Japanese government to draw up 5-yr plan to promote startups for innovation in Japan

The Japanese government will draw up a five-year plan by the end of this year to support startups and eyes increasing investments for their promotion by 10 times as part of its innovation drive, a draft growth strategy by a Cabinet task force showed Tuesday.

The task force discussing how to realize a new form of capitalism, a concept advocated by Prime Minister Fumio Kishida for fairer wealth distribution, will consider 14 measures including expanding investments to venture capital firms such as through state-owned Japan Investment Corp., according to the draft.

It will also consider a way of utilizing the Government Pension Investment Fund. In 2021, the government invested about 800 billion yen ($6.2 billion) to promote emerging companies.

The plan of boosting investments in startups is one of the four key pillars of intensive investment in an overall strategy to realize the new capitalism concept. The other focal areas are human resources, science technology and innovation, and green and digital technology.

While Kishida has promoted aggressive wage hikes, the draft strategy also stipulated that the government will compile by the end of 2022 a plan to prompt more individuals to shift their money to investments from savings to double the household asset incomes.

More than half of the Japanese household assets are cash and deposits. The envisaged plan includes considering a “drastic revision” of a small-lot, tax-advantaged investment program known as NISA, or the Nippon Individual Savings Account.

Other key measures in the four fields include plans such as requiring companies to disclose gender pay gaps as well as the government issuing so-called transition bonds, which are typically used to fund environment-related projects.

The essence of the draft strategy was included in an annual draft fiscal and economic policy guideline, expected to be approved by the Cabinet on June 7. The blueprint will be reflected in drafting the state budget for fiscal 2023.

By — Kyodo News

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Abhay Tiwari

Social Entrepreneur | ScientistPage Inc. | Tokyo Institute of Technology