Mismanagement and Government Control
Japan's public-private investment funds, designed to support risky investments, have been plagued by mismanagement and are now largely controlled by the government. This shift in control raises concerns about the effectiveness of these funds and the potential for further losses.
An Asahi Shimbun study revealed that the government's investment ratio in eight representative public-private funds averaged 80%, exceeding 90% in five of them. This dominance stems from inefficient management and a series of investment failures, leading the government to underwrite most of the additional capital pumped into the funds.
The study focused on eight funds established between 2009 and 2022, six of which were initially funded equally by the government and private companies. However, as of the end of fiscal 2023, the average government investment in these funds had risen to 80.2%.
the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN), the Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value-chain and Expansion Japan (A-FIVE), and the Fund Corporation for the Overseas Development of Japan’s ICT and Postal Services (JICT). During capital expansions, the government underwrote the majority of the increase, while private companies contributed only a small amount.
With the government holding more than 90% of the equity in these funds, the incentive for private companies to participate in management has diminished. This lack of private sector involvement raises concerns about the effectiveness of these funds and the potential for further losses.
Professor Hideaki Tanaka of Meiji University emphasizes the need for a management overhaul, suggesting that the government's investment ratio should be limited to about one-third to allow the private sector to take the lead. He believes that the current situation, where private companies are only investing out of courtesy, undermines the true spirit of public-private partnerships.