Seminars in FukuokaCollaboration with Local Firms “Toward Overseas Business Development of Local Firms”
Local firms and small and medium enterprises have had increasing interest in recent years in overseas environmental business. There are vigorous moves to take a leap forward from the mature domestic market into overseas markets, especially entering into the environment sector where significant growth is expected. Since environmental business takes time for recouping invested capital and involves risks unique to overseas markets, there is growing expectations on financing provided by JBIC.
Takashi Hongo, Head of Environmental Finance Engineering Department, JBIC, made presentations in 2 seminars held on January 31 and February 4, 2011, in Fukuoka City.
The 6th Meeting of the Kyusyu Society for Low-carbon Systems: A Seminar on Clean Coal Technology
The 6th Meeting of the Kyusyu Society for Low-carbon Systems: A Seminar on Clean Coal Technology was held on January 31, 2011, by the Kyusyu Society for Low-carbon Systems. The Center was established by Kyusyu University and the Kyusyu Bureau of Economy, Trade and Industry at Ministry of Economy, Trade and Industry (METI) amid impending response required to global environmental issues and energy problems with the objective of development of human resources for using energy-saving technologies and knowhow regarding; promotion of clean coal technology and development of industries associated with low-carbon systems. In the Seminar held this time with a theme of overseas business operations, presentations on overseas environmental business operations were given from a range of perspectives by local firms, financial institutions and other stakeholders.
At the outset, Director Syunichi Iwakiri of Resource, Energy and Environment represented the Kyushu Bureau of Economy, Trade and Industry at METI, which co-organized the event. He made welcome remarks and emphasized the importance of moving to overseas, and to this end the local firms would need to draw on a broad range of knowhow and strengths of Kyushu, thereby leading to helping boost the national economy, he explained. Next, Research Professor Isao Mochida of the Research and Education Center of Carbon Resources, Kyusyu University, who chaired the Seminar, explained the importance of overseas expansion of Clean Coal Technology (CCT).
Senior Manager Mototsugu Nagamatsu of Global Business Support Gr., HEAD OFFICE & PLANT, SEIBU GIKEN CO., LTD. gave a presentation on “Experience of China Risk and Future Response.” Mr. Nagamatsu pointed out the problem of local trademark, the importance of understanding local laws and regulations, points to bear in mind when hiring local employees and others based on his company's actual experience when expanding business in China.
Hongo gave a talk titled: “Financial Support for Overseas Low-Carbon Projects.” As the first order of business in conducting environmental business overseas, he first explained Green Finance from the point of view of financing. This was intended to provide a solution to the problems behind economic growth—a financial crisis, energy constraint and environmental constraint. There are 3 important points to address these problems: (1) the utilization of technologies; (2) private-sector-led effort; and (3) Public Private Partnership (PPP).
“In making use of technologies, it is important to build a cycle of technology development, commercialization, diffusion and recouping investment by using financing,” he said. When business firms hold their proprietary technologies, a crucial factor is private-sector-led effort. PPP is important in the sense that public institutions lays down an environment for facilitating such firms in make investments. In Japanese economic development, it is important to consider Asian markets, such as China, India and ASEAN countries. Mobilizing advanced technologies held by Japanese firms is expected to bring substantial growth but financing is required for mobilizing technologies.”
Next, he showed in the diagram the potential of CO2 reduction if environmental technologies actually used in Japan were to be disseminated overseas and the possibility of overseas utilization of Japan's proprietary technologies. From the point of view of financing, active investment in the technologies that are both commercially viable and stable in quality was indispensable for disseminating these technologies overseas.
He also explained the outline and performance of the Global action for Reconciling Economic growth and ENvironmental preservation (GREEN)*1 operations and operations under the Leading Investment to Future Environment Initiative (LIFE Initiative).*2 In this context, he referred to the Guidelines for Measurement, Reporting and Verification of the GHG Emission Reductions in JBIC's GREEN (the “J-MRV Guidelines”)*3 that were conceived to be used for bilateral credits for measuring emission reductions.
In concluding his remarks, he emphasized: “What is important in environmental business is that the private sector that has advanced technologies should perform a leading role. And to this end, it is important to improve the investment climate through PPP.”
In the speech titled “Efforts for CCT and Issues of overseas business development”, Technology Executive Yukihiko Kazao, of Thermal & Hydro Power Engineering, Toshiba Corporation Power Systems Company, cited examples of thermal power plant rehabilitation projects in Bulgaria and Romania and of coal-fired thermal power plants in which steam turbines and other facilities utilizing Toshiba's proprietary technologies had been installed with the help of JBIC financing, as well as the project aimed at manufacturing equipment essential for the construction of high efficient coal-fired thermal power plants in India. He then proceeded to explain that Toshiba had set the objective of pursuing thermal technology featuring higher efficiency and zero emissions. Finally, touching on how to tackle challenges in business development overseas, he listed Japanese industries' technological strengths and other advantages, namely highly efficient, high-quality technologies and expertise on operation and maintenance, stressing that they should build some mechanism that would enable them to leverage these strengths in competing with foreign firms whose primary advantage is lower prices.
