2 0 17 Annual ReportJBIC 2017

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Profile of JBIC · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 1

1 Profile · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ······· 22 Interview with the Governor · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ······· 4
3 Directors, Managing Executive Officers, and Corporate Auditors · · · · · · · · · · · · · · · · · · · · · · ······· 8
4 Medium-term Business Plan (FY2015–2017) · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 10
5 Outline of Operations in FY2016 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 14Japan Bank forInternational Cooperation
Annual Report

2

The Environment Surrounding JBIC and Its Challenges · · · · · · · · · · · · · · · · · · · · · · · ···· 21

1 Energy and Natural Resources Finance Group · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 22
2 Infrastructure and Environment Finance Group· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 26
3 Industry Finance Group · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 30
4 Equity Finance Group· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 34

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Examples of Business Outcomes in FY2016 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 37

1 Overview of Business Outcomes by Region · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 38
2 Examples of Business Outcomes by Region · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 40
3 Examples of Business Outcomes Relating to Support for Mid-tierEnterprises and SMEs · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 48

4 Examples of Business Outcomes Relating to Environment· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 52
5 Examples of Business Outcomes Relating to Studies, and Collaboration
with Overseas Governmental Organizations and International Organizations · · · · · · ···· 55

4Financial Instruments · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 57

1 Financial Instruments· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 58
2 Prominent Initiatives in Recent Years· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 68
3 Framework for Supporting Globalization Efforts of Mid-tierEnterprises and SMEs · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 70

5Operational and Administrative Policies · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 73

1 Corporate Governance · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 74
2 Risk Management · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 78
3 Public Information and Disclosure · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 81
Data1

Statistics · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ··· 83

Data

2

Financial Statements · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 99

Data

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Corporate Data · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·· 163

Numerical figures in this report
1. Numerical figures, other than percentages, in this report are truncated to the nearest whole number. (Figures prior to FY2008 were rounded off.) Percentage figures
are rounded off. Thus numerical and percentage figures may not add up to the totals given. Amounts denominated in foreign currencies are treated as follows.
Commitments are converted into yen at the Basic Rate of Exchange (revised semi-annually by the Minister of Finance, based on the prevailing market rates during
the preceding six months) at the time financing contracts are concluded. Disbursements, repayments, and outstanding balances are calculated based on book value.
2. Numerical figures less than the specified units are denoted by “0”; “—” denotes that data is not available.
3. Until FY1998, the data of the Export-Import Bank of Japan (JEXIM) was used. Data in FY1999 is the sum of the data from JEXIM in the first half and that fromthe International Financial Account of the then-JBIC in the second half. From FY2000 to FY2007, data came from the International Financial Account of thethen-JBIC. Data for FY2008 is the sum of the data from the International Financial Account of then-JBIC in the first half and the data from the Account for JBIC
operations under the Japan Finance Corporation in the second half. From FY2009 to FY2011, data came from the Account for JBIC operations under the Japan
Finance Corporation. Data for FY2012 and after is that of JBIC.
4. Due to the launch of the newly established Special Operations, JBIC started to perform separate accounting procedures for the Ordinary Operations and theSpecial Operations on October 1, 2016. Data for JBIC operations during the period until the day before October 1, 2016, was recorded in the Ordinary Operations
Account. In this annual report, financial data after October 1, 2016 is presented separately in the Ordinary Operations Account and the Special Operations
Account. For financial reporting in FY2016, data from the Ordinary Operations Account covers the period from April 1, 2016 to March 31, 2017, while that fromthe Special Operations Account covers the period from October 1, 2016 to March 31, 2017. In the supplementary document “Data 1: Statistics,” which can befound later in this annual report, JBIC’s business data is presented without separating the Ordinary Operations Account and the Special Operations Account.

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Profile of JBIC
1 Profile······················································· ···· 22 Interview with the Governor ·································· 4
3 Directors, Managing Executive Officers, andCorporate Auditors ·············································· 8

4 Medium-term Business Plan (FY2015–2017) ················ 10
5 Outline of Operations in FY2016 ····························· 14

JBIC ■ Annual Report 2017

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1

ProfileThe Purpose of JBIC

1
Profile of JBIC

Japan Bank for International Cooperation (JBIC) is a policy-based financial institution wholly owned by the Japanese government,
which has the objective of contributing to the sound development of Japan and the international economy and society, byconducting financial operations in the following four fields:
 Promoting the overseas development and securement of resources which are important for Japan Maintaining and improving the international competitiveness of Japanese industries
 Promoting the overseas business having the purpose of preserving the global environment, such as preventing global

warming Preventing disruptions to international financial order or taking appropriate measures with respect to damages caused bysuch disruptions

Corporate Slogan

1ProfileCorporate Philosophy
The objective of JBIC, as set forth in its statutory law, is to “contribute to the sound development of Japan and the international
economy and society” by executing a variety of financial functions. To pursue this objective, we have set out the following corporate
philosophy, which espouses three core values: “Hands-on Policy,” “Customer-1st Approach,” and “Forward-looking Action.”

Positioned at the crossroads of global business opportunities,
JBIC is opening new venues to the future for the Japanese and global economy.
Hands-on Policy: Pioneering new value by participating at the forefront of overseas project development, and by engaging
proactively in projects from the early stages
Customer-1st Approach: Offering customers one-of-a-kind solutions by adopting their perspectives and integrating theirviews into policy development
Forward-looking Action: Contributing to the sustainable development of Japan and the world as a whole by deploying highly
professional skills, with a view to realizing a secure and affluent future society

Operational Principles
JBIC, as a policy-based financial institution and in accordance with the following principles, conducts speedy and well-focused
operations based on policy needs in response to economic and financial situations in Japan and abroad.
1. Supplementing the financial transactions implemented by private-sector financial institutions
To effectively perform the functions required for policy-based financing, JBIC shall take account of situations where privatesector financial institutions are placed in their international finance activities and supplement their operations.
2. Ensuring financial soundness and certainty of repayment
Pursuant to the JBIC Act, JBIC shall make efforts to maintain the financial soundness of its operations, and when making
financial decisions, to conduct adequate screening regarding the outlook for the recovery of funds.
3. Maintaining and improving international creditworthiness and confidence
In order to conduct adequate operations and effective overseas funding operations, JBIC shall maintain and improve theinternational creditworthiness and confidence gained by JBIC over the years.
4. Conducting business operations by drawing on its expertise and initiatives
JBIC shall conduct operations by drawing on its own expertise and initiatives on international finance.

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JBIC ■ Annual Report 2017

JBIC Code of Conduct

1
Profile of JBIC

 Act consistently in the public interest. Contribute to Japan and the international community by pursuing our Mission.
 Prioritize client satisfaction. Deliberate, decide, and act from the client’s perspective.
 Accept responsibility as a professional. Perform every task based on your own initiative.
 Undertake challenges daringly. Create new value without fear of failure.
 Work quickly and cost-effectively. Enhance your work quality with an eye to efficiency.
 Focus on teamwork. Share unified objectives with your colleagues to achieve significant successes.
 Maintain high ethical standards and a law-abiding spirit. Observe our moral code as a JBIC member at all times.

History
JBIC was established on April 1, 2012 in accordance with the Japan Bank for International Cooperation Act (JBIC Act), which
was promulgated and came into effect on May 2, 2011.

ProfileOctober 2008

April 2012

Japan Finance Corporation
(JFC)

JBIC
(International Wing)

December 1950

Export-Import
Bank of Japan(JEXIM)

October 1999

(Domestic Finance Units)

Japan Bank forInternational Cooperation(former JBIC)

Micro Business andIndividual Unit
Agriculture, Forestry, Fisheries
and Food Business Unit
Small and Medium
Enterprise (SME) Unit

International
Financial
Operations

Japan Bank forInternational
Cooperation (JBIC)

Operations to Facilitate
Crisis Responses and Specific
Businesses Promotion, etc.

March 1961

Overseas Economic
Cooperation Fund
(OECF)

Overseas Economic
Cooperation
Operations

Japan International
Cooperation Agency (JICA)

Profi leName
OfficeCapital*Outstanding Loans and Equity Participations*
Outstanding Guarantees*

Japan Bank for International Cooperation (JBIC)
4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan
¥1,683.0 billion (wholly owned by the Japanese government)¥14,657.4 billion¥2,385.0 billion* As of March 31, 2017

JBIC ■ Annual Report 2017

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1

Interview with the Governor

On behalf of the Japan Bank for International Cooperation (JBIC), I would like to express my sincerest appreciation for yourcontinued support for and understanding of JBIC.

Profile of JBIC

In 2016 the global economy was exposed to several downside risks to economic growth. These included the impact ofmonetary policy normalization in the U.S. and decelerating economic growth in China and other emerging countries.
Under these conditions, the international environment surrounding the Japanese economy is further changing. In the energy
and natural resources sector, it is an important challenge that resource-poor Japan develops energy and mineral resources andsecures a medium-to-long-term supply of those resources by increasing its self-development ratio of the resources, which canbe achieved through intensified joint efforts of the public and private sectors in resource diplomacy and energy cooperation
while watching changes in the international geopolitical structure.
Meanwhile, Japanese industries are accelerating their pursuit of income-earning opportunities overseas to respond to an
expected decline in domestic demand as a result of declining birth rates and aging population. It is a key task to promote theinvestment in quality infrastructure with outstanding economic efficiency, such as a reduction in lifecycle costs, and safety bymaking the best use of Japan’s leading technologies and know-how, with an eye to Japan’s strong economic growth in the
future. Therefore, instead of merely exporting machinery and facilities, it is important to promote public-private partnerships(PPP) and undertake diverse business development, such as expanding project investments and securing orders for systems

2

encompassing design, operation, and management. Furthermore, achieving a balance between environmental conservation

Interview with the Governor

environmental and social impacts, there is an increasing expectation to form renewable energy projects that employ Japan’sand economic development is a universal challenge. In addition to developing projects that respond to the need for reduced
advanced environmental technologies as wellas projects that contribute to improving andprotecting the natural environment.
The Act for Partial Amendment of theJapan Bank for International Cooperation Act(Amendment Act of the JBIC Act) was enacted
in May 2016 to enhance JBIC’s functions inproviding further support toward Japanesecompanies’ overseas businesses. As part of theenhancement of functions, in October 2016, JBIC
launched the Special Operations to strengthen
its risk-taking ability for overseas infrastructure
projects.
As Japan’s policy-based financial institution,
JBIC will continue to focus on developing
sophisticated and diverse financial techniques
to better support Japanese companies as theirpresence overseas grows.

Akira Kondoh
Governor
Japan Bank for International Cooperation (JBIC)

4JBIC ■ Annual Report 2017

■ World’s Infrastructure Investment Forecast1($ trillion)

60

49.1

50

60%
share of
Emerging
Markets

31.4

China
Eastern Europe

30

Latin America
Middle East

20

Other emerging Asia
India
Africa10

U.S. and Canada
Western Europe
Developed Asia and Oceania

2000-152016-30

Source: McKinsey Global Institute “Bridging Global Infrastructure Gaps
June 2016”

Breaking this down further, infrastructure investment
demand in Asia is forecast to total $26 trillion over the next 15
years ($1.7 trillion/year) (Source: Asian Development Bank).
To drive growth within the ASEAN region, it isimportant to facilitate economic activities by maintaining theconnectivity of such infrastructure as electric power, railways,
roads, and information and communications networks.
In 2010, ASEAN adopted a Master Plan to strengthen
connectivity among infrastructures, systems, and people
and is steadily progressing with an infrastructure plan that
includes cross-border highways, gas pipelines, and powertransmission lines based on a wide-region infrastructure
scheme. In 2016, ASEAN members revised this Master Plan
to accelerate infrastructure development. Going forward,
it is certain that 1) increased domestic demand driven by
growth in emerging market economies will be materialized
and 2) liquefied natural gas (LNG) markets will be expanded
in tandem with rising needs for low-carbon gas-fired thermal
power generation as a measure to combat global warming.
LNG demand is expected to outpace supply over the medium
to long term, with especially pronounced growth in demandin Asian emerging markets.

— Can you please explain JBIC’s business results for
FY2016?
In FY2016, JBIC made financial commitments totaling¥2,239.7 trillion in loans, equity participations, andguarantees, a decrease of 6.5% from the previous year,with 257 commitments. Both the amount and number ofcommitments in loans, equity participations, and guarantees
declined from the previous fiscal year due to sluggish global
energy-related investments. On the other hand, large-scale
project finance in the field of infrastructure investment
grew and the amount and number of commitments forinfrastructure-related investment was maintained above¥2 trillion and 200 commitments for the fifth consecutive
fiscal year.
Of particular note, commitments for loans, equity
participations, and guarantees for Asia surged approximately
2.5 times over the previous fiscal year to around ¥840.0
billion on the back of successive large-scale projects such as
for the construction of thermal power-generating facilities
and LNG development projects. This amount represented an
all-time high following the launch of the new JBIC in 2012.
■ Loans, Equity Participations, and Guarantees (Commitments)(Billions of yen)AmountNumber(Number)

5,000

300

271

4,240.9
4,000

242

298
257

239

250

3,249.3
3,000

200

2,397.4

2,206.1

2,239.7

2,000

150

1,000

100

50

0

FY2012FY2013

FY2014FY2015FY2016JBIC ■ Annual Report 2017

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2
Interview with the Governor

400— JBIC responded to these trends by launching theSpecial Operations in October 2016.
The Amendment Act of the JBIC Act was enacted on May
11, 2016 to provide further support to Japanese companies’
overseas businesses with a view to the “Partnership for Quality
Infrastructure” promoted by the Japanese government. This
amendment enhances JBIC’s functions in a way that enables
JBIC to finance a wider range of countries and infrastructure
projects by expanding its risk-taking ability.
In response to this amendment, we launched theSpecial Operations in October 2016. As the first project
under the Special Operations, in March 2017, JBIC provided
a buyer’s credit to the government of Iraq to support theexport of substation facilities of Japanese companies. Using
this project as a springboard, JBIC will identify the needsof Japanese companies in detail and appropriately control
risk while steadily building on its achievements in project
formation.

