energy issues.

04 Productive Individuals & HEALTHCARE MOBILITY FINTECH

Society ● Integrate and store Personal Health ● Starting with mountainous regions, ● Drive FinTech innovation by Records (PHR) using big data by 2020 introduce drone delivery services to facilitating experimentation with 1 to provide customized medical care include urban regions by the 2020s blockchain technology [e.g.] medical checkup, treatment, and *This technology allows faster and deeper Changing societal structures is a nursing care records ● Introduce driverless transportation online transactions while providing security services with the aim of making them by recording transactions in a chance to unlock new market chronological order within a chain of ● Enhance remote medical care opportunities. An aging society commercial by 2020 encrypted, interlocking blocks. After services combined with face-to-face *Road tests ongoing in the capital and in mountains creation, falsification of any part of the stimulates demand for care & chain is extremely difficult, creating a medical examinations (effective care trusted and secure record. wellness products and services, ● to be evaluated based on a FY2018 Autonomous truck platoons for mass ● Install open application which in turn pushes innovation in revision of medical service fees) transportation to address the robotics, AI, and IoT. shortage of truck drivers programming interface (API) ● Use AI and robots at long-term care (commercialization by 2022) systems in more than 80 banks by A smaller workforce will also facilities to maintain/improve users’ 2020 to further drive innovation motivate business efficiencies, as quality of life and reduce caregivers’ ● City planning will include new *API is a software interface within which an mobility options so that model cities application and other operations provide well as more demand for higher burden separate applications with a common skills to best use technological include autonomous driving, function. In software development, a shopping support and Mobility as a function provided by an API does not advances, as per the Society 5.0 Service (MaaS) from the start require further programming, which vision. Many believe economies makes the process more efficient.

only grow because of population ● Transport data dissemination via ● Achieve a 40% cashless payment growth. However, history shows Apps will be introduced from this rate by 2027 us that growth actually happens fiscal year to ease congestion, when the skills of society reflect its especially during peak times and major events economic opportunities.

AI IoT

ROBOTS

BIG DATA

05 DECARBONIZATION AND MORE FOR A DATA-DRIVEN SOCIETY y ● By 2030, between 50% and 70% of new DIGITAL GOVERNMENT n with autos will use electric, fuel cell or ● Change “administration” by making all services and procedures other non-gasoline engines digital nd deeper - Eliminate attachments required in various procedures, and ing security ● Promote a hydrogen society where modify the personal identification method such as affixing a seal OPEN DATA the lightest element in the periodic ain of table ushers in carbon-free Open up government data to promote innovative products and After NEXT-GENERATION INFRASTRUCTURE rt of the technology services, particularly in eight selected areas that include ting a - Establish 160 commercially ● Use robotics and sensors to repair and improve productivity of healthcare, agriculture and mobility infrastructure, also cutting costs operating hydrogen stations by 2020 ● Introduce data-driven operations to improve precision of and double that number by 2025 PI) construction, renewal and maintenance processes - Infrastructure Efficiency roadmap for next five years being prepared anks by ● Utilize AI and IoT for energy use 5G / CYBER SECURITY ation management with the n which an commercialization of VPP (Virtual PPP & PFI Move our telecommunications standard to 5G by 2020 to cope s provide ● Operating performance of airports, water supply and sewage with increasing data volumes, while strengthening cyber mmon Power Plant) systems by 2021 that ent, a offer more efficient resource systems, roads, education facilities and harbors can be bolstered security further with private business know-how s not distribution which ● Government considering ways to bring private initiative into nt. public utilities to generate long-term revenue and better INDUSTRY-ACADEMIA yment cost-performance returns COLLABORATION SMART CITY Set up an operating system in universities to accept private investments, and set up an incentive system to encourage ● Bring together town-planning with new mobility services and private data capacities to develop the “Compact · Plus · Network,” universities to collaborate with industry ensuring that efficient and clean transport is built into cities with aging population needs ECOSYSTEM FOR STARTUPS SMART AGRICULTURE

● Agriculture of tomorrow means utilizing sensors, big data Supply the foundation for people that have inside them analysis and AI to help farmers develop larger-scale, less a venture spirit by creating an agile environment where startups labor-intensive production and integrate their work into the can continuously create and drive innovation modern farm-gate-to-store supply chain at minimal cost. The approach will be expanded to forestry and fishery industries.

