2011 February 2 - 8 TOP3 [
ECONOMY]
Large corporations close plants after accepting subsidies from local gov’t
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February 6, 2011
Large corporations across Japan are shutting down or selling their factories after receiving generous financial support from local governments. This delivers a heavy blow to the local employment situation and economies.
Large corporations across Japan are shutting down or selling their factories in municipalities after receiving large amounts of subsidies from local governments.
Local governments supported by the Democratic, Liberal Democratic, and Komei parties have carried out a policy of using residents’ taxes to invite large corporations to locate their factories there. They used the argument that having large corporations build their factories locally would contribute to the creation of jobs and the recovery of local economies.
Out of 47 prefectures, 44 have subsidized large companies building their factories locally. Some prefectures like Iwate, Hyogo, and Yamaguchi set no limit on the amount of the subsidy budget. Osaka allocates 15 billion yen and Wakayama 10 billion yen to invite large corporations to locate there.
However, large corporations are moving their factories elsewhere after receiving the generous financial support. This delivers a heavy blow to the local employment situation and economies.
In 2005, NEC Lighting, Ltd., Japan’s major manufacture of fluorescent lamps and lighting fixtures, received 300 million yen in subsidies from Nagano Prefecture to build a plant in Ina City. However, at the end of November 2010, the company shut down the plant and dismissed the 300 full-time workers.
Japanese Communist Party members of the Nagano Prefectural Assembly are demanding that the governor instruct NEC Lighting to compensate the laid-off workers until they find a new job.
In order to encourage Sharp Corporation to build its factory producing liquid crystal panels in Kameyama City in Mie Prefecture in 2004, the prefectural government provided 9 billion yen in subsidies to the company and the city government provided 4.5 billion yen. However, in January 2009, Sharp decided to stop its production there and in August it sold the factory to a Chinese enterprise without giving any notice to the prefecture or the city.
In 2004, then Mie Governor Kitagawa Masayasu unilaterally decided to give the grant to Sharp. The Japanese Communist Party in the prefectural assembly pointed out that providing such a large subsidy to only one corporation lacks any sense of administrative fairness. However, other political parties, including the DPJ, LDP, and Komei, approved the governor’s decision.
The JCP Mie Prefectural Assembly members group in September 2009 at the ordinary session of the assembly demanded that the prefecture urge Sharp to return the subsidy. As a result, Sharp paid back 640 million yen to the prefecture.
In its policy for the nationwide local elections to be held in April, the JCP position is that to revitalize local economies, the need for local governments is to change their policy to one financially assisting local industries from one using tax money to attract big companies from elsewhere.
