Emergency Economic Measures for the Revival of the Japanese Economy. 1. Enhancement of growth potentials through encouragement of private investment

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1 Provisional Translation Emergency Economic Measures for the Revival of the Japanese Economy Outline of FY 2012 Supplementary Budget for METI-related Measures January 15, 2013 Ministry of Economy, Trade and Industry Total: 1,202.9 billion yen (including billion yen requested by the Ministry of Finance) * Figures are rounded to the nearest hundred million. 1. Enhancement of growth potentials through encouragement of private investment (1) Promotion of capital investment for enhancing growth potential, saving energy, and promoting renewable energy (313.5 billion yen) Project to promote investment in advanced equipment as measures to deal with yen appreciation and energy constraints (subsidy): billion yen In order to support the introduction of latest equipment and production technology that contribute to dealing with the yen appreciation and energy constraints in order to increase the competitiveness and prevent the hollowing out of industries, partial assistance will be provided for capital investment expenses. Project to promote acceleration of introduction of smart apartments (subsidy): 13.0 billion yen Partial assistance will be provided for expenses for installing mansion energy management system (MEMS) introduced through business operators that engage in energy management of entire apartment buildings (MEMS aggregator). This support measure is designed to accelerate private investment in MEMS-related equipment and services and to contribute to energy measures including energy and electricity conservation. Project to promote development of charging infrastructures for next-generation vehicles (subsidy): billion yen By accelerating the development of charging infrastructure necessary for electric vehicles (EV) and plug-in hybrid vehicles (PHEV), further dissemination of next-generation vehicles will be encouraged. 1

2 (2) Promotion of research and development and innovations (252.9 billion yen) Development of research and development bases in strategic industrial sectors (subsidy for expenses for developing facilities of incorporated administrative agencies): 35.0 billion yen Research bases for studying next-generation storage batteries and nanotechnology will be established in the National Institute of Advanced Industrial Science and Technology (AIST), and measures will be taken for the aging of research facilities and equipment of AIST's eight regional research bases nationwide. In addition, back-up bases for safely storing and managing genetic resources of microorganisms that are useful for industries will be established in the National Institute of Technology and Evaluation (NITE), while seismic isolation systems will be installed in and measures will be taken for the aging of laboratories of NITE's head office. Project to reinforce bases for creating new industries and businesses in regions (commission): 2.0 billion yen In order for regions to leverage fields in which they have technical strengths and to create new industries, development bases including testing, research, and inspection equipment will be improved in public testing and research institutes. Project to accelerate development of automated culture devices for ips cells (commission): 0.6 billion yen In order to accelerate the practical application of regenerative medicine and screening of new drug candidates using ips cells, evaluation of automated culture devices for ips cells will be carried out by research institutes, and development of equipment that meets the needs of research institutes and companies will be supported. Project to develop human resources who have an eye for creation of new businesses (commission): 0.7 billion yen Cooperation between venture funds, financial institutions, and public and private human resources such as accountants who support business start-ups will be enhanced and thorough management support (hands-on support) will be provided for business ideas and seeds with high growth potential, so as to realize start-ups. In addition, the environment for creating ventures in Japan will be substantially improved by developing human resources who support business start-ups through informing them of successful case examples and know-how. Supply of risk money for the establishment of venture companies and commercialization of advanced technology (industrial investment): billion yen In order to intensively support the establishment of venture businesses and the commercialization 2

