- Region: Asia
- Manufacturing and Services
November 22, 2010
- The Japan Bank for International Cooperation (JBIC, President & CEO: Hiroshi Watanabe)*1 signed a guarantee agreement totaling up to Rp 475 billion (about 4.3 billion yen) with the Jakarta Branch of The Bank of Tokyo-Mitsubishi UFJ, Ltd. for a rupiah-denominated loan it has offered to PT. Bussan Auto Finance (BAF), a joint venture company where Mitsui & Co., Ltd. and Yamaha Motor Co., Ltd. have equity stakes.
- The loan will finance BAF for its sales financing of Yamaha motorcycles in Indonesia. In Indonesia, motorcycles are indispensable items for people as a means of daily transport, and with the rapidly growing economy, motorcycle sales in Indonesia jumped from about 3.9 million in 2004 to about 6.2 million in 2008. While the sales volume sagged to about 5.9 million in 2009, affected by the global recession, it is forecast to rebound to more than 7 million in 2010 due to ever-increasing demand. Sales financing is used by as many as 70% of motorcycle buyers in Indonesia, and thus sales financing performs a substantial role in the growth of the motorcycle market in Indonesia.
- As sales finance companies have been significantly expanding their financial assets to meet the buoyant demand for motorcycles, there is an increasing need to ensure stable local currency funding for sales financing. This has prompted JBIC to collaborate with a private financial institution to meet the local currency funding needs of a local sales finance company by utilizing its function of credit enhancement; this function has materialized in the above transaction, in which JBIC provides a guarantee for a rupiah-denominated loan provided by a private financial institution to BAF. Through this transaction, JBIC aims to support local currency financing by a private financial institution, and thereby sustain stable development of the Indonesian motorcycle market, and finally to contribute to enabling the Japanese auto industry to develop a voluminous segment of an emerging economy.
- This guarantee was provided as part of financing operations under the JBIC Facility for Asia Cooperation and Environment (FACE), *2 launched in April 2008 with a view to making active use of JBIC's equity participation and guarantee functions to mobilize private capital to the maximum extent. In its capacity as an official financial institution, JBIC will continue to support the overseas business activities of Japanese firms by utilizing its wide range of financial instruments and schemes.
- *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
- *2 See Press Release on April 1, 2008.