Were it not for Nepal, new banknotes that went into circulation with much fanfare on July 3 might never have got printed.

The 1,000-, 5,000- and 10,000-yen banknotes issued by the Bank of Japan feature 3-D holographic portraits, the first design change in 20 years.

Since 1879, “mitsumata” (Oriental paperbush) has been used to print banknotes, according to the National Printing Bureau (NPB).

The deciduous shrub native to the Himalayan region also grows in Okayama and Tokushima prefectures, and elsewhere in Japan, and is used in the production of traditional “washi” paper. However, domestic output is declining.

“We thought we were the ones supporting (the cultivation), but actually, it is mitsumata from Nepal that supports our banknotes, which obviously are crucial for Japan’s economy,” said Tadashi Matsubara, who is integral to the story of Nepal’s connection with Japanese money.

The 62-year-old Matsubara is president of Kanpou Inc. in Osaka’s Nishi Ward, which was founded in 1921.

As its name suggests, the company’s core business is to sell government publications such as “kanpo” gazettes, white papers and statistical handbooks.

In 1990, Kanpou set up a program to support the cultivation of mitsumata in Nepal, some 5,000 kilometers from Japan, to ensure the NPB has a sufficient supply to produce banknotes.

One of the reasons the company got involved with mitsumata cultivation was that the president at the time had participated in a volunteer project to dig wells in farming villages in Nepal.

The plant also flourishes in the South Asian country and is used as a raw material for paper production.

With the domestic supply running low in Japan, Kanpou was encouraged by members close to the NPB to see if it could turn mitsumata cultivation into a profitable business.

Nepal, with its spectacular “roof of the world” landscape, is mostly mountainous.

But there are many areas with well-drained soil and plenty of sunlight, ideal conditions to cultivate mitsumata.

No fancy equipment is needed to grow and process the plant, which is harvested during the winter off-season, giving locals an opportunity to earn extra income.

In 1997, Kanpou founded a local subsidiary in Nepal to nurture producers.

The company has also been providing guidance on how to steam the branches and peel the bark after harvesting.

Initially, the project was really more of a social contribution activity than a business, Matsubara said.

Feeding Japan’s appetite for banknotes requires around 100 tons of mitsumata each year, but Nepal’s maximum annual production capacity stood at approximately 30 tons.

The project remained unprofitable while it failed to meet the production scale.

A turning point came in November 2014 during a Kanpou shareholders meeting when stockholders lambasted Matsubara and other management members, saying that they should pull out of the money-losing business.

The president replied that he would scrap the project if there was no prospect of turning it around within three years.

But actually, he was confident.

Matsubara knew full well the business was unprofitable due to a production shortfall, which meant the company lost out on numerous opportunities to win contracts from the NPB through bidding procedures.

But he also had an ace up his sleeve. Matsubara also knew he had a chance if he could up production to about 60 tons a year.

Kanpou became eligible for assistance from the Japan International Cooperation Agency in 2016, and the company immediately increased production areas in villages in eastern Nepal close to the border with India, in addition to those near Katmandu where the local subsidiary is based.

The company also focused on improving quality.

Because banknote production requires high-quality mitsumata, which is traded at high prices, the difference in the price can be several times greater.

In Japan, the total volume of mitsumata harvested in major production areas varies from year to year, ranging from 43 tons in fiscal 2018 to 12 tons in fiscal 2021. The unstable supply made it difficult to meet demand for producing banknotes.

Matsubara decided that profitability could be improved if high-quality mitsumata was produced in Nepal on a stable basis.

The president and other members of the company visited production areas in Nepal several times a year for up to a month at a time to instill technical expertise among growers.

Their efforts bore fruit, and the total volume of mitsumata harvested in Kanpou-related production areas drastically increased to around 96 tons in 2023 from about 34 tons in 2014.

Many producers were severely affected by the powerful earthquake that rocked Nepal in 2015, but the cultivation business also provided a precious source of income that supported their livelihoods.

Kanpou’s side business returned to profitability.

In 2026, the United Nations is expected to remove Nepal from its list of least developed countries.

When Matsubara shows Japanese banknotes made from mitsumata and other materials, Nepalese producers are surprised at how durable they are, the president said.

“Everyone works with pride in doing this job,” he said, adding that he is looking forward to showing them the new bills next time he visits Nepal.