It is crucial to strictly manage public-private investment funds to prevent wasteful spending of precious public funding.
Cases in which public-private investment funds financed mainly by government investments and loans have yet to produce sufficient results have become conspicuous.
According to an audit by the Board of Audit, six of 14 such funds incurred losses of about 200 million yen to 5.5 billion yen in real terms as of the end of March 2017.
There were eight funds whose investment amount did not even reach half of the money put up by the central government and other entities. This suggests that the funds are struggling to find promising investment destinations and amassing more public money than they can manage.
The funds should swiftly return idle money to the state coffers, among other sources, without hoarding it.
Public-private investment funds are established with joint financing by the government and private entities to provide investments and loans primarily to high-risk projects that are difficult for private entities to operate alone.
Such funds include the Innovation Network Corporation of Japan (INCJ), which is tasked with nurturing next-generation industries, and Cool Japan Fund Inc., which promotes Japanese products and services overseas. Since 2013, in particular, a number of funds have been launched in the aim of promoting the government's growth strategy.
While some funds have steadily yielded profits, many others have allowed public money to be consumed by personnel costs and other operating expenses as they have failed to discover major investment destinations.
Secure capable personnel
It is essential to invest in projects that can contribute to the nation's economic growth, without squeezing private businesses. It is understandable that finding appropriate projects requires time, but loss-making funds must not be allowed to continue indefinitely.
The government needs to strictly scrutinize the cost-effectiveness and significance of each fund individually. Drastic measures, including the disbandment of funds, must be taken with close collaboration between the government bodies that oversee the funds and the Finance Ministry, which provides funding.
The revised Industrial Competitiveness Enhancement Law was enacted in the previous Diet session to strengthen the functions of the INCJ. Under the revised law the INCJ will change its name to one bearing the word "investment" and will be able to hold shares in other public-private funds, placing them under its control.
If new functions of the fund to be created from the INCJ are utilized, the disbandment and integration of funds can proceed beyond the boundaries of the jurisdiction of the government bodies overseeing them. This would become a potent option for the reform of public-private funds.
Needless to say, it is meaningless to simply combine unprofitable funds. It is vital to improve investment income by thoroughly consolidating the funds' functions and making their operations more efficient.
It has been pointed out that securing personnel capable of identifying appropriate projects to invest in has become difficult due to the upsurge in the number of funds.
Finding outstanding individuals with the practical experience is a major task to achieve the reform of public-private funds.
(From The Yomiuri Shimbun, Aug. 18, 2018)
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