Japan's Latest Policies to Emphasize Supply Chains

As per a draught of the plan reviewed by Reuters on Nov 10, Japan's government plans to increase its fiscal loan and investment programme in a planned second extra budget to beef up supply chains and other long-term spending. Fiscal investment and loan programmes involve the issuance of bonds based on the government's credit, which are redeemed by government-affiliated agencies to carry out large-scale projects that are deemed difficult to tackle in the private sector by providing long-term and low-interest funding.

According to the draught document from the Ministry of Finance, the programme will generate additional funding of 886 billion yen ($5.85 billion).

With that funding, the government would boost financial support through government-affiliated financial institutions to enhance the supply of chips and by constructing advanced logistic facilities and data centres, the draft document showed.

The government would also invest 150 billion yen in power grid development to help supply more renewable energy, according to the document. The spending and loan programmes would be revised to 17.2 trillion yen with the additional funding, up from the initial 16.3 trillion yen for this fiscal year, which will be decided by the cabinet on Friday.

The government also wants to secure vital resources from the "global south" to help Japanese firms improve their supply networks. To that end, the government will provide 300 billion yen in financial assistance through the Japan Bank for International Cooperation (JBIC). Japan will also provide 406 billion yen in yen loans for infrastructure exports in order to promote coordination with developing countries.