Current Condition of the Kansai Economy and METI-KANSAI’s Initiatives

March 1, 2018

—METI-KANSAI’s Initiatives to Achieve SDGs—

Kiyoshi MoriDirector General,

Kansai Bureau of Economy, Trade and Industry(METI-KANSAI),

Ministry of Economy, Trade and Industry

Note: The figure for the Kansai region is that of FY2014 (April 2014 to March 2015), while the other figures are those of 2014 (January to December).

1

Size of the Kansai Economy

Sources: Relevant statistics

19.7

21.2

11.9

15.2

19.5

17.0

19.6

16.4

16.9

8.3

16.2

0.0 5.0 10.0 15.0 20.0 25.0

Amount of cleared imports (2016)

Amount of cleared exports (2016)

Contract amount for public works (FY2016)

No. of newly registered or notified cars(2016)

Sales at department stores andsupermarkets (2016)

No. of employees in manufacturing (2015)

No. of manufacturing business facilities(2015)

Shipments of manufactured goods, etc.(2015)

Population (Jan. 1, 2017)

Land area (Oct. 1, 2016)

GDP (FY2014)

（％） Comparison with nominal national GDPs(2014; unit: billion dollars)

U.S. 17,393China 10,535Japan 4,853Germany 3,879UK 2,999France 2,839Brazil 2,417Italy 2,150India 2,046Russia 2,031Canada 1,793Australia 1,451South Korea 1,411Spain 1,376Mexico 1,295Indonesia 890Netherlands 880Turkey 798Kansai 792Saudi Arabia 754Switzerland 703

2

Estimated Growth of Kansai’s GDP

Estimated growth rate of Kansai’s real GDP FY2017 FY2018 FY2019

Asia Pacific Institute of Research1.8 1.4 1.1 (1.7) (1.1) (0.9)

The Japan Research Institute, Limited1.2 1.1 0.9

(1.5) (1.2) (0.9)

Resona Research Institute Co., Ltd.1.3 1.2

(1.5) (1.1)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.1.9 1.4 (1.8) (1.3)

Mitsubishi UFJ Research and Consulting Co., Ltd.

1.4 1.2 1.0(1.7) (1.1) (0.9)

Sources: Materials disclosed by the think tanks (November to December 2017)Kansai: 6 prefectures (excluding Fukui)

* Fukui Prefecture’s real GDP growth rate is estimated to be 2.0 (1.9) for FY2017 and 2.3 (1.5) for FY2018 by the Chubu Region Institute for Social and Economic Research.

The figures in parentheses are the estimated growth rate of Japan’s nationwide real GDP .

Comparison with the National Economy and Major Regions

85

90

95

100

105

110

115

120

125

11H26

12 1H27

2 3 4 5 6 7 8 9 10 11 12 1H28

2 3 4 5 6 7 8 9 10 11 12 1H29

2 3 4 5 6 7 8 9 10 11

Seasonally adjusted monthly Indices of Industrial Production (Japan, Kanto, Chubu, Kansai)

月次（全国）

月次（関東）

月次（中部）

月次（近畿）

Production in 2010 = 100

Chubu

Kansai

Japan

Kanto

108.1

103.6

119.7

96.9

3

2014 2015 2016 2017

Monthly index (Japan)Monthly index (Kanto)Monthly index (Chubu)Monthly index (Kansai)

20141.0 18.6 5.8 2.4 13.1 4.6 13.9 10.1 19.7 8.6 2.1

20140.4 19.5 4.8 2.5 13.6 3.8 15.3 9.7 20.3 7.7 2.4

Source: Annual Report on Prefectural Accounts (Cabinet Office) 4

Compared with Japan as a whole, Kansai has a larger percentage of the mining and manufacturing industry, the real estate industry, and the service industry comprising its GDP.

GDP Composition by Industry

Kansai

Japan

1st Industrialrevolution（steam）

2nd Industrialrevolution（motor）

3rd Industrialrevolution

（computer）

4th Industrialrevolution

(autonomy based onBig-data, AI and IoT)

PrimitiveSociety

AgriculturalSociety

IndustrialSociety

DigitalSociety

Society 5.0(Human centric &Solution-oriented)

＜Society＞

＜Technology＞

Connected IndustriesMaterial × MaterialHuman × MachineHuman × Human

…Field × Digital

Developmentof each company

・ New Network = Value・ Collaboration of Individuals

→ New Business models

5

(Reference) “Connected Industries” and “New Society”

6

« Previous situation » « Current situation »

・・・

Gamecontent

Gamecontent

NES(Nintendo)

PlayStation(SONY)

XBOX(Microsoft)

[Video game consoles]

ConsumersConsumers

App Store(Apple)

Google Play(Google)

Content providers were able to secure their profits.

