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Policy Radar February 2020

In the opening of the parliamentary session, Prime Minister Abe has pledged to remodel Japan’s welfare system to address the growing needs of the ageing population. The government will study ways to encourage people to work longer, in an effort to collect more revenues for medical care as well as reduce the burden of the pension system. Abe will continue efforts to revise the constitution and improve relations with neighbouring countries. Furthermore, the Prime Minister has pledged to keep Japan at the forefront of technological development, vowing to promote innovation as part of a national strategy.

The 201st Diet Session started on the 20th of January and will end on the 17th of June. The government is scheduled to submit 52 government-sponsored bills during the 150-day session, forecasted to be the lowest number of government bills in one year, since 1947. The fiscal 2020 budget of ¥102.66 trillion, with an additional ¥4.47 trillion yen from last year’s budget was passed in the opening of the Diet session. The ruling coalition seeks to utilize the budget for growth beyond the Olympic Games, funding for typhoon-hit areas, and offsetting the negative effects caused by last year’s October consumption tax hike.

This month’s edition of Policy Radar focuses on policy developments in agriculture, cryptocurrency, diplomacy, integrated resorts, and telecommunications.

Agricultural Policy Japan

Agriculture

Farm Ministry to launch online system linking food banks to food donors

The Ministry of Agriculture, Forestry, and Fisheries will launch an online system to link bodies managing food banks with food donors in fiscal 2020. This measure aims to support disadvantaged families and individuals who cannot access a steady diet, while at the same time reducing food waste left by vendors. The government remains committed to reducing the 6.43 million tons of food waste generated each year.

cryptocurrency policy japan

Cryptocurrency

Bank of Japan joins study group analysing effects of national digital study group

The Bank of Japan has revealed that it plans to accelerate its research on digital currencies to cover for rapid developments in financial technology, in cooperation with central banks in Europe and Canada. The study group will assess how central banks could benefit from the development of digital currencies. The group of central banks will analyse the impact of digital currencies and digital technologies on the economy. Additionally, it will study measures against digital money laundering, cyber-security as well as protecting personal data through blockchain technology. The Bank of Japan has declared that it does not intend to create a digital yen at the moment, but is interested in studying the implications on the economy if such a currency was issued.

Financial Services Agency to limit margin trading leverages

The Financial Services Agency will revise the Financial Instruments and Exchange Act to introduce a new rule limiting the leverage of cryptocurrency in margin trading to twice the deposits of traders. With this new rule, the Financial Services Agency expects to reduce the risks of losses linked to the volatility of the cryptocurrency markets. The new rule will be discussed by the Cabinet soon, and is expected to come into force in April this year.

Group of lawmakers form study group to pursue digital yen

Lawmakers, arguing that a digital yen is necessary, have taken steps toward creating a joint project between public and private sectors to keep Japan at the vanguard of digital technology on the global stage. The Parliamentary Vice-Minister of Foreign Affairs Nakayama Norihiro argued that such an effort is necessary to “counter China’s attempt towards issuing a digital yuan.” The group of lawmakers will be headed by former METI Minister Amari Akira and its first task, like the joint group of central banks, will be research covering the effects of a digital yen. The group of lawmakers will submit a proposal to the government this month (February).

Diplomacy

Japan and China to create fifth political document for President Xi’s state visit

The Japanese and Chinese governments have decided to craft a major political document, which will lay the foundation of the future bilateral relationship between the two neighbouring countries. This will be the fifth political document since 1972, when both countries normalised their diplomatic relations. The new political document between both nations aims to keep both countries tied to the rule of international law and to their joint responsibility to maintain peace and stability in East Asia and is likely to be unveiled during Xi’s state visit in Spring. However, differences still remain concerning territorial disputes and China’s detainment of Japanese nationals over unclear charges.

Environmental Protection Japan

Energy and Climate Change

Jogmec to increase stockpile of rare metals by Energy panel recommendation

The Japanese government will expand its reserves consisting of metals necessary for the production of high-tech products and electric vehicles. Recommendations from the panel suggest boosting-up efforts to secure 34 variations of rare metals, due to China’s expanding access and control of global supplies. Although the timing and details of the coming years’ new resource strategy have not been decided yet, the Ministry will need to release a new strategy this year to replace the resource strategy plan active since 2012.

Environment Minister to ask for Government review on overseas coal-fired power plants

The Minister of the Environment, Koizumi Shinjiro, urged the government to revise plans to finance coal-fired power plants in Vietnam, despite opposition from various ministries (particularly METI). Paralleling policy developments in the European Union, Minister Koizumi is considering introducing the issue of carbon tax, to tackle greenhouse gas emissions in production processes.

Integrated Resorts

Tourism Ministry to delay IR development timeline

In response to recent bribery scandals involving several LDP and Ishin no Kai lawmakers, the Ministry of Land, Infrastructure, Transport, and Tourism will delay the deadline for finalising its IR Basic Policy from January to the end of this month (February). Opposition parties have sought to repeal casino legislation passed in 2016 and 2018 as casinos are “hotbeds of fraud and corruption.” To respond to the opposition and a sceptic public opinion on the entry of casinos in Japan, the government is looking to add more strict anti-corruption provisions to its basic policy. The new provisions would include limiting contact between casino operators and government officials, including Cabinet members, state ministers, vice-ministers, and candidate local governments. Once the government’s IR Basic Policy is passed, operators and local governments will have from January to July 2021 to submit their applications to the central government (no indication has been yet made that this timeline will be affected by the current delay).

Telecommunications Policy Japan

Telecommunications

Communications Ministry mulls introducing internet user fee to subsidise 5G development

The Ministry of Internal Affairs and Communications is debating whether to tax internet users to subsidise the development of 5G infrastructure across the country. This measure seeks to make possible the construction and repair of fibre-optic lines in rural areas which are often seen as unprofitable and too remote to be invested in by companies, aligning 5G connection standards with the rest of the country. The drafted plan suggests monthly fees to online users to be collected by major internet providers and phone carriers. The fee is expected to be a few yen per internet subscription. A panel of experts will be launched this year to further discuss the proposed internet fee and oversee its introduction.

Government to draft blueprint regarding the future of 6G policies

The government intends to draft a comprehensive strategy on 6G communication networks by summer this year, and has set up a panel to discuss the future of 6G ultrafast communications to that effect at the end of last month. The panel will discuss things such as potential 6G utilisation methods, technological development and policy measures related to 6G, preparing for the Government’s objective to introduce these ultrafast communications by 2030. The panel is composed of 10 experts from the public sector, representatives from the private sector and university researchers, hearing out proposals and recommendations (i.e. company’s white-papers) to assess the impact and challenges posed by communications beyond 5G in Japan. The strategy aims to position Japan as a global leader to introduce ultrafast communications by 2030.

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