The coronacrisis pandemic has ruined the traditional supply chains between Japan and China. Shinzo Abe’s government announced another subsidy programme aimed at encouraging domestic manufacturers to transfer their overseas production bases to Southeast Asia.
In another effort to reinforce supply chains, the Japanese government will spend 23.5 billion yen ($220 million) to promote domestic output of items that are currently heavily imported from certain areas. The manufacturers will receive financial support for the relocation of Japanese firms’ overseas production sites back home.
Japan will launch a subsidy programme to encourage domestic manufacturers to transfer their overseas production bases to Southeast Asia, as the coronavirus pandemic has greatly disrupted their supply chains heavily dependent on China.
The multi-billion-yen programme is incorporated into the government’s emergency stimulus package to ease the economic fallout from the COVID-19 outbreak, Japan’s Kyodo News reported.
The governmental financial injection aimed at helping firms diversify their supply chains. In addition, Abe’s government wants to bring some relief to the business, including the construction of production facilities as well as feasibility studies in ASEAN countries.
Launching the new project came after many Japanese automakers and other manufacturers suffered a shortage of parts produced in China. The collapse took place after the novel virus outbreak started late last year in the central Chinese city of Wuhan.
Abe’s financial initiative will also target manufacturers of items essential for Japanese people to “lead a healthy life” amid the outbreak, including face masks and alcohol sanitizers. The businessmen can receive subsidies when they newly open factories or boost their existing output capacity in Japan.