3 of advanced technology, which are sources of Japan's industrial competitiveness, the financial base of Innovation Network Corporation of Japan will be reinforced. Project to subsidize practical application of research and development results by venture companies (subsidy): 10.0 billion yen In order to achieve more effective and efficient practical application of research and development results by research and development ventures, subsidies will be provided through the New Energy and Industrial Technology Development Organization for development aimed at the practical application of technology. (Comprehensive support will be provided in cooperation with financial institutions with regard to the supply of funds for practical application of technology.) Demonstrative research of high-temperature, superconducting, direct-current transmission systems (commission): 2.50 billion yen In order to drastically reduce distribution losses in electricity supplied to data centers and other large electricity consumers, trial production and verification of direct-current transmission systems will be implemented, using high-temperature superconducting technology in which Japan has an advantage. Research and development of network of small earth observation satellites (commission (partially subsidized): 8.90 billion yen Subsidy will be provided to accelerate the currently ongoing development of a small high-performance radar satellite (ASNARO-2). Furthermore, a "Disaster Management Network for the ASEAN Region" will be established by developing a high-frequency, high-accuracy imaging system using multiple satellites with the already successfully launched ASNARO as the core. In doing so, Japan aims to export satellites to Vietnam, Thailand and other countries as infrastructure. Research and development of wireless transmission technology for photovoltaics (commission): 1.0 billion yen Technology will be established for enabling long-distance wireless transmission of electricity in the form of microwaves, which is a core technology for space photovoltaics to be used as a new energy system in the future. Development of technology for creating alternative materials to and for highly purifying rare metals and rare earths (subsidy): 0.3 billion yen With regard to rare metals and rare earths, which are expected to involve higher price hike risk and supply risk in line with the consumption surge in emerging countries, subsidies will be 3

4 provided for the development of technology for highly purifying low-grade ores and technology to create alternative materials, aiming at ensuring stable supply of rare metals and rare earths. Project to develop testing facilities for large hydrogen containers to be used as hydrogen supply infrastructures for fuel-cell vehicles (subsidy): 2.9 billion yen In order to expand the dissemination of fuel-cell vehicles to be placed on the market in 2015, reducing the cost of hydrogen stations is an urgent task. To address this issue, it would be effective to develop large high-pressure compound containers using carbon fiber, which are lightweight and low cost. Accordingly, subsidies will be provided to testing and research institutes that engage in the development of testing environments for such a purpose. Project to develop research base facilities for studying radioactive materials (investment): 85.0 billion yen Facilities for analyzing and studying radioactive materials generated from the accident at Fukushima Daiichi Nuclear Power Plant (NPP) and facilities for developing and demonstrating remote control equipment to be used in severe environments at disaster-affected sites will be developed. (Investment in organizations developing such facilities.) (3) Resource/ocean development (35.5 billion yen) Supply of risk money for securing Japan's interests in overseas resources (industrial investment): 32.9 billion yen In order to secure stable supplies of natural gas, coal, and metal ores, for which a tight demand-supply balance is feared in the future due to an increase in their consumption in emerging countries, investment will be made and debt guarantees will be provided for securing Japan's interests through Japan Oil, Gas and Metals National Corporation (JOGMEC). Project to promote securing of Japan's interests in resources (commission): 1.0 billion yen In order to stably secure mineral resources such as rare metals, which are indispensable for manufacturing next-generation vehicles and other operations for which Japan s manufacturing industry has strength but which are distributed unevenly geographically and have an oligopolistic supply structure, strategic support including support for resource surveys, production technology development, and mine pollution control will be provided to resource-rich countries. Survey project for development of mining technology for submarine hydrothermal deposits (commission): 1.6 billion yen In order to promote the development of ocean mineral resources, it is necessary to accelerate the 4

