Japanese tax cut – subsidies – deregulation 3-piece set
Japanese Prime Minister Fumio Kishida, who celebrated his second anniversary in office on the 4th, held a public-private linkage meeting attended by heads of economic organizations and economic ministers at the Prime Minister’s Office. At this event, the Japanese government introduced a plan to ease regulations on land use for semiconductor factories. Prime Minister Kishida, who has promoted the development of the semiconductor industry as a core industrial policy since taking office, has brought out an even stronger ‘semiconductor card’ to mark his second anniversary in office.
The Japanese government has indicated plans to improve regulations so that factories producing important ‘economic security’ materials such as semiconductors can be built on farmland and forests as early as this year. The plan is to turn the entire Japanese territory, from Hokkaido in the north to Kyushu in the south, into a ‘Silicon Island’. It has revealed its will to catch up with competitors such as Korea by completing a ‘three-piece semiconductor support set’ that reduces taxes, provides subsidies, and relaxes land regulations. Last year, the Japanese information technology (IT) industry (Electronics and Information Technology Industry Association, JEITA) appealed to the government that “2025-2030 is the last and greatest opportunity for the revival of Japanese semiconductors,” and it appears to be actively responding with various support measures.
In addition to providing tax benefits and subsidies, the Japanese government decided to lift land use regulations because it judged that the current system has limitations in supporting the expansion of semiconductor factories. According to Japan’s Ministry of Economy, Trade and Industry and the Nippon Keizai Shimbun, the industrial land available for sale in Japan was only about 100㎢ as of last year. In Japan, where semiconductor factory expansion is active, with only two-thirds of the capacity in 2011, it is pointed out that securing land is already becoming difficult.
In Japan, some restrictions have been placed on the construction of factories in underdeveloped areas or green areas to prevent disorderly urban development. Until now, only the development of food and logistics facilities was allowed, but it was decided to interpret the law more flexibly in the future. The plan is to boldly relax regulations on businesses that revive the local economy, such as semiconductors and batteries.
If the Japanese government determines that there are no special problems with environmental protection, it plans to encourage factory construction after completing the change in land use designation in four months, which has taken more than a year so far. To this end, the relevant ministries (Ministry of Economy, Trade and Industry, Ministry of Agriculture, Forestry and Fisheries, and Ministry of Land, Infrastructure and Transport) decided to link up and proceed with the development permit process all at once. This means that if each government office stamps it as a ‘one stop’, a factory can be built immediately.
The economic measures that the Japanese government is expected to prepare and announce as early as this month are effectively equivalent to comprehensive support measures for semiconductors. Measures to improve land regulations are also included here. Japan is considering the creation of a ‘strategic material production-based tax system’ that provides preferential tax benefits in proportion to domestic production of semiconductors and other products. Previously, part of the cost of facility investment was reduced from corporate tax, but in the future, taxes are also planned to be reduced on production costs. In order to ensure that it is not limited to short-term support, the plan is to set the tax benefit period in 5 to 10 year increments and provide tax benefits to the entire investment, maintenance, and production process.
Huge subsidies are also Japan’s weapon. Taiwan’s TSMC, which is building a semiconductor factory in Kumamoto Prefecture, Japan’s large conglomerate Lapidus (330 billion yen), and U.S. Micron (192 billion yen) are seeking to expand facilities by receiving trillions of won worth of subsidies from the Japanese government. In the Kyushu region, including Kumamoto Prefecture, where TSMC is located, Sony, Tokyo Electron, and Mitsubishi Electric are successively building or expanding semiconductor factories.
Links with the United States are also becoming stronger. In a joint statement adopted in Tokyo on the 4th, the ‘U.S.-Japan Business Meeting’, a gathering of the two countries’ business communities, included the need for the two governments to strengthen their partnership to ensure a stable supply of semiconductors.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.