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ECONOMY

EXCLUSIVE: Funding by govt lender eyed for strategic goods

  • February 11, 2022
  • , Jiji Press , 4:45 p.m.
  • English Press

Tokyo, Feb. 11 (Jiji Press)–The government is considering allowing state-backed Japan Finance Corp. to provide public- and private-sector lenders with funds as resources of loans to help domestic firms secure semiconductors and other strategic goods stably, Jiji Press learned Friday.

 

This will be a centerpiece in a package of new financial assistance measures the government is set to compile to beef up the supply chains for strategically important goods.

 

The government will include the measures in economic security promotion legislation, seen to be submitted to the Diet, Japan’s parliament, in late February.

 

Under the envisaged scheme, JFC will supply funds for loans to lenders having business deals with makers of “specified important goods” to be designated by the government under the economic security promotion law, such as semiconductors, pharmaceutical products and rare earth, informed sources said.

 

Financial institutions that will provide loans using the JFC funds will likely include megabanks, major regional banks, the Development Bank of Japan and Shoko Chukin Bank, the sources said.

 

The financial assistance scheme is similar to one devised in the aftermath of the March 2011 powerful earthquake and tsunami, and another forged amid the ongoing novel coronavirus pandemic.

 

The government will create a special measure to make it easier for small firms handling strategic goods to receive public guarantees for loans they would obtain, the sources said.

 

In addition, public institutions that support the enhancement of supply chains will be asked to provide funds to cover loan interest payments to the financial institutions and distribute subsidies to businesses handling strategic goods.

 

For goods for which it is difficult to maintain the supply chains even after these support measures are implemented, the government will designate them as items eligible for “special measures” under the economic security law so that it can take steps to stockpile such products based on decisions by cabinet ministers concerned, the sources said.

 

Amid the continuing economic rivalry between the United States and China, ensuring stable procurement of strategic goods and state-of-the-art technologies is increasingly critical for Japan in light of economic security.

 

The economic security legislation covers four areas–strengthening supply chains, prior reviews of critical infrastructure, public-private cooperation over advanced technologies, and keeping secret patents on sensitive technologies that can be used for military purposes.

 

The government plans to implement the measures by 2024 in stages if the legislation is enacted and promulgated this summer.

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