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A man walks on an almost empty street in Yokohama on Tuesday. Photo: REUTERS/Edgard Garrido
politics

Gov't unveils package focusing on support for small businesses hit by virus

16 Comments
By Tetsushi Kajimoto and Daniel Leussink

The Japanese government unveiled on Tuesday a second package of measures worth about 430.8 billion yen in spending to cope with the fallout of the coronavirus outbreak, focusing on support to small and mid-sized firms, as concerns mount about risks to the fragile economy.

The package shows how much pressure policymakers are under to bolster fragile growth and stem the risk of corporate bankruptcies, as event cancellations and a slump in tourism threaten to hit the broader economy hard.

To help fund the package, the government will tap the rest of this fiscal year's budget reserve of about 270 billion yen, Japanese Prime Minister Shinzo Abe said.

The move is likely to affect what the Bank of Japan decides at its March 18-19 policy review.

The central bank will aim to ensure that companies hit by the virus outbreak do not face a financial squeeze before the end of the current fiscal year in March, Reuters has reported.

Finance Minister Taro Aso said on Tuesday there was no need yet for a bigger extra budget, adding that the fallout from the outbreak so far had not reached the scale of the 2009 financial crisis.

"We need to ascertain the current situation," Aso told reporters after a cabinet meeting, adding "There's no saying" whether the government needs an extra budget.

FINANCIAL SUPPORT

As well as support for businesses, the new package will fund improvements to medical facilities and provide subsidies of 4,100 yen a day to working parents who must take leave because of closed schools.

Aso said financing will focus on small and tiny businesses in need of financing over the next two to three weeks.

The financial watchdog has urged credit associations and regional banks to hold hearings with small businesses about their financial situation, he added.

Japan will boost to 1.6 trillion yen its special financing for small- and mid-size firms hit by the virus, up from about 500 billion yen previously announced, Abe said.

Reuters first reported the second package's size earlier on Tuesday and the financing on Monday.

As part of the second package, Prime Minister Shinzo Abe has said a government-affiliated lender would offer funds effectively at no interest and without collateral to small firms whose sales slumped in the outbreak.

The virus has infected more than 111,000 people and killed more than 3,800 globally, with the accompanying economic disruption undermining Japan's export-led economy.

The world's third-largest economy shrank by the most since a 2014 sales tax hike in the quarter to December, intensifying fears of an economic downturn.

The outbreak comes at a critical time for Japan, shattering hopes of a gradual economic recovery fuelled by strong domestic demand just as it prepares to host the summer Olympic Games in July and August.

The epidemic has prompted heavy selling of riskier assets and a scramble into assets such as the yen, perceived as safe havens during times of financial distress.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

16 Comments
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OH ! an other package, how much it gonna cost us later?

4 ( +9 / -5 )

adding that the fallout from the outbreak so far is not akin to the 2009 financial crisis.

this is yet to be seen.

5 ( +5 / -0 )

OH ! an other package, how much it gonna cost us later?

If those small businesses go bust, how much is that going to cost society? It seems like a reasonable idea (in contrast to US Republicans proposing to take the chance to slip in yet more tax breaks for the wealthy).

5 ( +11 / -6 )

Dr MaybeToday  04:31 pm JST

OH ! an other package, how much it gonna cost us later?

If those small businesses go bust, how much is that going to cost society? It seems like a reasonable idea (in contrast to US Republicans proposing to take the chance to slip in yet more tax breaks for the wealthy).

the quantitative easing was already on schedule to give a dose to loan junkies, BOJ Kuroda was just waiting the corona excuse to unleash the money tsunami on the zombie economy .

2 ( +5 / -3 )

Aso has had more than seven years to ensure financial stability for small medium businesses but choose not to untill now. His / LDPs focuss has been on large donating companies, totally ignoring small, medium businesses. But now the tax income is effected it's, suddenly we care.

60% odd of Japan's economy is internal, 40% odd exports. Yet exporters have been year after year tax breaks, government incentives. While everyone else small or medium get increased taxes. And now he changes tune? How about Toyota finally paying taxes, might make Aso and Co uncomfortable but would balance the expenditure at least for half the Olympics. Baboons. Can't even organise paper masks or toilet paper....can't wait to see their latest brain storming ideas.

3 ( +5 / -2 )

If those small businesses go bust, how much is that going to cost society?

Nothing, if not a benefit. Japan is suffering from a serious labor shortage. The laid off workers will have the chance to find work in viable companies, ergot, not ones whose survival depends on being propped up by taxpayer money.

0 ( +2 / -2 )

Contrast to stereotypes, consumption, not production, is the main driver for the current Japanese economy. Pro-business, supply-side approach would end up being futile in the face of purchase reluctance. State support and interventions therefore should be focused on demand side. Temporary consumption tax reduction or shopping coupons to households are effective.

3 ( +4 / -1 )

Kids are on spring break, why are the parents taking leave when the kids are on leave in the first place and still get paid for taking time off from work? As well as support for businesses, the new package will beef up medical facilities and provide subsidies of 4,100 yen a day to parents who must take leave because of closed schools, Aso said.

-4 ( +1 / -5 )

country's economy was flagging before the corona outbreak ...

this is just the last nail in the coffin.

Abe NO MIX!!

2 ( +4 / -2 )

¥4,100 a day, think that's going to pay the bills. Cup noodles for all. And no denki, gas. Can't afford masks on that either, or toilet paper so that should solve that problem. Misery for all. "Vote LDP We don't care why should you"

5 ( +6 / -1 )

¥4100/day to take a day off work? And no doubt the stipulations will be for taking off at least a few days, and not just one (for which people will get nothing). That is, let's say you work 9-5, about ¥512/hr.

3 ( +3 / -0 )

need to start helping people rather than just being a government of the companies

2 ( +2 / -0 )

Wrong priority, again. The first thing is to increase nationwide test for free, so that people can get tested at the earliest stage.

1 ( +1 / -0 )

sf2k said "need to start helping people rather than just being a government of the companies".

Glad to see that you have changed your mindset. Serve the people, as simple as that.

0 ( +0 / -0 )

Lots of people trying to monetize from the Cornavirus, this doctor at Medcram could make a fortune he does it for free

0 ( +0 / -0 )

What about supporting part-time and freelancers who are at the bottom of the heap and left with no work and no money?

0 ( +0 / -0 )

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