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Public lenders will be consolidated or scrapped

The government Council on Economic and Fiscal Policy on November 29 compiled a basic policy to integrate five of the eight government-affiliated financial institutions, privatize two, and transfer operations of one to a local government-funded organization.

The targeted institutions for consolidation are the Japan Finance Corporation for Small and Medium Enterprise, the National Life Finance Corp., the Agriculture, Forestry and Fisheries Finance Corp., the Okinawa Development Finance Corp., and the Japan Bank for International Cooperation. Those to be privatized are the Development Bank of Japan and Shoko Chukin Bank. The Japan Finance Corporation for Municipal Enterprises will be placed under local governments control.

Under the basic plan, Japan Finance Corporation for Small and Medium Enterprise loans will be abolished. The Japan Bank for International Cooperation will withdraw from trade investment credit. Education loans by the National Life Insurance Corporation will be reduced.

Sasaki Kensho, Japanese Communist Party member of the House of Representatives, commented on this policy as follows:

"Integrating and privatizing government-controlled lenders that provide funding to small businesses will make it difficult to finance them.

Without government funding available, new institutions will scale down direct lending operations and adopt such methods as partial lending, securitization, and indirect lending. Conditionality and lending methods will likely to be very different from the government-run lenders. The JCP opposes reductions in the public financing for small businesses as they are the backbone of the Japanese economy.

The need now is to improve policy-based finance that supports the public and small companies. The JCP calls for the elimination of the re-employment of retired government officials to high positions in the private sector, so-called Amakudari, drastic cuts in waste, and reform in which needed funds will be provided for small businesses and local economies.

There are currently eight financial institutions fully or mostly funded by the government. As well as lending money to people and small businesses in difficulty of getting a loan from private banks, these government-run lenders provide long-term low-interest financing for sectors like agriculture, forestry and fishery projects, large development programs, and overseas Official Development Assistance (ODA).
- Akahata, November 30, 2005





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