Japan eyes trade insurance coverage of losses linked to COVID-19

The government is planning to provide trade insurance coverage of Japanese companies’ overseas losses linked to the COVID-19 pandemic, according to informed sources.

The government is also aiming to submit a related bill to revise the trade insurance law during the ongoing parliamentary session in mid-February and put the revised law into force at an early date this year, the sources said Wednesday.

The envisioned measure is expected to cover additional costs at Japanese businesses overseas amid the pandemic, including those caused by lockdowns.

The costs are expected to include payments to workers over halts in plant construction projects, according to the sources.

The ceiling for insurance payouts and other details will be decided later.

The existing law limits trade insurance payouts to those covering losses incurred due to war, revolution or insurrection outside Japan.

The planned bill will also call for lifting the ban on investment by the government-backed Nippon Export and Investment Insurance (NEXI) in international financial institutions, with a view to securing opportunities for Japanese companies to grow.

Specifically, the government eyes NEXI investment in a trade insurance organization in the African region to collect local information and support collaboration between Japanese companies and their partners there.

Initially, the government planned to submit the bill during last year’s ordinary parliamentary session. It dropped the plan, however, after it was revealed that NEXI engaged in inappropriate investment practices.

It came to light that NEXI had possessed bonds issued by foreign companies in violation of ministry ordinances. The organization later compiled measures to prevent any recurrence of the misconduct, including by conducting a thorough internal audit.

Finding that NEXI is implementing the preventive measures properly, the government has concluded that it can now submit the bill, the sources said.