By Takaya Yamaguchi
TOKYO (Reuters) - A draft plan to boost Japanese growth promises to overhaul corporate governance, promote technology and attract private investment, but it leaves many of the toughest questions unanswered as the country seeks to claw its way out of a crippling cycle of deflation.
The 60-page draft outline of Prime Minister Shinzo Abe's growth strategy reviewed by Reuters, which has not been made public, gives no details of how and whether the government would cut the corporate tax rate.
Nor does it detail plans to overhaul the nation's public pension fund, known as GPIF, another of the most closely watched policy measures for investors in Japan's stock market.
Other unanswered questions include whether corporations will be allowed to own farmland and whether companies will get reforms of the labour arbitration process to make it easier to dismiss workers.
Both of those controversial issues are marked as pending in the still-evolving policy draft.
The document does not mention whether Abe's government will push for legalizing casino gambling in Japan, a step that proponents say could drive up tourism and tax revenues in Tokyo and elsewhere.
The draft plan was compiled by government ministries and will form the basis of Abe's "third arrow" reform update due to be announced later this month.
Abe's growth plan is aimed at lifting the potential output of an economy that has been mired in deflation since the late 1990s, coupled with an aggressive program of quantitative easing by the Bank of Japan and an earlier round of fiscal stimulus.
But Abe's coming structural reform announcement also has a more immediate target: lifting investor sentiment at a time when confidence in "Abenomics" has been fading and the Nikkei stock average is down 8 percent since the start of the year.
The Abe policy draft entitled "Japan Industrial Revival Plan" paints a vision of an innovative Japanese economy that would also be more transparent, more open to women in the workplace and friendlier to foreign investors.
Most of the policy commitments are broad and lack detail on funding or related legislation, however.
The draft growth plan offers a range of "key performance indicators" to measure whether the plan is succeeding in lifting Japan's potential growth rate, but many are set for 2020 or beyond. The next general election is due by December 2016.
On corporate governance, an area where offshore investors have urged Japan to reform, the draft plan being readied for Abe pulls back from some of the more aggressive steps backed by members of his Liberal Democratic Party. The plan says the Tokyo Stock Exchange would compile by mid-2015 a "corporate governance code", or a set of guidelines to bring oversight of the country's public companies in line with international standards.
Most developed economies require listed firms to select a majority of their board members from outside the company, and corporate governance experts say one or two directors on a board of more than 10 are not enough.
By contrast, the only detail in the draft plan reviewed by Reuters calls for banks to have at least one outside director. Abe has been pushing for improved governance in an effort to boost foreign investment.
The draft plan sets a target for doubling annual foreign direct investment to nearly $345 billion by 2020. Japan's inbound direct investment is the lowest among OECD countries at around 3.5 percent relative to GDP. With Japanese public finances under increasing strain, Abe also wants to encourage more private investment in public projects. The draft plan sets a target of opening up about $30 billion in deals for investors to manage infrastructure projects such as airports.
U.S. property investor Fortress Investment Group LLC and Australian investment bank Macquarie Group Ltd are taking stakes in Japan's infrastructure sector.
Goldman Sachs Group Inc has also said it was considering investing in operating rights for Osaka's new Kansai International Airport when those are put up for sale. Further reforms are aimed at helping Japanese women succeed in a male-dominated corporate culture. The proportion of women in managerial posts should jump from last year's 7.5 percent to 30 percent, the plan suggests.
All listed companies would be required to disclose the ratio of women in management posts in reports to investors.
The draft plan also sees a big role for the increased use of robotics in boosting productivity at a time when Japan's population is declining.
It promises to create a forum on the "robotic revolution." By 2020 Abe wants to see a 20-fold increase in use of robots in agriculture and a two-fold jump in manufacturing.
The draft plan included a pledge to create a new world-class research centre and to provide support for Silicon Valley-style start-ups, an area where Japan has been hobbled by the lack of active venture capital investors.
On energy policy, the draft growth plan pledges to complete a reform of the country's electricity market by 2020 that would break up regional monopolies that have been held by utilities led by Tokyo Electric Power. It says Japan will promote imports of liquefied natural gas from the United States and reiterates Abe's plans to restart nuclear power plants that have passed tougher safety checks imposed after the 2011 Fukushima disaster.
In a potential boost for Toyota Motor Corp and others, the draft plan promises to loosen regulations on hydrogen fuelling stations.
Toyota is preparing to launch a hydrogen-powered car in the United States, Japan and Europe in 2015, a major bet on fuel-cell technology by Japan's top automaker.
Gaming companies including Las Vegas Sands Corp, MGM Resorts International, Wynn Resorts Ltd and Malaysia's Genting Bhd have expressed an interest in investing in casino projects in Japan.
Proponents of legalizing casinos in markets like Tokyo have not yet submitted legislation to start the process. ($1 = 101.7450 Japanese Yen)
(Writing by Antoni Slodkowski, editing by Kevin Krolicki, Edmund Klamann and Mike Collett-White)