Research Professor Masahiro Usami, Research and Education Center of Carbon Resources, Kyushu University, made a speech on “Future Efforts to be Made by the Research and Education Center of Carbon Resources, Kyushu University.” He gave an overview of the Center's program to develop human resource for engaging in effective use of coal and other materials, as well as its research activities. He then stated that the Center would further conduct research and development and increase international networking activities.
Seminar for Celebrating the Establishment of the Fukuoka Industrial Council on Asian Environment Cooperation
The Fukuoka Industrial Council on Asian Environment Cooperation held a seminar for celebrating its establishment on February 4, 2011. Consisting of Fukuoka-based companies, the Council aims to support environment-related firms located in the Fukuoka Prefecture for their business operations abroad. JBIC's Hongo assumed Vice Chairman of the Council and, made a presentation at this seminar.
Vice Governor Takeo Ushio of Fukuoka Prefecture who delivered a welcome speech as the host of this Seminar. He pointed out in his speech global environmental issues and expressed his expectations on the good business potential of Japanese environmental technologies. This was followed by greeting remarks made by Kenji Tsugami, leader of the Council and Director of Kyushu Electric Power Co., Inc. He said: “In recent years, fast-growing Asian countries are paying increasing attention to environmental conservation, which presents a good opportunity for Japanese firms to propagate its top-level environmental technologies overseas. The newly established Council wants to vigorously support Japanese industries' overseas business development by taking advantage of Fukuoka's proximity to the rest of Asia.”
During the presentation sessions, the first speaker, Koichi Gono, Director of Community, Culture and International Affairs Division, Fukuoka Prefecture Government, described the purpose of establishing the Council and its business plan. Regarding the purpose, he stated that it was created to provide the best trading environment, including obtaining business information faster and securing appropriate partners, based on the PPP between Japan and the Asian region with which Fukuoka has friendly relations, as part of efforts to help disseminate environment technologies overseas that Fukuoka-based companies have accumulated over the years by striving to overcome pollution. For its support for overseas business operations, he referred to assistance provided by overseas offices, exchange program for SMEs and business matching services, before calling for local companies to actively enter overseas markets.
As the second speaker, JBIC's Hongo, gave a talk about: “Local Companies Participating in the Asian Environmental Business.” “Among them, 4 major issues lurking in the shadow of economic growth are environmental constraints,” he said. More specifically, they were climate change, water infrastructure, food and agriculture and biological diversity. “Whereas fighting climate change would call for huge financial resources, its solutions such as greater investment in energy-saving and harnessing renewable energy could lead to easier international supply-demand conditions and lower energy prices, thereby contributing to energy security and the mitigation of public financial burden. This could provide a good business opportunity. Regarding biodiversity, he expressed his view that it was actually an economic issue, since the root of the problem lies in how to distribute profits gained from genetic resources.
“In identifying “seeds of business,” it is essential to cooperate with foreign companies with rich experiences in that field. A case in point is the cooperation with a Singapore base international company in water infrastructure business.
“In collaboration with municipalities, it is important to use them navigating the development of new markets, and it is worth asking for their views and suggestions in institutional design, as they can draw on the past performance of their overseas economic cooperation. He informed the participants that the Council is currently planning a mission to Vietnam late this March. To take advantage of good business potentials such as in the solid waste disposal sector, it is vital to take a two-way approach, that is, in terms both technology and institution.
“In conclusion, it will become even more important for the private sector to perform a leading role in identifying their business opportunities in the future. What one can expect from the public sector is to improve the investment climate, while the role of financial institutions is to structure appropriate financing schemes for investments. I would like to emphasize the significance of three-pronged efforts jointly made by the public, private and financial sectors in moving forward business projects,” he said.
In the final presentation, President Norihiro Takama of Chiyoda U-Tech Co., Ltd. talked about “The Current State and Project Structuring in Vietnam.” He said: “The role that our company plays for the Council includes, sending a study mission to the project site from the project structuring stage; identifying the targeted local needs; and proposing a good solution.” Also, he gave a brief account of how his company took advantage of its plant-engineering background in formulating a project, by citing a specific example of a wastewater treatment project.
There are many companies unfamiliar with overseas markets, and the local municipalities are making efforts to give them a push. JBIC has signed business cooperation agreements with the municipal governments of Tokyo, Kitakyushu and Yokohama on cooperation in the environmental and water sectors, thereby supporting their efforts as well as efforts of the local firms for which they are giving encouragement.
- *1 See Information on April 27, 2010."Promoting the Overseas Business Having the Purpose of Preserving the Global Environment, such as Preventing Global Warming"
- *2 See Information on March 23, 2009."Establishing Leading Investment to Future Environment(LIFE) Initiative"
- *3 Guidelines for Measurement, Reporting and Verification of GHG Emission Reductions in JBIC's GREEN (the "J-MRV Guidelines")