Japan govt mulls abandoning Cool Japan Fund

Japan govt mulls abandoning Cool Japan Fund

A fan takes a picture of a billboard for Demon Slayer: Kimetsu no Yaiba - The Movie: Mugen Train, a film based on the massively popular Japanese manga, at a cinema in Tokyo's Shinjuku Ward on October 16, 2020. Tsubasa Setoguchi A major public-private fund, founded a decade ago to promote Japanese culture overseas, is on the rocks after having a deficit of 30.9 billion yen $218 million from investments that didn't pan out.

The central government created Cool Japan Fund Inc. in 2013 to support overseas sales of cultural products, such as anime and Japanese cuisine, and saw it as a potential winner that could drive growth.

In hindsight, the project looked much better on paper than in practice, and performed so poorly that different parts of the government are now at odds over its future.

The Korean culture took over, a senior government official said. We are even struggling to sell Japanese anime overseas. The Ministry of Economy, Trade, and Industry wants to keep the fund up by throwing it a lifeline that would allow it to turn a profit by fiscal 2025. The Finance Ministry is considering merging it with other funds or abolishing it altogether.

A new plan to improve the business operations of the fund was presented by the industry ministry on November 22 at a meeting of a subcommittee of the Fiscal System Council, an advisory panel for Finance Minister Shunichi Suzuki.

The ministry originally hoped to make the fund more profitable in fiscal 2024, but the new plan will push the deadline to fiscal 2025 because the firms the fund has invested in have underperformed since the COVID-19 epidemic.

This will be the second time that the ministry will overhaul its plan for the fund after the first in May 2021, although the Finance Ministry has decided that it will merge the fund or eliminate it if it doesn't meet the target in the new plan.

The government had put 106.6 billion yen into the fund as of March 2022, and 24 private sector firms have chipped in around 10.7 billion yen.

The fund invested in 56 projects, such as marketing Japanese video content overseas. The fund has founded Anime Consortium Japan, a company that distributes anime, and WakuWaku Japan, a satellite broadcasting company.

These companies didn't perform well due to the success of rivals, such as the U.S. streaming giant Netflix Inc.

The government lost a lot of money by selling its stakes in these companies to the private sector at discount prices and closing their operations after that.

According to sources, one of the pillars of the industry ministry's plan is to expand the types of businesses it invests in.

In addition to the companies in the anime and food industries that were originally targeted investors, the new plan would invest in companies that make clothing materials and startups that develop soy-based alternative meats.

A Japani industry ministry official said that Japan's ability to create things is part of Cool Japan.

That strategy would hamper the original purpose of the fund, promoting Japanese culture overseas. Adopting it would leave the government with less incentive to support the fund.