VZCZCXRO1267
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #0345/01 0440930
ZNR UUUUU ZZH
P 130930Z FEB 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 0776
INFO RUEHBJ/AMEMBASSY BEIJING 7723
RUEHRL/AMEMBASSY BERLIN 1592
RUEHBY/AMEMBASSY CANBERRA 3033
RUEHLO/AMEMBASSY LONDON 2343
RUEHFR/AMEMBASSY PARIS 6425
RUEHUL/AMEMBASSY SEOUL 3746
RUEHGP/AMEMBASSY SINGAPORE 7343
RUEHNAG/AMCONSUL NAGOYA 0250
RUEHNH/AMCONSUL NAHA 4765
RUEHOK/AMCONSUL OSAKA KOBE 6208
RUEHFK/AMCONSUL FUKUOKA 2421
RUEHKSO/AMCONSUL SAPPORO 2972
RUEHHK/AMCONSUL HONG KONG 6702
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBS/USEU BRUSSELS
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC

UNCLAS SECTION 01 OF 02 TOKYO 000345 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J, EEB/TRA, EEB/TTP/MTAA FOR B. NAFZIGER 
STATE PASS USTR FOR R. MALMROSE, W. CUTLER, AND M. BEEMAN 
DEPARTMENT OF COMMERCE FOR K. ROTH AND D. BARZDUKAS 
 
E.O. 12958: N/A 
TAGS: EIND ETRD SENV PREL WTO EFIN ENRG JA
SUBJECT: PROGRAMS FOR JAPAN'S AUTOMAKERS 
 
REF: A. STATE 4753 
     ¶B. TOKYO 286 
     ¶C. TOKYO 174 
     ¶D. TOKYO 187 
     ¶E. TOKYO 189 
     ¶F. TOKYO 219 
     ¶G. TOKYO 228 
 
¶1. (SBU)  Summary: Although car manufacturers in Japan have 
been hit hard by the global economic crisis -- with six of 
the country's eight auto manufacturers reporting losses last 
year -- none is clamoring for a bailout.  The GOJ has adopted 
an incremental approach to assist the auto industry with key 
meaures falling into two categories:  initiatives aimed 
directly at auto manufacturers and other, more broadly 
focused relief measures.  Given the protracted budget debates 
in the Diet, it remains uncertain what final form these 
measures will take, if approved at all.  End Summary. 
 
¶2.  (U)  The following points are responses keyed to the 
requests in ref A.  Refs B - G contains previous post 
reporting on auto and related issues. 
 
¶3.  (U)  Auto Sector-Specific Initiatives 
----------------------------------------- 
 
-- Tax breaks for environmentally-friendly vehicles: 
 
Lawmakers in the Diet continue to deliberate on proposals to 
lower the National Tonnage Tax and the prefectural-level 
Automobile Acquisition Tax, two of the nine levies on new 
vehicle purchases, by April 2009.  Reductions could range 
from 50 to 100 percent on next-generation vehicles (e.g., 
fuel-cell, plug-ins, hybrids), depending on the level of fuel 
efficiency and emissions.  Hybrid and electric car purchases 
would be exempt from the more substantial Automobile 
Acquisition Tax, which typically equals five percent of the 
cost of the vehicle. 
 
-- Funding for next-generation vehicles and fuel cells: 
 
In the FY09 budget which the Diet is now considering, the 
Ministry of Economy, Trade, and Industry (METI), in line with 
the GOJ's goal for next-generation vehicles to constitute 
half of new auto sales by 2020, proposes 29.7 billion yen 
($292 million) to introduce and develop next-generation 
vehicles and fuel cells.  The proposal includes 5.3 billion 
yen ($58 million) for the introduction of clean-energy 
automobiles, including plug-in hybrids, Clean Natural Gas 
vehicles, and accompanying infrastructure such as charging 
stations.  The METI's budget request also includes 800 
million yen ($8.8 million) in new funding for non-feedstock 
bio-ethanol production and three billion yen ($32.8 
million) for fundamental research on innovative battery 
technologies. 
 
¶4. (U) Non-Specific Industry Initiatives 
---------------------------------------- 
 
-- Fund infusions and government-backed capital stakes: 
 
The Cabinet recently approved revision of the Industrial 
Revitalization Law.  The amended law would allow the 
Development Bank of Japan (DBJ) to take non-voting preferred 
equity in both financial and non-financial firms.  The DBJ 
can provide up to 1.5 trillion yen ($16.4 billion) in 
guarantees covering 50 to 80 percent of any losses, which 
would be offset through public lender Japan Finance 
Corporation (JFC). 
 
 
TOKYO 00000345  002 OF 002 
 
 
-- Emergency financing: 
 
The Japan Bank for International Cooperation (JBIC) announced 
emergency financing, loans and debt guarantees in December 
2008 to companies faced with tight restrictions on access to 
credit in developed countries.  The Cabinet-approved 
temporary measure stipulates the "competent minister in due 
course" will identify which industries are having 
"significant difficulties... maintaining their international 
competitiveness due to the global financial turmoil."  The 
media report Nissan intends to request 50 billion yen ($54.7 
million) in low-interest JBIC loans. 
 
-- Financial support for overseas subsidiaries: 
 
Nippon Export and Investment Insurance (NEXI) began offering 
working capital, commercial risk coverage, and liquidity 
support for Japanese overseas subsidies in January 2009. 
Honda representatives told emboffs it might apply for the 
JBIC and NEXI programs (ref B). 
 
-- Wage subsidies: 
 
The Ministry of Health, Labour and Welfare (MHLW) offers a 
wage supports for companies whose production and employment 
volume have dropped by a specified amount.  The program aims 
to prevent lay-offs by paying a portion of workers' wages or 
training costs during production suspensions.  Mazda 
reportedly plans to apply for help under this program. 
 
-- Employment support for SMEs: 
 
The GOJ's first supplemental budget for FY08 includes 6.94 
billion yen ($75.9 million) in employment support for SMEs. 
This figure breaks down to 4.5 billion yen ($49.2 million) to 
help SMEs affected by high raw material prices retain workers 
and 2.5 billion yen ($27.4 million) to create jobs in areas 
with the highest unemployment. 
 
-- Commercial paper purchases: 
 
The Bank of Japan (BOJ) announced January 22 it will purchase 
up to three trillion yen ($32.8 billion) in commercial paper 
(for large enterprises) and asset-backed commercial paper 
(for small and medium-sized enterprises). 
 
-- Purchases of ailing stocks: 
 
The BOJ announced February 3 a plan to purchase up to one 
trillion yen ($10.9 billion) in bank shares to reduce stock 
market-related exposure risks.  Under the plan, the BOJ would 
initiate bank-held share purchases through the end of April 
2010 and hold them through the end of March 2012.  The BOJ 
would purchase stocks of listed companies at market prices 
based on approval by the Minister of Finance and Financial 
Services Agency Commissioner. 
ZUMWALT