(Oct 1): Japanese Prime Minister Sanae Takaichi’s government plans to hammer out the detailed costs associated with the first five years of its US$2.3 trillion (RM9.4 trillion), 14-year investment initiative, a first step towards clearing up uncertainty surrounding the sweeping programme.

The government will lay out by year end the areas and scale of domestic investment through around 2030, providing more detail on its previously announced growth strategy, according to documents presented to the Japan Growth Strategy Council on Thursday. It also aims to provide a breakdown of public and private-sector investment, a Cabinet Secretariat official said.

“As countries around the world compete with large-scale, long-term industrial policies backed by their governments, now is the time for Japan to spur domestic investment and raise its potential growth rate through responsible and proactive fiscal policy,” Takaichi said at the end of the council meeting on Thursday. 

Takaichi unveiled in June the broad points of her plan for a combined ¥370 trillion (RM9.4 trillion) in public and private investment across 17 strategic sectors through 2040, including artificial intelligence, semiconductors and defence.

The sheer scale and duration of the programme, coupled with the lack of detail about who will shoulder the costs, have raised questions about its fiscal implications and how much of the investment can realistically be delivered.

The upcoming shorter-term blueprint could help address market concerns by providing greater clarity on its costs, feasibility and the division of spending between the government and private sector. 

For the first five years, the government will narrow its focus to priority areas based on several criteria, including sectors that are already generating earnings, those expected to become future growth engines and those critical to strengthening economic security, according to the panel materials.

Separately, the year-end plan will specify which projects will be financed through a newly established multi-year budget framework supporting the initiative. Investments deemed particularly important for economic security will be managed through a special account and financed in part by bridge bonds.

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