Profile of JBIC

— How would you describe the global economy andthe international environment surrounding Japan in
2016?
The global economy was relatively stable in 2016, but still
remained sluggish overall. I believe that any assessment of
the global environment surrounding Japan should be madefrom a medium- to long-term perspective, with particularfocus on global infrastructure investment.
Global infrastructure investment during the 15-year
period from 2016 to 2030 is forecast to increase around
1.5 times to $49.1 trillion. This compares with cumulative
investment of $31.4 trillion from 2000 to 2015. Also
noteworthy, the share of this investment by emerging
markets is expected to grow from about 50% in the past
15-year period to around 60% of total investment during
the next 15 years (Source: McKinsey Global Institute).

1
Profile of JBIC

2Interview with the Governor— Could you explain the results of your activities ineach business sector?
In the energy and natural resources sector, the number offinancial commitments for loans, equity participations, andguarantees declined, owing to sluggish market conditions.
In FY2016, JBIC approved financial commitments for four
projects in the form of loans, equity participations, andguarantees, totaling ¥250.5 billion. These included a loan
for: i) the Tangguh LNG 3 Project in Indonesia (additional
development and production of gas fields while expanding
the existing natural gas liquefaction facilities), ii) the Hail
Oilfield development project in Abu Dhabi, and iii) the
acquisition of an interest in the Morenci Copper Mine in
the U.S.
In the infrastructure sector, I believe it is also importantthat JBIC is actively involved in projects from the earlystage of project formation in order to encourage Japanesecompanies to obtain orders in overseas infrastructure
projects. Under this policy, capitalizing on its status as apolicy-based financial institution, JBIC conducted policy
dialogues with the governments of Indonesia, Mexico, andVietnam in order to discuss the issues and challenges thatJapanese companies come across when they participate ininfrastructure projects in those countries. As a result, in this
sector, JBIC approved financial commitments to the Muara
Laboh geothermal power project in Indonesia and to a waste
treatment and power generation project in the U.S.
In the industrial sector, there were continued needs
for supporting the overseas M&A activities of Japanesecompanies. In FY2016, JBIC made 108 commitments
for M&A, reaching a total amount of ¥984.1 billion. This
marked the second consecutive year that the numberof commitments exceeded 100. As main achievements,
JBIC provided credit lines to Japanese financial institutions
which supported Japanese companies in acquiring a■ Financial Commitments to Mid-tier Enterprises and SMEs

(Billions of yen)Amount120

Number111.7*

96(Number)

150
133
114

109

120

81.0
72

90

48

24

60

42.9
34.1

54

34

18.0

FY2012FY201330

00FY2014FY2015FY2016* Financial commitments in FY2014 include loans amounting toapproximately ¥75.4 billion to fund the Mizkan Group’s acquisitionof a pasta sauce business from a Unilever subsidiary in the U.S.

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JBIC ■ Annual Report 2017

pharmaceuticals company in the U.S. and a railway business
in Italy.
In the mid-tier enterprises and small and medium-sizedenterprises (SMEs) sectors, to provide highly detailed support
for their overseas business deployment, JBIC established the
Finance Office for SMEs in October 2016. In FY2016, thenumber of financial commitments grew steadily to 114.
These included loans for a solar power generation projectin Mongolia and automotive parts manufacturing and sales
businesses in Indonesia. Besides support for overseas M&A
by mid-tier enterprises and SMEs, JBIC established credit
lines with Japanese regional financial institutions as well aswith overseas subsidiaries of Japanese leasing companies toprovide financing to mid-tier enterprises and SMEs whichwish to enter into overseas markets.
In FY2016, JBIC signed memoranda of understanding(MOUs) with Mexico’s local governments and financial
institutions for supporting Japanese mid-tier enterprises
and SMEs in expanding their business to Mexico. Under
those MOUs, a financial support framework was created, inwhich 67 Japanese financial institutions in total will provide
support to those companies which wish to enter into the
Mexican market.
In the environmental field, under the “Global action
for Reconciling Economic growth and ENvironmental
preservation” (GREEN) operations, JBIC supported anenergy efficiency project, which is its first credit line
provided to the government of Ecuador. This is the firstproject which was co-financed with the Inter-American
Development Bank (IDB) under the GREEN operations.
JBIC also provided financing using the Joint Crediting
Mechanism (JCM). As Japan’s policy-based financial
institution, JBIC will closely monitor and ascertain global
trends in climate change policies and will utilize its ties
with Japanese and overseas government-related parties
and international institutions to continue providing financesupport to address environmental issues.
In the equity investment sector, in October 2016, JBIC
newly established the Equity Finance Group and the Equity
Investment Department to strengthen its institutional
capacity of equity investments in line with various
government initiatives. Under loan facilities to support
overseas business deployment, JBIC invested in: i) a private
equity fund that invests in companies with operationsin Mexico, Canada, and the U.S. and ii) an investment
fund that invests in microfinance institutions in ASEAN
countries. JBIC also acquired preferred shares of a Japanesecompany which operates an industrial park in India. JBIC
will expand, upgrade, sophisticate, and strategically deploy
its investment business.

— Can you update us on the progress of the Mediumterm Business Plan?
JBIC’s business is significantly influenced by trends in largescale natural resources, infrastructure, and M&A projects aswell as changes in the environment surrounding these areas.
I am confident that we have achieved steady progress overall
during the past two years of this business plan.
The Amendment Act of the JBIC Act was enacted in
May 2016 and along with this, we launched the Special

Operations in October 2016. Under our Medium-term
Business Plan, JBIC added the following new challenges in
its Key Action Plans: “Strengthening Support for Overseas
Infrastructure Projects by the Special Operations” and“Increasing Supply of Funding through Equity Participation.”
JBIC is also making efforts toward the establishment
and enhancement of risk management in the Special
Operations Account.

enhance knowledge regarding taxation affairs. We aremaking various efforts to improve skills in this area, suchas organizing workshops on international taxation. This
will enable us to provide optimal financial support inconsideration of the different tax systems in each country.
Capital markets in emerging countries are growing, making
it important that we sophisticate our responses such aswith local currency loans and swaps. In natural resources
development and infrastructure investments, it is also
important to cooperate with other export credit agencies,
international development financial institutions, andgovernments of partner countries. For this reason, I hope todevelop world-class, multi-skilled human resources who canplay active roles on the global stage.

— Finally, what is your message to stakeholders inJapan and overseas?
Infrastructure investment is expected to grow sharply andneeds for procuring energy and mineral resources are forecast
to rise further. To support the overseas business deployment
of Japanese companies, JBIC will actively provide financing
as Japan’s policy-based financial institution. To this end, we
will work toward well-balanced and sound organizational
management by strengthening risk management and otherareas of governance.
In addition, securing financing sources is a major issue
amid growth in global investment demand. In large-scale
projects, it is important to cooperate with a variety of players
such as other official export credit agencies, international
development financial institutions, the governments ofeach country, and private-sector financial institutions. JBIC
will strive to meet the diversified financing demands fromour clients by further strengthening the cooperative ties
with global financial institutions, government agenciesof countries in the world, and private-sector financial
institutions inside and outside of Japan.

JBIC ■ Annual Report 20177

2
Interview with the Governor— What initiatives will you promote in the future?
On June 22, 2017, JBIC partially realigned the organizational
structure and renamed some of the Groups with a view to
new business deployment. JBIC has also selected its firstfemale director.
For strengthening the governance framework, JBIC
newly established the Credit, Assessment and Risk
Management Group and placed the Credit Department,
Country Credit Department, and Risk Management
Department within this Group. This reorganization aimed toenhance governance by appointing a Senior Managing
Director and a Managing Executive Director who supervise
the operations of the front office.
To enhance management control, we placed theTreasury Department, Administration and General
Services Department, and the IT Planning and Operations
Administration Department within the Treasury and
Systems Group. As our business operations become moresophisticated and diverse with limited human resources,
we will focus efforts on utilizing IT more effectively andefficiently to undertake our main business to the greatest
degree possible.
Developing human resources who will lead the way
in the next generation is a high priority. I joined JBIC
from a private-sector company. Looking at JBIC’s history,
JBIC began its operations by providing export loans. As itthen gradually expanded the scope of business to importloans, overseas investment loans, and project finance, JBIC
accumulated sophisticated skills and nurtured outstanding
human resources. Nonetheless, intense global investmentcompetition requires that we now further need to raise ourcapabilities to provide support that will enable Japanesecompanies to prevail. One such example is our efforts toProfile of JBIC

— Would you explain your initiatives for FY2017, thefinal year of the plan, and tell us about the next
Medium-term Business Plan?
JBIC’s business environment is set to change dramatically.
JBIC recognizes the large needs for its support, not only forlarge-scale projects but also for support for Japanese mid-tierenterprises and SMEs which wish to start business abroad.
During FY2017, JBIC will accurately respond to these needs
and link these efforts to the next Medium-term Business
Plan. Regarding the Special Operations, we will work hard tobuild a solid business record in fields where JBIC is involved,
while supplementing the ordinary transactions conducted byprivate-sector financial institutions. In formulating our next
Medium-term Business Plan, we will focus on creating a planthat can respond flexibly to the major changes in the global
economy and the Japanese economy.

1

3

Directors, Managing Executive Officers,
and Corporate Auditors (As of August 1, 2017)

1
Profile of JBIC

3
Directors, Managing Executive Officers, and Corporate Auditors(Back row,from left)(Front row,from left)

8

Senior Managing Director

Senior Managing Director

Senior Managing Director

Managing Director

Tatsuhiko Takesada

Yasushi Hasegawa

Kenichiro Hayashi

Shinichi Koizumi

CEO, Executive Managing Director

Governor

COO, Senior Managing Director

Tadashi Maeda

Akira Kondoh

Nobumitsu Hayashi

Corporate Auditor

Corporate Auditor

Corporate Auditor

Mitsuaki Tsuchiya

Yasuo Ota

Yuko Tamai

JBIC ■ Annual Report 2017

1

 Directors

Akira Kondoh

CEO, Executive Managing Director

Tadashi Maeda

COO, Senior Managing Director

Nobumitsu Hayashi

Senior Managing Director

Yasushi Hasegawa

Senior Managing Director

Kenichiro Hayashi

Senior Managing Director

Tatsuhiko Takesada

Managing Director (Outside Director)

Shinichi Koizumi

Profile of JBIC

Governor3
Directors, Managing Executive Officers, and Corporate Auditors

 Corporate Auditors

Corporate Auditor (Full-Time Corporate Auditor)

Yasuo Ota

Corporate Auditor (Outside Corporate Auditor)

Mitsuaki Tsuchiya

Corporate Auditor (Outside Corporate Auditor)

Yuko Tamai

 Managing Executive Officers

Managing Executive Officer, Global Head of Corporate Planning Group

Kazuhiko Amakawa

Managing Executive Officer, Global Head of Credit, Assessment and Risk Management Group Yutaka Funada
Managing Executive Officer, Global Head of Treasury and Systems GroupKuninori Kuroishi

Managing Executive Officer, Global Head of Energy and Natural Resources Finance Group

Masaaki Yamada

Managing Executive Officer, Global Head of Infrastructure and Environment Finance Group

Kazuhisa Yumikura

Managing Executive Officer, Global Head of Industry Finance Group

Kazuhiko Tanaka

Managing Executive Officer, Global Head of Equity Finance Group

Shinji Fujino

JBIC ■ Annual Report 2017

9

4
1

Medium-term Business Plan
(FY2015–2017)

Profile of JBICJBIC has carried out its business activities in keeping with
our goal: “JBIC will contribute to exploring and creating
new business opportunities that will lead to the sustainablegrowth of Japan, through supporting the strengthening ofJapanese companies’ overseas business deployment andresource acquisition, by exercising the financial intermediaryfunctions unique to JBIC” under its Medium-term Business
Plan (FY2015–2017) formulated in June 2015.
The Amendment Act of the JBIC Act was enacted on
May 11, 2016 to strengthen JBIC’s functions in order tofurther support the overseas business expansion of Japanesecompanies for overseas infrastructure projects that utilize
private-sector finance and know-how. In accordance withthis Amendment Act of the JBIC Act, on October 1, 2016
JBIC launched the Special Operations, enabling JBIC totake further risks regarding overseas infrastructure projects.
Concurrently, JBIC newly established the Equity FinanceGroup in order to increase the supply of funding in line withthe government policies and to strengthen its corporate
structure for equity participations.
On this basis, JBIC also added “Strengthening Support forOverseas Infrastructure Projects by the Special Operations”
and “Increasing Supply of Funding through Equity
Participation” as new Key Action Plans within its Mediumterm Business Plan. JBIC will also continue efforts toward theestablishment and enhancement of risk management in theSpecial Operations Account taking into consideration thebusiness scale of the Special Operations and that the Special
Operations exclusively targets businesses related to overseas
infrastructure projects.

4
Medium-term Business Plan (FY2015–2017)

Our Goal
Establish our Goal below to conduct business more proactively and further contribute toward Japan’s sustainable future
growth.

“JBIC will contribute to exploring and creating new business opportunities that will lead to thesustainable growth of Japan, through supporting the strengthening of Japanese companies’
overseas business deployment and resource acquisition, by exercising the financial intermediaryfunctions unique to JBIC.”

Business Areas, Institutional Capabilities,
and Key Action Plans
 Identity 5 Business Areas which JBIC needs to focus on.
 Identity 4 Institutional Capabilities to be demonstrated and strengthened, which are essential to better perform JBIC’s
function in the 5 Business Areas.
 Identity Key Action Plans to “contribute to exploring and creating new business opportunities (country, region, area,
sector and etc.) that will lead to the sustainable growth of the Japanese economy” by demonstrating and strengthening
our 4 Institutional Capabilities in the 5 Business Areas.

10

JBIC ■ Annual Report 2017

Our Goal

1

Business Areas

Profile of JBICJBIC will contribute to exploring and creating new business opportunities that will leadto the sustainable growth of Japan, through supporting the strengthening of Japanesecompanies’ overseas business deployment and resource acquisition, by exercising thefinancial intermediary functions unique to JBIC.

