Photo/Illutration A bullet train station is planned in this area of Dallas, Texas. (Yuko Lanham)

A Japanese public-private fund that helps companies invest in overseas infrastructure projects reported a loss of 79.9 billion yen ($500 million) for fiscal 2023 largely because of failures in Myanmar and Brazil.

Including previous losses, the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) is now 95.5 billion yen in the red.

JOIN was established in October 2014 as a public-private fund. But the private sector holds only 2 percent of its capital.

JOIN is nearly a wholly owned subsidiary of the central government, meaning that billions of yen in taxpayers’ money is lost.

As of the end of March this year, JOIN has provided investments or loans worth a total of 256.1 billion yen for urban infrastructure, new ports and other projects in developing countries.

According to JOIN, around 40 percent of this amount is now unrecoverable, a level unprecedented for a government-related fund.

In Myanmar, an urban redevelopment project called Y-Complex was suspended because of the military junta’s coup that started in February 2021. This resulted in a loss of 41.7 billion yen for JOIN.

A much-delayed bullet train construction project in the U.S. state of Texas incurred a loss of 41.7 billion yen.

JOIN also appears unable to recover its investment for a railroad project in Brazil.

JOIN’s management plan had earlier projected its accumulated deficit at the end of March at 16.6 billion yen. Under the plan, JOIN would return to the black in fiscal 2027, and the entire deficit would be eliminated in fiscal 2031.

But with losses piling up at an unexpected rate, the prospect of achieving the plan’s targets is hopeless.

Funds gained through investments would normally be paid into the national treasury. But this money now appears lost, and the public will effectively bear the burden.

The central government has stated it will conduct a fundamental review of JOIN’s organizational structure and other things if there is a significant discrepancy between JOIN’s revenue plan and the actual results.

The infrastructure ministry, which has jurisdiction over JOIN, has set up a panel of experts for the review. Investments in new projects will be suspended until the panel reaches a conclusion by the end of 2024.

The administration of Shinzo Abe established public-private funds as pillar of its economic growth strategy.

However, nine of the 15 major funds, including JOIN, had accumulated losses as of the end of March 2023.

JOIN’s 95.5-billion-yen loss is the largest reported among the major funds, far exceeding the loss of 39.8 billion yen posted by Cool Japan Fund Inc., which is under the jurisdiction of economy ministry.

The Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value-chain and Expansion Japan has racked up 16.2 billion yen in losses. This awkwardly named fund under the jurisdiction of the agriculture ministry will be abolished.

For many money-losing projects involving JOIN, joint venture partners, such as West Japan Railway Co. (JR West), had reported losses more than a year before JOIN.

The fund had delayed announcing the business failures to the public.

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