Engagement-based path, unique answers solve global issues
Many in the international community are working tirelessly to advance technological innovations and establish a sustainable society. The efforts are expected to accelerate digitalization, decarbonization, and other social transformations, resulting in a growing global need for flexible responses to new infrastructure needs that differ from those of the past. Moreover, it is essential that members of the international community work together to ensure a future-oriented, peaceful, stable, and better international environment. This is on top of dealing with such current issues as the need for social adaptation to climate change and assistance for reconstruction following damage caused by war, conflict, and natural disasters.
Amid these conditions, under the Fifth Medium-Term Business Plan (FY2024–2026) announced in June 2024, the Infrastructure and Environment Finance Group aims to contribute to resolving climate change-related issues. It will co-create a realistic path to decarbonization, tailored to each country’s circumstances. The balancing of decarbonization with economic growth and enhancing of energy security will be prioritized, while concrete solutions will be put forward.
Additionally, we will focus on adapting to climate change, presenting solutions to a wide range of social issues, such as the securing of water and addressing waste problems, as well as the promotion of specific projects. With the digital age approaching, we will also promote the development of highly reliable infrastructure to help realize a safe and secure digitalized society.
To achieve these goals, JBIC will leverage its unique strengths and employ three approaches. First, we will conduct dialogues with various countries to identify the wide range of social issues facing each. Second, we will utilize JBIC’s global network and demonstrate its coordination capabilities within multilateral cooperation to address issues that would be difficult to tackle alone. Third, we will monitor technological innovation trends that contribute to resolving various issues and, through the daily accumulation of knowledge outside the boundaries of finance, we will propose custom-made solutions. These three approaches will enable us to maintain an awareness of challenges facing countries around the world amid constantly changing international conditions. At the same time, we will play a leading role as a navigator, in the development of global infrastructure by Japanese companies.
SEKINE Hiroki
Managing Executive Officer
Global Head of Infrastructure and Environment Finance Group
Group Outline
We strive to maintain and improve the international competitiveness of Japanese companies by promoting the use overseas of quality infrastructure based on Japan’s advanced technologies. We provide:
- Support for overseas expansion in the areas of infrastructure and the environment, to maintain and improve the international competitiveness of Japanese industry
- Support for overseas projects aimed at protecting the global environment
- Infrastructure and Environment Finance Group loans, equity investment, and guarantees, on the basis that, over the past five years, we have been involved in 80 projects valued at approximately ¥2.5 trillion
Business Environment: Risks and Opportunities
Under the Paris Agreement, international efforts and collaboration targeting decarbonization are accelerating. Particularly high are the expectations of the leadership of countries with economic power and advanced technologies. There is a growing recognition that individual companies have a duty to responsibly tackle the international challenge of decarbonization, and this will be a major factor in corporate investment decisions.
Given these changes in the environment, in addition to domestic initiatives, the Japanese government aims to realize borderless decarbonization efforts by engaging with energy policies, especially those of Asian nations, to realize an energy transition. As part of this policy, the Japanese government has proposed, and is promoting, the Asia Zero Emission Community (AZEC) initiative.
Further, as the world responded to the global spread of COVID-19 infections, supply chain vulnerabilities became apparent. There is a growing need to take a fresh look at the global flow of production, transportation, and delivery, as also for a flexible response to infrastructure needs from perspectives that differ from those of the past.
To respond to these new issues and deal with environmental changes, JBIC is supporting Japanese companies with strengths in proprietary technological capabilities, such as cutting-edge environmental, digital, and communications technologies, for Japanese companies’ overseas expansion and supply chain enhancements. Our support is critical for maintaining and improving the international competitiveness of Japanese companies in the new post-COVID world, as well as for linking Japanese solutions to the resolution of global issues.
Looking at the international political and economic situation, Russia’s invasion of Ukraine is having a significant impact and poses a major threat. The international community continues to provide support to Ukraine and neighboring countries, and the Japanese government is also taking concrete action, such as holding the Japan–Ukraine Conference for Promotion of Economic Growth and Reconstruction in February 2024. Multilateral cooperation, together with cooperation with international organizations supporting Ukraine and neighboring countries, is becoming increasingly important.
The concept of a Free and Open Indo-Pacific (FOIP), advocated by the government of Japan in 2016, is rooted in the idea of ensuring peace and prosperity for the entire region and, by extension, the whole world, through a free and open rules-based international order.
In March 2023, multi-layered connectivity was set forth as the fourth pillar of cooperation for FOIP. It also sees as important the development of quality infrastructure that can help improve connectivity among regions. We believe that Japan and JBIC will play increasingly important roles in the formation of projects involving the complex intersection of various stakeholders and the realization of large-scale projects.
Group Strategy
Ⅰ. Realize a sustainable future
We will proactively implement engagement-based approaches through the AZEC framework and policy dialogues with governments, relevant organizations, and councils. We will co- create a realistic decarbonization process that takes into account the specific circumstances of the host country, and places importance on a balance between decarbonization and economic growth, as well as on energy security. In addition, we will mobilize all JBIC’s resources to present specific solutions and promote the achievement of projects. By pursuing practical solutions that differ in each country, in conjunction with decarbonization and problem-solving efforts by Japanese companies expanding overseas, we hope to build on our achievements and expand international support for the flexibility and usefulness of AZEC initiatives.