06 Productive Individuals & WORK-STYLE REFORM HUMAN RESOURCES DEVELOPMENT

Society ● Legislative rules and guidelines of “equal pay for equal ● Move toward free education for infants (from low income work”: Eliminate the irrational gaps in the working conditions households), all pre-school children, and higher-education 1 between regular and non-regular workers in order to enable (university) students (from low income households) non-regular workers to be fairly evaluated and to work with When speaking about economics, higher motivation ● Support further education and mid-life career change for everything starts with people. - Individuals who seek to advance their skills ● Promote a flexible work style: They are the country’s top asset Promote teleworking, side jobs - Those wishing to switch jobs and those who wish to take on multiple jobs with a variety of - Mothers returning to work after child-care leave, who wish to and this is where we are focused policy measures, including the renewal of guidelines boost skills or change employment to make the biggest difference.

Law passed in June 2018 ● Make education more practical As people’s average life span - Reform higher education curriculum and facilities to better meet expands, and our society grows the needs of today’s professions, especially in terms of technical more diverse, we want to help skills such as in IT people remain productive, learn - Introduce programming as mandatory study from elementary new skills, and re-invest that school to bolster societal IT knowledge in the future knowledge in their work.

Our initiatives include the Council for Designing 100-Year Life Society and measures to boost the workforce through higher female and senior engagement, as well as overseas talent.

07 WOMEN SENIORS EXPATRIATES

● Bolster health support for women at various life stages ● Provide a choice to work beyond the official retirement ● Actively attract overseas professionals who have age for those who want to do so, as well as support expertise or experience in certain areas through ● Offer greater assistance to single parents, irrespective companies that retain retiree-age staff easier visa procedures of gender - Fast-track visa screenings to 10 days ● Provide support in matching job openings and - Established a new status of residence for foreign human ● Make available further and recurrent education for applications women returning to work after child-care leave resources who have a certain level of professional and technical skill, and Japanese language proficiency ● Consider raising the retirement age of civil servants ● Provide female candidates with executive leadership gradually from 60 to 65 years old - Set up the world’s fastest Japanese Green Card training programs from the world’s leading business program for Highly-Skilled Foreign Professionals in scholars select fields

● Eliminate all forms of violence against women including ● Online applications accepted from 2018 spousal violence, sex crimes, prostitution, human ● Ease quality-of-life with more non-Japanese signage, trafficking, sexual harassment, and stalking international schools, English-speaking hospitals

● Promote men taking child-care leave and being more ● Option to invite housekeeping staff from overseas active with domestic tasks ● Support more international students and entrepreneurs

Achievements Achievements Achievements

▶ From 2012 to 2017, the number of women joining the ▶ From 2012 to 2017, employment rate of people over ▶ The number of workers from abroad reached workforce increased by about the age of 65 increased by

Source: Ministry of Internal Affairs and 1.28 Communications “Labour Force Survey” 3.5% 1.3million 1.08 2.0 million (Approx.) 0.91 Source: Ministry of Internal Affairs and Communications “Labour Force Survey” 0.79 0.68 0.72 ▶ Women in management positions in the private ▶ sector approaches 71% (mn) of seniors report that they would like to continue to 2012 2013 2014 2015 2016 2017 work past retirement age 10% Source: Ministry of Health, Labour and Welfare “Report on the Source: Ministry of Health, Labour and Welfare “Basic Survey on Wage Structure” Source: Cabinet Office “Research on daily life of seniors”2014 Employment Situations of Foreigners”

