The Yomiuri ShimbunGiven that public-private investment funds entail state expenditures, it is vital to provide the public with sufficient explanations and disclose information about the policy effects of the investment schemes involved and their results in terms of earnings and expenditures.
Public-private investment funds, which are mainly financed through government investment and loan programs, known as “zaito,” have been established one after another as part of the growth strategy adopted by the administration of Prime Minister Shinzo Abe.
There are 14 such funds, the total capital of which reaches about ¥4 trillion through the combination of government-invested money and credit guarantees.
The earnings-expenditures balance of such funds is in the red in many cases, and their financial condition is deteriorating significantly. The reality seems to be that investment schemes are not proceeding as smoothly as anticipated, and that the money invested is not being properly utilized.
The zaito program faces questions about how effectively the vitality of the private sector can be utilized to shore up the economy, using money collected through the government's creditworthiness.
A question persists as to whether the public-private investment funds are properly fulfilling their roles in a manner conducive to promoting the Abenomics economic policy.
In the case of an investment fund aimed at promoting the growth of agriculture, forestry and fishery, the money involved has been sunk into 109 projects, with a loss of ¥1.5 billion incurred last fiscal year.
The fund seems to have been subject to the influence of some negative factors. This was evident in a scheme aimed at promoting so-called sixth-sector industrialization, which seeks to integrate production-to-sale business operations tied to agricultural products. Sales fell below the target of 70 percent, as only 56 percent of relevant projects achieved their planned sales figures.
Don’t prioritize quotas
One aspect of such funds seems to be that it takes time to achieve tangible investment results. However, it can be viewed as a major problem that each investment fund does not publicize its investment records for individual projects.
How adequately has each project produced on-target policy effects? What was the reason the business value of each project was not increased to the extent that the money invested could be recovered? Even such fundamental matters cannot be examined.
To restore the public-private investment funds, it will be indispensable to disclose information about the details of the methods used for each investment scheme and its profits and losses. It is essential to identify the problems involved in each investment project by exposing it to rigorous external appraisal, and to utilize the results of such scrutiny for the next investment scheme.
It is also important to closely examine investment destinations. There is no denying that the framework of financing allocated to each fund was deliberately expanded so the scale of projects carried out as economic measures hammered out by the government would appear larger.
Starting a less-promising investment scheme, just to place priority on securing a sufficient number of pertinent projects and reach targets set for the amount of money to be invested, must be avoided.
To smoothly promote the growth of an investment destination’s business, it is important for an investment fund to voluntarily get involved in planning the business’ management strategy, as a provider of the money required.
The public-private investment funds cover a wide range of fields, ranging from agriculture and start-up to information technology.
It is essential to extensively gather and train people well versed in certain areas of expertise, dropping the idea of using such funds as bodies to accept bureaucrats who have retired from the ministries and agencies that govern the funds.