5 establishment of production technology (in the mining field and the lifting field). Among such technology, improvement tests will be carried out in actual ocean areas for mining technology for which submarine hydrothermal deposit mining tests were successfully implemented by Japan on the deep-ocean floor for the first time in the world. 2. Measures for SMEs and small businesses (543.4 billion yen) (1) Support for challenges to start new businesses, support for monodzukuri (manufacturing) companies, and the revitalization of shopping districts Subsidy for supporting trial production and development by SMEs and micro enterprises in the manufacturing industry: billion yen In order to encourage creative and original efforts in catering to detailed customer needs, subsidies will be provided for a part of the expenses required for trial production and development and capital investment by SMEs and micro enterprises in the manufacturing industry (small local factories). (Comprehensive support will be provided in cooperation with regional financial institutions which are certified support institutions.) Project to develop shopping districts (subsidy): 20.0 billion yen Subsidies will be provided in cases where shopping district promotion associations develop facilities and equipment to protect the safe and secure living environment for local residents (installing security cameras, installing street lights, and using vacant stores for business start-ups by women and young people for supporting the lives of elderly people) based on requests from local administrative organs. Project to revitalize regional shopping districts (subsidy): 10.0 billion yen Support will be provided for the efforts of local small and medium-sized retailers to attract more customers and their holding of events for stimulating consumption. Expenses for projects to support autonomous regional measures for disadvantaged shoppers (subsidy): 1.0 billion yen Subsidies will be provided for projects including joint home delivery and mobile catering services, and opportunities will be secured for disadvantaged shoppers, such as elderly people who suffer inconveniences in going shopping, to purchase products smoothly. 5

6 Subsidy for expenses for project to discover or create attractiveness of city centers: 1.5 billion yen Support will be provided for efforts by community planning companies and others in municipalities certified by the Prime Minister based on the Act on the Improvement and Vitalization in City Center. Specifically, intensive support will be provided urgently for (i) commercialization surveys for increasing the attractiveness of cities, (ii) progressive or demonstrative efforts, and (iii) dispatch of specialized human resources. Subsidy for promoting business start-ups such as businesses to create demand in the region: 20.0 billion yen Subsidies will be provided for part of the initial expenses as well as operating expenses borne by women who have a business plan to newly provide unique services and products by precisely identifying the needs in the region. Support will also be provided for business start-ups by young people. (In both cases, comprehensive support will be provided in cooperation with financial institutions which are certified support institutions.) Project to support human resource measures implemented by SMEs and micro enterprises (subsidy): 28.2 billion yen In order to enable SMEs and micro enterprises to secure excellent human resources, support will be provided for on-the-job training carried out by SMEs and micro enterprises for women who have once retired from work due to child raising or other reasons but who wish to be reemployed. In addition, consistent support will be provided throughout the phases of publicizing of the attractiveness of SMEs and micro enterprises by universities, matching between students and SMEs and micro enterprises, and recruitment and settlement of new graduates. In addition, support will be provided for on-the-job training carried out by SMEs and micro enterprises for new graduates. Project to support realization of overseas expansion and local employees training of SMEs and micro enterprises (subsidy): 2.0 billion yen Consistent support will be provided to SMEs and micro enterprises to realize overseas business expansion, including feasibility studies on overseas expansion as well as the establishment of a local support platform in cooperation with public/ local private support organizations. Support, also will be provided support for training carried out in Japan to foster local employees who will support overseas expansion of SMEs in the service industry. Project to support business creation by SMEs and micro enterprises (commission): 1.5 billion yen 6

7 More than one million SMEs and micro enterprises and more than ten thousand experts and experienced business managers will be linked together by utilizing cloud computing, to realize the sharing of practical knowledge and know-how and to promote business matching. Project to support market acquisition by making use of potentials in the regions (subsidy): 20.0 billion yen By supporting efforts by SMEs and micro enterprises to develop new products, development of sales channels both domestic and international, joint expansion of businesses overseas, and developing/introducing integrated financial management software along with improving both their sales and financial management ability. Project to establish consultations offices for the smooth transfer of increased consumption tax (subsidy): 4.2 billion yen For the smooth implementation of two-step consumption tax raise and transition of the system, subsidy assistance will be provided for related efforts by SME associations by holding lectures, establishing counseling offices, and distributing pamphlets. (2) Support for management improvement and business rehabilitation, and support for funding Project to provide training on management improvement and business rehabilitation plans for certified support service providers (subsidy): 0.5 billion yen Training will be provided by large accounting firms or the like to support service providers certified under the SME Business Capabilities Enhancement Support Act (tax accountants, lawyers, financial institutions, etc.) so as to reinforce their ability to formulate business rehabilitation and management improvement plans, and thereby business rehabilitation and management improvement of SMEs and micro enterprises will be promoted. Support for formulating management improvement plans by certified support service providers (subsidy): 40.5 billion yen Subsidies will be provided for support and follow-up services provided by support service providers certified under the SME Business Capabilities Enhancement Support Act with regard to the formulation of management improvement plans by SMEs and micro enterprises. Enhancement of functions of SME business rehabilitation support cooperatives (subsidy): 4.1 billion yen In order to make possible to provide support for formulating around 3,000 business rehabilitation 7