08 Smart Regulations & REGULATORY SANDBOX NATIONAL STRATEGIC SPECIAL ZONES HEA

Laws A fledging business idea or technology needs support and Selected regions have the privilege of carrying out Adopt flexible reg understanding. In the case of government, we are introducing advanced structural reform in the hope of turning Japan a centralu h a sandbox approach that seeks to help new ideas develop by successful test cases into touchstones for and grow the mar limiting administrative barriers and regulations on a case by nationwide implementation. 2 ● Create a faste Many say nothing ever changes case basis without being subject to existing regulations. innovative me in Japan. This section more areas have been ▶ - Implement fa - Early stage business models or technologies are proposed to selected since 2013 than others demonstrates that 10 pharmaceuti the government and evaluated on their merit this is simply not the case. reforms were undertaken regenerative - Rules are relaxed to test these innovations within a certain ▶ In recent years, changes have (as of October 2018) contained “sandbox” (e.g. within an approved company or 300 ● Create a globa drilled down into the bedrock of project). Businesses are able to conduct demonstration tests medicine some of the oldest and most and pilot projects that are not envisaged under existing - Make Nation traditional industries in Japan. into hubs for regulations inside of their “sandbox.” OKINAWA A revolution in efficiency and - The testing environment allows businesses to conduct pilot ophthalmic t SEMBOKU projects quickly, building up data that can lead to change in - Promote ma innovation is taking place in the NIIGATA SENDAI regulations energy, agriculture, medicine, ● Expand and po - If pilot demonstrations of new technologies/business models and telecommunications YABU medical treatm are successful, government considers extending the same CITY TOKYO AREA industries. And this is only the KITA AICHI KYUSHU KANSAI AREA deregulation to the rest of the country IMABARI beginning. AREA FUKUOKA Achieveme - A dedicated office for this is set up to ease with the application Japan is introducing more measures, process ▶ World’s fastes in regenerativ such as a regulatory sandbox, to help Law took effect in June 2018 Before 2014 stimulate new business, Clinical Study

opening the door to smart ideas Achievements After 2014 with smart regulation. Clinical Study C ▶ 1st automated bus driving test conducted on a public road in Semboku City (November 2016) 䢠 ▶ Accept non-Japanese workers ▶ Rapid developmen who have certain skills to help turn treatments suchs a agriculture into a growth industry in Kyoto Pref., ▶ World’s first succ Niigata City, Okinawa Pref. and Aichi Pref. cell transplantp o

Law took effect in April 2018 macular degener

09 HEALTHCARE AGRICULTURE ENERGY RADIO FREQUENCY

Adopt flexible regulatory frameworks to make First major structural reform and Undertake comprehensive reform, for Efficient frequency utilization is key Japan a central hub for regenerative medicine deregulation in 60 years to turn the first time in 60 years, to increase to accelerating innovation in next- and grow the market to 26 trillion yen by 2020 agriculture into a growth industry competitiveness for current energy generation fields such as IoT, digital sources while exploring new energy media and mobile entertainment. ● Create a faster R&D process in ● Reform the Agricultural Cooperative sources to create an eco-friendly and innovative medicine ● system to encourage entrepreneurship growing industry Provide more transparency to - Implement faster approval system for Law took effect in 2016 frequency assignment

