- YOMIURI EDITORIAL
- Public-private investment funds
Consider abolition if profits cannot be secured
12:29 JST, December 6, 2022
It is unacceptable for public-private investment funds established with government money to keep aimlessly accumulating deficits. If their investments are not yielding results, it must be decided whether to abolish the funds or merge them with other funds.
The Economy, Trade and Industry Ministry has presented a management improvement plan for Cool Japan Fund Inc., a public-private investment fund under its jurisdiction.
The Cool Japan Fund was established in 2013 with the aim of promoting and selling overseas such things as globally popular Japanese anime, fashion and food culture. The government invests money in related companies through the organization and has put more than ¥100 billion into the fund so far.
But while the Cool Japan Fund has invested or decided to invest in 56 projects since its establishment, many of the companies involved have failed to generate profits. Withdrawals from businesses and appraisal losses on stocks have resulted in an accumulated deficit of ¥30.9 billion.
It is unfortunate that the fund, which was formed as a pillar of the growth strategy pursued by the second Cabinet of then Prime Minister Shinzo Abe, has fallen into a slump.
For example, the Cool Japan Fund withdrew from a large shopping complex it opened in Malaysia in cooperation with a major Japanese department store to sell Japanese brand items there because customers rejected high prices that ignored local price levels.
A company created to distribute Japanese anime lost out to competition from such businesses as U.S. video distribution giant Netflix, which buys popular works at high prices, resulting in a loss of Cool Japan Fund’s investment.
Under the management improvement plan, the Cool Japan Fund is required to take such measures as immediately withdrawing funds from projects that are not expected to generate profits. However, the plan also includes expanding the scope of investments to include clothing materials companies and businesses developing soy-based meat substitutes.
It is questionable whether the new types of business suggested for investment are in line with the fund’s original aim of promoting Japanese culture abroad.
It is only natural for the Finance Ministry to have called for the abolition of the Cool Japan Fund to be considered or its integration with another fund, if improvements are not seen by next spring.
Public-private investment funds are designed to draw private investment by investing government money in areas where the private sector alone cannot take on the risk. Since 2013, a number of public-private investment funds have been formed in the name of promoting the growth strategy, but many are facing deficits like the Cool Japan Fund.
The Land, Infrastructure, Transport and Tourism Ministry’s investment fund for financing such projects as overseas railroads and urban development has accumulated a deficit of ¥14.5 billion, while the Internal Affairs and Communications Ministry’s fund for telecommunications infrastructure has racked up a deficit of ¥11.2 billion. Some argue that such investment funds lack discernment in selecting investment targets.
The cost-effectiveness and significance of public-private investment funds should be reexamined and their targets for investment must be narrowed down.
(From The Yomiuri Shimbun, Dec. 6, 2022)
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