Japan’s Y15,000bn fiscal stimulus, announced in April in the teeth of a deepening recession, contains something for everybody – from Y1,100bn for the country’s farmers to Y60bn for tourism and promotion of Japanese “soft power”.
But the measure seen as its public flagship is a Y870bn ($9bn, €6.6bn, £5.8bn) scheme to subsidise energy-efficient cars, televisions and washing machines.
The government hopes it will stimulate domestic consumption and support the car and consumer electronics industries – particularly affected by the downturn – all the while burnishing Japan’s green credentials. Other benefits could include spreading digital televisions before analogue broadcasts are discontinued.
The stimulus package is still winding its way through a divided parliament, but politicians may be encouraged by signs previous “green” aid is already helping carmakers. Toyota, Honda and Nissan say orders for new vehicles are up by 20-30 per cent this month thanks to a tax break on fuel-efficient cars that took effect in April.
At a briefing on Toyota’s dismal annual results this month, Katsuaki Watanabe, chief executive, said he had “great expectations” for the newest support plan, a “cash for clunkers” incentive to pay drivers Y250,000 to scrap vehicles of 13 years or older. The Japan Automobile Manufacturers Association (Jama), which lobbied for the incentive, estimates it would boost Japanese vehicle sales by about 20 per cent during its proposed three-year life. But analysts caution demand could fall off sharply as consumers front-load their purchases.
Sceptics say the ungainly bureaucracy of the rebate system risks undermining its effect. Under the system, the government has designated about 2,000 appliances as eligible for “eco points”. The buyer of an energy-efficient fridge, for example, will receive eco points equal to five per cent of the purchase price. Consumers will be able to spend the eco points on energy-efficient goods from a government-backed catalogue.
Japan’s big electronics companies, having for years spent heavily on research to lower energy consumption, welcome the scheme.
Fumio Ohtsubo, president of Panasonic, said: “Flat panel digital TVs, refrigerators and air conditioners are all flagship products for Panasonic, they all contribute to the global environment, and this new policy will be a stimulus not just for us, but for our supporting industries and [our] suppliers too.”
But the system is not yet fully set up. The office to issue points is not open. Meanwhile, consumers must keep their receipts. That has fed fears potential buyers may postpone buying a new TV until eco points are issued and until it is clear what they can be redeemed for. If so, that would achieve the direct opposite of the intended stimulus.