pharmaceuticals,medical devices and ● Increase competitiveness in the regenerative medicine ● Decrease production costs and promote electricity and gas market ● Ensure unlicensed frequency bands for structural reform in distribution and Internet of Things (IoT) ● Create a global hub for regenerative processing medicine ● Consider auctions for radio spectrum Law took effect in August 2017 Achievements - Make National Strategic Special Zones distribution in the future into hubs for cardiac, neurologic and ● Increase exports to one trillion yen by 2019 Full liberalization of the retail market ophthalmic treatments - Strengthen export promotion through ● Promote and support business models (Electricity: Since April 2016) that go beyond traditional television or - Promote market entry from overseas the Japan Food Product Overseas (Gas: Since April 2017) Promotion Center (JFOODO) telecom operations ● Expand and popularize the use of online ELECTRICITY GAS medical treatment ● Introduce similar approaches to 8 2.4 modernize forestry and fishery Market size (JPY) trillion trillion Achievements industries New market 520 1,422 ▶ World’s fastest approval process Achievements entry companies companies in regenerative medicine Users switched to Before 2014 ▶ Exports of agricultural, forestry, and 5.68 1.41 a different retailer fishery products million million Clinical Study Clinical Trial 1,000 After 2014 807 Clinical Study Clinical Trial 745 750 Establishment of a negawatt trading market 612 SHORTER PERIOD 551 ELECTRICITY GAS FOR APPROVAL 450 Successful 1 ▶ Rapid development in advanced heart failure bid quantity GW treatments such as myoblast cell-sheet transplants (JPY bn) ▶ World’s first successful iPS origin retinal 2012 2013 2014 2015 2016 2017 2019 cell transplant operation for age-related target Full liberalization of the retail market: as of November 2018 Establishment of a negawatt trading market:result of reserve macular degeneration Source: Ministry of Finance “Trade Statistics of Japan” procurement for FY2018

10 Attractive International FREE TRADE EXPORT OF QUALITY INFRASTRUCTURE TO

Opportunities ● Comprehensive and Progressive Agreement for Trans-Pacific For more information: https://www.japan.go.jp/infrastructure ● Form 100 wor

Partnership by 11 nations [TPP11] entered into force in ● Provide financing to infrastructure projects across the world Organizations December 2018 of approximately USD 200 billion by 2021 specialists by

● ● 3 ● Japan-EU Economic Partnership Agreement [Japan-EU EPA] Promote bran By signing a trade deal with the Strengthen competitiveness through public-private will enter into force in February 2019 cultural prope EU this July, Japan did not simply cooperation - One of the world’s largest bilateral free trade deals ever and travel routes enter into a business deal. It was one that will eliminate nearly all customs duties on products ● Expand infrastructure investment, taking advantage of the biggest evidence to date of ● Improve the to traded between the two sides Japanese technologies and expertise Wi-Fi spots an Japan's commitment to lead and - The EPA will be a model for 21st century economic order, international t be a champion of free trade, to based on free and fair rules Achievements encourage global cooperation ● Promote priva ● Promote negotiations of other EPAs such as RCEP and both economically and politically, ▶ Decided with Prime Minister Modi of India to develop the procedures Japan-China-Korea FTA and to seek ways in which to support Mumbai-Ahmedabad High Speed Rail Corridor (MAHSR) based business, innovation, and growth. on the Japanese Shinkansen system, aiming to start operation Achieveme

in 2023 ▶ Abenomics has always aimed to create Achievements Inbound tourist A groundbreaking ceremony was held on September 14, 2017 prosperity in Japan and share that ▶ FTA coverage ratio has reached 50% m globally as part of a virtuous business -Trade value base, in force or signed ▶ Infrastructure project orders received 29 to cycle based on free, fair, rule-based Source: Calculated by Ministry of Economy, Trade and Industry with an expend markets. While opening its markets to based on Ministry of Finance “Trade Statistics of Japan” (January 2017–December 2017, Fixed numbers) 30 investors from overseas, Japan is also 30 exporting infrastructure and providing trillion* 4.4 21 financial aid so as to affect a win-win 19 20 yen global relationship. 15 by 2020 10

(JPY tn) (mn tourists % 51.6% 34.2 In force or signed 8 Under 2010 2013 2014 2015 2016 2020 (JPY tn) 1 negotiation target 20

Source: Cabinet Office “37th Meeting of the Management Council for Infrastructure Strategy” Source: Japan Natio *Approximate figure “International Visito

