Japan should weigh safety net for pandemic-hit firms, says PM aide
04/12/2020 07:45
* BOJ may need to support financial institutions - Takenaka
* Calls for rules on which firms to rescue
* Japan may be better off with single airline for Int'l
flights
By Kaori Kaneko and Yoshifumi Takemoto
TOKYO, Dec 4 (Reuters) - Japan should consider creating a
safety net for companies that may need help surviving the hit
from the coronavirus pandemic, such as airlines and
transportation firms, said Heizo Takenaka, a close aide to
premier Yoshihide Suga.
The Bank of Japan (BOJ) also may need to support financial
institutions if they suffer huge losses from big bailouts, said
Takenaka, who as economic minister battled Japan's domestic
banking crisis in the late 1990s.
But he was cautious about the idea, floated by some
analysts, that the BOJ should directly inject capital into such
ailing firms, arguing the central bank is already taking on
private risk by buying massive amounts of exchange-traded funds
(ETF).
"The reason why we haven't seen a sharp rise in corporate
bankruptcies and job losses is because measures taken by the BOJ
and the government have proved effective in mitigating the
immediate damage," Takenaka told Reuters on Wednesday.
"But we can't continue these measures forever," Takenaka
said. "There needs to be discussion on creating a framework
similar to the Industrial Revitalization Corporation of Japan."
The Industrial Revitalisation Corporation of Japan was a
semi-government investment fund that invested in troubled
companies between 2003 and 2007. Takenaka served as economy
minister at the time when the fund was established.
Takenaka, a member of a panel overseeing the government's
growth strategy, said Japan must create rules so that decisions
on which companies to rescue are not political or arbitrary.
"It is hard to draw a line on which companies are defined as
infrastructure companies," he said, on calls from some lawmakers
for the government to rescue firms involved in infrastructure
that is key to society.
"Major transportation companies could be defined as such.
But it's hard to draw such a line for manufacturers."
Airlines have been among industries hit hardest by the
coronavirus pandemic. Some lawmakers have floated the idea of
merging Japan's two biggest airlines - ANA Holdings 9202.T and
Japan Airlines Co Ltd 9201.T (JAL).
Takaneka said intensifying global competition has already
forced many airlines to consolidate but that merging Japan's two
major airlines was not a simple matter since competition was
necessary for domestic routes.
"For example, it will be desirable for JAL to cover domestic
flights and international flights to neighboring areas such as
to Seoul and Taipei, while ANA to cover long-distance
international flights."
Takenaka also serves as a chairman of staffing agency Pasona
Group Inc 2168.T , which is a founding member of a private
non-profit called Service Design whose role in a troubled
roll-out of coronavirus subsidies came under scrutiny in the
summer. urn:newsml:reuters.com:*:nL3N2F00P0
Lawmakers and critics questioned how taxpayer money was
spent under a complex subcontracting scheme, and whether a small
non-profit was a front that would protect its founder companies,
which also include powerful advertising agency Dentsu Inc, from
public scrutiny.
In response to the outcry, both Dentsu, which is part of
Dentsu Group Inc 4324.T , and the Ministry of Economy, Trade
and Industry (METI) launched internal reviews of their
procurement practices.
(Reporting by Kaori Kaneko, Editing by Leika Kihara and Kim
Coghill)
((kaori.kaneko@thomsonreuters.com; +81-3-4563-2733;))