Institutional Capabilities
Financial Structuring for Business Implementation

1

Energy and Natural Resources

2

Infrastructure

3

Manufacturing and Other Industries

4

Mid-tier Enterprises and SMEs

5

Environment

Realization of Projects Bankability
Providing Information and Policy Recommendations

4

Mobilization of Private Sector FinanceMedium-term Business Plan (FY2015–2017)

Key Action Plans
Supporting JapaneseCompanies’ Energy
and Natural Resources
Business

Supporting Promotion
for Diversification andAdvancement of JapaneseCompanies’ Overseas
Infrastructure Development

Supporting the Improvementof Japanese Industries’
Competitive Advantage and
Growth Opportunities in theWorld Market

Supporting Overseas
Business Expansionof Japanese Mid-tierEnterprises and SMEs

Positive Contribution to Preserving the Global Environment, including Measures to Mitigate Climate Change
Strengthening Support for Overseas Infrastructure Projects by the Special Operations*
Increasing Supply of Funding through Equity Participation*
Enhancing Mobilization of Private Sector Finance through Strengthened Collaboration with Private Financial Institutions

Key Action Plans of Corporate and Treasury Areas
Enhancement of Risk Management and Maintenance/Strengthening of Financial Stability
Establishment and Enhancement of Risk Management in the Special Operations Account*
Strengthening of Human Resources Development for the Further Improvement of Organizational Capability
Improvement of Efficient Organizational Operation and Workflow*Newly established due to a revision in January 2017

JBIC ■ Annual Report 201711

Details of Key Action Plans*

1
Profile of JBIC

4

1. Supporting Japanese Companies’ Energy andNatural Resources Business
1-1 Promoting projects that secure and diversify the
supply of resources
 JBIC supports project formation and implementation,
through taking the country risk of resource-rich countries,
utilizing its knowledge of risk management/allocationand developing a dialogue with overseas counterparties
such as the governments of host countries, state-owned
oil & gas companies, and the international resources
majors, by leveraging JBIC’s status as a policy-based
financial institution. In addition, JBIC supports integrated
natural resource projects, which include surrounding
infrastructure and/or advanced technology.

Medium-term Business Plan (FY2015–2017)

1-2 Promoting projects that reduce LNG procurementcosts
 JBIC supports the financing and realization of Japanesecompanies’ businesses that reduce Japan’s long-term LNG
procurement costs in addition to the activities mentioned
in the above 1-1.

2. Supporting Promotion for Diversification
and Advancement of Japanese Companies’
Overseas Infrastructure Development
2-1 Strengthening efforts for social infrastructure
projects such as railroad and water JBIC supports Japanese companies’ overseas infrastructure
system projects, through developing a dialogue with theoverseas counterparties and international key-players
by leveraging JBIC’s status as a policy-based financial
institution, utilizing its knowledge of risk management/
allocation and drawing on various financial facilities andschemes, and promoting JBIC’s involvement from anearly stage in the project’s framework development andformation.
2-2 Strengthening efforts for smooth implementationof power generation projects
 JBIC supports the overseas deployment of advanced
technology and the participation of Japanese companies
in high efficiency and renewable energy power generation
projects, etc., beyond existing markets and schemes, by
taking advantage of close relationships with and strong
influence on host country governments and overseas
key players, and utilizing its knowledge of risk control/
allocation and drawing on various financial facilities andschemes.

12

JBIC ■ Annual Report 2017

3. Supporting the Improvement of JapaneseIndustries’ Competitive Advantage and
Growth Opportunities in the World Market
3-1 Strengthening support for the overseas businessdeployment of various industries, which are thebasis of the Japanese economy
 JBIC supports further opportunities for Japanesecompanies in various industries, which are the basis of
the Japanese economy, to increase their earnings throughoverseas investment, by strengthening overseas risktaking and communication from the development stageof corporate strategy.
3-2 Contributing to the development of competitive
Japanese technologies and business models into
growing industries through overseas businessdeployment
 JBIC supports Japanese companies with competitivetechnologies/brands/business models, etc., to develop
into growth industries on a commercial basis and to
capture market share in overseas markets, aiming tocreate Japan’s new growth industries.

4. Supporting Overseas Business Expansion ofJapanese Mid-tier Enterprises and SMEs
Supporting mid-tier enterprises’ and SMEs’ overseas
business expansion utilizing JBIC’s characteristics
 In collaboration with private financial institutions,
JBIC supports Japanese mid-tier enterprises and SMEs
increasing their earning opportunities through overseas
business expansion, taking into account JBIC’s uniquecharacteristics (e.g., local currency financing).

5. Positive Contribution to Preserving the Global
Environment, Including Measures to Mitigate
Climate Change
Strengthening efforts on projects that promote thepreservation of the global environment, including
measures to tackle climate change
 JBIC supports the efforts of Japanese companies
and overseas counterparties to preserve the global
environment, including measures to tackle climatechange, considering the international discussions andpolicies of the Japanese and host country governments inthis field, by taking advantage of close relationships withhost country governments and utilizing its knowledgeof risk management/allocation and a wide range offinancial facilities and schemes such as Global action
for Reconciling Economic growth and ENvironmental
preservation (GREEN).

6 Strengthening Support for Overseas
Infrastructure Projects by the Special Operations

1(Newly established due to a revision in January 2017)

Profile of JBIC

Strengthening Support for Overseas Infrastructure
Projects by the Special Operations
 Utilizing the Special Operations launched in October 2016
under the Amendment Act of the JBIC Act, JBIC provides
further support to overseas infrastructure projects,
including those that have not been considered under
the Ordinary Operations, through risk control measures
such as dialogues with host country governments andconducting appropriate risk-sharing with concerned
parties.

7 Increasing Supply of Funding through Equity
Participation(Newly established due to a revision in January 2017)4
Medium-term Business Plan (FY2015–2017)

Increasing Supply of Funding through Equity
Participation
 Under the Equity Finance Group newly established in
October 2016, JBIC integrates functions related to equity
participation to accumulate know-how and strengthen
expertise in order to increase the supply of funding throughequity participation, while establishing organizational
structure to enable strategic equity participation.

8. Enhancing Mobilization of Private Sector
Finance through Strengthened Collaboration
with Private Financial Institutions
Further enhancement of private sector financemobilization
 JBIC expands efforts to promote its initiatives of credit
securitization, including assignment of its loan portfolio.
 JBIC promotes the mobilization of private sector financein a variety of ways, including providing funds in theform of equity, subordinated loans, and providing LBO
financing.
 JBIC pursues appropriate cofinancing taking into accountthe uniqueness of individual projects and the surrounding
financial environment.

*JBIC will make necessary revisions to the Key Action Plans of the Mediumterm Business Plan when the surrounding environment or expected rolechange significantly, and as a result, JBIC determines that it should engage
in additional/different fields.

JBIC ■ Annual Report 201713

5

Outline of Operations in FY2016

Operational Highlights

1
Profile of JBIC

The total amount of commitments JBIC made during
FY2016 in loans, equity participations, and guarantees was¥2,239.7 billion, which is 6.5% less than that of FY2015.
The outstanding amount of loans and equity participations
and guarantees as of March 31, 2017 was ¥17,042.4 billion.
The following is a report on JBIC’s major operations ineach sector during FY2016.

waste treatment and power generation project in the U.S.,
both of which are invested in by Japanese companies. JBIC
also supported Japanese companies to export gas-fired
combined cycle power plant facilities to PT PLN (Persero), a
state-owned power company in Indonesia.

Supporting Strategic Overseas Business
Activities by Japanese Companies
Efforts in the Energy and Natural Resources
Sector5
Outline of Operations in FY2016

JBIC provided loans for the car sales financing business inThailand run by a Japanese company, as well as for a steel
processing and distribution business in India participated inby a Japanese company.
Furthermore, JBIC contributed to a private equity fundthat invests in companies in Mexico, Canada, and the U.S.,
as well as to a fund which provides loans and equity to
microfinance organizations in ASEAN countries. JBIC alsoacquired preferred shares for a Japanese company’s industrial
park operation business in India.

Securing stable medium- to long-term supplies of energy andmineral resources through increasing the self-development
ratio is a vital task in Japan, as a country heavily dependenton imports from overseas for most of its resources. Throughfinancially supporting acquisition of upstream resource
interests, diversification of supply sources, enhancement of
the fuel value chain, and strengthening of relationships withresource-rich countries, JBIC contributes to securing a stablelong-term supply of resources.
As examples, JBIC provided necessary funds to
the Tangguh LNG 3 project in Indonesia for additional
development and production of gas fields, as well as
expansion of existing gas liquefaction facilities. JBIC alsofinanced the Hail Oilfield development project in Abu Dhabi
and provided funds required for acquisition of interest inMorenci Copper Mine in the U.S.

JBIC joined project financing1 to provide necessary funds forexporting Japanese-made plant facilities to the Yamal LNG
project in Russia. JBIC also supported the export of vessels
built by Japanese shipbuilding companies.

Supporting Overseas Infrastructure Business
Deployment by Japanese Companies

Supporting Overseas Business Deployment ofJapanese Mid-tier Enterprises and SMEs

In the power sector, JBIC provided loans for the Muara
Laboh geothermal power project in Indonesia and for a

To support the overseas business expansion of Japanese
mid-tier enterprises and SMEs, JBIC made a total of■ Commitments by Purpose of Financing■ Commitments by Region

Supporting Exports by Japanese Companies(FY2016; unit: billions of yen)

Equity Participations 16.2 (1%)
Guarantees
293.5 (13%)

Export Loans
175.0
8%

Untied Loans
33.7 (2%)¥2,239.7

Overseas Investment Loans
1,721.0

JBIC ■ Annual Report 2017

Others 15.4 (1%)
International Institutes, etc.
14.9 (1%)
Latin America andthe Caribbean
89.0 (4%)
North America
605.8

The Middle East
134.2

77%

14

(FY2016; unit: billions of yen)27%

¥2,239.7

Asia 843.2

38%

6%
23%

Oceania11.1 (1%)
Europe 525.7

Supporting Japanese Companies with Local
Currency Loans

Supporting Samurai Bond Issuance
JBIC agreed to provide a guarantee for the Samurai bonds3(privately placed Japanese yen-denominated foreign bonds)
issued by the Mexican state-owned petroleum company, andto acquire a part of the bonds issued by the Government ofIndonesia.

Promoting the Liquidation of Loans
JBIC made partial liquidation of project financing owned
by JBIC for power infrastructure projects through a trust
account in order to promote active utilization of Japanese
private financial institutions.

Launch of the Special Operations

Efforts in the Environment-related Sector
JBIC established credit lines for renewable energy andenergy efficiency businesses with the Government of
Ecuador and a Philippine financial institution under Global
action for Reconciling Economic growth and ENvironmental
preservation (GREEN) operations.

The Amendment Act of the JBIC Act was enacted on May
11, 2016, enhancing JBIC’s functions in order to provide
further support toward Japanese companies’ overseas
businesses, in accordance with the Japanese Government’s
policy to promote investment in quality infrastructure, suchas the “Partnership for Quality Infrastructure.” In October
2016, as part of the enhancement of its functions, JBIC
launched the Special Operations, which enables financing
for a wider range of countries and infrastructure projects.
JBIC supported the export of substation facilities to the Iraq
government as the first loan provided under the Operations.

1. Project financing is a financing scheme in which repayments for a loan are
made solely from the cash flows generated by the project.
2. Currencies other than JPY, USD and EUR
3. Samurai bonds are yen-denominated bonds issued by a foreign government
or company in the Tokyo bond market.

■ Changing Composition of Loans, Equity Participations and Guarantees (Commitments)(Unit: billions of yen)

1.0 (2%)
60.3

¥61.3

(98%)

402.8

FY1970

33.3

(74%)

356.4

FY1985

(6%)

233.5

(40%)

31.1 (6%) 7.4 (1%)
68.5

(13%)

14.2 (2%)
101.4

182.4

(26%)

(21%)

(11%)

¥543.0¥888.4

Guarantees 0.5 (0%)
174.0

FY2000

(14%)

321.4

523.7

(27%)

67.4

(43%)

(6%)

118.3
(10%)

¥1,204.7

175.0 (8%)
1,721.0

FY2016

293.5

(77%)

33.7 (2%)■ Export Loans■ Import Loans■ Overseas Investment Loans■ Untied Loans¥2,239.7(13%)■ Governmental Loans

16.2 (1%)■ Guarantees■ Equity Participations

JBIC ■ Annual Report 201715

5
Outline of Operations in FY2016

JBIC provided 18 local currency loans2 totaling the equivalentof approximately ¥16.7 billion. They included JBIC’s first
Russian ruble loan to fund a car sales financing businessin Russia by a Japanese company and a Thai baht loan tofund an automobile exhaust-purifying ceramic productmanufacturing and sales business in Thailand.

FY1955

1
Profile of JBIC

114 commitments in co-finance with regional financial
institutions and Shinkin banks in Japan. The support included
loans for a solar power generation project in Mongolia andthe automotive parts manufacturing and sales businesses inIndonesia run by Japanese companies.
Furthermore, a total of 67 Japanese financial institutions
joined a framework established based on MOUs which
JBIC signed with Mexican state governments and Mexican
financial institutions to support Japanese mid-tier enterprises
and SMEs, which are clients of Japanese regional financial
institutions, in expanding their businesses to Mexico.
In addition, JBIC established credit lines with Japaneseregional financial institutions, as well as overseas subsidiaries
of Japanese leasing companies, to support the overseas
business deployment of mid-tier enterprises and SMEs.

Operational Results

1
Profile of JBICJBIC made total disbursements of ¥2,200.4 billion in FY2016.
Planned and Actual Lending and Investments(Unit: billions of yen)

FY2013
PlannedExport Loans

FY2014
ActualPlannedFY2015
ActualPlannedFY2016
ActualPlannedActual

190.0

112.5

200.0

112.0

200.0

148.8

290.0

227.2

1,971.0

2,162.5

1,900.0

2,071.2

1,450.0

1,867.9

1,560.0

1,922.4

Untied Loans

50.0

88.5

50.0

64.3

70.0

44.5

90.0

32.2

Equity Participations

100.0

85.4

100.0

30.9

100.0

42.4

120.0

18.5

2,311.0

2,449.0

2,250.0

2,278.6

1,820.0

2,103.8

2,060.0

2,200.4

Import Loans and Overseas
Investment Loans

Total

Financial Results

5
Outline of Operations in FY2016(2) Preparation of Financial Statements
Pursuant to the Companies Act and Article 26 of the Japan
Bank for International Cooperation Act, JBIC prepares
financial statements and submits them to the Minister ofFinance. The report on the final settlement of accounts is
submitted to the government of Japan, together with thefinancial statements and, after examination by the Board ofAudit of Japan, to the Diet.

