For decades, Japanese culture, from anime to food, has captivated people around the world. Given its global popularity, the scale of the Cool Japan Fund’s losses raises serious questions.\u00a0<\/p>\n
Created in 2013 with strong backing from then-Prime Minister Shinzo Abe, the public-private investment fund was intended to support the overseas expansion of Japanese companies, particularly in Asia.<\/p>\n
By fiscal 2025, the fund accumulated losses of \u00a554 billion (about $330 million), despite investing a total of \u00a5204 billion ($1.2 billion). So what went wrong?<\/p>\n
Under government rules, public-private funds must consider restructuring or closure if they miss their cumulative profit-and-loss targets for three consecutive fiscal years. The Cool Japan Fund has now missed its targets for three years in a row.\u00a0<\/p>\n
The Ministry of Economy, Trade and Industry, which oversees the fund, has established an outside expert panel to review its future and plans to decide by the end of this year.<\/p>\n
The fund recorded its first annual profit in fiscal 2024 but fell back into the red the following year, pushing cumulative losses far beyond expectations.\u00a0<\/p>\n
One major setback was the collapse of Spiber, a Yamagata Prefecture-based startup developing bio-based materials. The company received about \u00a514 billion ($85 million) from the fund before entering private restructuring after becoming insolvent.<\/p>\n
Lessons for Future Investment<\/p>\n
The administration of Prime Minister Sanae Takaichi has identified 17 strategic sectors for public-private investment, aiming to mobilize \u00a5370 trillion ($2.25 trillion) by fiscal 2030 to strengthen economic growth and national security.\u00a0<\/p>\n
These include content industries such as games and anime, where \u00a533.7 trillion ($205 billion) in investment is planned.<\/p>\n
As these initiatives move forward, the government cannot afford to repeat the mistakes of Cool Japan. Officials must determine who was responsible for the losses, identify why investments failed, and ensure those lessons are reflected in future policy.<\/p>\n
A Need for Greater Oversight<\/p>\n
Cool Japan is not the only government-backed fund facing difficulties. According to the Board of Audit of Japan, 14 of the 23 public-private funds supported by the government had accumulated losses as of the end of fiscal 2023.<\/p>\n
One of them, the Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value-chain and Expansion Japan, was deemed unable to recover and was dissolved at the end of March this year.<\/p>\n
Public-private funds are designed to encourage private investment by providing government-backed risk capital. However, a series of failures has raised concerns over the rigor of investment decisions. The review of the Cool Japan fund should be used as an opportunity to reconsider the role of public-private funds and establish clearer rules for how they should operate.<\/p>\n