Content providers have become a kind of tenant.

PlatformsCompetition for

contentsApp market under the control of

a few platform providers

Main Battlefield Until Now: Virtual Data

[Mobile devices]

7

Parts and materials Production Services

Added value

Provision of services with high added value through the acquisition of consumer contact points

(Construction of a service platform)

Value chain

Provision of parts, materials, software, etc. with a common basis and few alternatives

(Construction of a product platform)

Economic Regeneration System

8

Composition of Manufactured Goods Shipments

Source: 2015 Census of Manufacture, Ministry of Economy, Trade and Industry

Kansai

Japan

0% 20% 40% 60% 80% 100%

37.6

43.2

45.2

38.0

15.9

16.8

1.3

1.9

Primary material industry

Processing & assemblyindustry

Daily life-relatedindustry

Other

HealthLeisureSports Lifestyle

Traditional skills &

expertise

iPS cellsGenome

Drug development

Medical devices

Long-term careHealth care

Sports MusicGames

Amusements

Dailygoods

Housing

History & culture

Traditional craftworks

Japanesecuisine & sweets

SakeHistorical tourism

resourcesTraditional

performing arts

Iemoto(teachers of

traditional arts)

Industries improving and enriching

people’s minds

Industries helping people enjoy their

lives

Industries protecting life

Products

Services

Contents

MedicineLong-term care

Health care

Entertainment

Medicine

Industry clusters closely related to each other, for which Kansai has promising potentials

9

Kansai’s Promising Business Potential

Consumption per capita

Hokkaido 136,668

Tohoku 73,490

Kanto 159,436Hokuriku Shin’etsu 54,271

Chubu 61,518

Kansai 93,343

Chugoku 39,895

Shikoku 44,890

Kyushu 91,824

Okinawa 82,920

Japan 140,339

Trends in Consumption by International Tourists

Destination2016

(Percentage of visitors)

2017(Percentage

of visitors)

Japan 24,039 (100) 28,690 (100)

Kansai 10,240 (42.6) 12,080 (42.1)

Fukui Pref. 48 (0.2) 49 (0.2)

Shiga Pref. 144 (0.6) 179 (0.6)

Kyoto Pref. 6,610 (27.5) 7,415 (25.8)

Osaka Pref. 9,399 (39.1) 11,113 (38.7)

Hyogo Pref. 1,490 (6.2) 1,580 (5.5)

Nara Pref. 1,658 (6.9) 2,091 (7.3)

Wakayama Pref. 288 (1.2) 340 (1.2)

(Unit: thousand people)Number of international visitors to Kansai Consumption by intl. visitors

per capita by region (Unit: yen)

10Source: Calculated based on Japanese

government statistics

持続可能な開発目標（SDGｓ）

11

12

Japan’s Initiatives to Achieve SDGs

Establishment of the SDGs Promotion Headquarters and the SDGs Implementation Guiding Principles

On May 20, 2016, the Japanese government established a Cabinet body, the SDGs Promotion Headquarters, headed by the Prime Minister and composed of all ministers

The SDGs Promotion Headquarters established the SDGs Implementation Guiding Principles on December 22, 2017.

13

Japanese Government’s Eight Priority Areas(decided on December 22, 2017)

1. Empowerment of All People

2. Achievement of Good Health and Longevity

3. Creation of Growth Markets, Revitalization of Rural Areas, and Promotion of Science, Technology and Innovation

4. Sustainable and Resilient Land Use, and Promotion of Quality Infrastructure

5. Energy Conservation, Renewable Energy, Climate Change Countermeasures, and Sound Material-cycle Society

6. Conservation of the Environment, Including Biodiversity, Forests and Oceans

7. Achievement of Peaceful, Safe and Secure Societies

8. Strengthening of the Means and Frameworks for the Implementation of the SDGs

14

METI-KANSAI’s Previous Initiatives

Team E-KansaiSupporting small and medium-sized companies in expanding their environmental and energy-saving business to the overseas market

Social Venture Support Project

and

Kansai SDGs Platform and Kansai Business Network for the SDGs

15

Examples

Kansai-Asia Environmental and Energy-Saving Business Promotion Forum

(Team E-Kansai)

Foundation: November 2008Chair: Minoru Furukawa (Director & Senior Advisor,

Hitachi Zosen Corporation)Deputy Chair Companies:

Kubota CorporationKobelko Eco-Solutions, Co., Ltd.REMATEC Holdings Corporation

No. of member companies/organizations:181 (as of December 2017)

Executive Office: Global Environment Centre Foundation

Support institution: METI-KANSAI

Team E-Kansai

☆ Focus fields：Water treatment, waste treatment, prevention of air pollution, energy-saving, etc.

