Japan Considers Government Investment Fund

[Mulboyne]

[Mulboyne]

Kyodo via the JT: LDP to suggest sovereign fund based on forex, pension money

A Liberal Democratic Party project team said Thursday it will propose that Japan launch its own sovereign wealth fund, using money from the nation's pension plan and foreign currency reserves. The group, led by former financial services minister Yuji Yamamoto, discussed an outline of its interim report, which will be submitted to Prime Minister Yasuo Fukuda possibly in July. The report will urge Japan to tap into some of its \150 trillion state-run pension program and about $1 trillion in foreign reserves. The team will also recommend that the government make use of profits from sales of its shares in such former state-run firms, including the Japan Railway group and Nippon Telegraph and Telephone Corp. as resources for the envisioned sovereign fund. Yamamoto said at the team's meeting that it is necessary to clarify who should take the blame for possible losses on the sovereign fund's investments, since the planned strategy will draw Japanese people's money into riskier areas. Kotaro Tamura, a House of Councilors member who serves as the project team's secretariat chief, said that since Japan is a democratic country, the envisioned fund should ensure "transparency, information disclosure and accountability." Tamura said the sovereign fund incorporating the pension plan should aim for investment returns of about 8.5 percent, up from the recent average rate of about 3.5 percent for the nation's pension fund. The average annual investment returns of Japan's pension fund management body have been far smaller than those of similar funds in other countries.