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Wednesday, March 14, 2012
Ease loan burdens in disaster area
Enterprises and individuals in the areas devastated by the 3/11 disasters are saddled with loans and are facing great difficulty in restarting their business and rebuilding homes. On March 5, the doors opened at a government organization that was established to help small-scale enterprises, self-employed people, farmers, forestry people, fishermen and medical corporate bodies in the disaster zones solve their loan problems. It is hoped that the new organization will extend a helping hand to all individuals and enterprises that need its support.
Many small-scale enterprises in the disaster areas still cannot restart their operations. In Iwate, Miyagi and Fukushima prefectures, it is believed that some 100,000 people are jobless. People who made their living in the fisheries industry have suffered in particular. Many enterprises cannot take out new loans to restart their operations because they first must repay their current loans. Another organization jointly set up by the Organization for Small and Medium Enterprises and Regional Innovation, an independent administrative agency, as well as by local governments and local banks in the disaster areas have been trying to assist small and medium enterprises in the disaster area. Using a ¥200 billion fund, this organization purchases loans from enterprises.
Although it has received some 600 inquiries, it has so far purchased loans from only two firms in Iwate Prefecture. This is mainly because it is necessary to gain the consent of the banks that extended the loans and disagreement exists over how much the organization should pay to purchase the loans.
The new organization has a ¥500 billion fund guaranteed by the central government. The scope of its coverage for loan purchases is wide. It covers 285 municipalities in 14 prefectures, which include not only Iwate, Miyagi and Fukushima prefectures but also Hokkaido, Aomori, Ibaraki and Tochigi. Conditions for purchases of loans include the consent of the banks holding the loans and the prospect that the enterprises in question will achieve operating profits within five years.
The organization should boldly help local enterprises that have good prospects for recovery even if local banks are hesitant to do so. It should keep in mind that the economies in the disaster areas will continue to decline unless local firms can get back on their feet.