Principles of Accounting(1) Separate Accounting
Pursuant to Article 26-2 of the Japan Bank for International
Cooperation Act, JBIC shall apply separate accounting toOperations other than the Special Operations (Ordinary
Operations) and Special Operations.

The Fifth Term for JBIC (FY2016)
Statement of Operations

Balance Sheet(April 1, 2016–March 31, 2017; unit: millions of yen)Accounts(As of March 31, 2017; unit: millions of yen)

AssetsAmounts

Accounts

Amounts

Ordinary Income

294,656

Cash and Due from Banks

Interest Income

259,250

Securities

Note 3

Fees and Commissions

26,836Loans and Bills
Discounted

Note 4

Other Ordinary Income―

Other Income

8,570

Ordinary Expenses

253,118

Interest Expenses

177,433

Other Assets
Property, Plant andEquipment

Liabilities and Net Assets

Note 6

Intangible Assets

Borrowed Money281,249

Bonds Payable

14,309,138

Other Liabilities

3,301,565
461,442

Provision for Directors’ Bonuses

6

Provision for Retirement Benefits

6,807

2,711

Provision for Directors’
Retirement Benefits

519

Customers’ Liabilities for
Acceptances and Guarantees

2,384,997

Allowance for Loan Losses(222,036) Acceptances and Guarantees

2,384,997

Total Liabilities

16,064,061

Capital Stock

1,683,000

3,136

General and Administrative
Expenses

16,726

Other Expenses

53,902Retained Earnings

41,537

Total Shareholders’ Equity

75

Valuation Difference on
Available-for-sale Securities
Deferred Gains or Losses on
HedgesTotal Valuation and Translation
Adjustments

41,612

Total Assets

18,571,673

Note: See Notes 3 to 6 on pages 109 to 110 for details.

JBIC ■ Annual Report 2017

Note 527,613

Other Ordinary Expenses

Net Income

9,908,705

Provision for Bonuses

1,919

Extraordinary Income

Amounts

261,790

Fees and Commissions
Payments

Ordinary Profit

16

Accounts

1,526,209

16

842,366
2,525,366
2,468(20,223)(17,755)

Total Net Assets

2,507,611

Total Liabilities and Net Assets

18,571,673

[Ordinary Operations Account]

1

Balance Sheet

Statement of Operations(April 1, 2016–March 31, 2017; unit: millions of yen)

AssetsAmounts

Accounts

Liabilities and Net Assets
Amounts

Accounts

Amounts

Ordinary Income

294,661

Cash and Due from Banks

1,323,789

Borrowed Money

9,908,705

Interest Income

259,250

Securities

281,249

Bonds Payable

3,301,565

Fees and Commissions

26,836Loans and Bills Discounted

14,309,138

Other Liabilities

461,359

Other Income

8,574

Other Assets

261,788

Provision for Bonuses

Ordinary Expenses

253,042

Property, Plant and Equipment

27,613

Provision for Directors’ Bonuses

6Interest Expenses

177,433

Intangible Assets

2,711

Provision for Retirement Benefits

6,806

514

1,912

Customers’ Liabilities for
Acceptances and Guarantees

2,384,997

Other Ordinary Expenses

3,136

Allowance for Loan Losses(222,036) Acceptances and Guarantees

2,384,997

General and Administrative
Expenses

16,657

Total Liabilities

16,063,972

Other Expenses

53,902

Capital Stock

1,480,500

41,618Retained Earnings

Fees and Commissions
Payments

Ordinary Profit

Net Income

Provision for Directors’
Retirement Benefits

Total Shareholders’ Equity

75

16

842,448
2,322,948

Valuation Difference on
Available-for-sale Securities
Deferred Gains or Losses on
HedgesTotal Valuation and Translation
Adjustments

41,693

Total Assets

18,369,251

2,468(20,137)(17,669)

Total Net Assets

2,305,278

Total Liabilities and Net Assets

18,369,251[Special Operations Account]
Statement of Operations

Balance Sheet(October 1, 2016–March 31, 2017; unit: millions of yen)Accounts

Amounts(As of March 31, 2017; unit: millions of yen)

Assets
Accounts

Ordinary Income0

Cash and Due from Banks

Other Income0

Other Assets

Ordinary Expenses
Fees and Commissions
Payments
General and Administrative
Expenses
Ordinary Loss
Net Loss

Liabilities and Net Assets
Amounts
202,419

Accounts

Amounts

Other Liabilities

93

Provision for Bonuses

481

Provision for Directors’ Bonuses

07

Provision for Retirement Benefits

1

74

Provision for Directors’
Retirement Benefits

081

Total Liabilities

81

Capital Stock13

99
202,500

Retained Earnings
Total Shareholders’ Equity(81)
202,418

Deferred Gains or Losses on
HedgesTotal Valuation and Translation
Adjustments

Total Assets

202,432(85)(85)

Total Net Assets

202,333

Total Liabilities and Net Assets

202,432

JBIC ■ Annual Report 201717

5
Outline of Operations in FY2016

Extraordinary Income

Profile of JBIC

Accounts(As of March 31, 2017; unit: millions of yen)

1
Profile of JBIC

5Operations Account, to a capital increase, and to Net Incomeof ¥41.6 billion.

Ordinary Operations Account(1) Statement of Operations
In FY2016, JBIC recorded ¥259.2 billion in Interest Incomeand ¥294.6 billion in Ordinary Income. This was for various
reasons including support to promote the acquisition ofinterests and development of natural resources and to
expand the overseas operations of Japanese companies, suchas infrastructure projects. On the other hand, JBIC recorded¥253.0 billion in Ordinary Expenses as a result of posting¥177.4 billion in funding costs, such as interest expenses.
Therefore, Ordinary Profit was ¥41.6 billion, and Net Income
totaled ¥41.6 billion, which included Extraordinary Income.

Outline of Operations in FY2016(2) Balance Sheet
Total Assets reached ¥18,369.2 billion. This was due primarily
to an increase in Loans and Bills Discounted (increasedby ¥768.4 billion to ¥14,309.1 billion compared with
FY2015) because of increased loans denominated in foreign
currencies due to the extension of loans. Total Liabilities was¥16,063.9 billion. This was due mainly to an increase in
Borrowed Money (increased by ¥470.2 billion to ¥9,908.7
billion compared with FY2015) due to borrowing fromforeign exchange funds and an increase in Bonds Payable(increased by ¥633.0 billion to ¥3,301.5 billion comparedwith FY2015) as the amount of new issuances exceeded
redemptions. Total Net Assets was ¥2,305.2 billion. This wasdue mainly to the transfer of legal retained earnings of theOrdinary Operations Account to capital stock of the Special

Special Operations Account(1) Statement of Operations
In FY2016, which is the first financial closing period following
the launch of the Special Operations (October 1, 2016),
although there was a new commitment, Ordinary Income
amounted to ¥0 million primarily because no interest andfees on loans were recognized. On the other hand, Ordinary
Expenses of ¥81 million were recorded since Generaland Administrative Expenses such as personnel expenses
incurred. As a result, Ordinary Loss and Net Loss amounted
to ¥81 million, respectively.
(2) Balance Sheet
Total Assets amounted to ¥202,432 million. This was due
mainly to the transfer of legal retained earnings in the
Ordinary Operations Account to capital stock in the Special
Operations Account and to the receipt of investments.
Total Liabilities was ¥99 million. This was due mainly tothe recognition of derivatives other than for trading assets.
Total Net Assets was ¥202,333 million. This was due to thetransfer of legal retained earnings in the Ordinary Operations
Account to capital stock in the Special Operations Account,to the receipt of investments and to a Net Loss of ¥81 million.

Funding Sources
JBIC finances its operations through various sources,
including borrowings from the Fiscal Investment and Loan
Program (FILP) Fiscal Loan, Government-guaranteed Foreign
Bond issuance, Long-term Loans in Foreign Currency, FILP
Agency Bond issuance, capital contributions from FILP
Industrial Investment, and borrowings from the Foreign
Exchange Fund Special Account.
As JBIC provides long-term financing, its operations arefinanced by long-term funds to match maturities between
funding and lending instruments.

Borrowings from FILP Fiscal Loan, Governmentguaranteed Foreign Bond issuance, Government-guaranteed
Long-term Loans in Foreign Currency, and Capital
Contributions from FILP Industrial Investment, etc., areincluded in the national budget (either as an item in the
General Account budget or the Special Account budget),and requests for them are submitted to the Diet for approval
along the operating budget of JBIC. Recent funding results
and plans for FY2017 are shown in the table below.

Funding Sources: Actual and Planned(Unit: billions of yen)

FY2013 Actual
Capital Contribution from FILP Industrial Investment
Borrowing from FILP Fiscal Loan
Borrowing from Foreign Exchange Fund Special Account

FY2014 Actual

FY2015 Actual

—

31.0

—

142.0

85.0

555.1

239.7

244.9

530.5

441.0

1,581.3

1,273.2

1,595.8

1,142.7

340.0

—

40.0

Government-guaranteed Long-term Loans in Foreign
Currency
Government-guaranteed Foreign Bonds*
FILP Agency Bonds*

FY2016 Actual FY2017 Planned

658.6

374.8

419.0

1,106.2

1,760.0

—

10.0

—

—

60.0

Other Sources of Funds, Including Repayments(345.9)349.8(155.9)(721.0)(116.0)Total

2,449.0

2,278.6

2,103.8

2,200.4

2,610.0* Figures for bonds are indicated at face value.

18

JBIC ■ Annual Report 2017

■ Funding Sources

1
Profile of JBIC

Financial Market
FILP Bonds
Special Account for Fiscal
Investment and Loan
Program Fund
Investment
Fund AccountFiscal Loan
Fund Account

CapitalContribution

Loans

Foreign
Exchange Fund
Special Account
Loans

Governmentguaranteed
Foreign Bonds

FILP Agency
Bonds

Governmentguaranteed
Long-term
Loans in Foreign
Currency

Internal Funds** Repayments, etc.

5
Japanese and foreign companies, foreign financial institutions, foreign governments andgovernment agencies, multilateral financial institutions

Government-guaranteed Bonds

FILP Agency Bonds

JBIC raises part of its funds by issuing governmentguaranteed bonds in international capital markets.
Outstanding government-guaranteed bonds at the end of
FY2016 amounted to ¥3,080.2 billion at face value, which
accounts for 23.3% of the total outstanding borrowings
and bonds. JBIC provides foreign currency loans whennecessary to effectively implement policy, and funds raisedby issuing government-guaranteed bonds are used as asource of those loans.
As Japanese companies have been recently moving
forward with their overseas business deployment, there are
greater expectations for JBIC to provide financial support
denominated in local currencies. To properly meet demand
for such funds, JBIC issued government-guaranteed foreign
bonds denominated in Canadian dollars in March 2013 andsimilar bonds denominated in British pounds in March 2014.
In the FY2017 budget, JBIC plans to issue in the total
amount of up to ¥1,760.0 billion in government-guaranteedbonds.
JBIC’s government-guaranteed bonds receive the sameratings as the Government of Japan from the rating agencies(A1 from Moody’s Japan K.K. (Moody’s) and A+ from S&P
Global Ratings Japan Inc. (S&P) as of July 31, 2017). Since
they are treated as assets for which the Bank for International
Settlements (BIS) assigns zero risk weight in calculating thecapital adequacy ratio for depository institutions, thesebonds provide a quality investment opportunity for investors
in international capital markets.

In compliance with the government policy to reform FILP,JBIC has issued bonds without government guarantees (FILP
agency bonds) in the Japan’s capital market since FY2001,
thereby raising funds based on its own creditworthiness.
JBIC plans to issue up to ¥60.0 billion in FY2017.
FILP agency bonds that JBIC has already issued received
the same ratings as the government of Japan (as of July
31, 2017) as shown below. They are treated as assets forwhich BIS assigns 10% risk weight in calculating the capital
adequacy ratio for depository financial institutions.
Rating & Investment Information, Inc (R&I): ....... AA+
Japan Credit Rating Agency, Ltd. (JCR): .............AAA
Moody’s: ..............................................................A1
S&P: ................................................................... A+

JBIC ■ Annual Report 201719

Outline of Operations in FY2016

Loans /
Investments

2

The Environment
Surrounding JBIC and Its
Challenges
1 Energy and Natural Resources Finance Group ·········· 22
2 Infrastructure and Environment Finance Group ········ ··· 26
3 Industry Finance Group ····································· ··· 30
4 Equity Finance Group ·········································· 34

JBIC ■ Annual Report 2017

21

1
2

Energy and Natural Resources
Finance Group● Message from the Global Head of the GroupThe Environment Surrounding JBIC and Its Challenges

As Japan depends on overseas sources for most of its natural
resources, the stable procurement of energy resources, such as oil andnatural gas, and mineral resources from overseas is indispensable inorder to maintain and strengthen the stable lives of Japan’s citizens
and the country’s industrial infrastructure.
The Energy and Natural Resources Finance Group is responsible
for promoting the development and acquisition of overseas natural
resources which are essential for Japan. Overseas natural resource
development projects require massive, long-term investments andentail various risks, including geopolitical and price fluctuation risks.
While supplementing private-sector funds, JBIC provides long-term
funds to those projects in the form of loans or equity participation.
As a policy-based financial institution, JBIC also focuses on creating
an environment which enables the smooth implementation ofprojects by actively engaging in dialogues with the governments andstate-run oil companies of resource countries.
JBIC will continue to contribute to securing a stable supply ofnatural resources through the above-mentioned activities.

