An amendment to the JBIC Act was enacted to allow the bank to fulfill its role more fully while responding to the changing times. The kind of transformations JBIC will be undergoing and what are its roles going forward are addressed by JBIC Executive Managing Director HASHIYAMA Shigeto.
Executive Managing Director of JBIC HASHIYAMA Shigeto Joined the Export-Import Bank of Japan (now JBIC) after graduating from Hitotsubashi University, Faculty of Economics, in 1990. After assignments including Director General of the Corporate Finance Department, Industry Finance Group, he was appointed Managing Executive Officer, Global Head of the Corporate Planning Group in 2018, and Senior Managing Director in 2021. Assumed his current post in June 2022.
Strengthening Japan’s industrial competitiveness and developing the global supply chains of its companies
Prior to the amended JBIC Act, which was passed into law at the regular session of the Diet (parliament) in 2023, the Japanese government enacted the Economic Security Promotion Act (Act on the Promotion of Ensuring National Security through Integrated Implementation of Economic Measures).
With “security” at its foundation, this law aims to prevent economic activities from harming national security via the following four pillars: (1) ensuring stable supply of critical products, (2) ensuring stable provision of essential infrastructure services, (3) enhancing development of cutting-edge critical technologies, and (4) non-disclosure of selected patent applications.
From the perspective of strengthening industrial competitiveness, “ensuring stable supply of critical products” and “ensuring stable provision of essential infrastructure services” require not only building domestic systems but also developing and bolstering the global supply chain itself, where Japanese companies have a competitive advantage.
In fact, across global supply chains that span countries and continents, there are Japanese companies competing globally. Therefore, it is in the direct interest of Japan to strengthen supply chains, a concept at the foundation of the JBIC Act amendment.
The environment surrounding Japan’s industries is changing dramatically. In terms of the external environment, global supply chains have been built with a focus on efficiency, but recent years have seen economic conflicts resurface due to a lack of mutual understanding between states. Moreover, a gradual return to a more fragmented global economy is on the cards.
Meanwhile, there are limits to growth in the domestic market. As exemplified by the “demographic burden” (a high percentage of the dependent population aged 14 or younger and 65 or older compared to the working-age population) caused by the declining birthrate and aging society, Japan currently has a low potential growth rate. Against this backdrop, it is recognized that global business development will become ever more important in strengthening Japan's industrial competitiveness.
Supporting the competitiveness and technological innovation of Japanese companies through necessary “capital”
One of the key characteristics of globally active Japanese companies is their technological prowess. Therefore, of the “capital,” “labor,” and “technology” necessary for the corporate economy, JBIC's role should be to supplement the “capital” needed and thereby further encourage the activities of Japanese companies in the global market and foster more technological innovation.
For example, in the global semiconductor supply chain, Japanese companies have a competitive edge in the materials and manufacturing equipment markets stemming from their technological capabilities. In order to maintain and strengthen this competitiveness, it is essential to not only support Japanese companies, but to also enhance the resilience of the entire global supply chain in which they play an integral role. It is in this context that JBIC is now able to provide loans to foreign companies.
▶▶▶ Point 1 of the JBIC Act amendment
In addition, as climate change is a particularly urgent issue among the various challenges confronting the world, technological breakthroughs are indispensable for greenhouse gas reduction and other related areas such as energy, water, soil, and infrastructure development. JBIC will do its part to provide active support for risk taking by companies with the potential to be game changers through advanced technologies so that they can further grow.
▶▶▶ Point 2 of the JBIC Act amendment
Moreover, a system has been established through this amendment that allows us to continue support for Ukraine, including full reconstruction efforts in the future in collaboration with international financial institutions.
▶▶▶ Point 3 of the JBIC Act amendment
Responding flexibly even in uncertain times
JBIC has a history of adapting its roles and functions to meet the needs of the times. Amid uncertainty as to what lies ahead as geopolitical risks increase and bring about major changes in the world, JBIC is now able to flexibly respond with a broader scope of operations in such situations. This is the core of the recent legal revisions.
As stated in Article 1 of the JBIC Act, the organization’s four roles are: “Promoting the overseas development and securement of resources which are important for Japan,” “Maintaining and improving the international competitiveness of Japanese industries,” “Promoting the overseas business having the purpose of preserving the global environment, such as preventing global warming,” and “Preventing disruptions to international financial order or taking appropriate measures with respect to damages caused by such disruptions.”
Today, amid a rapid and fundamentally changing global order, JBIC’s activities need to be more agile and effective than ever. While building a worldwide information network, we must aim to realize a balance between the overseas business strategies of Japanese companies and the national interests of countries around the world from our two perspectives as a public institution and a financial institution.
To that end, in addition to our function as a financial institution, we must also strengthen our functions as an intermediary linking Japan and the rest of the world, and as an information provider by leveraging our access to all kinds of industries worldwide.
Change the rules if need be: Don’t be bound by rules, bind them.
JBIC’s vision is, “To serve as a ‘navigator’ to build a brighter future with Japanese power in an uncharted global situation.” However, along with being a “navigator,” it is now more necessary than ever to look beyond that.
The challenges we face are increasingly complex. These include searching for and implementing realistic, shared solutions to climate change based on mutual respect among states, consideration of human rights in renewable energy projects, and the establishment of a level playing field to maintain and strengthen the international competitiveness of Japanese industries in the process of decoupling economic growth and energy use. Confirming the facts quickly and accurately, and promoting projects while formulating hypotheses is crucial. The role that JBIC should take from now is to flexibly develop solutions after first immersing itself in the competitive conditions of each industry, including its technology.
To do this, it is important to think freely with an open mind in order to ascertain the facts, and then take an inductive reasoning approach to future projections. Of course, it is necessary to learn from precedents, but you shouldn’t be fixated on them. I always tell my staff, “Change the rules if need be. Don't be bound by rules, bind them.”
We need to know where we stand, but to constantly change that position. Taking a flexible, diverse, and proactive approach in confirming, focusing on, and considering solutions to issues occurring on the frontlines of the world—that is precisely what is demanded now of each and every one of our employees and for JBIC as an organization.
