Japan to inject public funds into companies

Japan will provide public funds to companies to help them through the global economic crisis, widening a rescue plan beyond the banking sector, the trade and industry ministry said today. The scheme "will allow the injection of public funds into companies outside the financial sector," a ministry spokesman said. "The plan would ensure companies operate smoothly. We are looking to see which companies will be eligible for the funds. They may include companies that have ties to local economies," said another official. Details of the scheme were sketchy but the government is reportedly planning to use the public funds to buy shares in ailing companies through the Development Bank of Japan and other organisations. In order to secure financial aid, firms may be required to show how they plan to boost earnings within three years. The news cheered investors. The benchmark Nikkei index was up 4.0 per cent in early afternoon trade, extending an early rally. Japanese companies have been hit hard by the global economic downturn, which has pushed Asia's biggest economy into its first recession in seven years. Japan's parliament approved a new law last month allowing the government to pump public funds into banks.