Japan rejigs growth strategy to emerge Asia-Pacific economic hub

Japan's government today unveiled a new economic growth strategy to open up the economy by liberalising sectors like tourism, health care and education and make Japan the nerve centre of a new Asia-Pacific free trade zone.

The new mid- to long-term strategy approved by Prime Minister Naoto Kan's cabinet envisions a 2-per cent minimum economic growth and creation of around 5 million jobs in the environment, health care and tourism sectors by 2020. The target is to bring the unemployment rate to below 4 per cent from the current 5 per cent.

For the corporate sector, the new strategy offers a cut in tax rate to bring it in line with other major counties. The plan is to gradually cut the effective corporate tax rate from 40 per cent 25 per cent, to make domestic companies more competitive internationally and attract foreign firms to do business in Japan.

The Japanese government would also encourage more foreign firms to operate in Japan by providing corporate tax breaks to them from fiscal 2011.

Japan also hopes to emerge Asia-Pacific's main technology supplier by providing Japan's high technologies for Asian nations' social-infrastructure improvements. This is expected to rake in Y19.7 trillion for Japan.

The new strategy also envisions Y11 trillion in new demand from increased tourism and another Y12 trillion from rising business ties with Asia.