1
Energy and Natural Resources Finance Group

Masaaki Yamada
Managing Executive Officer
Global Head of Energy and Natural Resources Finance Group

Business Environment and Key Challenges
Global energy supply and demand balance is affected bymacroeconomic trends and various other factors. In recent
years, the global energy supply and demand have loosened
due to increased shale oil production in the U.S. On theother hand, energy demand in Asia is growing at a fasterpace than in any other regions. In particular, Indonesia—oneof the leading oil and gas producers in Asia—is exporting
less energy resources due to its increasing domestic demandfor energy as a result of rapid economic growth. As thisshows, demand for oil and natural gas is increasing acrossthe entire Asian region. Also, there is growing concern about
global warming, as evidenced by the adoption of the Paris
Agreement at the 21st yearly session of the Conferenceof the Parties (COP21) to the United Nations Framework
Convention on Climate Change. Under this new agreement
on climate change, all participating countries are required
to submit greenhouse gas reduction targets. Against thisbackdrop, there has been increased attention on the use ofnatural gas, which emits less CO2 than any other thermal
power-generating fuels.
Over 80% of Japan’s crude oil imports come from
the Middle East and such imports remain highly exposedto geopolitical risks in the region. Therefore, from theperspective of Japan’s energy security, it is also important
to diversify its crude oil procurement sources to areas otherthan the Middle East, while maintaining and strengthening
its relationship with oil-producing countries in the region.
With regards to liquefied natural gas (LNG), the LNG
market will continue to have excess supply over the short

22

JBIC ■ Annual Report 2017and medium terms as the large-scale LNG projects scheduled
to be launched in the U.S. and Australia are expected toboost production of LNG. In contrast, on the demand side,
China and India are increasing their imports of LNG, andother Asian countries are also moving to commence andincrease LNG imports. With this in mind, Japan is required
to create strategic initiatives which are in line with global
trends in LNG supply and demand, including the trends
in Asia, for ensuring Japan’s medium- and long-term LNG
supply security.
Japan also faces other challenges in securing a stablesupply of mineral resources used for a wide range ofapplication across industries. Despite a temporary slowdown
in demand for mineral resources in China, as overall demand
for those mineral resources continues to trend upward, it
is important to secure a stable supply of those resources.
With regards to iron ore, in addition to securing the required
quantities of iron ore, it is important to explore high-qualityiron ore amid deteriorating quality of that obtained fromexisting mines. Similarly, it is also a key challenge to explore
high-quality copper ore under worsening mining conditions.
Amid changes in global supply and demand balancein energy and mineral resources, there is heightened
geopolitical risk in oil-producing nations, such as the riseof extremism. Under such circumstances, it is increasingly
necessary to proactively support Japanese companies inacquiring interests in, and long-term off-take of, energy
and mineral resources in order to secure a stable supply of
resources.

JBIC’s Activities

Oil and Natural Gas

Mineral Resources

Morenci Copper Mine in the U.S.
(Provided by: Sumitomo Metal Mining Co., Ltd.)The Japanese government formulated the Strategy for
Securing Natural Resources in June 2012 based on the
Guidelines for Securing Natural Resources (approved by the
Cabinet on March 28, 2008). This strategy aims to makeStrengthening Ties with Resource Countries

Tangguh LNG Project

To secure the stable supply of natural resources, it isimportant to strengthen the relationships with resourcesupplying countries and major resource companies in theworld. Capitalizing on its status as Japan’s policy-based
financial institution, JBIC continues to hold consultations anddialogues with the governments and their bodies of resource
countries in order to encourage Japanese companies toacquire interests in resources in those countries and resource
development projects to be smoothly implemented.
As one of its efforts to strengthen bilateral ties with animportant resource country for Japan, JBIC signed multiple
MOUs and agreements with the governmental institutionsof Russia, Russian oil and gas companies and financial
institutions. These MOUs and agreements were signed
in an effort to support the initiatives for the “eight-point
cooperation plan ”1 proposed by Japanese Prime Minister
Shinzo Abe to Russian president Vladimir Putin during theJapan-Russia Summit in May 2016. The purpose of these
MOUs and agreements is to reinforce the relationships
with the Russian governmental and commercial entities,
with a view to create future projects which are expected to

JBIC ■ Annual Report 2017

1
Energy and Natural Resources Finance GroupThe Japanese government set a goal of increasing its selfdevelopment ratio of oil and natural gas to 40% or moreby 2030 in the Basic Energy Plan approved by the Cabineton April 11, 2014. To this end, JBIC is providing financial
support for securing Japan’s stable energy supply. For
example, JBIC provided a loan to a project where Abu Dhabi
Oil Co., Ltd. (ADOC) will develop a new oilfield (Hail oilfield)in the Emirate of Abu Dhabi (Abu Dhabi), the United ArabEmirates (UAE), which is a vital country in Japan’s resource
strategy. ADOC is a Japanese company engaged in oilfielddevelopment and operations in Abu Dhabi by acquiring a
100% interest in the concession of several oilfields in the
country. In the LNG field, JBIC provided a loan to expand theexisting natural gas liquefaction facilities at the Tangguh LNG
3 project in Indonesia. Excess supply and slumping prices inthe LNG market have caused concerns about sluggishness ininvestment in LNG—the energy that Japan will need in themedium to long term. Given such circumstances, JBIC madeefforts to secure the medium-to-long-term steady supply of
LNG for Japan by financially supporting the expansion ofthis LNG project in Indonesia, which has a proven record forstable production and supply of LNG, with the additional
advantage of its geographical position close to Japan.
The Kansai Electric Power Co., Inc. will off-take the LNG
produced by this project.

strategic efforts to secure mineral resources by maximizing
the use of public-private resources based on the recognition
that securing the stable supply of low-cost mineral resources
is a major premise for high-added value and sophisticatedmanufacturing technology that is expected to create Japan’snational wealth.
JBIC provided a loan to a Japanese company whichplans to acquire an additional interest in the Morenci Copper
Mine, in the U.S., for the purpose of securing the longterm stable supply of copper—the energy required by theJapanese industry for a wide range of applications, such as
electric cables and automobiles. JBIC also provided a loan toa Japanese company to acquire an interest in the Malinau
coal mines in Indonesia in order to secure long-term off-takeof high-quality thermal coal used for generating electricity.
Through these activities, JBIC has contributed to securing astable supply of mineral resources for Japan.

The Environment Surrounding JBIC and Its Challenges

In FY2016, JBIC made the following efforts to secure a stablesupply of energy and mineral resources from overseas.

2

23

2
The Environment Surrounding JBIC and Its Challenges

1
Energy and Natural Resources Finance Group

accelerate business between Japan and Russia.
JBIC also signed an agreement to provide guarantees
to support the issuance of yen-denominated foreign bonds(Samurai bonds) by Mexican state-owned petroleum
company Petróleos Mexicanos (PEMEX). As Mexico seeks
to increase crude oil exports to Asia, it is a promising oilproducing nation for the diversification of oil supply sources
pursued by the Japanese government based on its energy
policy. The Mexican government has opened up its oil
reserves to foreign companies as part of its energy reform
passed by constitutional amendment, ending a 75-year statemonopoly. This movement led to creating more business
opportunities for Japanese companies to acquire upstream
interests in crude oil or participate in midstream anddownstream businesses. In light of these circumstances, JBIC
signed an agreement to guarantee the issuance of Samurai
bonds by PEMEX, as part of its efforts to assist Japanesecompanies in finding business opportunities in Mexico bystrengthening the relationship with PEMEX.
Additionally, JBIC provided a loan to the governmentof the Republic of Iraq to finance its purchase of a set of
substation facilities from a Japanese company. Japan’s
export of infrastructure to Iraq will contribute to improving
and stabilizing the power supply in Iraq, which will lead to aself-sustaining recovery by the country. Besides, it will help
strengthen the relationship between Japan and Iraq which
has the fifth largest crude oil reserves in the world. This
project is the first project that JBIC has approved under theSpecial Operations, which was launched on October 1, 2016
in accordance with the enactment of the Amendment Act of
the JBIC Act in May 2016.

1. This is a bilateral economic cooperation plan between Japan andRussia, aimed at: (1) extending healthy life expectancies, (2) developing
comfortable and clean cities easy to reside and live in, (3) fundamentally
expansion medium-sized and small companies exchange and cooperation,(4) energy, (5) promoting industrial diversification and enhancing productivity in Russia, (6) developing industries and export bases in the Far East,(7) cooperation on cutting-edge technologies, and (8) fundamentally
expansion of people-to-people interaction.

Future Business Strategy

Substation facilities in Iraq

24

JBIC ■ Annual Report 2017

Signing ceremony for investment in project development companies which
are responsible for the advanced special economic zone for advanced
development as well as the free port project in the Russian Federation Far East

The recent resource price decline or stagnation has brought
concern that there will be a slowdown in investment innatural resource development by major resource companies
or Japanese companies, which will result in a tightening
supply and demand balance of resources in the medium
to long term. On the other hand, resource countries are
faced with financial difficulties and this situation creates afavorable opportunity for Japanese companies to acquire
an interest in high-quality natural resources. Consideringsuch circumstances, JBIC will work hard to secure thestable supply of natural resources for Japan by proactively
supporting Japanese companies which plan to acquire aninterest in natural resources and/or participate in resource
development projects overseas.
To diversify resource supply sources, JBIC will provide
financial support to natural resource development projects
in Africa, which is seen as “The Last Frontier” for foreign exploration as the region is expected to be a source of extractionof natural resources—particularly, oil, natural gas, and minerals. In fact, non-African countries have started investing inresource development projects in Africa. Resource development projects in Africaplay an important role not
only in contributing to job
creation and acquisition offoreign currencies in Africancountries where those projects are implemented, butalso in advancing the initiatives to promote infrastructure and industrial development in Africa, to which
the Japanese government
expressed its commitment at
the 6th Tokyo International
ConferenceonAfricanDevelopment (TICAD VI).
As for LNG, thebalance between global
supply and demand isMajor Projects in Recent Years

2
The Environment Surrounding JBIC and Its Challenges

Oil● Natural Gas■ Coal◆ Iron Ore▲ Copper✚ Other Mineral
Resources, etc.
IGBC Shale Gas, Canada
Cordova Shale Gas, Canada

Norwegian North Sea Oil Field

Montney Shale Gas, Canada

Pogo Gold Mine, U.S.

✚

West Mynkuduk Uranium Mine, Kazakhstan

British North Sea Oil Field

Suska Sukunka Mine, Canada✚

Kashagan Field,✚
Kazakhstan
Kharassan Uranium Mine, Kazakhstan
BTC Pipeline
ACG Field, Azerbaijan

Tungsten Mine,
Portugal✚

Tempa Rossa
Oil Field, Italy

LNG, Qatar
Amic-Toho, Saudi Arabia✚■
Vijachip, Vietnam✚

✚

◆✚

✚
✚

Assmang Iron, Zinc,
Chrome Ore Mine,
South Africa

Gorgon LNG
Pluto LNG

◆
✚ ◆◆
◆
✚

Shark Bay Salt Field

Worsley Bauxite Mine &Alumina Reﬁnery
Cape Lambert
Iron Ore Shipping Port
West Angelas Mine
Jimblebar Mine
Roy Hill Mine

Ambatovy Nickel,
Madagascar●

Prelude FLNG

● ●Bayu-Undan LNG●●●●● Ichthys LNG

Browse LNG
Wheatstone LNG✚

Donggi-Senoro LNG, Indonesia
Tangguh LNG, Indonesia●
PNG LNG, Papua New Guinea

Rasp Zinc & Lead Mine

METOR Methanol, Venezuela

1●■● Purchasing Oil ProductDrummond Project, Columbia

from PDVSA, Venezuela

Bayovar Phosphate Mine, Peru

Energy and Natural Resources Finance Group

■
✚
✚ ●
●
Kangean Oil & Gas Field, Indonesia

Trinidad Methanol,
Trinidad and Tobago

Freeport LNG, U.S.

Taganito Nickel Project, Philippines●

Petra Nova CO2-EOR Project, U.S.

● ● ● Cameron LNG, U.S.
Eagle Ford Shale Oil & Gas, U.S.

Malinau coal mines, Indonesia

Woodchip, Indonesia

Woodchip,Mozambique● Sakhalin II, Russia

Advance Payment Loan to
VINACOMIN, Vietnam
Tiga LNG, Malaysia

Tayan Alumina Project, Indonesia
MOZAL Aluminum Smelter,
Mozambique

Hangingstone Oil Sands, Canada

Morenci Mine, U.S. ▲Advance Payment Loan to
ADNOC● ADCO oilﬁelds, UAE● Hail oilﬁeld, UAE

Oil Field, UAE●●●■■ Grande Cache Coal Mine, Canada
Coal Bed Methane, Canada ●Alouette Aluminium✚ Smelter, Canada
Similco Mine, Canada ▲● Marcellus Shale Gas, U.S.

Sakhalin I, Russia✚

Cerro Verde Mine, Peru
Quellaveco Mine,Peru
San Cristobal Zinc Mine, Bolivia▲▲✚● Curtis LNG
Queensland Curtis LNG●■ Boggabri Mine
✚ ■▲ Sierra Gorda Copper Mine, Chile▲ Esperanza Mine, Chile✚ Promoly Project, Chile✚
Forestation, New Zealand ▲ Antucoya Copper Mine, Chile▲ Escondida Mine, Chile▲ Caserones Copper Mine, Chile▲ Los Pelambres Mine, Chile▲ Stock Acquisition of Anglo American Sur, Chile

Moolarben Mine

■ Caval Ridge Mine
■ Isaac Plains Mine
■ Byerwen Mine
■ Kestrel Mine
■ Minerva Mine

Frade Oil Field, Brazil✚ Forestation, Brazil✚ AMAZON Alumina Reﬁnery/Aluminum Smelter, Brazil✚ CENIBRA Pulp, Brazil◆ NAMISA Mine, Brazil◆ MUSA Mine, Brazil✚ Niobium Mine, Brazil* Including projects that were approved for funding by JBIC more than 10 years ago

forecast to remain loosened for the time being. Also, there
is uncertainty over the outlook for LNG demand due to the
mixture of energy sources in the future and the deregulationof electricity and gas markets. In light of these situations,Japanese electric power and gas companies are seeking
flexibility in the process to secure the supply of LNG andalso liquidity in the LNG market, such as by diversifying
LNG supply sources and the pricing structures, as well as
by removing destination clauses from LNG contracts. The
Japanese government released the Strategy for LNG Market
Development in May 2016, highlighting the creation of the
LNG market with high liquidity. Against these backdrops,
Japan’s electric power and gas companies have started new
businesses to spur LNG demand in Asian countries. JBIC willconsider providing financial support to not only upstream
investments and LNG projects by Japanese companies, butalso their new businesses to boost LNG demand in Asia.
JBIC will continue its efforts to create an environment

As of June 30, 2017

which enables the successful launch and smooth
implementation of resource development projects byactively engaging in dialogues with the governments andtheir bodies of resource countries. The key to strengthening
the relationship with these countries lies not only in thecooperation in resource development projects, but also in theestablishment of comprehensive and sustained cooperative
relationships that meet the needs of these countries
in various fields, including infrastructure construction,industrial advances, employment creation, technology
transfer, and reduced environmental burden through the useof renewable energy and energy saving. JBIC will maintainand strengthen the multilayered and positive relationships
with the governments of resource countries through its
comprehensive efforts to support projects in the areasof infrastructure development and manufacturing in the
resource countries.

