Japan to set up 150 bln yen fund to encourage innovation -draft

TOKYO Mon Jan 7, 2013 12:31am EST

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TOKYO Jan 7 (Reuters) - Japan's government will set up a 150 billion yen ($1.7 billion)lending scheme to encourage firms to develop new technologies and collaborate on new business lines, according to a draft of a stimulus package expected to be approved as early as this week.

The Development Bank of Japan (DBJ), a state-backed lender, will administer the lending scheme, a draft of the stimulus measures showed on Monday, as Prime Minister Shinzo Abe tries to spur corporate investment and kick-start the economy.

The government will set aside 100 billion yen for the scheme with the DBJ in an extra budget, and the state-backed lender will use its own capital for the remaining 50 billion yen, the draft showed.

The stimulus package will also establish a 200 billion yen fund with the Japan Bank for International Cooperation (JBIC), another state-sponsored lender, to encourage overseas mergers and acquisitions, the draft showed.

Government expenditure for the scheme with JBIC will total 70 billion yen. Lending from JBIC and private-sector banks will account for the remaining 130 billion yen, the draft showed.

The stimulus package will also include 83 billion yen in loan guarantees and low-interest-rate loans for small firms, the draft showed.

Abe has made reviving the economy top priority after voters returned his Liberal Democratic Party to government last month after spending three years in the opposition. ($1 = 88.0400 Japanese yen) (Writing by Stanley White; Reporting by Yuko Yoshikawa; Editing by Simon Cameron-Moore)

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