The rate of actual Japanese investment forming part of a US$550 billion (RM2.32 trillion) US fund could be higher than the 1% to 2% initially cited, Japan’s top negotiator Ryosei Akazawa said in a live television interview on Wednesday.
During the interview with TV Asahi, he pointed out that the US may not be able to get Japan’s investment unless they keep their promises, as he explained the details of the fund which forms a crucial pillar of the Japan-US trade deal agreed late July. Japan had said that the bulk of the US$550 billion US fund will be loans and loan guarantees, with only 1% to 2% deployed as investment.
“If we follow past patterns, investment would be 1% to 2%, but if the US side takes on more risk for example, we could increase that rate,” Akazawa said. Flicking at the existing discrepancies between the US and Japanese descriptions of the US$550 billion vehicle, “we will likely end up having something that’s in between”, he said.
Akazawa’s comments are likely to be seen as a slight change in tune as differences remain between the Japanese and American rhetorics on the deal and the fund. The agreement first announced by US President Donald Trump had caused confusion as disparity in the finer details of the agreement came to light.
Japan has said that the US$550 billion investment framework is a combination of investments, loans and loan guarantees provided by government-backed financial institutions. Of the total, investment will comprise up to 2% and the US and Japan will split the profits of that investment at a ratio of 90-10.
That explanation has diverged with how Trump describes the fund. Last week, he called the package a “signing bonus” much like that of a baseball player and claimed: “It’s our money to invest as we like.”
Akazawa in turn sought to temper that expectation, saying that the investments will be made when it is also beneficial for Japan.
Other questions, including who will be funding the bulk of the package and in what specific time frame remains unanswered. It is also still unclear whether previous investment pledges by Japanese companies, such as SoftBank Group Corp’s promise to invest US$100 billion over the next four years and Nippon Steel Corp’s US$11 billion investment by 2028, will be considered as part of the deal.
Akazawa also said it would not be bad timing for Trump to sign in the next executive order on the trade deal by around mid-September. Despite an agreement reached mid-July, a reduction of the auto levy to 15% and a clarification that a universal 15% levy is not stacked on top of current rates has not yet been signed into effect.
According to Akazawa, the US has agreed to sign in the new rates, but the timing of when they will come into effect remains unclear.
Source: theedgemalaysia