JBIC ■ Annual Report 2017

25

2
2

Infrastructure and Environment
Finance Group● Message from the Global Head of the GroupThe Environment Surrounding JBIC and Its Challenges

As stated in the G7 Ise-Shima Leaders’ Declaration issued by the G7
leaders following the Ise-Shima Summit, there is a significant global
demand-supply gap in infrastructure investment. To reduce the gap
in global infrastructure investment, it is important to provide highquality long-term funds. To this end, JBIC will strive to proactively
offer long-term financing to infrastructure development projects,
while enhancing its financing capabilities in order to further mobilize
long-term private-sector funds. In regards to formulating projects,
especially in a PPP framework, development of high-quality projects
that will attract long-term investment from private-sector investors
and promote the participation of the private sector is expected. JBIC
will make efforts to develop such projects in cooperation with thegovernments of projects’ host countries, as well as international
institutions.
Under its Medium-term Business Plan (FY2015-2017), JBIC
will promote the diversification and advancement of overseas
infrastructure projects in which Japanese companies will participate.
Especially, JBIC will expand financing support through means ofvarious financial instruments to other countries and regions thathave not yet been included within the scope of JBIC’s business in theelectric power field. JBIC will also increase its efforts to be involved
in social infrastructure projects, such as railways, seaports, waste
disposals, or water systems. Furthermore, in the environmental field,
JBIC will proactively work toward protecting the global environment,
including efforts to address climate change.

2
Infrastructure and Environment Finance Group

Kazuhisa Yumikura
Managing Executive Officer
Global Head of Infrastructure and Environment Finance Group

Business Environment and Key Challenges
Toward Enhancing International
Competitiveness of Japanese Companies
Having formulated existing policies aimed at promoting quality
infrastructure, the Japanese government announced in May
Table of G7 Ise-Shima Principles for Promoting Quality
Infrastructure Investment

Principle 1: Ensuring effective governance, reliable operationand economic efficiency in view of life-cycle cost
as well as safety and resilience against natural
disaster, terrorism and cyber-attack risks
Principle 2: Ensuring job creation, capacity building andtransfer of expertise and know-how for local
communities
Principle 3: Addressing social and environmental impacts
Principle 4: Ensuring alignment with economic anddevelopment strategies including aspect ofclimate change and environment at the nationaland regional levels
Principle 5: Enhancing effective resource mobilization
including through PPP
Source: Prepared by JBIC based on MOFA’s G7 Ise-Shima Principles for
Promoting Quality Infrastructure Investment

26

JBIC ■ Annual Report 20172016 an additional initiative called the “Expanded Partnershipfor Quality Infrastructure” ahead of the G7 Ise-Shima Summit
meeting. The G7 leaders expressed, in the the G7 Ise-Shima
Leaders’ Declaration, their agreement to align infrastructure
investment with the G7 Ise-Shima Principles for Promoting
Quality Infrastructure Investment (see table at left).
In line with these Japanese government policies,
JBIC will continue its efforts to maintain and increase theinternational competitiveness of Japanese companies bypromoting the export of high-quality infrastructure backed
by Japan’s advanced technology.
Furthermore, JBIC will strive to address the challenges,
as discussed more in detail below, in supporting Japanesecompanies to find more opportunities to invest in overseas
infrastructure business and participating in infrastructuredevelopment projects amid increasingly fierce international
competition in the infrastructure field.
(1) Responding to various risks
Infrastructure projects are considered to be exposed tovarious risks as the projects are, in general, large in size
and also require a long time span from the planning andbidding phases of the project to construction and ultimately
the recovery of invested funds. For example, if the counterparty risk of the national or local governments of developing

(3) Mobilizing a wide range of private-sector funds
Global demand for infrastructure is expected to continue

Commitment to Preserving the Global
Environment
Economic development while protecting the global
environment is now globally recognized as a common issue,
as highlighted by the adoption of the Paris Agreement in2015. Against this backdrop, there is a global hope for
implementation of projects that will contribute to protecting
and improving the global environment. In this area, JBIC
provides support to environment projects through its
operations called “Global action for Reconciling Economic
growth and ENvironmental preservation (GREEN)” (referto page 61 for details). JBIC has established these GREEN
operations in line with “Actions for Cool Earth: ACE 2.0,”
an initiative announced by the Japanese government inNovember 2015, aimed at supporting action in developing
countries and advancement of innovative technologies toaddress climate change. Under the GREEN operations, JBIC
will contribute to promoting economic growth in developing
countries and tackling various global environmental issues
that affect the global economy by implementing measures
for greenhouse gas reduction and climate change.

1. Projects in which the feasibility, economic performance, and the risk burdenof involved parties in the relevant project have been confirmed and assured,and the project participation of private-sector companies and long-term
funding by financial institutions can be expected

JBIC’s Activities
Toward Enhancing International
Competitiveness of Japanese Companies(ADB). In Vietnam, JBIC made a financial commitment toexport electric machinery and equipment for the Binh Thuan

In FY2016, the Infrastructure and Environment
Finance Group approved financial commitments for
23 projects, particularly in the field of electric power,
totaling ¥690.2 billion. In Indonesia, JBIC provided
a loan to the Central Java ultra-supercritical coalfired power generation project, which is Indonesia’s
first PPP project. Additionally, JBIC supported theMuara Laboh Geothermal Power Project throughcofinancing with the Asian Development Bank
Natural gas-fired combined cycle power plant and a desalination plant
project in Kuwait in which Japanese companies are participating

JBIC ■ Annual Report 2017

27

2

2
Infrastructure and Environment Finance Group(2) Promoting to develop bankable projects1
When it comes to the development of public-private
collaboration such as PPP projects and the Build-OperateTransfer (BOT) model, especially in developing countries,
there are cases where risks associated with those PPP projects
might not be properly assessed and shared among project
participants, including the government of a project’s hostcountry, which results in private-sector participants being
exposed to excessive risk. This situation is due to: i) a lack ofintegrity and clarity in the legal system in the project’s hostcountry, ii) a lack of ability and experience in the government
agencies or organizations of the project’s host country, oriii) an absence of proper feasibility studies on the project.
Under these circumstances, PPP projects face difficulty inobtaining investment from the private sector, and as a result,
those projects do not progress in the way the host country’s
government expects. It is pointed out that it is important
to share risks among all parties involved in PPP projects ina way that enables them to manage and control those risks
on their own.

increasing at a faster pace than actual investments amid
economic and population growth, and rapid urbanization,
especially in emerging countries. To reduce the global
demand-supply gap in infrastructure investment, it isimportant to address the above-mentioned challenges,
but in addition, it is also crucial to mobilize a wide rangeof private-sector funds, such as life insurance companies,
pension funds, or investment funds. This is because financing
by Multilateral Development Banks (MDBs) and publicfinancial institutions in each country such as JBIC alone is
not sufficient to meet the global demand for infrastructure
investment in terms of quantity.

The Environment Surrounding JBIC and Its Challenges

countries with low credit ratings is high due to the riskof failure to perform their contractual obligations, or if
the future demand or sales of products or services to bedelivered by the infrastructure operators are uncertain, theinvestment appetite of parties who are interested in the
project might decline, or enough long-term funds might not
be available from financial institutions to start the project.
Profits generated by infrastructure projects are, in principle,
denominated in local currencies. On the other hand, while
there is a need, especially by developing countries, to importleading-edge technologies and management know-how
from overseas, those developing countries might need todepend on private-sector funds from overseas sources inforeign currencies due to the immature domestic financial
markets in those developing countries. Given these situations,
it is also important to find a solution to how currency risks
are shared among parties involved in infrastructure projects,
including the governments of projects’ host countries.

2
The Environment Surrounding JBIC and Its Challenges

2

Power Station, the first ultra-supercritical coal-fired power
plant project in the country. As explained in detail in the next
sub-section (1), JBIC also approved a financial commitment
to a waste treatment and power generation plant projectin the U.S. in accordance with the Amendment Act of the
JBIC Act.
In regards to international competitive bidding on
investment projects, JBIC supported Japanese companies tobid and acquire operation rights of projects by explaining
JBIC’s ability to take risks in providing funding support or
proposing its various financial instruments for structuring
projects during business negotiations with related parties
not only in Asia, but also in the Middle East and North Africa.
Our activities to meet the previously mentioned three
key challenges are as follows.

Infrastructure and Environment Finance Group(1) Responding to various risks
As part of efforts to strengthen risk-assuming functions, JBIC
newly established the Special Operations in accordance withthe enactment of the Amendment Act of the JBIC Act in
May 2016 (refer to page 68).
The launch of the Special Operations Account enables
JBIC to take further risks and as a result, in March 2017,
JBIC made a financial commitment to the government of
Iraq as the first project under the Special Operations (referto page 44).
Alongside the Amendment Act of the JBIC Act, eligible
sectors in developed countries have been expanded (refer topage 69). As a result, JBIC approved a financial commitment
to construct a waste treatment and power generation plantin California in the U.S. as JBIC’s first loan for supporting awaste treatment project.
JBIC is also promoting consultations in order to takefurther risks in assisting local governments and local privatecompanies. JBIC intends to proactively draw on diverse
financial tools, such as acquisition of project bonds or Islamic
finance, that JBIC is allowed to use through the Amendment
Act of the JBIC Act as explained above.
(2) Promoting the formulation of bankable projects
JBIC works toward the formulation of bankable projects
through policy dialogues, consultations, and negotiations
with the projects’ host country governments, their relatedparties, and project operators, and also through collaboration
with MDBs.
In the policy dialogues, JBIC discusses various aspects,
including: the macroeconomic conditions and investment
environment, and financial systems in projects’ host countries,
which are crucial for the stable operations of infrastructure
projects, as well as regulations for infrastructure business,
PPP schemes, and major issues and projects identified ininfrastructure development in key sectors. In addition toregular discussions with the governments of Indonesia,
Mexico, and Vietnam, JBIC responds to individual businessnegotiations and engages in discussions with a varietyof countries considering areas, such as the host country’s
legal system and risk sharing of involved parties for businessconcession contracts, and tries to improve risk allocation
among all parties involved in projects. In particular, JBIC
proposed and discussed ways to share risks for PPPs,
targeting sectors such as transportation infrastructure in thePhilippines. In India, JBIC undertook joint research on theissue of mobilizing overseas capital in solar power generation
projects. Through these efforts, JBIC strives to help expand
investment opportunities for Japanese companies.
Furthermore, JBIC is utilizing the knowledge of outside

Seminar titled “Future Prospect of Quality Infrastructure Projects in Asia through Public Private Partnership” which was co-sponsored by JBIC and ADB at the AsianDevelopment Bank Annual Meeting.

28

JBIC ■ Annual Report 2017

Commitment to Protecting the Global
Environment

Sarulla geothermal power plant project in Indonesia in which Japanesecompanies are participating(3) Mobilizing a wide range of private-sector funds
JBIC makes various efforts to execute its functions as acatalyst for further mobilizing private sector finance.
JBIC provides guarantees to private-sector financial
institutions who participate in cofinancing infrastructure
projects, depending on the requirements of individual
projects. For example, JBIC encourages private-sector
financial institutions to participate in long-term financing by
providing risk guarantees to projects where the private-sector
financial institutions face high political and counterparty
risk of host country governments and their agencies. In
FY2016, JBIC provided risk guarantees to cofinancing banks
that provided finance to large-scale infrastructure projects,
overseas governments and regional development financial
institutions.
JBIC also holds seminars about project finance and
GREEN projects (refer to page 61) for Japanese regionalbanks and life insurance companies. In recent years, JBIC has
been expanding the base of financial institutions involvedin cofinancing. As part of these efforts, in FY2016 three
Japanese banks (the Hachijuni Bank, Ltd., the Bank of
Yokohama, Ltd., and the Joyo Bank, Ltd.) participated forthe first time in cofinancing under the GREEN operations.

Solar power generation project in Jordan in which Japanese companies are
participating

2. A platform set up and led by the World Bank Group aimed at theformulation of infrastructure projects utilizing PPPs
3. Business 20 (B20) is the official G20 dialogue with the global business
community.
4. As of March 2017

JBIC ■ Annual Report 201729

2
Infrastructure and Environment Finance Groupexperts in implementing feasibility studies which are essential
for realizing individual projects that will help maintain andimprove the international competitiveness of Japaneseindustry.
JBIC is also promoting initiatives in collaboration
with MDBs. At the 50th Asian Development Bank Annual
Meeting held in Yokohama in May 2017, JBIC and ADB
co-sponsored “Future Prospect of Quality Infrastructure
Projects in Asia through Public-Private Partnership,” aseminar on PPP schemes, and discussed issues and measures
toward the promotion of PPP projects in the Asian region.
In addition, JBIC participates in international discussions
toward the promotion of bankable project formulation,such as participating as an Advisory Partner in the Global
Infrastructure Facility (GIF)2 led by the World Bank andparticipating in the infrastructure field of the Business 203
task force.

