- Region: Others
The Japan Bank for International Cooperation (JBIC, Governor: Akira Kondoh) today announced its business results for FY2017 as outlined below. Details of the business results by region and financial instrument as well as changes in the results over the last five years are shown in the appendices attached to this press release.
I. Overview of Business Results for FY2017
■ In FY2017, JBIC made financial commitments totaling JPY 1.1932 trillion in loans, equity participation and guarantees, a decrease of 46.7% from the previous year.
■ Outstanding loans and equity participation totaled JPY13.9194 trillion and outstanding guarantees were JPY2.2602 trillion as of March 31, 2018, with the total outstanding amount for those financial instruments reaching JPY16.1796 trillion.
II. Business Highlights
1. Promoting Overseas Development and Acquisition of Important Resources for Japan
As Japan depends on imports from overseas for most of its resources, it is an important challenge that the country secures a stable supply of energy and mineral resources in the medium to long term by increasing its self-development ratio of those resources. JBIC contributes to securing a long-term stable supply of resources through financial support for acquisition of upstream interests in resources development, diversification of supply sources, enhancement of the fuel value chain, and strengthening of relationships with resource-rich countries. In FY2017, JBIC made a total of nine financial commitments in the resource sector, amounting to JPY494.6 billion in loans, equity participation and guarantees for projects.
In particular, JBIC provided project finance*1 to fund the construction of the Nacala railway and port infrastructure, in Mozambique and Malawi which is needed to transport and export coal produced from a coal mine. JBIC also signed a loan facility agreement with Abu Dhabi National Oil Company (ADNOC) in the Emirate of Abu Dhabi in the United Arab Emirates. This facility is intended to provide the necessary support to ADNOC in ensuring the stable import of crude oil by Japanese companies. Other projects that received financing from JBIC included a zinc and silver mine development project in Los Gatos, Mexico.
2. Maintaining and Increasing International Competitiveness of Japanese Industries
Amid a growing move by Japanese industries to seek earnings opportunities outside Japan due to declining domestic demand, JBIC draws on its various financial instruments to support Japanese companies in implementing their overseas business strategies as well as maintaining and strengthening their global supply chains. In this way, JBIC contributes to maintaining and increasing the international competitiveness of Japanese industries. In these areas of business activity, JBIC made a total of 120 financial commitments amounting to JPY682.4 billion in FY2017.
(1) Support for Japanese Companies' Participation in Overseas Infrastructure Development
In the power sector, JBIC provided project finance to infrastructure projects involving Japanese companies, such as a photovoltaic power project in India, an onshore wind power generation project in Egypt and a geothermal power project in Indonesia. In other sectors, JBIC provided support, in the form of project finance with a political risk guarantee, to a hospital public-private partnership project in Turkey, in which a Japanese company participated.
(2) Support for Strategic Overseas Business Expansion of Japanese Companies
(1) Financing Overseas Investments by Japanese Companies
JBIC provided loans to finance a Japanese company's automobile sales finance business in Russia and the manufacturing and sales of automobile parts by a Japanese company in India.
Furthermore, JBIC, in collaboration with Japanese companies, implemented equity participation in a fund that invests in advanced IT companies including those based in Silicon Valley.
(2) Financing Exports by Japanese Companies
JBIC offered financing for export of automatic railway stop systems by a Japanese company to the Government of Argentina. JBIC also supported a Japanese company in exporting construction machinery to Africa by utilizing the export credit line offered to the Eastern and Southern African Trade and Development Bank, a regional development bank in Africa. Other export support extended by JBIC included project finance to fund the export of vessels manufactured by a Japanese shipbuilder.
(3) Support for Overseas Expansion of Japanese Mid-tier Enterprises and SMEs
To support the overseas business expansion of Japanese mid-tier enterprises and small-and medium-sized enterprises (SMEs), JBIC made a total of 74 financial commitments, in co-financing with Japanese regional banks and shinkin (credit) banks. The support included loans for a broiler meat processing business in Myanmar and an automobile maintenance and sales business in Vietnam.
As the number of Japanese regional banks which cooperate with JBIC in financing Japanese mid-tier enterprises and SMEs is increasing, JBIC organized a High-Level Workshop on International Finance for those regional banks to further strengthen the cooperative relationship between the regional banks and JBIC. Approximately 100 top executives and officials from more than 60 Japanese regional banks and foreign banks participated in the workshop. During the workshop, they exchanged their opinions and views on helping Japanese companies expand their business overseas. Additionally, JBIC held a project finance seminar to meet the needs of those regional banks to develop their knowledge of project finance for Japanese companies planning to expand overseas.
JBIC provided 14 local currency loans*2 totaling the equivalent of about JPY6.8 billion. The loans included a Russian ruble loan to fund a Japanese company's automobile sales finance business in Russia and a Mexican peso loan to support the manufacturing and sales of automobile parts in Mexico.
As part of its efforts to develop future projects, JBIC signed a memorandum of understanding (MOU) with Overseas Private Investment Corporation for promoting projects in sectors such as infrastructure, energy and natural resources in the regions of Asia, the Indo Pacific, the Middle East and Africa. JBIC also concluded a memorandum of cooperation with the Washington State Government, the United States, aiming to contribute to the sustainable economic development of Washington State through supporting projects in the infrastructure sector. To support joint business between Japan and Turkey in third countries, JBIC signed an MOU with Export Credit Bank of Turkey for business cooperation, while holding a joint conference with Export-Import Bank of India to promote bilateral cooperation for exports to and investments in third countries.
JBIC also signed guarantee agreements with private-sector financial institutions for loans necessary for the import of aircraft.
3. Support for Projects in Environmental Sector
JBIC provided project financing to renewable energy projects involving Japanese companies, such as a photovoltaic power project in India, onshore wind power generation project in Egypt and geothermal power project in Indonesia.
4. Support for Samurai Bond Issuance
JBIC acquired a part of the Samurai bonds (privately placed Japanese yen-denominated foreign bonds) issued by the Government of Turkey.
5. Establishment of JBIC IG Partners
JBIC established JBIC IG Partners (JBIC IG) in June 2017 in collaboration with Industrial Growth Platform, Inc. (IGPI). The objective of JBIC IG is to provide investment advisory services regarding overseas investment funds by applying the respective strengths of JBIC and IGPI. While JBIC executes overseas business as Japan's policy-based financial institution, IGPI has extensive experience in providing companies with hands-on support for long-term, sustainable growth in corporate and business value.
In September 2017, JBIC launched the Russia-Japan Investment Fund (RJIF) in cooperation with the Russian Direct Investment Fund (RDIF), Russia's sovereign wealth fund. The aim of establishing the RJIF is to jointly invest in projects and companies which are expected to help enhance economic cooperation between Japan and Russia. JBIC IG administers and manages the RJIF along with the RDIF. As of the end of FY2017, the RJIF has decided to make three investments.