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Japan to set up 

massive fund for 

scientific research

By Suvendrini Kakuchi for University World News

Japan is setting up a massive new fund to increase public financing for scientific research, even as the country is struggling to contain the third wave of COVID-19 infections, according to an announcement last month. The pandemic has exposed the country’s lack of long-term and stable funding of research, experts said.

Referred to as the University Fund, the endowment fund is projected by the government to reach JPY10 trillion (US$95 billion) over time, which, if achieved, would make it one of the world’s largest endowment funds to support science research. It is expected to start investing in 2022.
The government said the new fund under the Japan Science and Technology Agency, but professionally managed to achieve gains from the stock and bond markets, would invest in internationally competitive research and shared facilities for universities, increased R&D infrastructure for universities to scale up research, and a national innovation ecosystem.
It will help halt a slide in Japan’s research performance and in international university rankings. Japan fell to 11th in the world from fourth over the last two decades in the number of top-level academic papers published, according to the Cabinet Office.
The fund will also help increase the number of doctoral students in R&D, as one of its aims.
The government is currently also awaiting approval from the Diet or Japanese parliament to extend JPY2.4 million (US$23,000) annually to doctoral students for living expenses. That proposal is aimed at reversing a decline in the number of PhD students, which is seen as hindering progress in scientific research. In contrast to their Western counterparts, Japanese students do not receive public grants.
According to the Ministry of Education, a total of 70,000 students are currently enrolled in doctoral courses, of which over 60% are in the medical and biological sciences. Almost 15,000 students do not have access to any funding.
Government seed money
The government will allocate JPY4.5 trillion (US$43 billion) in the third supplementary budget in fiscal 2020 as seed money for the fund, to be distributed from fiscal 2021 starting in April this year.
It will mostly be funded by government debt and sales of government gold reserves, but the ministry also envisages funds from the universities themselves and the private sector paying into the professionally managed University Fund administered by third-party asset management companies.
Japan’s leading financial daily the Nikkei projected a 3% annual return once the fund management programme is on track.
According to a Ministry of Finance document, the fund will have a similar investment portfolio to the Government Pension Investment Fund – one of the world’s largest, with a 3%-4% annual return, although some in the finance sector see this as ambitious for a university fund.
The national decline in the international competitiveness of Japanese research in science and innovation is often linked to official policy enacted in 2004 that expected universities to raise their own funding.
The fund’s investors will be the government, the financial sector and universities – but with a reduced risk for universities, according to a Finance Ministry document seen by University World News. The document emphasises proper risk management of the fund and pledges transparent monitoring by independent bodies.
The Ministry of Finance said it envisages universities eventually managing their own funds with the endowment fund also targeting university reforms, specifically more efficient management systems to increase financial independence from government and increasing collaborations with the private sector to produce joint ventures.
Some Japanese universities have invested in securities in the past, but many suffered losses due to stock market fluctuations and poor bond return rates in recent decades. Kyoto University and Osaka University have their own independently managed endowment funds worth over US$2 billion each.
Harvard University’s endowment fund, valued at almost US$50 billion, is the world’s largest individual university endowment fund, distributing US$2 billion in the fiscal year ending 30 June 2020.
In Asia, Singapore set up a national endowment fund to benefit universities known as the Singapore Universities Trust 10 years ago to provide some US$4 billion to universities each year over 20 years. The National University of Singapore has its own endowment fund worth US$4.42 billion in 2019, currently the largest in the Asian region, while other universities in Singapore have smaller endowment funds.
Mixed response
However, there has been mixed response to the new pledges. “The coronavirus crisis has showcased the lack of long-term and stable public support for the research sector in Japan. While funding is important, there is a more pressing need for sustainable strategies,” said Kouichi Morita, dean of the Institute of Tropical Medicine at Nagasaki University.
For example, the university’s subsidies for the Vietnam virus research centre, part of the Japan Initiative for Global Research Network on Infectious Diseases (J-GRID), was going to be halved.
“The government of Japan has been supporting the communicable disease research programme in Vietnam for many years. Research topics include not only anti-virus research but also bacteriology, epidemiology, entomology, etc,” Morita told University World News.
“During the past years, the government reduced all [research] funding, and this communicable disease programme was no exception. Last year, they were determined to halve the funding for the J-GRID programme in 2020 before the emergence of COVID-19,” he said.
Morita benefited from a special JPY50 million (US$476,000) grant in February 2020 to research COVID-19 vaccine development support, which included 10 researchers in six institutions, including the University of Tokyo for research in China, Osaka University for research in Thailand and Hokkaido University for COVID-19 analysis and other research in Zambia.
Masanori Baba, head of the Center for Chronic Viral Diseases at Kagoshima University and a leading researcher of anti-viral drugs, recently received new grant funding from the government for coronavirus and public safety research. But he has long struggled with a low budget and a small team – comprised of only two full-time members and a pharmaceutical science researcher who has a three-year contract ending in a few months.
Researchers also say they worry that public grants – on average extended over 3 years – do not support competitive long-term results. The increase of funds in 2020 meant they can only focus on ‘hot topics’ such as the ongoing coronavirus pandemic.
“Government policy during the past few years responded to research only during a crisis and narrowly focused on raising the international rankings of universities,” explained Masanori Okada, an expert on university governance and administrative law at Waseda University, adding that it amounted to government interference in higher education research if government funding directs research themes.
Researchers point to the case of 2012 Nobel Laureate, stem cell biologist, Shinya Yamanaka, a professor at Kyoto University who discovered iPS cells (induced pluripotent stem cells) for regenerative medicine. Stuck without long-term public funding, Yamanaka’s joint medical research with 2018 Nobel Prize winner Tasuku Honjo is largely supported by a private JPY10 billion grant announced in June 2020 by Fast Retailing Co, operating Uniqlo, an apparel company.
In media interviews, Yamanaka has frequently called for a public system that rewards scientists for sharing knowledge and discoveries and has also warned that the pandemic will not be defeated without this.
Support for doctoral students
While the Diet is debating stipends for doctoral students, an official, who declined to be named, explained that, with government budgets so tight, the new allowances for PhD students will be a mix of public and university income.
Baba, one of the few Japanese experts on anti-HIV viral compounds, on which he is basing his COVID-19 research, who is also vice-president of Kagoshima University, explained that academics had little time for research in addition to their administrative duties.
“More than 90% of medical graduates shun research positions due to financial constraints. As a result, it is very hard to expand,” he told University World News, adding that he welcomed stipends for doctoral students.
University World News Asia Editor Yojana Sharma contributed to this article.