Under the GREEN operations, JBIC provides financing
support to environment projects, in the form of loans,equity participations, and guarantees, while mobilizing
private-sector funds. The environment projects in which
JBIC considers participating include: i) projects for solar
power plants and energy-efficient power plants that utilize
advanced environmental technologies, and ii) projects that
ensure significant environmental preservation effects byintroducing energy-efficient equipment. To date4, JBIC has
made 31 financial commitments mainly in renewable energy
projects and energy efficiency projects.
In FY2016, under the GREEN operations, JBIC supported
an energy efficiency project, which is its first credit line
provided to the government of Ecuador. This is also thefirst project involving cofinancing with the Inter-American
Development Bank (IDB) under the GREEN operations.
Additionally, JBIC established a second credit line for the
Corporación Andina de Fomento (CAF), Development Bankof Latin America, with the aim of supporting renewableenergy and energy efficiency projects.
JBIC will continue to provide support to ensure thatongoing growth in overseas infrastructure demand leads
steadily to business opportunities for Japanese companies.
At the same time, JBIC will also continue to provide
financial support for efforts aimed at global environmental
preservation.

2
The Environment Surrounding JBIC and Its Challenges

In addition, JBIC also works toward credit securitizationof its loan portfolio with the aim of mobilizing private sector
finance. In FY2016, JBIC securitized existing project financeloans for electric power infrastructure projects in Asia as it
aimed to mobilize finance from regional banks (the Iyo Bank,
Ltd., the Chiba Bank, Ltd., and the Gunma Bank, Ltd.).

3
2

Industry Finance Group● Message from the Global Head of the GroupThe Environment Surrounding JBIC and Its Challenges

In October 2016, JBIC set up the Finance Office for SMEs as partof an organizational realignment, aiming at more attentive support
for overseas business deployment of mid-tier enterprises and small
and medium-sized enterprises (SMEs). The Industry Finance Group
is currently composed of four departments and offices, namely the
Corporate Finance Department, Marine and Aerospace Finance
Department, and West Japan Office in addition to the Finance
Office for SMEs. The group will deploy diverse financial techniquesmatched to each project as it implements initiatives for maintaining
and raising the international competitiveness of Japanese industries.
Amid a continuing strong appetite for overseas investment
by Japanese companies, particularly for overseas mergers andacquisitions (M&A), the Group provided loans and guarantees
amounting to ¥1,141.6 billion for 221 commitments in FY2016.
In the run-up to the final year of the current Medium-TermBusiness Plan (FY2015-2017) formulated in 2015, the Group
continued proactive efforts toward “Supporting the improvementof Japanese industries’ competitive advantage and growth
opportunities in the world market” and “Supporting mid-tierenterprises and SMEs’ overseas business expansion utilizing JBIC’s
characteristics,” which are Key Action Plans under the plan.

3
Industry Finance Group

Kazuhiko Tanaka
Managing Executive Officer
Global Head of Industry Finance Group

Business Environment and Key Challenges
Amid steady foreign direct investment by Japanesecompanies, despite a brief decline following the collapse of
Lehman Brothers, their overseas M&A have surged on theback of declining acquisition prices due to the strong yen.
This level of activity is continuing, irrespective of subsequent
forex trends. Over the past three years as well, overseas
M&A deals have continued to rise, increasing from 557 in2014 to 663 in 2016. The value of such M&A has also risen
for two consecutive years, surpassing ¥10 trillion in 2015
and 2016 (Figure 2). This trend of M&A activities shows that

Overseas M&A by Japanese Companies Trending
UpwardDespite the slowdown sparked by the global financial crisis
in 2008, foreign direct investment by Japanese companies
exceeded $100 billion in 2011 in consequence of the sudden
appreciation of the yen. Although the yen also subsequently
weakened, during this time, foreign direct investment by
Japanese companies has remained steady, reaching $145.2
billion in 2016 (Figure 1).

Figure 1. Value of Japanese Foreign Direct Investment(Billions of U.S. dollars)
150Japanese foreign direct investment (left axis)

120

120

90

90

60

60

30

30

0

’02

’03

’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

Source: Bank of Japan (exchange rate). UNCTAD (Japanese Foreign Direct Investment)

30(USD/JPY)
150

Exchange rate (right axis)

JBIC ■ Annual Report 2017

’14

’15

’16 (Year)0the expansion of the business scale has also been a major
business strategy for Japanese companies.

Japanese companies are seeking to substitute the shrinking
domestic market by businesses in new markets. M&A
aimed at achieving an edge on global competitors through

The Environment Surrounding JBIC and Its Challenges

Figure 2. Changes in the Value and Number of Overseas M&A by Japanese Companies(Trillions of yen)
15

Value (left axis)(Number)
1,000(Number) (right axis)

12

800

9

600

6

400

3

200

0

’02

’03

’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16 (Year)

0

Source: RECOF Corporation

3

The value of global export transactions gradually increased
from 2011, reaching $19.0 trillion in 2014. However, amid
stagnant demand in emerging markets and weak natural
resource prices, the value of export transactions began
shrinking from 2015, amounting to $15.9 trillion in 2016.
From 2012 to 2015, Japan’s export transactions continued
declining despite the ongoing yen depreciation. However,in 2016 export transactions increased 3.2% year-on-year to$644.9 billion (Figure 3). Japan’s exports were dragged down

Figure 3. Global and Japanese Export Value
Japanese export value (left axis)(Billions of U.S. dollars)
20,000Global export value (right axis)

800

16,000600

12,000

400

8,000

200

4,000

0

’02
’03
Source: UNCTAD

’04

’05

’06

’07

’08

Boosting Overseas Business for Mid-tierEnterprises and SMEs
Mid-tier enterprises and SMEs deploying business overseas
have become increasingly active in trying to create new
business opportunities, both by capturing demand inoverseas markets in addition to striving to meet local
procurement needs of major Japanese companies. Every
year, JBIC implements a survey, the medium-term prospects

’09

’10

’11

’12

’13

’14

’15

’16 (Year)0for overseas operations, in Survey Report on Overseas
Business Operations by Japanese Manufacturing Companies.
In view of the accumulated results of their overseas businessexpansion to date, it is assumed that the appetite foroverseas business deployment by mid-tier enterprises and
SMEs will remain at a high level (Figure 4).
Diversification has been seen in the mid-tier enterprises
and SMEs willing to take on the challenge of goingoverseas, the countries they target, and their funding needs.

JBIC ■ Annual Report 201731

Industry Finance Groupby the establishment of local production systems by Japanesecompanies to tap growth overseas as well as the subsequent
steady, successful development of Japanese supply chain
systems abroad. Nonetheless, a recovery in demand, mainly
for automobile-related goods in developed countries and for
information-related products in Asian emerging markets due
to robust economic growth in developed countries and apickup in the economies of emerging countries, has beena primary factor driving a recovery in the value of Japan’s
export transactions despite the overall decline in global
export transactions.

Value of Japan’s Exports in a Recovery Trend(Billions of U.S. dollars)
1,000

2

2

Nevertheless, the mid-tier enterprises and SMEs tend to face
greater constraints than larger companies on various fronts,
such as fund procurement and information gathering for theoperation of overseas businesses. It is, therefore, incumbent
on us to further enhance the support provided to thesecompanies.

The Environment Surrounding JBIC and Its Challenges

Figure 4. Medium-term Prospects (Next Three Years, or so) for Overseas Operations1
Strengthen / expand

Maintain present level

Scale back / withdraw
Mid-tier enterprises / SMEs3

Total responding companies
(%)
100

(588)
0.9

(610)
1.5

(602)
0.7

(594)
1.5

(623) 2

14.8

16.1

18.4

18.0

23.0

0.5

80

80

60

60

40

84.4

82.5

80.9

80.5

76.6

20
0

3

(%)
100

40

(153)
1.3

(169)
2.4

(166)
0.0

(157)
1.9

(186) 2
0.0

26.1

23.7

25.3

22.9

31.2

72.5

74.0

74.7

75.2

68.8

’12

’13

’14

’15

’16 (FY)

20

’12

’13

’14

’15

’16 (FY)

0

Industry Finance GroupNotes
1. “Overseas Operations” is defined as production, sales, and R&D activities at overseas bases, as well as the outsourcing of manufacturing
and procurement overseas.
2. The numbers in the parentheses above the bar graphs indicate the numbers of responding companies to the question.
3. Mid-tier enterprises/SMEs are companies whose paid-in capital is less than ¥1 billion.
Source: Results of the JBIC FY2016 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies

JBIC’s Activities
Supporting Overseas Business Expansion Using
Various Financial Instruments
JBIC works to support the overseas business deployment
of Japanese companies by providing long-term fundingfor overseas M&A activities, overseas infrastructure, andnatural resource-related sectors. Led by the Industry FinanceGroup, JBIC continues to provide support for meeting thehigh needs for overseas M&A. JBIC provides a flexible formof long-term funding required for the M&A activities ofJapanese companies targeting overseas companies in various
fields, including the medical care, food, pharmaceuticals,
automobile parts, semiconductor, precious metals recovery
and purification, human resource dispatch, and IT industries.
This funding is provided through direct financing from JBIC
or indirect financing (two-step loans (TSL)) utilizing M&A
credit lines (credit facilities) concluded with Japanese private
financial institutions. In FY2016, JBIC approved financial
commitments valued at¥971.0 billion for overseas
M&A transactions.
JBIC also provided
support for procuring local
currencies, which includes
support for a Thai bahtdenominated loan for an
JBIC supported an overseas M&A(medical care) by a Japanese company. auto parts manufacturing

32

JBIC ■ Annual Report 2017

and sales business as well as JBIC’s first-ever loan
denominated in Russian rubles. In this manner, in FY2016
as well, JBIC proactively provided support for overseas
business deployment to maintain and raise the international
competitiveness of Japanese companies.

Opening ceremony at a Thai subsidiary of the mid-tier enterprises and SMEs
supported by JBIC

Supporting Japanese Exports and Overseas
Businesses
JBIC is committed to supporting exports and overseas sales
by Japanese companies. During FY2016, JBIC supported

(financing facilities) through private financial institutions.
In addition to seamless funding in the form of loans
denominated in hard currencies (U.S. dollars and Euros),
JBIC also actively supported the local currency needs ofoverseas subsidiaries of mid-tier enterprises and SMEs by
providing loans denominated in local currencies such asThai baht.
Besides support in procuring funds, JBIC also
strengthened collaboration aimed at solidifying ties
between Japan and related parties in host countries byconcluding memoranda of understanding (MOUs) with state
governments of developing countries and with local financial
institutions to support the overseas advancement of mid-tierenterprises and SMEs via Japan’s regional banks. Also, in
response to the growing desire to set up overseas operations
by mid-tier enterprises and SMEs, JBIC continued to provide
various types of information, beginning with informationon the overseas investment environment. JBIC has also
held seminars and individual consultations across Japan toprovide information on overseas business deployment andon concluding MOUs.

Since FY2012, JBIC has been working more aggressively
to support the overseas business deployment of mid-tierenterprises and SMEs through business units dedicated tothis purpose at its Head Office and West Japan Office. These
efforts are steadily bearing fruit as the number of financial
commitments to mid-tier enterprises and SMEs has risen from34 during FY2012, the first fiscal year of these dedicatedbusiness units, to 114 commitments during FY2016.
To facilitate the support of mid-tier enterprises andSMEs, JBIC has strengthened cooperation with Japaneseregional financial institutions and overseas subsidiaries oflease companies by establishing investment credit lines

3
Industry Finance GroupJBIC supports the expansion of plant equipment exports by Japanesecompanies.

Supporting Overseas Business Deployment of
Mid-tier Enterprises and SMEs

2
The Environment Surrounding JBIC and Its Challenges

exports of Japanese-made plant equipment for upgradingan oil refinery to enable production of fuels with low
environmental impact. To support these exports, JBIC
approached buyers, such as the governments of hostcountries, with finance-related proposals to cover projects
from the early stage, and conducted direct negotiations whilesmoothly structuring finance. Also, exports of tankers and
LNG carriers constructed by Japan’s shipbuilding companies
support the shipbuilding industry that plays a significant role
in regional economies and affects many mid-tier enterprises
and SMEs. Given the importance of these exports, JBIC
supports the Japanese shipbuilding industry by deploying its
diverse risk-assuming functions and flexibly utilizing buyer’s
credits for ship exports backed by its capabilities in buyer risk
and project finance.

JBIC holds seminars for mid-tier enterprises and SMEs.

Meeting the Needs of Japanese Companies
Japanese companies continue to confront ever-changing
economic conditions, such as trends in emerging country
economies, and in particular, the global impact of unclear
U.S. economic policy management and the direction ofnegotiations on the U.K. exit from the EU. However, guided
by the policies of the Japanese government, JBIC continues
to provide support aimed at maintaining and improving theinternational competitiveness of Japanese industries.
JBIC’s financing options, including project finance,
subordinated loans, and loans denominated in local
currencies, were further diversified following the May 2016
enactment of the Amendment Act of the JBIC Act.
Through the Industry Finance Group, JBIC will utilize
these financing instruments to deepen its support forJapanese companies and, in order to contribute to the
exploration and creation of new business opportunities
that lead to sustainable growth for Japan, connect Japanto the world by accurately responding to the true needs ofJapanese companies.

JBIC supports ships built by Japanese companies via export financing.

JBIC ■ Annual Report 2017

33

4
2

Equity Finance Group● Message from the Global Head of the GroupThe Environment Surrounding JBIC and Its Challenges

FY2016 was a turning point for JBIC as it established a new business
function known as the Equity Finance Group on October 1, 2016
to enhance its capability in the area of equity financing. This Group
has an Equity Investment Department placed under its supervision.
Up to the present, JBIC has made equity participation inoverseas corporations funded by Japanese companies as well as
invested in overseas private equity funds (PE Funds) that Japanesecompanies play a major role within those funds. One of the growthstrategies of the Japanese government aims to benefit from overseas
growth markets. To achieve the government’s growth strategy, it is
becoming increasingly significant to supply risk money. To this end,
JBIC set up a new business group specializing in equity financing,with an aim to reinforce its ability to supply risk money.
Since the establishment of the Group, there have been
increasing expectations for supply of risk money by JBIC. Under
such a situation, JBIC will continue to provide proactive support
to Japanese companies which plan to expand their business tooverseas markets by utilizing equity financing tools.