8 plans, the functions of SME Business Rehabilitation Support Cooperatives will be enhanced through measures such as increasing the staff at their national headquarters. Support for funding of SMEs and micro enterprises (others): billion yen (*171.3 billion yen requested by the Ministry of Finance and billion yen requested by the Ministry of Economy, Trade and Industry) By providing support for funding through public financing and credit guarantees along with management support, all possible measures will be taken to assure funding for SMEs and micro enterprises, while promoting their rehabilitation and management improvement efforts. Creation of safety net loans: billion yen In order to support the management improvement of SMEs and micro enterprises whose business conditions have temporarily deteriorated due to changes in the management environment or other factors, safety net loans premising management support by support service providers certified under the SME Business Capabilities Enhancement Support Act will be created. Expansion of capital subordinated loans: 98.6 billion yen By extending high-risk, long-term (7-year, 10-year, and 15-year) bullet loans (capital loans) to SMEs and micro enterprises engaged in new business development or business rehabilitation and reinforcing their financial bases, funding for SMEs and micro enterprises will be stabilized by attracting co-financing by the private sector. * Capital loans are loans that are subordinated to all other debts when an order to commence legal bankruptcy proceedings has been issued. These loans can be regarded as "equity capital" in inspections of financial institutions by the Financial Services Agency. Promotion of refinancing guarantees: 50.0 billion yen By promoting refinancing guarantees, which consolidate multiple loan obligations and reduce the burden of debt repayment, including business capabilities enhancement guarantees whereby SMEs and micro enterprises are exempted from all or part of the guarantee charge, if they are engaged in management improvement with the help of support service providers certified under the SME Business Capabilities Enhancement Support Act, funding for SMEs and micro enterprises will be stabilized. 8

9 3. Support for overseas expansion of Japanese companies (17.0 billion yen) (1) Support for overseas expansion of Japanese companies and facilitation of the return of foreign investment profits to Japan Project to dispatch experts for supporting SMEs and micro enterprises to expand business overseas in emerging countries (grant for incorporated administrative agencies): 4.2 billion yen Support will be provided to SMEs and micro enterprises wishing to expand business in emerging countries with high business risks, by dispatching senior human resources such as the retired, who have abundant experience and know-how in business in emerging countries. Project to develop global certification infrastructure (commission): 0.5 billion yen A feasibility study will be carried out toward establishing an international certification body which can comprehensively certify, from a third-party standpoint, the safety and performance of strategic products and systems for which Japan aims to win international standards. (2) Promotion of Cool Japan and efforts toward increasing international tourists visiting Japan Project to promote overseas expansion of Cool Japan contents (subsidy): 12.3 billion yen By providing comprehensive support for the overseas expansion of Japanese contents (such as localization of video materials required for the overseas expansion and support for promotional activities), we aim to create a "Japan boom," expand overseas business operations of the consumer goods industry, and promote tourism. 4. Reconstruction, disaster prevention measures, and information security (40.6 billion yen) Project of investigations to secure resilience of industrial and energy infrastructures (commission): 4.3 billion yen In order to secure the resilience (early recovery and backup ability) of Japan's important industrial and energy facilities such as industrial complexes, assuming damage (such as earthquake, tsunami and liquefaction damage) from an earthquake directly hitting the Tokyo metropolitan area and a major Nankai Trough earthquake, thorough inspections, including seismic assessments and boring investigations, will be carried out at industrial complexes and other relevant facilities. 9

