The Japanese government on Monday pledged to support massive investment in shipbuilding as part of its stimulus package, as Prime Minister Sanae Takaichi seeks to build a robust economy through public and private sector spending.
The government also unveiled during a meeting of its growth strategy task force a plan to ramp up trial production of rare earths in waters around Japan's easternmost Minamitori Island. The move comes as China, which has an overwhelming share of the strategically important materials, tightens export controls on the resources.
As part of Japan's growth strategy measures, which will be included in an economic package to be compiled by the end of the month, the government also plans to create tax breaks to encourage private sector capital spending.
Takaichi aims to achieve strong economic growth through bold investments that can enhance resilience against potential crises and has designated 17 strategic fields, including shipbuilding, artificial intelligence and semiconductors.
The prime minister, who took office last month, assigned each of the 17 areas to relevant ministers and instructed them to draw up road maps detailing specific investment plans, aiming to finalize the strategy by next summer.
Shipbuilding is an area where Takaichi and U.S. President Donald Trump agreed to promote cooperation during their meeting last month.
An advocate of what she calls "responsible and proactive" fiscal expansion, Takaichi has said her government will finance the economic steps with a supplementary budget for the current fiscal year through March.
With rising living costs weighing on households, the stimulus measures are expected to also feature expanded subsidies for local governments to help ease the financial burdens of residents, as well as aid for electricity and gas bills during winter, sources close to the matter said.
Takaichi has appointed as members of the growth strategy task force several figures who have espoused fiscal spending to spur growth, such as Takuji Aida, chief economist at Credit Agricole Securities Tokyo, and Goshi Kataoka, a former Bank of Japan Policy Board member.
In a related move, former BOJ Deputy Governor Masazumi Wakatabe and Toshihiro Nagahama, chief economist at the Dai-ichi Life Research Institute, were among newly selected private-sector members of the Council on Economic and Fiscal Policy. They are seen as supportive of her economic agenda.
The government advisory panel, which includes Cabinet members, is tasked with discussing Japan's economic and fiscal policy to compile the government's annual blueprint.
The Japan Innovation Party, the coalition partner of Takaichi's Liberal Democratic Party, has hammered out a new economic package designed to improve people's livelihoods by better utilizing limited fiscal resources, another source close to the matter said.
The JIP, also known as Nippon Ishin, proposes establishing a new government bureau to review inefficient tax privileges and large subsidies, and calls for legislation that would exempt food and beverages from the consumption tax for two years.
The party, led by Osaka Gov. Hirofumi Yoshimura, plans to submit the proposal to Takaichi on Tuesday, the source added.
© KYODO
