- Region: Asia
- Machinery and Equipment
- Others
February 21, 2005
- Ｊapan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a cooperation agreement with the State Bank for Foreign Economic Affairs of Turkmenistan (TVEB) *1 on February 19.
- The agreement set forth the exchange of information between JBIC and TVEB, the policy-based external financing institution owned by the government, on operational strategies of respective banks and new projects in Turkmenistan. This will facilitate JBIC's financial cooperation with TVEB, through which JBIC will be able to support exports of Japanese companies to Turkmenistan.
- Turkmenistan has estimated 2.9 trillion cubic meters (102.4 Tcf) of proven natural gas reserves, the largest in Europe and Central Asia. Its economy is expected to continue robust performance driven by exports of natural gas and other resources,*2 with real GDP projected to grow 7.5% in 2004 and 7.0% in 2005. For this reason, Japanese firms are showing keen interest in business opportunities related to the country's natural gas development. Furthermore, the country has a vibrant textile industry in which cotton, its main agricultural product, is processed for exports to Europe. There are thus good prospects for Japanese businesses to export cutting-edge machinery in that field.
- Turkmenistan has in recent years sought to build good relations with the International Monetary Fund (IMF) and other multilateral institutions.*3 It is also moving toward strengthening its relations with Japan, and in January the Japanese embassy was opened in the capital city of Ashgabat. As Japan's only policy-based external financing institution, JBIC has set its sights on improving Turkmenistan's business environment and growth potential and, by taking this opportunity, intends to strengthen policy dialogue and promote economic ties between the two countries.
- This agreement is the fourth of its kind that JBIC has signed with its partners in the countries of Central Asia and the Caucasus.*4 There have been growing cooperative relations between Japan and Central Asia, as demonstrated by the launching in August 2004 of the Central Asia plus Japan Dialogue, a framework for cooperation that is aimed at supporting intra-regional cooperation and strengthening relations between Japan and Central Asian countries. The cooperation agreements that JBIC has signed with its partners in this region will complement this framework, serving to advance economic partnership between Japan and Central Asia.
- *1 To date in JBIC's international financial operations, three loans totaling 46.5 billion yen had been provided for TVEB for the textile industry (the cotton processing plant project) and business related to the natural gas project.
- *2 Turkmenistan's government signed long-term supply contracts with Russian and Ukrainian firms to secure the stable export of natural gas.
- *3 Since 1999 Turkmenistan had refused to accept economic research missions from the IMF (undertaken for consultation under Article 4 of the IMF's Articles of Agreement). However, the country has restored normal relations with the IMF after accepting the IMF mission in early 2004.
- *4 This is the fourth cooperation agreement that JBIC has signed with its partners in the countries of Central Asia and the Caucasus, following those with the Development Bank of Kazakhstan (November 2003), the International Bank of Azerbaijan (January 2005) and KazMunayGas (February 2005).