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A Strategy Council for Utilization of Benchmarks for Local Companies is to be Established

On Thursday, April 14, 2016, the Ministry of Economy, Trade and Industry (METI) will establish a Strategy Council for Utilization of Benchmarks for Local Companies for the purpose of utilizing “local benchmarks” (benchmarks for local companies) as a tool for conducting business diagnoses, studying feedback from businesses, and further examining the results. The council will hold its first meeting on the same date.

1. Purpose of the meeting of the Strategy Council for Utilization of Benchmarks for Local Companies

On Friday, March 4, 2016, METI published local benchmarks as a tool for conducting business diagnoses. On the same date, Prime Minister Shinzo Abe held a public-private dialogue and issued instructions to utilize the benchmarks.

In response to the instructions, METI decided to broadly call for officials from related ministries and agencies, personnel from related organizations, including financial institution associations, enterprise associations, and support organizations and experts and to hold a meeting of Strategy Council for Utilization of Benchmarks for Local Companies, aiming to utilize the benchmarks as well as related feedback and further discuss the challenges in improvement. (For participating organizations, see the Appendix (in Japanese).) The council plans to hold about four meetings by the end of FY2016.

2. Outline of the Benchmarks for Local Companies (local benchmarks)

The Benchmarks for Local Companies are tools for conducting business diagnoses and serve as a basic framework for leaders, including company managers, and external entities such as financial institutions, as well as supporting organizations, to understand the financial conditions of companies and to hold dialogues based on common standards. Also, these Benchmarks are expected to be utilized as a gateway to business viability assessments. Specifically, company managers and external entities can understand the business conditions of companies and find out changes in these conditions at an earlier stage by inputting data on financial information (six indexes*) and data on non-financial information (four perspectives**) into a reference tool (software application), so as to facilitate dialogues and provide support at an earlier stage.

*Note 1: Six indexes:(i) rate of increase in sales (whether or not companies can keep securing sales), (ii) operating profit margin (profitability), (iii) labor productivity (productivity), (iv) ratio of EBITDA (earnings before interest, taxes, depreciation, and amortization) to interest-bearing debts (soundness), (v) working capital turnover period (efficiency), and (vi) capital adequacy ratio (safety)

**Note 2: Four perspectives: (i) focus on managers, (ii) focus on parties concerned, (iii) focus on business, and (iv) focus on internal control systems

For further details, see the Japanese language press release.

Release date

April 14, 2016

Division in charge

Industrial Finance Division, Economic and Industrial Policy Bureau

Related Information

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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