11 TOURISM INTEGRATED RESORT Come and Visit Japan! ● Form 100 world-class Destination Marketing Pave the way for the creation of Integrated Resorts [IR] Organizations and train tourism management , facilities that “integrate” hotels, dining, SHORTER TRAVEL TIME TO DOWNTOWN TOKYO specialists by 2020 entertainment, business conference space, and In addition to Narita International Airport, Tokyo is served by the casino options, in order to broaden Japan’s ● Promote branding of national parks, usage of more centrally located Haneda International Airport. Providing hospitality and tourism offering cultural properties and create globally attractive domestic connections to 48 cities, Haneda is now offering a wider choice of international routes. travel routes ● Create world’s first comprehensive legal framework for the IR industry Haneda ● Improve the tourist experience with additional free International Airport 30minutes Wi-Fi spots and 3,000 ATMs equipped for ● Outline vision to build facilities that promote diverse by car Tokyo Station international transactions attractions all across Japan ACCOMMODATION FOR LESS ● Promote private lodging services under certified ● Invite private sector to operate IR facilities New York 258 The Hotels.com Hotel Price procedures ● Closely regulate casino activities through additional London 230 Index (2016) shows that Tokyo legal measures that squarely address gambling has a lower average price point Achievements Paris 184 addiction Tokyo 184 compared to other iconic cities

▶ Inbound tourists in 2017 Madrid 138 Law passed in July 2018 2016 USD yearly average currency exchange rate: million 1 GBP = 1.28 USD, 1 EUR = 1.13 USD, 1 JPY = 0.0089 USD tourists 29 SHOP FOR LESS with an expenditure of Japan is not that expensive anymore. In fact, The Economist’s MICE1 Big Mac Index—a broad indicator of price points—ranks Japan trillion 36th out of 57 countries. (January 2018) (USD) 4.4 yen 60 1st 6.8 Switzerland Restaurants Hotels 2nd 6.2 Norway 40 Malls 36th 3rd 6.1 Sweden 29 15 Integrated 36th 3.4 Japan 24 Resort (mn tourists) 8 8 3.7 4.4 TOP DESTINATION FOR FINE DINING (JPY tn) According to The 1.1 1 227 Tokyo Michelin Guide (2017), 2012 2016 2017 2020 2030 Casinos Entertainment 97 Paris target target Facilities Tokyo has the most Michelin-starred 96 Kyoto Source: Japan National Tourism Organization, Japan Tourism Agency restaurants globally. “International Visitor Survey” 1. MICE: Meeting, Incentive Travel, Convention, and Exhibition 91 Osaka

12 More Competitive SMEs CORPORATE GOVERNANCE CORP

Business SMEs provide 70% of all employment and more than 50% of Strengthen investor confidence through transparency Reform corporate

all added value in Japan’s manufacturing. As such, the ● Reduce corporate potential to boost the economy via raising SME productivity ● Drew up a Corporate Governance Code, to promote transparent, (%) 4 with new technology is enormous. fair, timely and decisive decision-making by listed companies 38 The key to success is unleashing your 37.00 ● Help over 1 million firms to introduce cutting-edge ICT, ● Formulated a Stewardship Code, to promote constructive 36 potential. Japan has vast competitive robotics and cloud tools over the next three years engagement and a purposeful dialogue between institutional reserves in its regions, as well as in 34 investors and investee companies big cities, and we are helping to ● Reduce property tax as for SMEs that make certain capital 32 32.11 unlock them through better corporate investments in ICT, robotics and cloud tools ● Eliminate overlap in disclosure rules and expedite provision of governance, lower taxes, and by Law took effect in May 2018 information (relevant documents) to shareholders by electronic 30 welcoming businesses from abroad transfer 28 ● Support ownership and business transitions for SMEs via FDI. whose owners are retiring due to age ● Promote investment based on good environmental, social and 26 governance (ESG) practices to encourage better corporate FY2013 FY201 ● Encourage more international expansion by SMEs, As we help more SMEs, the bedrock disclosure, as well as to stimulate more dialogue between especially regional firms with “hidden champions” potential ● Substantial tax bu of Japan’s economy, become more investors and Japanese companies as low as 25% for productive and ambitious, Abenomics ● Motivate SMEs to grow their overseas assets by 50% by increases and cap is creating a forward motion that aims 2023, compared with 2015 standing INVESTORS CORPORATIONS to involve all stakeholders, from Corporate ● Companies also p Stewardship regional staff to overseas investors. Achievements DIALOGUE Governance will be eligible for Code Code A shared desire to succeed will yield substantial tax bu ▶ Pre-tax profit after tax of SMEs is at a record high shared benefits. 20.2 20%. Achievements 20.2 trillion yen 16.9 13.5 13.9 13.6 ▶Corporate Governance Code - Applied to more than 2,000 companies Achievements 10.5 9.1 - Percentage of listed companies with two or more independent outside ▶ Annual corporate directors rose from 17% to 91 % 7trillion yen co (JPY tn) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 ▶ Stewardship Code tion, despite the r