10 Project for post-disaster recovery in former mining districts (subsidy) (reconstruction): 0.1 billion yen In order to recover from ground subsidence and other damage resulting from the Great East Japan Earthquake, subsidies will be provided for projects conducted by public-interest corporations by reserving funds. (This time, subsidies will be provided for expenses borne by Miyagi Prefecture for making contributions to such corporations.) Emergency facility renewal or renovation of earthquake resistant industrial water supply facilities (subsidy): 1.6 billion yen Subsidies will be provided to cover part of the expenses required for seismic reinforcement projects (projects for industrial water supply facilities that are in great need of facility renewal or seismic reinforcement measures which are implemented based on a management plan containing management efficiency measures such as prioritization of facilities to be made earthquake-resistant) carried out by industrial water supply business operators, such as local public entities. Subsidy for SME efforts to diagnose disaster preparedness of industrial safety facilities: 0.1 billion yen With regard to facilities (high pressure gas facilities and mine dumps) for which conformity to the current technical standards under the High Pressure Gas Safety Act and other relevant Acts has not been confirmed, subsidies will be provided to cover part of the expenses required for diagnosing their conformity status. Project for developing disaster-resilient industries and infrastructures (commission): 0.3 billion yen Investigations will be carried out with regard to new technical standards for packaging and levees pertaining to storage of explosives as well as appropriate standards for use of flammable refrigerants in small refrigerating machines involving high fire risks. Project for research and study of technology for preventing abandoned mines from causing mine pollution (commission): 0.1 billion yen In mine dumps for which there is no person having obligations under the Mine Safety Act and which are in areas where a large earthquake could occur, conformity investigation will be conducted based on the technical guidelines on safety assessment of dumps that were revised in November 2012 and taking into account the damage caused by the Great East Japan Earthquake. Project for new management system standards, such as business continuity, and business 10

11 competitiveness enhancement models using such standards (commission): 0.5 billion yen Support will be provided for the formulation of business continuity plans and energy management plans and exercising of such plans conducted by wide-area groups of communities, industries, and supply chains based on the related management system standards (ISO22301: business continuity management system, ISO50001: energy management system). Project for emergency measures against expansion of damage caused by cyber attacks (commission): 0.8 billion yen In order to strengthen the ability to deal with cyber attacks, which have become more complex and guileful in recent years, measures such as sophistication of analysis methods and systems and early development of human resources specialized in analysis will be promoted under international cooperation at specialized organizations for dealing with cyber attacks. Project for making regional oil supply chains resilient (subsidy): 8.0 billion yen From the viewpoint of reinforcing the safety of oil facilities (improvement of early recovery ability and improvement of the ability of securing backup supplies from other areas), support will be provided for the efforts of oil business operators to increase the effectiveness of their business continuity plans (BCPs), while support will also be provided for measures to make oil terminals in various regions earthquake-resistant and water-proof. In addition, subsidy will be provided for the introduction of facilities that enable efficient shipping in and out by large vessels so as to prepare for times of crisis. Project to develop infrastructures for supplying and using oil products in times of disaster (subsidy): 16.3 billion yen In order to develop a structure to supply oil products quickly and stably to affected areas in the event of a large disaster, the disaster response ability of service stations that serve as core local oil product supply bases will be enhanced, and support will be provided for deploying kerosene delivery lorries in the areas where there are concerns about the supply of oil products. Project for developing infrastructures for the supply and use of liquefied petroleum (LP) gas in times of disaster (subsidy): 8.4 billion yen In order to develop a structure for supplying LP gas quickly and stably to affected areas in the event of a large disaster, the disaster response ability of major gas filling stations that serve as core local LP gas supply bases will be enhanced. Also, in order to stably supply oil products and LP gas to hospitals and evacuation centers when supply of grid power and city gas becomes disrupted, support will be provided for establishing bulk gas storage systems for times of disaster at local 11

12 evacuation centers in order to secure a structure to prevent lifeline disruptions in advance. 12