30 Jun What fiscal stimulus did Japan extend?
Japan has been quite successful in keeping the pandemic at bay. As at 24 June, 2020 the cumulative number of deaths from COVID-19 stood at 963. Like Australia, the Japanese Government went in hard with two fiscal stimulatory packages. What were the areas targeted and what was the extent of yen appropriated?
On 27 May 2020, the Japanese Government announced a supplementary budget of 32 trillion yen (around A$434 billion) covering 5 areas and an additional provisional contingency fund:
- Medical Fields: 3 trillion yen (about A$41 billion)
- Development of medicine
- Monetary compensation for medical staff
- Rent Support for businesses whose sales have fallen: 2 trillion yen (about A$27 billion -pay two thirds of the rent for six months
- Employed workers who have been stood down: 0.45 trillion yen (about A$6 billion)
- Max 330,000 yen (about A$4,500 per month)
- Loan program for businesses: 12 trillion yen (about A$158 billion)
- Regional areas revitalisation grant: 2 trillion yen (about A$27 billion)
Reserve Fund: 10 trillion yen (about A$135 billion)
The Supplementary budget followed on from an initial pandemic fiscal stimulus on 7 April and amended on 20 April, which amounted to 26 trillion yen (about A$350 billion).
That package was made up of two parts:
- policies to assist people to get through economic hardships caused by the coronavirus
- policies to encourage spending post COVID-19.
Policies to deal with the current crisis
- The Government will use the money to stockpile two million doses of the antiviral drug Avigan (made by Japanese manufacturer Fuji Film).
- Financial support for households whose income has decreased due to the coronavirus, initially 300,000 yen (about A$4,000) . This policy was subsequently replaced later in April by a cash payment to all citizens of 100,000 yen (about A$1,400) per head.
- Financial benefits for SMEs and self employed; Up to 2 million yen (about A$27,000) for SMEs and 1 million yen (about $14,000) for self employed.
- Increasing financial aid for families with children. Each child up to 15,000 yen (about A$200).
- Waiving tax for one year if income has fallen more than 20% compared to the previous year.
- Setting up an environment for online learning by providing a laptop/tablet to each student free of charge.
- A 240 billion yen subsidy (about A$3.6 billion) for companies that reorganise their supply chains with relocation back to Japan. See our article last month on Supply Chains.
Policies post COVID-19
- Campaign and sales for tourism and events industries.
- Use of coupons and a points system to reinvigorate industries which have been strongly impacted by COVID-19 such as tourism, hotel, restaurant, event and entertainment industries.