The Council on Economic and Fiscal Policy issued the recommendation as part of a report which outlines direction and strategy for the Japanese economy comprising the first set of medium-term economic guidelines under prime minister Yasuo Fukuda’s cabinet.

Japan’s FDI remains behind other major countries, and according to government figures reached $144.8bn, or about 3% of Japan’s GDP by the end of September. The government aims to raise the ratio of FDI to GDP to 5% by 2010 by pushing reforms in the tax and regulatory systems.

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Recommendations included expediting negotiations for economic partnership agreements (EPAs) with Australia, South Korea, the US and Europe. Tokyo signed EPAs with countries including Singapore and Chile, as well as the Association of South-east Asian Nations in November.