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Tokyo’s bumper virus emergency fund highlights yawning wealth gap

  • April 16, 2020
  • , The Japan Times digital
  • English Press



The Tokyo Metropolitan Government is set to roll out an ¥800 billion relief package in response to the ongoing coronavirus outbreak, a figure that far exceeds what was seen in the capital during the 2008-2009 global financial crisis or the Great East Japan Earthquake and subsequent nuclear disaster in March 2011.


Tokyo had been at odds with neighboring prefectures who said closing a large number of businesses would necessitate a massive stimulus package only the capital can afford to pay. Gov. Yuriko Koike’s latest announcement seems to have reaffirmed those concerns, as the Tokyo package offers ¥500,000 to ¥1 million in cash for small businesses that voluntarily comply with virus countermeasures and curtail or suspend their operations.


“Only Tokyo has the financial weight to put forward an emergency fund of that scale,” said Takero Doi, an economics professor at Keio University. “In cities and prefectures across the country, businesses will instead have to bear the weight.”


Last week, the capital requested the temporary or partial closure of a long list of businesses and private facilities until May 6, including universities, live music venues, concert halls and community centers as well as bars, night clubs, net cafes and other nightlife destinations.


Other prefectural governments under a state of emergency declared by Prime Minister Shinzo Abe last week followed suit, but many couldn’t provide the same level of financial support for local businesses, or had to lean on the central government for help. The disparity, Doi said, demonstrates the capital’s advantage over other municipalities in dealing with the coronavirus outbreak.


Earlier this week, Kanagawa Gov. Yuji Kuroiwa announced that — with the help of financial support from the central government — local businesses will be provided between ¥100,000 and ¥300,000.


“It’s regrettable that we can’t offer the same level of financial support as the capital,” Kuroiwa said during a news conference on Tuesday. “Under the current economic circumstances, this is the best we can do.”


The difference in spending power between Tokyo and other Japanese municipalities can be observed via the fiscal adjustment fund, which is similar to savings. For instance, Osaka Prefecture, with a population of about 8.8 million people, said its fund was about ¥104 billion as of February while Tokyo, where 13.9 million people live, had about ¥900 billion.


Osaka Gov. Hirofumi Yoshimura announced on Wednesday that the prefecture is considering a plan to offer ¥1 million to businesses by sharing the cost with local municipalities.


“We want to set up a system that does not pale in comparison to that of Tokyo,” Yoshimura told reporters.


Koike said on Wednesday that she plans to submit a ¥357 billion supplementary budget to an emergency assembly session on Friday and draft additional measures later in the fiscal year.


It would provide schools and medical institutions with face masks, sanitizers, thermometers and other supplies, as well as bolster efforts to improve the city’s ability to respond to and contain the ongoing outbreak.


An additional ¥200 billion would go towards creating a safety net for local businesses and residents, more than ¥196 billion of which will be allocated to small and midsize firms in the form of zero-interest loans. What remains has been earmarked for restaurants adopting takeout and delivery services as well as a program to recruit up to four thousands artists from a broad selection of disciplines, paying each ¥100,000 for their music, paintings and theatrical performances, among other art forms, that might help residents endure long periods of self-isolation.


Tokyo also set aside funding to establish a call center that will provide assistance in 14 languages for foreign residents in the capital.


Abe declared a state of emergency in seven prefectures last week that is scheduled to last until May 6. The declaration, which was later extended to all 47 prefectures, endowed municipal leaders with greater authority when requesting residents and businesses to voluntarily comply with efforts to prevent the novel coronavirus from spreading further.

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