Japan Provides State-backed Fund to COVID-hit Firms

A Japanese state-backed fund will invest in companies suffering from the fallout of the COVID-19 pandemic. This was Japan’s Economic Minister Yasutoshi Nishimura’s statement on Monday. They said they’ve received requests from a wide range of industries. These include dining and accommodation.

The Regional Economic Vitalization Corporation of Japan (REVIC) provided financial support to a taxi company in the southern Kumamoto prefecture. This was through preferred stock investments and included 50 million yen ($456,000). This is part of its objectives in supporting businesses hit by the health crisis.

A fruit and vegetable distributor from rural Okayama prefecture is also on the fund’s list to invest the same amount. Moreover, it will provide 30 million yen to a resin manufacturer from Nagano prefecture, northwest of Tokyo. 

A government official said REVIC is considering investing in more than 10 other businesses hurt by the pandemic.

Furthermore, the government should create a safety net for companies that may need help to survive the health crisis. These include airlines and transportation firms, according to Heizo Takenaka, a close aide to Prime Minister Yoshihide Suga, in December.

Enterprise Turnaround Initiative Corp was REVIC’s predecessor. It invested in Japan Airlines Co not long after the fund was founded in October 2009, as the airline went into bankruptcy.

BOJ Debated Bright Signs in Economy in March

On Monday, opinions at the March rate review showed that some Bank of Japan’s policymakers saw early bright spots in their country’s economy. This was despite them debating on steps to make the bank’s ultra-loose monetary policy more sustainable.

The BOJ decided on a range of steps at the March meeting. These steps make its policy tools sustainable enough to withstand an extended battle in cushioning the economic blow from COVID-19. Moreover, in firing up inflation to its perennially elusive 2% target.

Regarding prices, some board members warned that risks of deflation or prolonged price stagnation remained the central bank’s main concern. That’s even as some Western economies were experiencing a rise in inflation. This was also shown in the summary of opinions voiced at the March rate review on Monday.

That the BOJ will keep monetary policy steady for the time being seemed to be the dominant market view, based on the remarks shown. Policymakers were hoping a rebound in overseas demand will help Japan’s economy, which is reliant on export.

In summary, a BOJ board member voiced hope for the review of its tools. It would allow the BOJ to stick to its current policy framework in the next few years.

Moreover, the BOJ’s policy review was likely to have gained consent from the government. A finance ministry representative attending the March meeting said he had “no disagreement” over the decision, the summary showed.

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