Japan’s Keidanren, Korean Counterpart Each to Create Fund amid Better Ties

The Yomiuri Shimbun

15:17 JST, March 17, 2023

With Japan-South Korea ties seemingly improving by the minute, Keidanren (Japan Business Federation) and the Federation of Korean Industries announced Thursday in Tokyo that they will establish a “future partnership fund” in their respective countries.

Each business group will contribute the equivalent of ¥100 million to their fund, which is expected to be used for projects in fields such as decarbonization and youth exchanges.

This move follows the South Korean government’s March 6 announcement of measures to resolve the issue of lawsuits related to former requisitioned workers from the Korean Peninsula.

Individual companies are not expected to contribute to the funds for the time being, including Nippon Steel Corp. and Mitsubishi Heavy Industries, Ltd. The South Korean Supreme Court had ruled that these two Japanese firms had to pay compensation to the former requisitioned workers. Once concrete projects are decided, however, Keidanren and FKI will call on their member companies to make contributions to the fund.

Keidanren, in order to show a positive attitude upon the visit to Japan by South Korean President Yoon Suk Yeol, worked hard to distinguish the two new funds from the compensation issue.

“We will firmly pave the way for a future-oriented relationship between Japan and South Korea,” Keidanren Chairman Masakazu Tokura said Thursday after meeting acting FKI Chairman Kim Byong Joon for talks.

Kim said that they would make efforts to create an environment in which future generations can understand and cooperate with each other.

Each fund will be established by around summer, with specific projects starting before the end of this year at the earliest. Projects could include those to help resolve issues such as resource and energy security, decarbonization and the declining birthrate. The funds will also be used to promote youth exchanges such as internship programs and assistance for studying abroad, with the aim of building a friendly relationship between the two countries for the future.

Careful consideration

The establishment of the funds is a measure taken in response to the resolution measures presented by Seoul on the issue of former requisitioned workers. Tokyo takes the position, however, that the compensation issue has been settled by the 1965 Agreement on the Settlement of Problems concerning Property and Claims and on Economic Cooperation between Japan and the Republic of Korea.

Nippon Steel and MHI are members of Keidanren, so the business group has considered the issue carefully.

“We needed to establish the fund with a system in which even when Keidanren contributes money to the funds, the money should be considered separate from these two companies,” a senior Keidanren official said.

As a result, Keidanren and FKI agreed to contribute their own resources to their respective fund.

Keidanren plans to ask member companies for contributions once concrete projects are decided, but their contributions will be recognized as donations separate from the compensation for former requisitioned workers.

According to the resolution measures presented by the South Korean government, a government-affiliated foundation is supposed to donate the amount equivalent to the damages the Japanese companies have been ordered to pay. Keidanren and FKI reportedly have confirmed that the South Korean side will not use the new fund to pay the compensation.

Keidanren communicated its intension to establish the fund to Nippon Steel and MHI behind the scenes. Just like the Japanese government, both companies have not changed their stance that the issue has been settled.

Asked to comment on the fund, both companies said that as members of Keidanren, they would have to first check the details of the plan.