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The prolonged economic slowdown forced most companies in
the transportation business to suffer declines in both revenue and profit in
FY 1997 and lose business confidence for the immediate future. Their capital
investment plans for FY 1998 posted a 4.9% drop from the previous year. They
have had difficulties raising funds due to banks' reluctance to increase lending
(Figures 38 and Figures 39).
The government is now implementing a record-size comprehensive economic
package worth more than \16 trillion in project value and is planning to form
the third supplementary budget for FY 1998 to expedite an early economic recovery.
The economic stimulus package includes various measures to help small and medium
businesses in the transportation sector. The government has raised ceilings
on credit insurance for small and medium businesses, widened the scope of small
and medium businesses subject to public loans and created tax incentives to
promote such businesses' investment. In employment, the government is taking
advantage of the employment adjustment subsidy system, the employment stabilization
subsidy system for workers changing occupation and other systems to fore-stall
unemployment. The Ministry of Transport under the package is front-loading spending
under the initial FY 1998 budget. It is also promoting the improvement of Narita,
Haneda and other key airports in major urban regions, development of core international
ports, and construction of wider urban railway networks to expand demand mainly
in urban regions (about 60% of public works spending for the Ministry is used
for the three largest urban regions), in order to contribute to economic recovery.
The Ministry has also submitted a FY 1999 budget request that features focused
efficient development oi social capital for transportation to stimulate domestic
demand expansion.
The comprehensive economic package is expected to succeed in putting the
Japanese economy back on track to recovery.
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