Cool Japan Fund Inc., a public-private fund established to contribute to the sustainable growth of Japan’s economy by expanding overseas demand for products and services rooted in Japanese lifestyles and culture, was launched in 2013 under the second administration of Prime Minister Shinzo Abe. It has now reached a decisive crossroads over whether it can continue to operate.

As of the end of March 2026, its cumulative investment totaled ¥158.8 billion. Investments that had been exited generated losses of ¥5.5 billion on an invested amount of ¥59.9 billion, while ongoing investments were subject to impairment losses of ¥25.8 billion on an invested amount of ¥98.9 billion.

Including the Fund’s operating expenses, cumulative losses reached ¥54.0 billion. The Fund therefore failed to meet the “minimum investment performance target” established in 2022, which projected cumulative losses of ¥42.6 billion. The government has consequently decided not to request funding for the Fund under the Fiscal Investment and Loan Program for fiscal 2027.

The failure was caused by a combination of factors, and there is little reason at this stage to be surprised by the Cool Japan Fund’s setbacks. Almost as though it had anticipated this outcome, the Ministry of Economy, Trade and Industry (METI), which oversees the Fund, established a new Study Group on Entertainment and Creative Industries Policy in 2024. In June 2025, it formulated a “Five-Year Action Plan toward ¥20 Trillion in Overseas Sales for the Content Industry.” Then, on August 20, 2026, amid reports that the Cool Japan Fund was to be abolished, METI announced its “Entertainment and Creative Industries Strategy 2026.”

The policy objective is to achieve ¥20 trillion in overseas sales by 2033. To this end, the government intends to bring together the collective expertise of the public and private sectors, consolidate budget implementation, and realize large-scale, long-term and strategic public-private investment. In implementing the strategy, it has also declared its determination to “continuously verify the effectiveness of policies and see them through responsibly until they produce results.” This suggests an ambition to redeem the government’s defeat with the Cool Japan Fund.

There can be no objection to the positive and assertive terms featured throughout the strategy: maximizing the value of intellectual property; tripling private-sector sales and investment; optimizing budget allocations across sectors and value chains; capturing overseas demand for high-value-added products and services; and ensuring that creators receive an appropriate share of the returns.

Nevertheless, as film director Hirokazu Kore-eda has pointed out,*1 creative work is not motivated solely by the prospect of finding a commercially successful formula. Nor can one deny the imbalance created by Japan’s cultural and arts budget, which compares poorly with those of other countries. Cultural expenditure accounts for 0.1% of Japan’s government budget, compared with 0.9% in France and 1.2% in South Korea.*2 Although these figures are from 2020, the overall trend remains unchanged.*3

The financial foundations for preserving, protecting and passing on cultural properties, the arts and the performing arts remain extremely fragile. If Japan truly aspires, in METI’s words, to become “a country that earns through creativity,” what is needed is a strategy for a “sustainable cultural value chain” that extends beyond the boundaries of individual government ministries and agencies.

Before anything else, however, there must be a comprehensive review of the Cool Japan Fund—what went wrong, why it happened and what lessons should be learned.

*1: Material 10 presented at The Second Meeting of the Public-Private Council on the Content Industry, April 2, 2026.

*2: Comparative Survey and Research on Cultural Policies in Other Countries, conducted under the fiscal 2020 Research Program on Cultural Administration.

*3: Japan’s cultural expenditure for fiscal 2026 totals ¥129.7 billion: ¥107.3 billion allocated to the Agency for Cultural Affairs and ¥22.4 billion distributed to the Agency from the International Tourist Tax. This represents 0.1% of the national government’s General Account budget.

 

Takashi Mizukoshi, the President
This Week’s Focus, August 23 – August 27, 2026