☆ Activity area：Conducting activities in Asia, with a focus on Thailand, Vietnam, Indonesia, and China (Liaoning and Guangdong Provinces)

Water supply project using simplified purifiersin rural villages in Tanzania

POLY-GLU SOCIAL BUSINESS Co., Ltd.

* Material provided by JICA Kansai and processed by METI-KANSAI 16

事業概要

* Material provided by JICA Kansai and processed by METI-KANSAI

Dissemination of a method of maintaining and managing bridgesusing a crack measurement system in Thailand

KUMONOS CORPORATION

17

* Material provided by JICA Kansai and processed by METI-KANSAI

Transfer of lightning protection technology in the Republic of Rwanda

OTOWA Electric, Co., Ltd.

18

Conducting an on-site survey A Rwandan engineer receiving training at OTOWA Electric

19

Establishment of the Kansai SDGs Platform (Dec. 16, 2017)① Creating the platform’s website and disseminating information on SNS② Spreading the SDGs logo (supporting prospective logo users)③ Holding various related events, including the general assembly,

symposiums, workshops (study meetings focusing on each goal)(many of which are planned to be held in parallel with cooperative organization-led events)

④ Sharing information about member companies’ activities with the world, and with the media

Main activities

Activity period Conducting activities intensively until FY2020

Members Economic organizations, private companies, governmental bodies and their related organizations, universities, research institutions, citizens’ groups, and NPOs in the Kansai region, which agree with the platform’s objectives (256 members as of the end of January 2018)

Joint executive offices

JICA Kansai: mainly in charge of NGOs, citizens’ groups, research institutions, etc.

Union of Kansai Governments: mainly in charge of local governmentsMETI-KANSAI: mainly in charge of the business world, economic

organizations, etc.

Kansai Business Network for the SDGsContribute to achievement of the SDGs

from business activities!

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• Disseminating information on the portal• Creating contents about the platform’s activities• Conducting PR activities through diplomatic

establishments abroad, JICA, JETRO, etc.• Publishing articles about the platform’s activities on UN

reviews with the help of the Ministry of Foreign Affairs

Company A NGO

University

Bank

Kansai Business Network for the SDGS

Activities: Sharing activity cases and challengesSharing business know-howDeveloping joint business plansSupporting the use of measures

Workshops

Spreading activity information

Kansai SDGs Platform

[Background]① High expectations for private

companies’ contributing to achievement of the SDGs

② Changes in the global business environment

③ Kansai-based companies’ great potential to help achieve the SDGs

Company B

Company C

２１

Workshop Themes (planned)

① Corporate Governance in the Age of SDGs— CSR and beyond: New Era of Corporate Management —

② Exploring Overseas Frontiers through Socially Contributive Business— SDGs for Middle-ranking, Small, or Medium-sized

Companies, and Startups —

③ New Collaboration and Creation of Added Value— Open Innovation in the Age of SDGs —

① Opening remarks by the organizer② Keynote comments by business experts③ Panel discussion○ SDGs-contributive Business Projects Created through Harmonious Coexistence

with Local Communities ー Beyond ODA ー○ New Collaboration in the Age of SDGs and Creation of Added Value

— Use of Open Innovation and Networks —

Kansai Business Network for the SDGsKickoff Seminar

Objectives ① Providing information about global trends concerning the SDGs② Sharing challenges and know-how of SDGs-related projects③ Networking

Date

Organizers, etc. Main organizer: METI-KANSAICo-organizers: JICA Kansai; Union of Kansai GovernmentsCooperators: Kansai Economic Federation

Osaka Chamber of Commerce and IndustryKansai Association of Corporate Executives, etc.

Hotel New Otani Osaka

22

Program

Venue

Thursday, March 22, 2018 from10:00 to 14:00