The Japanese government plans to start a system this fiscal year under which it will provide living costs of 6.5 million yen ($64,000) per year, for up to two years, for people who quit their companies and start a new business.

By eliminating entrepreneurs’ concern that they will have little income in the early stages of starting up a business, the government hopes to encourage competent engineers and researchers working for major companies to found their own ventures. The government particularly expects that more people will start businesses related to manufacturing, such as robotics, a market that is expected to expand in the future.

Under the system, entrepreneurs would become contract employees of a company affiliated with the New Energy and Industrial Technology Development Organization (NEDO), an independent administrative agency under the jurisdiction of the Economy, Trade and Industry Ministry. NEDO will pay them living costs as a de facto salary. The government will seek applications until Aug. 18 and select about 15 companies with up to three staffers.

NEDO will also provide subsidies of up to 15 million yen per year to make trial products and conduct marketing.

The current government subsidies to support ventures are designated to be used only for research and development projects and other purposes. Entrepreneurs are prohibited from using them for living costs. It has been pointed out that many entrepreneurs have to take subcontract work from major companies, such as research and development projects, to cover immediate living expenses. Consequently, they cannot spend enough time developing their own products.

With such criticism in mind, the government hopes to make it possible for entrepreneurs to concentrate on developing their own products by providing their living costs.

The government will regularly check their business performances, and if it considers their businesses to have no potential, the subsidies will be stopped. The government also will require recipients to use the subsidies for reasonable purposes and not for things like entertainment.

 

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