This explains the adoption of the supplementary budget for fiscal year 2020, to support the two axes of Japan’s Covid-19 relief package: strengthening supply chains by promoting investment in Japan (JPY 220 billion, or US$2.1 billion) and helping diversification through overseas investment (JPY 23.5 billion, or US$ 220 million). The two programs help cover expenses for feasibility studies, introduction of equipment or building new facilities, with a maximum subsidy of JPY 15 billion (US$ 140 million) for the Japanese domestic program. The stated goal of the Ministry of Trade, Economy and Industry (METI) for this program is to "enhance viability of industries by strengthening supply chain resilience" and it specifically addresses vulnerabilities linked to a "high degree of concentration of production bases".
Three months after the launch of the two programs, the first two batches of companies have been selected. The Ministry has released a list of 57 companies, including 40 SMEs, that have successfully applied for subsidies to invest in Japan, for a total approved budget of JPY 57.4 billion, or US$ 542.4 million – an average of US$ 9.5 million per company. 20 of the companies operate in the medical machinery/equipment and pharmaceutical manufacturing industry, and 14 in textile manufacturing. In total, 13 are listed as producers of different types of masks. Among them is Iris Ohyama, reported to be the first company to have benefited from the scheme to move production from Dalian to an existing facility in the Miyagi prefecture. Other approved industrial projects include material for masks, parts for ventilators, agents for virus testing, PCR test kits, protective clothing, pharmaceuticals, etc.
In addition,124 Japanese firms applied for subsidies to invest in third countries. METI selected 30, including 15 in Vietnam, confirming the attractiveness of Vietnam for Japanese businesses. The list provided by the Japan External Trade Organization (JETRO) shows a similar pattern of targeted action to support SMEs in the medical equipment and textile manufacturing sectors. This is complemented by action on the diplomatic side. METI has initiated discussions with Australia and India to launch a Supply Chain Resilience Initiative. The goal is to expand this initiative to include ASEAN countries. The idea is for governments sharing an interest on the demand or the supply side to create a business environment that facilitates industrial relocations or investment.
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