Japan links consumer subsidies to purchasing green products

The Japanese government will subsidise consumers purchasing eco-friendly home electronics and cars as part of an additional economic stimulus package to spur domestic demand.

The incentive programmes are aimed at both encouraging eco-friendly production and spurring domestic demand for Japan's electronics and auto industries suffering from sharp falls in sales amid the deepening global recession.

Consumers will receive a refund of up to 5 per cent of their purchases of home electronics  - that include refrigerators, air conditioners and televisions - in the form of "eco-points" if the products meet certain energy-saving conditions, officials said.

The `eco-points' that use public funds, however, cannot be cashed and can only be used to purchase other products.

In the case of TVs, purchase of sets capable of receiving digital broadcasting can earn eco-points equivalent to a maximum of 10 per cent of the purchase price.

The government is also planning to offer subsidies of up to 250,000 yen ($2,507) for purchases of hybrid and other energy-saving cars.

Under the scheme, consumers will be encouraged to scrap cars that are more than 13 years old and buy eco-friendly cars instead. Such purchases will be given a subsidy of 250,000 yen ($2,507) wile purchase of mini vehicles with engines of up to 660 cc will be eligible for subsidy of up to 125,000 yen ($1,254).

Consumers can also avail of a subsidy of 100,000 yen ($1,003) without trading in old cars if they go for an eco-friendly car. A subsidy of  50,000 yen ($501) will also be given for normal cars.

The consumer incentive programmes are expected to run through the current fiscal year ending in March 2010, with the government expecting to boost sales of new vehicles, including trucks, by 690,000 units during fiscal 2009.

The government is seeking an extra budget of 370 million yen in fiscal 2009 to implement the programme for purchasing eco-friendly cars, sources said.

Earlier this week, Japanese prime minister Taro Aso proposed a record 10-trillion-yen fiscal stimulus to combat the financial crisis.

Meanwhile, the subsidiaries offered so far are reported to have failed in boosting Japanese consumption. Subsidiaries for home solar panels are reported to be facing a difficult time luring applicants and, experts say, the government could soon step in to promote solar power industry.