Almost half of Japan’s cities, towns and villages and their malls and shopping streets are preparing shopping coupons that offer up to 20 percent in premiums, hoping beneficiaries of the ¥2 trillion cash handout program will spend the money there.
Municipal governments as of March 1 are planning to subsidize gift vouchers that will be issued at local stores. The coupons can be used only at the stores in a bid to spur private consumption and revitalize regional economies.
“The cash benefit program will be a landmark event. We rarely have such an opportunity, so we’d like to cash in on the scheme,” said Yoshitaka Kaneko, managing director of the Nakano Broadway shopping mall in Nakano Ward, Tokyo.
The handouts amount to ¥12,000 per person, plus ¥8,000 for people aged 18 or younger or 65 or older.
Nakano Ward plans to subsidize coupons bearing a 10 percent premium worth ¥550 million. It started a campaign Wednesday to promote the vouchers. One set with a face value of ¥11,000 will go on sale April 11 for ¥10,000.
Kaneko said the Nakano Broadway mall, which has about 300 shops and is known for drawing many “otaku” (geeks), has seen shoppers decline since late November as the economic slump worsened.
Noting that about ¥4.5 billion in cash will be provided to the ward’s citizens, Kaneko hopes at least one-third will be spent locally.
“We are in a recession, but it is meaningless to keep complaining. We should create a festive atmosphere with this cash benefit and change our attitude,” he said.
Yoshinori Hamamoto, head of a shopping mall in the Nakano area with some 120 stores, expects the 10 percent premium coupons will encourage shopkeepers to regain confidence and try innovative sales strategies.
Hugely unpopular in opinion polls, analysts doubt the cash benefit program will provide much lift to the economy. But Hamamoto expects that once the money is distributed, people will spend it.
“We are considering a bargain sale and will make the coupons available even at pubs and as offerings at a temple,” he said.
The city of Kumagaya, Saitama Prefecture, will back efforts by local shopping malls to issue gift vouchers with a total face value of ¥880 million starting May 15.
The coupons will have a 10 percent premium and the city will shoulder ¥80 million and other necessary expenditures of ¥30 million, including the costs of printing the gift certificates.
A Kumagaya official said he believes the scale of the coupon project is quite big compared with other municipalities and expressed hope the vouchers will be used for a wide range of purposes, including water works and housing renovation.
The vouchers being prepared in Shiojiri, Nagano Prefecture, will offer a 20 percent premium. The gift certificates, with a total face value of ¥200 million, will go on sale April 11, with the city shouldering 70 percent of the premium and local shopping malls 30 percent.
“We decided to put a 20 percent premium on the coupons because it will be difficult to generate economic ripple effects if the ratio is the same as other areas,” a city official said.
“Even though the city will bear some financial burden, we believe coupons with a 20 percent premium will have considerable economic effects. The vouchers may be sold out soon,” he said.
Hideo Kumano, chief economist at Dai-ichi Life Research Institute, said that even though the government is forecasting the cash benefit program to push up real gross domestic product by only 0.2 percentage point in fiscal 2009, “proactive efforts” by municipalities could boost the scheme’s economic effects.
Kumano noted the recent success story of Taiwan, where a consumer voucher plan worth some 85 billion New Taiwan dollars introduced in January to coincide with Chinese New Year’s led to an upward revision of the island’s projected GDP growth.
“It will be indispensable to keep the ratio of savings to cash handouts as low as possible and spur new spending,” Kumano said. “To that end, the private sector has to use its ingenuity and come up with many ideas. Otherwise, the economic effects will be limited.”