The government intends to include the review in the Basic Policy on Economic and Fiscal Management and Reform, which is to be finalized in June. It will request each ministry to conduct a survey in alignment with the 2026 fiscal year budget requests. The Council on Economic and Fiscal Policy will announce the results, likely in autumn.The government intends to include this initiative in the Basic Policy on Economic and Fiscal Management and Reform, which is to be finalized in June. It will request each ministry to conduct a survey in alignment with the 2026 fiscal year budget requests. The Council on Economic and Fiscal Policy will announce the results, likely in autumn.

In April 2025, the Ministry of Finance raised the threshold amounts for small discretionary contracts or  (kankōju), which are exempt from competitive bidding. For construction and manufacturing, the threshold was increased from 2.5 million yen to 4 million yen, and for property rentals, from 800,000 yen to 1.5 million yen. These thresholds had not been revised since 1974. During this period, the corporate goods price index rose by approximately 1.6 times. 

The kankōju system (J) can be regarded as a carve-out for SMEs, where public entities draft annual plans concerning smaller contracts offered to SMEs. There are various kinds of kankōju,including service provision such as survey research, PR work, management of systems, R&D and leasing and maintenance of machinery. Other examples include pamphlet printing, rental of office supplies, and minor repairs of government buildings. Excessive price-cutting pressure on contractors had led to concerns about reduced administrative efficiency.

For nearly three years, consumer prices have been growing by more than 2% year-on-year. Maintaining price settings established during the deflationary era risks causing strain on contracting companies and failing to achieve the intended goals of such systems. Approximately 30% of Japan’s GDP consists of public demand, such as final government consumption and public fixed capital investment. In regional areas especially, public procurement represents a significant portion of the local economy. Raising unit prices and standard amounts will help secure resources for wage increases through improved corporate profitability.

Source: Nikkei Online