Investments by eight of 14 public-private investment funds (see below) that were mostly set up since 2013 as part of the government’s growth strategy amount to less than half of the money put into them by the government and other entities for making investments, according to Board of Audit research.
The research underscores the fact that the public-private investment funds are struggling to use up the massive public funds allotted to them.
The board also discovered that the operations of six investment funds resulted in losses ranging from about ¥200 million to ¥5.5 billion as of the end of fiscal 2016.
The research was the first inspection by the Board of Audit of all 14 public-private investment funds.
The board has demanded the investment funds return unnecessary capital to the government coffers, pointing out the possibility that public funds may have been mothballed.
The 14 funds do not disclose the losses and gains of their individual investment projects. The board has proposed publicizing information as much as possible when, for example, huge losses are recorded.
The board analyzed the investments of each of the 14 funds from the start of their operations to the end of fiscal 2016.
According to the research, ¥100 billion was put into a fund set up to support the practical implementation of research and development at the national universities of Tohoku, Tokyo, Kyoto and Osaka. However, investments made from that fund — which is administered by the Education, Culture, Sports, Science and Technology Ministry — came to only about ¥4.6 billion, or 4.6 percent of the capital, across 30 projects.
Aside from the money it received for investments, the public-private investment fund also received ¥20 billion from the fiscal 2012 supplementary budget. But 93.5 percent of that money — about ¥18.7 billion — was left unused.
About ¥31.9 billion was put into an investment fund established to help people in the fields of agriculture, forestry and fisheries to pioneer new businesses. However, the fund — which is administered by the Agriculture, Forestry and Fisheries Ministry — has invested only about ¥6.5 billion, or about 20.5 percent of the money received, across 78 projects.
Moreover, four investment schemes set up using that fund have been liquidated without results — meaning the actual investments conducted by the fund are even lower than ¥6.5 billion.
Although about ¥280.5 billion in total has been allotted to those eight public-private investment funds, they have only used about 23.6 percent — about ¥66.1 billion — of it for investments.
Because the money in the public-private investment funds is to be ultimately collected by the central government, the hurdles for acquiring relevant budgets were lower than usual. Observers have pointed out that government offices in charge of the investment funds could have requested colossal amounts of capital despite dim prospects for investment demand.
On the other hand, the Innovation Network Corporation of Japan — an investment fund established to support industries expected to yield national wealth in the next generation, has invested about ¥815.9 billion into 114 projects — or, 271.9 percent of the about ¥300 billion it initially received. The fund, which is administered by the Economy, Trade and Industry Ministry, has reinvested the profits it made on initial investments.
■ Public-private investment funds
Organizations jointly financed by the government and the private sector aimed at nurturing fields in which investments are difficult to make solely by private companies because of the higher risks. Eleven of 14 funds have been established since 2013 as part of the growth strategy of the administration of Prime Minister Shinzo Abe. The government had invested about ¥781.2 billion in total as of the end of fiscal 2016, using government bonds and taxes. The government provides a loan guarantee for failed investments, meaning the amount of public funds injected could reach about ¥4 trillion.