World Economy

Japan Pension Fund Planning Investment in US Infrastructure

The GPIF was managing around $1.19 trillion as  of the end of March last year.The GPIF was managing around $1.19 trillion as  of the end of March last year.

Japan plans to use its public pension fund to invest in US infrastructure development, a source from the government said. 

The investment drive is part of a wide-ranging policy package Prime Minister Shinzo Abe is expected to present to US President Donald Trump during their highly anticipated summit in Washington on Feb. 10, Kyodo reported.

Without citing sources, the Nikkei business daily said the Government Pension Investment Fund, the world’s largest, will buy debt issued by US companies to fund the vast spending program.

In addition to infrastructure, it is hoped the package will lead to the creation of hundreds of thousands of US jobs in projects related to artificial intelligence and robotics, according to people familiar with the matter.

Trump has pinpointed infrastructure as an issue of concern, signing an executive order on Jan. 24 to fast-track the approval process for high-priority projects.

After investing heavily in Japanese Government Bonds, GPIF has been diversifying its asset portfolio since 2014 as part of the Abe administration’s economic plan, which saw it jump into the stock market.

But GPIF President Norihiro Takahashi denied that the US investment plan is part of government-ordered economic policy. “The GPIF is making investments, including in infrastructure, from a long-term view chiefly for the interest of pensioners, and there will be no change in our principle,” he said. “We won’t make changes to our investment portfolio in response to government instruction.”

Fund spokesman Shinichiro Mori echoed Takahashi. “We do invest in infrastructure projects from a purely investment point of view, but we never, ever, make an investment decision as part of government economic measures,” Mori said.

Government spokesman Yoshihide Suga took a similar line. “The GPIF makes decisions on a regular basis to bring benefits to those enrolled in it,” Suga told a news conference.

The pension fund, which was managing around ¥135 trillion ($1.19 trillion) as of the end of March last year, appears to have significant leeway to invest in US infrastructure without altering its principles.

The fund had invested ¥800 billion in overseas infrastructure as of March 2016. Its investment principals allow it to invest up to 5% of its total—around ¥7 trillion—in the category.

Meanwhile, a diplomatic source said that Tokyo and Washington plan to form a new framework for ministerial-level dialogue to coordinate policy on economic, trade and security issues.

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