Abstract
Review of the Second Phase of the Science and Technology Basic Plan shows that the budget allocation to government agencies is not flexible, that the flow of public fund to the industry is scarce, and that the performance of public research organizations are not fully evaluated. These should be corrected in the Third Phase of the Basic Plan, by strengthening the Council for Science and Technology Policy to lead budget allocation, implementing tax reduction for R&D activities in the industry, and improving the research evaluation systems, particularly that for innovative research subjects, along with increasing competitive R&D funds. A political initiative will be needed to perform these tasks that mean considerable changes in Japan's S&T policy.
