Although no details of Japan’s fiscal stimulus have been formally announced, a decision on the size and content of the much-anticipated package is expected next week.
The government yesterday submitted a list of projects to the Liberal Democratic Party, although the document did not provide specifics on the potential size of the spending package or how it will be financed.
The Nikkei Shimbun yesterday reported that the plan would include ￥6 trillion (US$57 billion) of new spending, although only about ￥2 trillion of that would be in a supplementary budget to be passed this year.
“I don’t think the headline is very important, because there’s a lot of smoke and mirrors in what they put in the headline,” said Robert Feldman, chief economist at Morgan Stanley MUFG Securities Co in Tokyo. “I would actually encourage investors to focus on the so-called real demand component,” which requires going “item by item by item and calculate what’s going to be spent, when it’s going to be spent.”
The Japanese Cabinet is to make the final decision on Tuesday next week, Kyodo News said.
Looking at the political calendar, it is likely for the package to win approval in the parliament some time in October, with money starting to flow from late this year into next year.
The draft plan also calls for continued cooperation with the Bank of Japan in efforts to revive the economy. The document says the government hopes the central bank will achieve its 2 percent inflation target.
In the days after Japanese Prime Minister Shinzo Abe’s ruling coalition won a big victory in the upper-house election on July 10, he ordered that a stimulus package be compiled, as he seeks to revive economic growth.
He specified spending on regional infrastructure, such as bringing forward the construction of maglev and other high-speed train lines, and improving facilities at ports for tourist cruise ships.
Abe also met with former US Federal Reserve chairman Ben Bernanke and told him he wants to speed the nation’s exit from deflation, underscoring his commitment to stimulus.
The government was discussing supplementary spending of about ￥3 trillion for the current fiscal year, two officials familiar with the talks said last week. Japanese Chief Cabinet Secretary Yoshihide Suga in a recent interview ruled out issuing deficit bonds to fund a stimulus package, instead hinting at using construction bonds for longer-term investments.
The markets have been expecting some spending package from the government. Partly because of speculation about the stimulus plan, Japan’s TOPIX has risen 8 percent since the upper-house election. During the campaign Abe pledged to work toward raising Japan’s GDP to ￥600 trillion from ￥500 trillion, and a well-constructed initiative could provide a boost for economic growth.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to