Major banks, trading companies and other firms in Japan will jointly establish a company in the hope of increasing overseas orders for Japanese shipbuilders, according to industry sources.
The new company will assist the shipbuilding industry financially in various ways. For example, special loan schemes will be introduced to encourage shipping companies, mainly those from emerging economies in Asia, to buy Japanese-made ships.
As an initial step, about 20 major shipbuilders, including Mitsubishi Heavy Industries Ltd. and IHI Corp., will jointly establish the company, tentatively named "Nippon Senpaku Toshi Sokushin," by the end of the month.
The company will be capitalized with about 80 million yen, and Japanese mega-banking groups, the Development Bank of Japan and trading firms will make additional contributions. It will remain in operation for only three years.
The new company will offer low-interest long-term loans to overseas shipping companies.
The loans will not require an initial payment to shipbuilders. Usually, about 20 percent of loans received by shipping companies must be paid up front to shipbuilders.
In the new loan program, the Japanese shipbuilding industry will shoulder the initial payment on behalf of their clients. The remaining 80 percent will be provided as a low-interest loan from financial institutions.
The scheme is expected to help Japanese shipbuilders win contracts from foreign shipping companies, which seem hesitant to buy Japanese-made ships due to financing concerns.
According to the Land, Infrastructure, Transport and Tourism Ministry, many Japanese shipbuilders are unlikely to have any pending orders in 2014.
Japanese shipbuilders once boasted the world's largest building tonnage and advanced technology in fuel efficiency and other fields. But now they are at a great disadvantage because of price wars with Chinese and South Korean rivals and the yen's appreciation.
In 2011, the total tonnage of Japanese shipbuilders' export contracts fell about 20 percent from the previous year to 8.96 million tons, or one-third that of five years ago.