Guarantee Contracts for Supplying Indonesian Rupiah to Japanese Companies in Indonesia through Currency Swap Guarantee Scheme
Supporting Japanese Companies' Funding of Local Currency through Collaboration with Japanese and Indonesian Private Financial Institutions
- Area: Asia
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed contracts with the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) and PT Bank CIMB Niaga Tbk (CIMB Niaga) of the Republic of Indonesia (Indonesia) concerning the currency swap guarantee arrangement (total guaranteed principal: USD100 million) under which JBIC will guarantee currency swap transactions executed for providing funds in Indonesian rupiah (Rupiah) to Japanese companies in Indonesia.
These contracts enable BTMU's smooth procurement of long-term Rupiah funds. JBIC will provide BTMU with a guarantee for the payment of early termination amount by CIMB Niaga, the counterparty of BTMU's currency swap transactions in case of cancellation of swap transactions. This currency swap guarantee arrangement will facilitate long-term funding in Rupiah by Japanese companies.
Japanese companies have expressed strong intentions to make capital investments in Indonesia*1
on the back of the country's stable economic growth. According to BKPM, the Indonesia Investment Coordinating Board, overseas direct investment in Indonesia by Japanese companies reached a record high in 2016. Amid such developments and in conjunction with the obligation to use Rupiah in fund settlements in the country, Japanese companies' needs for long-term Rupiah funds are rising.
As Japan's policy-based financial institution, JBIC will continue to financially support the overseas business deployment of Japanese companies in growth markets such as Indonesia, by drawing on its various financial facilities, including guarantees for private financial institutions, and performing its risk-assuming function.
- *1 Indonesia ranked third in "Promising Countries/Regions for Overseas Business Operations over Medium-term (over the next 3 years or so)" in JBIC's Survey Report on Overseas Business Operations by Japanese Manufacturing Companies that was conducted in 2016. Please see the press release on December 12, 2016 for details.