The BGA Japan team, led by Managing Director Kiyoaki Aburaki, wrote an update to clients on the Liberal Democratic Party (LDP) presidential election October 4.

Context

  • In the LDP presidential election October 4, lower house member Sanae Takaichi won in the runoff to become the party’s new president. She has long been regarded as a strong contender for party leadership after mounting a fierce challenge against outgoing Prime Minister Shigeru Ishiba in the 2024 race. Takaichi is expected to begin appointing party executives as early as next week and, following talks with LDP coalition partner Komeito and potential cooperation with opposition parties, will likely be designated prime minister during the extraordinary Diet session in mid-October. This would make her Japan’s first female prime minister.
  • Throughout the campaign, Takaichi stressed that strengthening Japan’s economic growth capacity would be her top priority, pledging bold policy measures. Her political style is known for its directness, reminiscent of her close ally, former Prime Minister Shinzo Abe. Compared with recent administrations, she is likely to start with relatively strong approval ratings. Backed by this momentum, her new Cabinet is expected to move quickly with ambitious economic initiatives, potentially creating significant opportunities for business in Japan.

Significance

  • Upon taking office, Takaichi is expected to act swiftly, introducing economic measures, advancing proactive fiscal policy and driving a major expansion of domestic investment through public-private cooperation. She is also considering bold tax incentives to strengthen strategic sectors such as artificial intelligence, semiconductors and aerospace. Having served as LDP Policy Research Council chair and minister for economic security, Takaichi helped lay the foundation for Japan’s current technology strategy. As prime minister, she is expected to reinforce and accelerate these policy directions.
  • Takaichi has made clear her intention to strengthen Japan’s defense capabilities by updating the National Security Strategy and defense build-up plan. As part of this effort, she will seek to reinforce the Japan-U.S. security alliance and advance defense cooperation with the U.S.-Korea and U.S.-Philippines frameworks. She is also expected to deepen partnerships with quasi-allies such as the United Kingdom, Italy and Australia through the development and procurement of defense equipment.

Implications

  • At a press conference after her election, Takaichi said Japan would uphold the bilaterally agreed upon $550 billion investment in the United States as agreed in recent tariff negotiations with Washington. However, she clarified that if any situation were to arise that harms Japan’s national interests, “it should be raised within the bilateral consultation framework.” Fundamentally, there is a lack of clear domestic understanding regarding the implementation mechanisms and operational details of this enormous investment in the United States. Furthermore, some are concerned about the inconsistencies between the explanation provided by the lead negotiator, Minister Ryosei Akazawa, and the actual agreement document. Clarifying and concretizing the Japan-U.S. investment agreement will become a major challenge for its smooth implementation.
  • Takaichi’s proposals seek to align Japan with global security and investment standards. She has advocated for a Japanese version of the Committee on Foreign Investment in the United States to improve transparency and effectiveness within the existing framework. She has expressed support for enacting an anti-espionage law. Japan remains virtually the only major economy without such legislation. As with the security clearance system introduced earlier this year, these measures face domestic concerns but should be viewed abroad as consistent with international norms.

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