Source: Ministry of Finance “Financial Statements Statistics of Corporations by - Accepted by more than 230 institutional investors Industry”; all industries, enterprises with capital of at least 10 JPY mn but less than 100 JPY mn, seasonally adjusted figures Source: Tokyo Stock Exchange

13 CORPORATE TAX REDUCTION FOREIGN DIRECT INVESTMENT Regional Revitalization Reform corporate tax to be growth-oriented For more information: https://www.jetro.go.jp/en/invest To ensure Japan's economic recovery ● Reduce corporate tax rate below 30% mark in 2016 ● Optimize administrative processes reaches all corners of the country, the (%) -Reduce administrative costs by 20% by 2020 from 2017 government is working in unison with all 38 levels in areas that are considered to have the heaviest burden, e.g., for “business approvals and licenses” and stakeholders to help create a more sustain- 36 37.00 “social insurance” able and self-reliant society, utilizing the unique characteristics of every region. 34 -Consolidate scattered registration outlets for different 7% documents into one convenient outlet, e.g., Tokyo One-Stop - Welcome foreign business and invest- 32 32.11 Business Establishment Center ment to areas outside of the major cities, 30 highlighting the rich opportunities in 29.97 29.74 ● to disseminate FDI information local areas 28 Host FDI seminars - Create a stimulus for people to move 26 Source: Ministry of Finance ● Support the matching of foreign companies with domestic outside of major cities to find more FY2013 FY2015 FY2016 FY2018 SMEs by utilizing the J-GoodTech website: fulfillment

● Substantial tax burden on corporate profits will be reduced to http://jgoodtech.smrj.go.jp - Remove geographical constraints when as low as 25% for companies proactively engaging in wage living in regional areas through new increases and capital investment. Achievements technologies, such as IoT

Hokkaido

● Companies also proactively engaging in advanced IT investment ▶ will be eligible for further tax reductions, bringing the 10,419 cases processed at the Tokyo One-Stop Business substantial tax burden on corporate profits down to as low as Okinawa Establishment Center (as of October 2018) 20%.

▶ Net amount of inward foreign direct investment (FDI) in 2017 marked a record high of 28.6 trillion yen Tohoku Achievements Chubu 35 Chugoku

28.2 28.6 Kyushu ▶ 35 Annual corporate tax revenue increased by close to 24.8 Kanto trillion yen TOKYO 7trillion yen compared to the previous administra- by 2020 (JPY tn) tion, despite the reduced corporate tax rate Kansai 2010 2015 2016 2017 2020 Shikoku target

Source: Ministry of Finance “International Investment Position of Japan” as of May 2018

14 ■ABENOMICS_Leaf

Invest in Japan, the Land of Rising Opportunities!

Japan is quickly transforming to become the most business-friendly nation in the world. Japan welcomes your investment.

Market Evolving Quality Business Potential Innovation Environment Thanks to Abenomics, the world’s Backed by regulatory reforms, R&D Sophisticated transportation third largest economy keeps activities are accelerating innova- network, expanding FTAs and booming by increasing productivity tion, and creating new business growth-oriented policy measures and embracing highly skilled, opportunities, e.g., in digital and are creating a favorable environment diverse human resources. medical/healthcare industries. for global business. AB For future gro

“I will break down a the Japanese econo for growth. This is pr

https://www.japan.go.jp/investment/