3rd Supplementary Budget Measures for SMEs

2011 December 26, Tsukuba Center Inc., Tsukuba

This post contains notes of a briefing seminar held for small and medium enterprises (SMEs) regarding measures contained in Japan's 3rd supplementary budget for recovery from the 3/11 Tohoku earthquake.

The National Federation of Small Business Associations (http://www.chuokai.or.jp/) is administering the programs described below. The deadline for applying for all programs is 20 January 2012.



The budget contains funding in 8 categories:

1. Global technology alliances and start-ups: 
1. General
2. Global technology alliances and start-ups: Start ups
2. Disaster recovery funding relating to agriculture, commerce and manufacturing.
1. Agriculture-commerce-industry alliances
2. Inter-industry alliances
3. Local resource development
• Alliance not required
4. Industrial alliances to strengthen manufacturing base
3. Assistance for developing domestic and international marketing channels
4. Regional economic development assistance - "Cool Japan" marketing assistance for traditional products from disaster areas

Today's is last in a series of briefings held across Japan.

1. Global technology alliances and start-ups: 
1. National program not restricted to disaster recovery but expected to contribute at least indirectly to disaster regions.  But applying alliances must have at least one member from disaster area.
2. Under Japan's SBIR administration
2. Disaster recovery funding relating to agriculture, commerce and manufacturing.
1. This is strictly related to disaster recovery. Proposed business must be related to disaster area.
3. Assistance for developing domestic and international marketing channels
1. Not strictly related to disaster recovery but expected to contribute at least indirectly to disaster regions. Applicants from disaster area can use funds to develop both domestic and international marketing channels. Applicants from outside area can use funds only for international marketing channels.

Funding levels:

1. Global technology alliances and start-ups: 
1. Up to 2/3 of proposed effort 
2. Upper limit 50 million yen.
2. Disaster recovery funding relating to agriculture, commerce and manufacturing.
1. Full funding
2. Up to 30 milllion yen
3. Assistance for developing domestic and international marketing channels
1. Full funding for disaster area companies
2. Up to 2/3 for others
3. Maximum 20 million yen
4. Regional development assistance for traditional products
1. To be determined
2. No funds for personnel costs

Local resources - e.g., tourism development

- New products & services based on local raw materials. For example, new products using rice or soba from disaster areas. New products using raw materials from outside disaster area not eligible.

Impression: Heavy emphasis on alliances may be needed to fit to existing policy frameworks. This means no programs from scratch, and will use existing administrative machinery, rules and regulations.

Applications must be from alliances containing at least 3 companies. Applicants must provide list of shareholders and investors to prevent same set of directors setting up 3 front companies when effectively only one entity. Not mentioned, but this helps in excluding organized crime.

Subsidies go to personnel costs. A company that joins an alliance to provide know-how, but doesn't need to hire will not receive personnel subsidy.

In applying, one company represents the alliance, but subsidies will be paid directly to alliance members and not go through representative company.

Large companies can participate in alliances but cannot receive subsidies.

Not all members of alliance must be in disaster area, but representative company

Proposals should treat new product development through market development together. Proposals covering only part of process will receive lower priorities. For example, proposal to take a developed product to trade show not likely to be funded. This doesn't mean that this entire process must be done within the proposal. But the proposed business plan should show the full process.

Product development requirement may be because this is funded through METI. For example, a proposal for developing a marketing channel for daikon would possibly fall under MAFF.

This program is butting up against fiscal year laws. This supplementary budget is for Fiscal 2011, which ends 31 March 2012. Because government cannot promise Fiscal 2012 funds before they pass the Diet, there is a possibility that adopted proposals will be reviewed again after 1 April 2012.

To match fiscal years, proposals will be divided into 4 quarters with the proposed effort to be completed by 31 December 2012, i.e., 1st quarter is 1 January - 31 March 2012.


Questions from floor

Can patent research be a "partner" under start up category? Answer: yes

Can NPOs apply? Answer: NPOs are not under SME law so cannot apply.