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Policy Watch

METI Drafts Tougher Supply-Crunch Rules for Its Critical-Materials Subsidy Program

Japan's trade ministry would make companies pursuing supply-crunch measures under its critical-materials subsidy program spell out how they'd handle supply counterparties and end-uses when a material runs short, on top of the existing response menu.

By Tokyo Brief DeskSep 28, 20263 min read
Illustration of shipping containers from multiple overseas sources arriving at a factory dock beside an inventory tracking board, representing supply-chain disclosure requirements.

Japan's Ministry of Economy, Trade and Industry has opened a one-month public comment period, running from September 25 to October 25, 2026, on a draft amendment to the ministerial ordinance that governs certification of "supply assurance plans" under the Economic Security Promotion Act (Law No. 43 of 2022). Certification under the 2023 ordinance is what lets a company tap subsidies, two-step loans and interest subsidies for shoring up domestic production of materials the government has designated critical.

The substantive change sits in Article 3, which lists the measures companies must adopt under Article 9, paragraph 4 of the act. Currently, firms choose either a menu of shortage-response measures for when supply of a designated material becomes tight, or a separate track of investment or research spending that maintains supply capacity or cuts dependence. The draft splits the shortage-response option in two: companies that take that route would now have to pair a new item, setting out how they will handle supply counterparties and end-uses when a material runs short, with a second item covering the remaining shortage-response measures. Companies can still choose the investment-and-R&D track instead, now renumbered as item three, without taking on the new counterparty-and-use commitment.

How Article 3's shortage-response measures would change
Article 3 defines the measures companies must adopt under Article 9, paragraph 4 of the Economic Security Promotion Act; the draft requires items 1 and 2 together, or item 3 alone. Source: METI draft ordinance amendment.
Ordinance itemCurrent rule (2023 Ordinance No. 3)Draft amendment
Item 1 (new)Not applicable (newly added)Required together with item 2 for firms taking the shortage-response route: sets out how the firm will handle supply counterparties and end-uses when a material runs short
Item 2General shortage-response menu: firms choose any of a list of measures for when supply runs shortSame shortage-response menu, now paired with new item 1 and excluding its content
Item 3Investment or R&D to maintain supply capacity or cut dependenceSame measure, renumbered from item 2; firms may choose this instead of items 1 and 2 together

The ministry is also rewriting the certification application itself, known as Form 1. Applicants pursuing production, sale or procurement of a designated material would need to disclose annual production volumes split between domestic and overseas output and sales volumes by destination; applicants providing an indispensable service tied to a critical material instead fill in separate fields covering service volumes and the goods needed to provide that service. For raw materials the applicant identifies as playing a core role in producing or procuring the designated material, plus any other materials already designated critical, the form asks for the top three suppliers by trade volume or share of procurement, named by company and by sourcing country or region. The revised form also asks applicants to break down how they plan to fund their supply-security investments, across loans from government-affiliated financial institutions, private-bank loans, subsidies, self-funding and other sources, and to indicate which support schemes they want: two-step loans under the Japan Finance Corporation Act's special provisions, credit-insurance and investment-company act special provisions aimed at small and mid-sized firms, or subsidies and interest subsidies administered through the stable-supply-support entities.

The revised application form also adds a checkbox commitment: an applicant that agrees to it pledges that, if it suffers a cyberattack or suspects one, it will promptly report the incident through METI to the Cabinet Secretariat's national cyber coordination office.

The draft, filed as public-comment case number 595320034 and handled by METI's Trade and Economic Security Bureau, Economic Security Policy Division, does not state when the amended ordinance would take effect, and the notice does not name which designated critical materials the changes apply to. Companies already holding or planning to seek certification under the scheme have until 23:59 on October 25, 2026 to comment before the rule can be finalized.