In discussions with host countries, we will identify a wide range of social issues beyond energy transition, and present solutions utilizing the technologies of Japanese companies to address them. As an example, we are formulating projects in areas such as water supply, sewage treatment, waste disposal, and waste-to-energy.
Ⅱ. Strengthen resilience of Japanese industry and support creative innovation
We will utilize discussions with host countries and leverage Japanese company know-how and technologies to structure projects related to telecommunications infrastructure, logistics infrastructure, and other areas.
In addition to formulating projects that utilize innovative technologies, we will spread technical knowledge to other countries. This, in turn, will lead to new projects.
Ⅲ. Provide JBIC’s own unique solutions by strategically functioning as an international financial institution
We have formulated projects involving support for Ukraine and surrounding countries through coordination with multilateral and international organizations. JBIC will formulate projects related to the development of quality infrastructure in areas such as energy transition, connectivity, and digitalization. This we will do through multilateral cooperation frameworks involving Japan, the U.S., Australia, and India, such as in the Quad Alliance; involving Japan, the U.S., and Australia; and involving Japan, the U.S., South Korea, and cooperation with international organizations.
Project Highlights
Financing for Hai Long offshore wind farm project in Taiwan
—JBIC’s first wind power generation project in Asia under multilateral cooperation—
JBIC signed loan agreements with two Taiwanese companies, in which Mitsui & Co., Ltd. and others have invested. The loans will finance an offshore wind power generation project in Taiwan. In addition to private financial institutions, a total of seven development finance institutions and export credit agencies, including Export Finance Australia (EFA), from six countries (Japan, Australia, Canada, the U.K., Belgium, and Norway) have cooperated to support the project, which is important for Taiwan’s decarbonization policy.
For this project, a business company in which Mitsui holds equity shares will construct, own, and operate an offshore wind farm with a generating capacity of 1,022 MW in the waters off the coast of Changhua County, Taiwan. Taiwan announced its policy of increasing the proportion of renewable energy in its power supply to 60–70% by 2050, and this project is in line with Taiwan’s renewable energy transition policy. By supporting the overseas business development of Japanese companies in this way, JBIC is helping maintain and improve the international competitiveness of Japanese industry.
Untied loan to IndusInd Bank Limited of India
—Supporting enhancement of supply chain resilience of Japanese agricultural machinery manufacturers in India—
JBIC signed a loan agreement with IndusInd Bank Limited to provide the funds needed by the manufacturing and sales businesses of local suppliers, by dealers of Japanese agricultural machinery manufacturers, and by the local sales finance businesses that sell Japanese agricultural machinery. India is one of the world’s largest agricultural machinery markets by units sold, and with India having become the world’s most populous country in 2023, the market is expected to expand in line with the rapid increase in the nation’s demand for food.
Given its high potential for growth, Japanese agricultural machinery manufacturers position India as an important market, as well as an export hub for countries in the Global South. The loan will financially support the general manufacturing and sales activities of Japanese agricultural machinery
manufacturers in India. In this way, it will support the enhancement of local supply chain resilience and contribute to maintaining and improving the international competitiveness of Japanese industry.
Fourth credit line for CAF under GREEN operations
—Supporting environment-related projects in Latin American and Caribbean countries—
JBIC set up a credit line for the 21-member Corporación Andina de Fomento (CAF) multilateral development bank to provide, through CAF, the necessary funds for environment-related projects in the bank’s Latin American and Caribbean member nations. This is part of JBIC’s Global action for Reconciling Economic growth and ENvironmental preservation (GREEN) operations.
The objectives of CAF are to achieve economic integration, as well as to promote economic development and trade finance in the region. CAF also focuses on climate change and environment initiatives in the region, and has announced its commitment to allocating $25 billion to green finance over five years from 2022. JBIC has built a strong cooperative relationship with CAF over more than 40 years, through JBIC loans for infrastructure projects, exports of machinery and equipment to the Latin American and Caribbean region, as well as for industrial investment and export promotion in the region. The loan will further support efforts to achieve decarbonization of the region.
Guarantee for Samurai bonds issued by Bank Gospodarstwa Krajowego of Poland
—Supporting humanitarian aid to Ukrainian refugees following the Russian invasion—
JBIC provided a guarantee for the issuance of Samurai bonds by the Polish development bank, Bank Gospodarstwa Krajowego (BGK). It is a policy-based, wholly government-owned financial institution that provides financial services with a view to realizing the sustainable economic and social development of Poland.
In September 2022, JBIC concluded a memorandum of understanding with BGK and has been engaged in ongoing discussions aimed at strengthening cooperation in various fields, including support for Ukraine. In this context, BGK established a Ukraine Aid Fund in Poland, the largest recipient of refugees in Central and Eastern Europe, and is helping fund Ukrainian refugees’ humanitarian aid, including medical care, education, and housing. Fund procured by the Samurai bonds will be utilized through the Ukraine Aid Fund.
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