Growth Strategy Draft Eyes Investment in Semiconductors, Other Strategic Fields

The Yomiuri Shimbun
Prime Minister Fumio Kishida, second from left, speaks at a meeting of the Council of New Form of Capitalism Realization at the Prime Minister’s Office on Tuesday.

The government presented Tuesday a revised draft of its Action Plan for a New Form of Capitalism, a growth strategy, and positioned four sectors, including semiconductors, as strategic sectors.

This is due to Japan’s increasing attractiveness as an investment destination from the perspective of economic security in the wake of the coronavirus pandemic and the Russian invasion of Ukraine.

The government aims to attract investment domestically and internationally, viewing changes in the international situation as an opportunity for growth.

“We will consider providing tax system and budgetary support at a level competitive with the rest of the world,” Prime Minister Fumio Kishida said at a meeting of the Council of New Form of Capitalism Realization on Tuesday.

In addition to semiconductors, the government’s strategic sectors include storage batteries, biotech manufacturing and data centers. All of these areas are attracting attention as growth sectors, and demand for semiconductors is expected to increase exponentially.

As semiconductor manufacturers around the world are eager to expand their investments, competition to attract related industries is intensifying in many countries. The government aims to put next-generation semiconductors into practical use in the 2020s and is encouraging the establishment of production bases.

Meanwhile, the electrification of automobiles and the growing adoption of renewable energy are leading the enclosure of supply networks for mineral resources such as rare earths and lithium, which are necessary for components of batteries. Competition to develop next-generation batteries is intensifying. The government plans to strengthen public-private cooperation to ensure stable procurement of mineral resources for batteries.

Biotechnology is also considered a growth area that will lead to solutions to global warming and other issues, and the government will support large-scale technological development. With the rapid increase in the use of artificial intelligence around the world, the government will also promote the decentralization of data centers, which is becoming increasingly important.

The growth strategy noted that in light of “geopolitical risks” such as the Russian invasion of Ukraine, developed countries are increasingly moving their parts supply networks to their own countries and other locations. It concluded that Japan, with its relative stability, is “increasingly attractive as an investment destination,” and that it is important to take advantage of this opportunity to provide bold and aggressive support.

However, each of the four sectors requires large sites and major investments to operate production facilities, and the cost of sustaining operations is likely to be enormous. The draft stressed that comprehensive government support is essential to ensure that companies considering investment in these areas can be confident of their earnings prospects.

The government also aims to increase the acceptance of highly skilled foreign labor. In addition to the language barrier, it has been pointed out that administrative procedures can be difficult to understand in Japan, and the number of highly skilled workers from abroad is remarkably low. In order to make up for its lag in the global labor market, the government plans to consider deregulation and preferential tax treatment.