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The government and ruling coalition plan to set up a public-private investment fund worth up to ¥900 billion to support companies with advanced technologies in environmental protection, medical treatment and other areas, according to sources.

The fund will be established as part of the revised industrial revitalization law that cleared the Diet Wednesday.

For the fund, the government has set aside ¥40 billion under its initial budget for fiscal 2009 and an additional ¥42 billion under a supplementary budget for the year that has yet to be approved by the Diet.

The remainder would involve investments to be provided by private financial institutions under government guarantees.

The fund will be operated by managers selected from the private sector for 15 years, with the principal aim of financing the consolidation of industries hit hard by the global economic crisis, including manufacturers of electrical and electronic equipment.

The government also said it will launch a program next Thursday to use public funds for recapitalization of nonfinancial companies struggling amid the global crisis.

The program, also part of the new industrial revitalization law, will enable the government-controlled Development Bank of Japan to invest in companies meeting certain requirements under the revised industrial revitalization law.

Elpida Memory Inc., a leading semiconductor maker, and some other companies are expected to apply for capital injections under the program effective until the end of next March.

Advice to small firms

Small companies in Japan should redouble their efforts to seek business opportunities in other parts of Asia where markets still have potential to expand even in the current global economic downturn, a government white paper released Friday said.

Over 67 percent of products manufactured by small firms, including auto parts and components for high-tech products, were exported to Asia in 2007, compared with 14.7 percent to North America and 9.8 percent to Western Europe, the Small and Medium Enterprise Agency said in the annual report.

While Asian markets are not immune to the worldwide financial turmoil and recession, the agency said the markets have continued to expand, and exploring them for more business opportunities is crucial for small firms.

Many of the companies that go through customs procedures by themselves can get “feedback” relatively easily from the markets in each Asian economy and become familiar with “changing demands” at the destinations, the white paper said.

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