KPMG Consulting and Hitachi Support Iki City's 'New City Planning Policy Concept' Using AI and Simulation Technology

KPMG Consulting Co., Ltd. (HQ: Chiyoda-ku, Tokyo; Representatives: Minoru Seki, Atsushi Taguchi, Masahiko Chino), together with Hitachi, Ltd. (HQ: Chiyoda-ku, Tokyo; President & CEO: Toshiaki Tokunaga), has supported Nagasaki Prefecture's Iki City (Mayor: Issei Shinohara) in examining its future vision and the policy directions necessary to achieve it. This was done using AI and simulation technology that generates possible future scenarios based on a 'Causal Linkage Model' defining relationships between indicators.

In recent years, municipalities have been forced to respond to complex, interrelated social issues such as a declining birthrate, an aging population, fiscal difficulties, and environmental problems. As future prospects become harder to foresee, determining where to start with limited financial resources has become increasingly difficult. Additionally, with the promotion of Evidence-Based Policy Making (EBPM), there is a need to explain the rationale for policy selection to councils and residents based on evidence. Conventional methods tend to rely on experience and intuition, leading to a growing need for support in future forecasting and policy review using objective data.

In March 2025, Iki City held the 'Iki New Era Creative Conference' and announced a policy concept for new city planning for the Iki New Era, aiming to maintain a population of 20,000 by 2050. The city has launched four projects: 'Port of Connection (Medical/Welfare x Commerce),' 'Port of Play (Fisheries x Tourism),' 'Port of Living (Agriculture x Construction),' and 'Port of Learning (Education x Tourism),' and is promoting regional revitalization through public-private collaboration.

KPMG Consulting utilized Hitachi's simulation technology and AI to support the construction of a Causal Linkage Model based on unique municipal indicators and historical data as the 'Iki City Future Simulation.' Approximately 20,000 simulations were conducted based on this model, and the results were classified and organized by AI to create and compare multiple future scenarios visualizing critical turning points and key events.

[Summary of Results Using Simulation Technology] - Population: Confirmed the effect of policy execution in suppressing population decline. Scenarios were derived showing significantly improved population trends compared to projections by the National Institute of Population and Social Security Research, particularly highlighting scenarios achieving a net social increase in population. - Ideal Future Vision: Confirmed a holistic improvement scenario where industrial revitalization progresses (centered on secondary industries), immigration increases (leading to social increase), and people feel greater attachment and livability in the region. - Branching Analysis: Identified critical branching points: a branch from overall worsening scenarios in 2-3 years, and a branch in 6 years determining whether social increase is achieved. - Factor Analysis: Factors related to citizen life ('internal') were dominant in the 2-3 year branch, followed by economic factors including 'external' ones such as the expansion of tourism spending in later stages.

KPMG Consulting will continue to support the transformation of local governments to solve various challenges they face by leveraging its accumulated knowledge and high level of expertise.