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FY2021 (36th) Summer Seminar Appeal
Transition to Resilient, Sustainable "New Normal"
by Leveraging Lessons Learned from Corona Crisis
—Five Agenda Items for LDP Presidential Election—

September 10, 2021

Kengo Sakurada
Chairman, Keizai Doyukai

PDF

The difficulty in combatting COVID-19 pandemic has revealed Japan's vulnerability and deep-rooted nature of its various structural issues. For saving our country on the brink of falling to a second-tier position and lifting it to "a country not only valuable, but indispensable, to the common good of the world," we must break away from the nature of bedrock-like resistance to change by leveraging lessons learned from the corona crisis.

For this to happen, we present herewith our opinions with regard to the policy challenges to be swiftly dealt with by the next Cabinet, as well as agenda items for policy-driven discussions during the campaign period of the upcoming presidential election of the Liberal Democratic Party (LDP).

Meanwhile, we, business leaders, will aim to transition to the new normal, create innovative businesses, and break down functional silos in our corporate structures, thereby delving into the existing systems and vested interests. Keizai Doyukai will present policy options for Japan's future through open discussions with multi-level stakeholders, while recommending an overhaul of the existing processes of policy making.

1. Policy challenges to be swiftly dealt with toward the reconstruction of resilient, sustainable social systems

1) Early transition to the new normal on the premise of co-existence with COVID-19

  • We need a few more years before seeing the pandemic subsiding. Normalization of activities in our economy and society, by recognizing "living with COVID-19" as the new normal, is a pressing issue.
  • For this, the higher ratio of vaccination--currently, the most effective anti-coronavirus measure--should be pursued, while behavioral restrictions are to be lifted soon on the basis of scientific evidence, with a use of a "package of vaccination and testing." Better healthcare environment must be also secured for the public with an effort to handle the issue of recuperation at home.

2) Establishment of resilient, sustainable fiscal and social security systems that can stand against the future crisis

  • Going forward, we must brace for another pandemic and devastating natural disasters, which require emergency and huge fiscal spending. Aiming to establish a sustainable fiscal structure that can stand against them, we must urgently build a mechanism that secures fiscal discipline, by striking a balance between benefits and contributions.
  • We have found that the current healthcare delivery system cannot make optimal adjustments or satisfy the medical needs under the emergency we are facing now. Reconstruction of highly efficient and flexible healthcare delivery system, which assumes both emergency and non-emergency cases, is of urgent necessity.

3) Overhaul of the processes of policy making, for the purpose of decision making toward innovation

  • We cannot break away from the country of bedrock-like resistance to change without overhauling the processes of policy making. A leader of country or government is expected to have a dual perspective that allows him/her to address challenges faced by today's society and medium- to long-term challenges.
  • Knowing that conflicts of interest are unavoidable at the level of each policy, (1) science and data-based policymaking (evidence-based policymaking or EBPM) followed by the explanation to the public, (2) gaining the trust from the public with after-the-fact verification, and (3) the preparation to exercise authority appropriately to achieve overall optimization, which goes beyond benefits and vested interests of individual organizations, are all indispensable.

4) Driving diversity and commitment to invest in human resources

  • Amid the acceleration of technological innovation, achievement of sustainable growth, while preventing Japan from falling to a second-tier country, necessitates three actions. First, a full-fledged reform to elementary and secondary education, along with digitalization of the society; Second, investment by companies for their employees such as for their continued reskilling; Third, breakaway from the labor regulations based on the time management, which is for realizing diverse work styles.

5) Accelerating digital transformation (DX) in all spheres such as society, government, and businesses

  • Going forward, the key to value creation is DX and data coordination/use. Being aware that Japan is far behind the world, we must accelerate DX in all spheres such as society, government, and businesses, taking the opportunity of the recent inauguration of the Digital Agency.
  • In this regard, the matters of essential importance are far reaching overhaul of regulations/systems to the ones fit for the digital age, rulemaking for data flow/use, and more strategic involvement in the global standardization. Businesses, on the other side, must pursue essential DX while making progress in recruiting and development of human resources versed in digitalization.

2. Five agenda items for LDP presidential election

Staying with the status quo now will lead Japan to defeat. There are no options acceptable to everyone. As such, we need a leader, who endeavors to pursue results, bracing for unpopularity. Below are the five key policy challenges that the next Cabinet must address, under the new leader, for determination and implementation of actions.

First, toward the upcoming LDP presidential election, we expect the candidates to present Japan's long-term visions, followed by the intense policy debates over the discussion points, which will facilitate the understanding by the public.

1) Pandemic countermeasures: Establishment of the new normal under "with/after COVID-19"

  • Clarification of comprehensive anti-COVID-19 policy, aiming at the subsiding of the pandemic and normalization of the activities in the economy and society
  • Views on the systems to cope with the resurgence of the pandemic in the future, and on healthcare for infectious diseases, vaccination, and development of therapeutic agents
  • Views on restrictions on private rights to some degree and government's use of coercion under a state of emergency

2) Fiscal and social security: Realization of sustainable fiscal structure and healthcare delivery systems

  • The exit strategy for the emergency fiscal policy, repayment policy of government's debt made in response to the COVID-19 countermeasures, and realization of sustainable fiscal structure in preparation for future crises
  • Review on balance between benefits and contributions, overhaul of healthcare delivery systems, and rebuilding of well-being by breaking the chain of poverty

3) Environment and energy: Targets and path to achieve carbon neutrality

  • Commitment to the goals of achieving the greenhouse gas emissions reduction targets in 2030 and 2050
  • Policy package and energy mix, taking into account anti-global warming and Japan's competitive edge

4) Growth strategy: Medium- to long-term strategy Japan thrives on

  • Rational regulatory reforms toward creation of innovation by leveraging digital and green initiatives
  • Mechanism that facilitates designing of effective growth strategies, involvement of the private sectors

5) Foreign and national security: Japan's position in the world

  • Views on national security that incorporates multifaceted factors such as economy, geopolitics, and technology
  • Commitment to key foreign relations such as the U.S.-Japan alliance and the Quadrilateral Security Dialogue (QUAD) of Japan, the United States, Australia and India and the foreign policy of "Free and Open Indo-Pacific"

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