The BGA Japan team, led by Managing Director Kiyoaki Aburaki, wrote an update to clients on the election of Prime Minister Sanae Takaichi.

Context

  • Liberal Democratic Party (LDP) President Sanae Takaichi was elected prime minister in the Diet’s designation vote October 21, becoming the first woman in Japan’s constitutional history to assume the nation’s highest office. She immediately began forming her Cabinet, which was inaugurated later that day.
  • Guided by her vision of a “strong Japan” under a policy of responsible and proactive fiscal management, Takaichi appointed Satsuki Katayama — one of her key allies during the LDP leadership race — as minister of finance, marking the first time a woman has held the position. Fellow contenders in the leadership race Toshimitsu Motegi, Yoshimasa Hayashi and Shinjiro Koizumi also joined the new administration as the ministers for foreign affairs, internal affairs and communications and defense, respectively. Ryosei Akazawa, a lower house member who previously led Japan’s tariff negotiations with the administration of U.S. President Donald Trump, was named minister of economy, trade and industry.
  • The path from Takaichi’s election as LDP president October 4 to the formation of her Cabinet was anything but smooth. Following the summer House of Councilors election, the LDP-Komeito coalition — already lacking a majority in the lower house — also lost its hold on the upper chamber. Amid rising tensions, Komeito sharply criticized the LDP’s stance on political finance reform and ended its 26-year coalition partnership October 10. The decision fueled speculation that the LDP might soon lose its grip on power. However, the party swiftly forged a new alliance with the conservative Japan Innovation Party (Ishin) and secured additional support from independent and right-leaning lawmakers. As a result, Takaichi captured a majority in the first round of the lower house’s prime ministerial vote, formally inaugurating the Takaichi Cabinet.

Significance

  • The Takaichi administration is poised to move quickly this autumn to implement key economic measures outlined in its coalition agreement with Ishin. These include cutting the gasoline tax, expanding income tax deductions and introducing new fiscal spending to stimulate domestic investment. At an October 21 press conference, Takaichi announced plans to establish a new public-private framework to advance Japan’s competitiveness in critical technologies such as semiconductors and artificial intelligence. Trump is scheduled to visit Japan October 28 for a bilateral summit, during which Takaichi is expected to outline plans to revise Japan’s national security strategy and reaffirm her commitment to strengthening the U.S.-Japan alliance.
  • Following the announcement of the LDP-Ishin coalition and the formation of the Takaichi Cabinet, the Nikkei Stock Average surged October 21, approaching the 50,000-point milestone for the first time in history. If the government successfully implements its tax cuts and achieves a favorable outcome at the upcoming U.S.-Japan summit, a rise in cabinet approval ratings appears highly likely. Should Takaichi decide to dissolve the lower house and call a general election with such public momentum, the ruling coalition with Ishin would be well-positioned to solidify and expand its political base.

Implications

  • For the business community, it is essential to recognize that the Takaichi Cabinet distinguishes itself through an unambiguous focus on execution and measurable outcomes, functioning as a results-oriented administration. The partnership with Ishin has made long-debated tax reforms unavoidable, yet Takaichi approaches these reforms not reactively but with deliberate initiative. This political realignment has strengthened the coalition’s foundation, accelerating both policy decisions and implementation. As a result, the environment for public-private collaboration is becoming more dynamic, allowing concrete corporate proposals to play a greater role in shaping policy.
  • Against this backdrop, businesses should move beyond a passive stance. Proactive, strategic and sustained engagement with policymakers, relevant ministries and coalition leaders will be essential not only to influence policy development but also to unlock new opportunities for business expansion and investment in Japan.

We will continue to keep you updated on developments in Japan. If you have any comments or questions, please contact BGA Japan Managing Director Kiyoaki Aburaki at kaburaki@bowergroupasia.com.

Best regards,

BGA Japan Team

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Managing Director

Kiyo understands the Japanese business community inside and out from his three decades working for Japan’s most powerful business organization, Keidanren. He covers international trade and investment, defense and aerospace, information technology, entrepreneurship, deregulation and data privacy policy. He also played a leading role in developing and implementing political strategies for the private sector. Kiyo has led Keidanren’s strategic international initiatives since 2013, and most recently headed up the federation’s international engagement. He worked closely with former Prime Minister Yasuo Fukuda to establish Japan’s Track 1.5 dialogues with the United States and China. The dialogues produced important results by strengthening ... Read More