Photo/Illutration A fan takes a photo of a billboard for “Demon Slayer: Kimetsu no Yaiba-- The Movie: Mugen Train,” a film based on the massively popular Japanese manga, at a cinema in Tokyo’s Shinjuku Ward on Oct. 16, 2020. (Tsubasa Setoguchi)

A major public-private fund created a decade ago to promote Japanese culture overseas is on the rocks after racking up a deficit of 30.9 billion yen ($218 million) from investments that did not pan out.

The central government originally created Cool Japan Fund Inc. in 2013 to support overseas sales of cultural products such as anime and Japanese cuisine, and saw it as a potential winner that could drive growth.

But in hindsight, the project looked much better on paper than in practice and performed so poorly that different arms of the government are now at odds over its future.

“Who talks about Cool Japan now? Korean culture took it over,” one senior government official said. “I heard that we are even struggling to sell Japanese anime overseas.”

The Ministry of Economy, Trade, and Industry wants to maintain the fund by throwing it a lifeline that would enable it to turn a profit by fiscal 2025. But the Finance Ministry is weighing merging it with other funds or scrapping it altogether.

The industry ministry presented a new plan to improve the business operations of the fund on Nov. 22 at a meeting of a subcommittee of the Fiscal System Council, an advisory panel for Finance Minister Shunichi Suzuki.

The ministry originally aimed for the fund to become profitable in fiscal 2024, but its new plan will push the deadline to fiscal 2025 because the firms the fund has invested in have underperformed amid the COVID-19 pandemic.

This will mark the second time the ministry will overhaul its plan for the fund, following the first in May 2021, although the Finance Ministry has decided it will merge the fund or eliminate it if it cannot achieve the target in the new plan.

The second administration of Prime Minister Shinzo Abe had regarded the Cool Japan Fund as a key to its growth strategy for Japan and poured money into the project.

As of March 2022, the government had put 106.6 billion yen into the fund and 24 private sector firms have chipped in some 10.7 billion yen.

The fund invested in 56 projects, such as marketing Japanese video content overseas. But most have failed.

Together with private sector companies, the fund founded Anime Consortium Japan, a company that distributes anime, and WakuWaku Japan, a satellite broadcasting company.

The fund contributed 1 billion yen to Anime Consortium Japan and 4.4 billion yen to WakuWaku Japan.

But these companies failed due to the success of rivals, such as the U.S. streaming giant Netflix Inc.

The government incurred losses by selling its stakes in these companies to the private sector at discount prices and, after that, the companies ended their operations.

Projects selling Japanese video content overseas, including these two, led to massive losses for the fund, worth some 6 billion yen.

One of the pillars in the industry ministry’s new plan is expanding the types of businesses it invests in, according to sources.

In addition to companies in the anime and food industries, which were original target investees, the new plan would invest in firms that make clothing materials and startups that develop soy-based alternative meats.

“We believe that Japan’s ability to create things is part of Cool Japan,” an industry ministry official said.

But that strategy would hamper the government’s original purpose for the fund: promoting Japanese culture overseas. Adopting it would leave the government with less incentive to support the fund.