The Finance Ministry said Monday it will set up an Asia-wide financial scheme to help small Japanese exporters quickly cash their sales credits.

The ministry said it will cooperate with the Asian Development Bank and Japanese banks to launch the scheme as quickly as possible.

The plan comes as other Asian nations are becoming increasingly important trade partners. Falling labor costs in the region have prompted a growing number of small and midsize Japanese firms, including electronics parts makers, to send items to the region for assembly.

Under the scheme, Japanese exporters will receive cash by selling their sales credits to special-purpose companies to be set up by Japanese banks. The SPCs will then issue commercial paper backed by the sales credit.

The Finance Ministry may ask the Bank of Japan to buy the commercial paper under the bank’s own plan to help small firms.

To help investors measure the credit risk of these firms, the ministry will ask prefectural credit-guarantee organizations to back Japanese companies, and the ADB will guarantee the credits of other Asian firms through banks in the region.

The proposed scheme will also reduce Japanese exporters’ exposure to dollar volatility because they can receive cash in yen from the SPCs, the ministry said. In dollar-based trade, when the dollar weakens against the yen, it reduces Japanese exporters’ receipts in yen.

Foreign reserves rise

Japan’s foreign-exchange reserves at the end of June hit a record high for the seventh straight month, rising by $2.53 billion from a month earlier to $545.62 billion, the Finance Ministry said Monday.

The previous record was $543.09 billion.

The rise was mainly due to currency market intervention by Japanese monetary authorities in the reporting month, a ministry official said.

The ministry said late last month that Japan used 628.9 billion yen (about $5.3 billion) to intervene in the foreign-exchange market from May 29 through June 26 to stem rapid gains in the yen.

But the increase was offset to some extent by the weakening of the euro against the dollar.

Japan remained the world’s largest holder of foreign reserves for the 43rd straight month, according to the latest comparable data.

The foreign-exchange reserves consist of securities and deposits denominated in foreign currencies plus International Monetary Fund reserve positions, IMF special drawing rights and gold.

Japan had $443.63 billion in foreign securities in June, up from $441.83 billion in May, and $82.94 billion in foreign currency deposits, up from $81.96 billion.

Of the deposits, $7.35 billion was at foreign central banks and the Swiss-based Bank for International Settlements, $40.82 billion at Japanese banks and $34.78 at foreign banks.

Japan had $8.51 billion in gold, down from $8.89 billion in May.

It had $7.99 billion in IMF reserve positions and $2.55 billion in special drawing rights.

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