- Region: Asia
- Manufacturing and Services
- Untied Loans
- Guarantees
March 24, 2008
- Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed today an Untied Loan agreement in an aggregate amount of up to US$100 million with RHB Bank Berhad (RHB), the fourth largest commercial bank in Malaysia that has 184 branches all over Malaysia. The loan is cofinanced with two private financial institutions (Sumitomo Mitsui Banking Corporation (agent bank) and Mizuho Corporate Bank, Ltd.), with JBIC providing guarantee for the portion of the private financial institutions.
- This loan is aimed at fostering the supporting industries of Japanese companies in Malaysia, where 1,442 Japanese firms*1are operating businesses mainly in the manufacturing sector, by providing long-term financing to the Japanese firms as well as the local companies within their supply chain in Malaysia through RHB. It is expected to pave the way for the Japanese firms in Malaysia to reduce their production costs by increasing the sophistication of their supply chain through measures such as improving the quality of local goods and raising the local supply portion, thereby contributing to maintaining and strengthening the international competitiveness of Japanese industries.
- In Malaysia, as a major ASEAN country, a large number of Japanese manufacturing firms are operating especially in the electronic and electrical production industry*2. For those Japanese companies, reduction of production costs through improving the quality of local goods and raising the local supply portion*3poses a major challenge. Although JBIC extended an Untied Loan in an aggregate of up to US$100 million to RHB in April 2006 to cope with this situation, it was decided to provide this second Untied Loan taking into account the strong financing needs of such Japanese companies and the local companies in Malaysia.
- Japan and Malaysia entered into the Economic Partnership Agreement (EPA) that came into effect in July 2006, which included cooperation to improve the business environment. This loan aims to strengthen the mutually beneficial economic partnership between Japan and Malaysia, in line with the EPA, by supporting the improvement of the business environment through fostering the supporting industries of Japanese companies in Malaysia.
- *1As of May 2007. Quoted from the JETRO survey.
- *2Based on the JETRO survey cited above, 773 companies out of 1,442 companies (51%) are manufacturers, and 294 companies belong to the electronic & electrical production sector.
- *3The local supply rate of the Japanese companies in Malaysia as of November/December 2006 is 41%.(Quoted from the JETRO survey)