The government said Tuesday it will formulate before the end of the year a basic policy on turning the stagnant industrial sector around.
The policy will include guidelines on which bad loans should be bought from banks by a new industrial revitalization body.
The schedule was agreed on during the first meeting of a new task force charged with studying ways to revitalize the debt-laden sector and worsening employment situation, Chief Cabinet Secretary Yasuo Fukuda said.
The task force, headed by Prime Minister Junichiro Koizumi and including all Cabinet ministers, was created in line with efforts to implement an economic package intended to simultaneously remedy the nation’s bad-loan and deflation problems.
The new revitalization organization, proposed in the government’s comprehensive economic package released Oct. 30, will purchase banks’ bad loans to companies deemed salvageable, thereby allowing banks to more rapidly unload their bad assets.
The new body is expected to begin operations as early as April and will be headed by Sadakazu Tanigaki, chairman of the National Public Safety Commission.
Fukuda emphasized that the government will create safety nets for workers who are likely to lose their jobs as more debt-ridden companies go bankrupt.
The task force agreed to submit related bills to the Diet during the ordinary session that will open in January, the top government spokesman said.
Ministers also agreed to discuss a draft of the planned guidelines at the task force’s next meeting, scheduled for late this month, they said.
Economy, Trade and Industry Minister Takeo Hiranuma said he plans to take the lead by submitting the draft to the upcoming meeting.
The guidelines may deal with issues such as setting prices at which the institution buys bad loans from banks and ways to secure financial resources for such purchases.
Finance Minister Masajuro Shiokawa said he expects the guidelines to include numerical criteria for selecting viable firms so “the public can understand that they will be handled in a fair manner.”
He called for the task force also to adopt numerical targets for the disposal of nonperforming loans, such as linking the ratio of bad loans to performing loans, and for the organization to accomplish its tasks as soon as possible by setting a deadline.
The finance chief also told a session of the House of Representatives Financial Affairs Committee the same day that the new body would require “an ample amount” of funds, and indicated it may receive some 10 trillion yen in resources.
But later in the day, Fukuda dismissed Shiokawa’s remark, saying the amount of public funds for the industrial revival body will be determined in future discussions.
“We haven’t decided anything concrete,” he told a regularly scheduled news conference. “We will get a large picture of the situation as we discuss the government’s basic policy for industrial revival” toward the end of the year.
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