Japanese Prime Minister Shinzo Abe on Friday previewed the "third arrow" of a three-part economic policy aimed at boosting growth in the long-stagnant economy, promising to open the economy through free trade deals, make it easier for women to work and promote growth sectors with private and public support.
Abe, now riding high in opinion polls after launching the first two pillars of his economic prescription - hyper-easy monetary policy and big spending - is to announce a growth strategy in June, including structural reforms such as deregulation and public-private support for key sectors.
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Skepticism runs deep about his appetite for economic reform, which experts say will be the acid test after his first two policy "arrows", which spurred a stock market rally, weakened the yen and bolstered Abe's popularity ratings.
Noting that there were signs that the economy was improving, such as a rapid return in companies' appetite for capital investment, Abe said: "But we cannot be satisfied with this. We must make these bright signs all the stronger and sustainable. Now is the turn of the growth strategy, which is the 'third arrow'."
Among the steps Abe said were in the pipeline were plans to foster growth in sectors such as medical technology, where Japan can compete globally, with public and private backing.
But he rejected criticism that the government was trying to pick winners and losers with an old-fashioned industrial policy more suited to the 1970s.
"This is an approach where, by concentrating government and private investment, we can create new growth. It is not government targeting of specific sectors."
Abe promised to promote the smooth shift of workers to growth sectors from mature business areas without creating unemployment. Japanese firms complain that the legal protection provided full-time employees makes it hard to exit loss-making businesses, and a government advisory panel on competitiveness is debating possible steps to address the problem.
Abe also said the government would set a goal of reducing the waiting list at day care centers to zero by 2017 to make it easier for women to work and raise children - a target previous governments have repeatedly floated but not met.
Abe decided last month that Tokyo would join talks on a U.S.-led free trade deal, the Trans-Pacific Partnership (TPP), overriding opposition from the politically powerful farm lobby.
The 11 current member countries already negotiating TPP were on the verge of formally inviting Japan into the talks, possibly ahead of a gathering of Asia Pacific trade ministers in Indonesia this weekend.
(Writing by Linda Sieg)