Estimate shows 200,000 small businesses will go bankrupt following bad loan disposal

From 200,000 to 300,000 small- and medium-sized enterprises will go bankrupt if the Koizumi Cabinet's plan to allow banks to write off bad loans is carried out.

The estimate was made public in a questioning by Japanese Communist Party House of Representatives member Sasaki Kensho in the Lower House Budget Committee meeting on May 28.

Even the lower estimate of 200,000 bankruptcies means more than ten times that of last year's 18,000 bankruptcies.

Sixteen major banks have a total of 12.7 trillion yen (106 billion dollars) in bad loans, accounting for 4.6 percent of the total loans outstanding. However, small- and- medium enterprises account for 99 percent in the number of loans which these banks grant.

In reply to Sasaki, Finance Minister Yanagisawa Hakuo said that he has no data available which can deny the figures.

The estimate has drawn media attention. The evening paper Nikkan Gendai reported it with the headline "Horrible data-- 300,000 bankruptcies and 1.5 million unemployment."

The private research company Teikoku Databank warned that the Koizumi Cabinet's "structural reform" will leave behind an unimaginably enormous amount of damage in increased bankruptcies and unemployment. (end)