4
Equity Finance Group

Shinji Fujino
Managing Executive Officer
Global Head of Equity Finance Group

Business Environment and Key Challenges
Establishment of the Equity Finance Group andthe Equity Investment Department
JBIC encourages Japanese companies to expand theirbusiness to overseas by supplying risk money under its equity
financing operations. Through these operations, JBIC strives
to help Japanese companies to further expand their businessactivities to overseas countries and enable Japan to benefit
from the growth potential of the global economy, with aview to boosting the Japanese economy.
In FY2016, Japan’s current account surplus exceeded¥20 trillion. Especially, the net primary income balance, whichreflects receipts such as dividend income from overseas
investments, remained at a high level above ¥18 trillion.
Furthermore, Japan’s foreign direct investment (calendar
year, on a net basis) in 2016 reached its historical high of
more than ¥18 trillion. This was due to continuous, vigorous
cross-border M&A activity by Japanese companies. In 2016,
the number of cross-border M&A transactions amounted toa record high of 636 deals (Source: RECOF Corporation).
As demonstrated by these figures, Japanese foreign
investment is further increasing. At the same time, the global
markets, especially emerging markets, are expanding at a
rapid speed. Under such circumstances, Japanese companies
are exposed to intense competition for securing overseas
markets. When Japanese companies plan to expand theirbusiness to overseas markets with an eye to diversifying
their earnings bases and sustaining growth in corporate
value, it is highly important to develop an overseas business

34

JBIC ■ Annual Report 2017

strategy, ensuring to i) gain access to long-term risk money
particularly for investments in emerging countries with risinggeopolitical risk and ii) reduce political risk in countries orregions where they plan to conduct operations.
Due to the launch of the Equity Finance Group, JBIC
partially revised its Medium-term Business Plan (FY20172019) in January 2017 to add “Increasing Supply of Funding
through Equity Participation” as one of the Key Action
Plans. The aim of establishment of the Equity Finance Groupand Equity Investment Department which specialize inequity financing operations is to further support Japanesecompanies which plan to expand their business to overseas
countries by increasing the supply of risk money.
Capitalizing on its status as a public financial institution
and accumulated relations with foreign governments,
JBIC will encourage Japanese companies to expand into
overseas markets while assisting them in reducing politicalrisk in countries or regions where they plan to start businessthrough the supply of long-term risk money.

JBIC’s Activities

JBIC signed an MOU with the State Government of Gujarat, where the projectsite is located, for business cooperation (January 2017).

4

An exterior view of the Mandal Japanese Industrial Zone

Future Business Strategy
JBIC established JBIC IG Partners (JBIC IG) on June 30, 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. IGPI has significant
experience in providing companies with hands-on support
for long-term and sustainable growth in corporate andbusiness value.
JBIC will continue to encourage Japanese companies
to expand their business to overseas markets through theuse of various equity financing techniques for structuring
projects, while utilizing the capabilities of JBIC IG.

JBIC IG’s directors and auditors

JBIC ■ Annual Report 201735

Equity Finance GroupUp to the present, JBIC has made investments in various
fields. With regards to the investment in a petrochemicalbusiness in Taiwan, JBIC supported a Japanese petrochemical
manufacturer with unique technology and knowledge ofmanufacturing of petrochemical products in structuring a
project to build a new large petroleum plant in Taiwan byparticipating from the early stage of the project development
process. This Japanese petrochemical manufacturer intends
to manufacture petrochemical products in the new plantand sell them to Asian countries in collaboration with a large
Taiwanese petroleum company.
In the infrastructure field, JBIC supported a Japanesecompany’s equity participation in a water managementcompany with a high presence in the Middle East, North
Africa, and the Asian region. In the renewable energy field,
where growth is expected especially in the European market,
JBIC provided support to a Japanese company which invested
in a business in Denmark for developing and commercializing
the technology to manufacture large offshore wind turbines
in collaboration with a Danish company.
In FY2016, JBIC made a commitment for an equity
participation in an industrial park operation businesscarried out by a Japanese company in the Mandal JapaneseIndustrial Zone in the state of Gujarat, India. The aim of
this business is to provide rental factories within thepremises of the industrial park and various infrastructureservices to Japanese companies in India, including mid-tierenterprises and SMEs. This business is also intended to help
Japanese companies to address issues they might face wheninvesting in India, such as undeveloped basic infrastructuresand complexity in obtaining approvals and licenses forbusinesses. JBIC’s efforts are in line with the objectives of
the Japan-India Investment Promotion Partnership which
was announced at the Japan-India summit meeting in
September 2014.
In addition, JBIC has invested in overseas investment
funds, such as those investing in companies with businesses
in Mexico, Canada, and the U. S. and those in microfinanceinstitutions in ASEAN countries. JBIC will utilize its experiences

gained through these investments in individual projects andoverseas investment funds, with an aim to strengthen its
capability in the area of equity financing.

The Environment Surrounding JBIC and Its Challenges

Equity Participation Business2

3

Examples of BusinessOutcomes in FY2016
1 Overview of Business Outcomes by Region ·············· 38
2 Examples of Business Outcomes by Region ················· 40
3 Examples of Business Outcomes Relating to Support
for Mid-tier Enterprises and SMEs ··························· 48

4 Examples of Business Outcomes Relating
to Environment ················································· 52

5 Examples of Business Outcomes Relating to Studies,
and Collaboration with Overseas Governmental
Organizations and International Organizations ··········· 55

JBIC ■ Annual Report 201737

1

Overview of Business Outcomes by Region

Geographical Distribution of Loan and Equity Participation Commitments(FY2016; unit: billions of yen)

3
Examples of Business Outcomes in FY2016

Belgium 0.2 (0%)
France 6.0 (1%)
RussiaSwitzerland 32.6
56.9
(6%)
(11%)

Norway 6.2 (1%)

Germany
93.9(18%)

Europe¥525.7
United Kingdom 64.7 (12%)
Netherlands
180.4
(34%)

1

Italy
77.7
(15%)
India 2.5 (0%)
Bangladesh 0.2 (0%)

Malta 6.7 (1%)

Overview of Business Outcomes by Region

United ArabEmirates
39.6 (30%)

Iraq
32.3
(24%)

Vietnam 21.0 (3%)
Thailand 19.7 (3%)
Singapore 10.5 (2%)

China 0.9 (0%)
Korea 0.7 (0%)
Mongolia 0.9 (0%)

The Philippines
0.4 (0%)The Middle East

Myanmar
1.7 (0%)¥134.2

Malaysia
1.2 (0%)Asia¥693.2

Kuwait56.6(42%)
Turkey 5.5 (4%)

Indonesia
633.0
(91%)

Oceania¥11.1
Australia
11.1(100%)

38

JBIC ■ Annual Report 2017

3
Examples of Business Outcomes in FY2016

Canada 0.8 (0%)

North America¥550.2

Mexico0.8(13%)

Latin America
and the Caribbean¥6.2

Transition in Composition of Commitments by Region(Loans, Equity Participations, and Guarantees)(Unit: billions of yen)over the Last 5 Years
The Middle East 305.9 (7%)

FY2012

Asia
513.6
(12%)

Oceania
1,005.7(24%)

The Middle East 104.8 (5%)
Africa 81.1 (4%)

FY2013

Oceania
292.9
(13%)

Asia
472.7
(21%)

Europe350.3(16%)

Oceania 173.8 (5%)

FY2014

Oceania 6.9 (0%)

Europe
598.3
(25%)

Asia
332.9
(14%)

Oceania 11.1 (1%)

FY2016

Latin America andthe Caribbean 136.1 (4%)
North America
1,389.3(43%)

Africa 14.9 (1%)

The Middle East
427.6
(18%)

Asia
843.2
(38%)

Europe525.7(23%)¥4,240.9¥2,206.1

Africa 195.6 (6%)

Europe 228.8 (7%)

FY2015Latin America and the Caribbean 209.1 (9%)
Others 40.8 (2%)

The Middle East
493.6
(15%)

Asia
610.5
(19%)

Others 154.2 (4%)
Latin America andthe Caribbean
805.5
(19%)

North America
710.8
(17%)

North America
654.0
(30%)

Brazil2.6(42%)

Ecuador
2.8(45%)

Africa 84.3 (2%)

Europe660.6(16%)

Overview of Business Outcomes by Region

United States
549.3(100%)

1

Latin America and the Caribbean
507.3 (21%)
Others 15.5 (1%)

North America
493.6
(21%)
The Middle East
134.2 (6%)
North America
605.8
(27%)

¥3,249.3
Others 21.2 (1%)¥2,397.4
Latin America and the Caribbean 89.0 (4%)
International Organizations, etc. 14.9 (1%)¥2,239.7

Others 15.4 (1%)

JBIC ■ Annual Report 201739

2

Examples of Business Outcomes by Region■ Asia3

Mongolia

Examples of Business Outcomes in FY2016

Loan for the Funds to Purchase Japanese-made Printers
Promoting trading activation between Japan and Mongolia
JBIC concluded a loan agreement based on a credit line extended to the government of Mongolia.
The loan is intended to provide, through the Ministry of Finance of Mongolia, the necessary funds
for ADMON PRINT LLC, a Mongolian company, to purchase from TOKOKOSEN CORP. Japanesemade printers, as well as services.
The enactment of the “Agreement between Japan and Mongolia for an Economic Partnership(EPA)” by the governments of Japan and Mongolia in June 2016 is expected to further enhancereciprocal economic cooperation and vitalize the two countries’ economies in a wide range ofﬁelds, along with the liberalization and facilitation of trade and investment between the twocountries. In addition, in July 2014, “ERCH Initiative Plus”1 was agreed on by the two countries’
leaders, supplementing the original and resolving to promote ﬁnancing utilizing this credit line.
This loan is in line with such measures of the two countries.

2

Indonesia

Examples of Business Outcomes by Region

Project Finance for Re-expansion of Coal-fired Power Plant
Supporting Japanese companies’ participation in IPP2 project for ultra-supercriticalpower plant
JBIC concluded a loan agreement for project ﬁnance3 with Indonesian company PT. Bhumi Jati
Power (BJP), in which SUMITOMO CORPORATION and The Kansai Electric Power Co., Inc. andothers have stakes for the re-expansion of the Tanjung Jati B coal-ﬁred power plant in the country.
In this project, BJP will build, own, and operate an ultra-supercritical power plant with an
installed capacity of 2,000 MW (two units of 1,000 MW each). The power from this plant will
be sold to PT PLN (Persero), a state-owned power utility in Indonesia, for 25 years and realize
introducing efﬁcient and environmentally friendly technology to Indonesia.
This loan supports an overseas infrastructure project in which Japanese businesses will
participate as investors and become involved in its operation and management for a long time bytaking advantage of the country’s advanced technology. The loan is also in line with the Japanese
government’s strategy, updated in May 2016, of promoting Japanese involvement in projects that
include the design, construction, operation, and management of infrastructure.

MyanmarLoans for the Manufacturing and Sales Business of PowerDistribution Equipment
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded two loan agreements with Nippon Kouatsu Electric Co., Ltd. These loans are to
be used as funds needed for the power distribution equipment manufacture and sales business
operated by Nippon Kouatsu Electric’s Myanmar subsidiary, Nippon Kouatsu Electric Myanmar Co.,
Ltd. (NKEM), and will be used to build new plant facilities.
Nippon Kouatsu Electric is an SME engaged in the manufacture and sale of power distribution
equipment used in power distribution facilities. With demand for power-related infrastructure
expected to grow in the ASEAN region, Nippon Kouatsu Electric seeks to further expand businessby initiating the manufacture and sales of power distribution equipment by NKEM in Myanmar,
where labor is abundant and low cost. These loans contribute to maintaining and strengthening
the international competitiveness of Japanese industry by supporting the overseas businessdeployment of such Japanese companies, including mid-tier enterprises and SMEs.

1. ERCH Initiative Plus: “The ERCH Initiative” is aimed at promoting economic relations between Japan and Mongolia consisting of two pillars: (1) the developmentof an investment environment and (2) cooperation for sustainable economic development, as proposed by Japanese Prime Minister Shinzo Abe on his visit to
Mongolia in March 2013. As a supplement to the ERCH Initiative, during the visit of Mongolian President Tsakhiagiin Elbegdorj in July 2014, “ERCH InitiativePlus” was proposed by Prime Minister Abe for the promotion of Mongolian exports and industrial diversiﬁcation that was agreed on by both leaders.
2. An IPP (Independent Power Producer) builds and operates power generation independently and sells the electricity produced.
3. Project ﬁnance is a ﬁnancing scheme in which repayments for a loan are made solely from the cash ﬂows generated by the project.

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Singapore

Examples of Business Outcomes in FY2016

Buyer’s Credit for Ship Export
Supporting export of tankers built by Japanese shipbuilders
JBIC concluded two buyer’s credit agreements with two Singaporean subsidiaries, Dynamic Tankers
Pte. Ltd. and Endeavor Tankers Pte. Ltd., of the Tai Chong Cheang Steamship Group (TCC Group),a ship owner based in Hong Kong, for funding the purchase of two tankers.
The TCC Group is based in Hong Kong and is one of the leading ship owners (mainly bulk
carriers and tankers) in Asia. These loans are intended to ﬁnance the TCC Group to purchase two
114,700 DWT4 type tankers built by Namura Shipbuilding Co., Ltd. in its Japanese shipyards.
These loans are intended to support the export of ships built by Japanese shipbuilders which
perform a signiﬁcant role in the regional economy and associated industries, including mid-tierenterprises and SMEs. Thus, these loans will contribute to maintaining and strengthening theinternational competitiveness of the Japanese shipbuilding industry.

2

Thailand

Examples of Business Outcomes by Region

Loans for the Manufacturing and Sales Business of LED Light
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded a loan agreement with GENTOS Co., Ltd. (GENTOS). This loan will provide the funds
needed for the LED light manufacture and sales business operated by GENTOS (Thailand) Co., Ltd.
(GT), the Thai subsidiary of GENTOS, and will be used to construct a new local manufacturing plant.
GENTOS is an SME engaged in the LED light sales business. GENTOS’s LED lights are highly
rated for their high functionality and sophisticated design and have won numerous design awards.
To further expand sales, GENTOS established GT, its ﬁrst overseas manufacturing base.
This loan will contribute to maintaining and strengthening the international competitivenessof Japanese industry by supporting the overseas business deployment of GENTOS.

Vietnam
Loans for the Manufacturing and Sales Business of Plastic Pallets
for Logistics
Supporting the overseas business deployment of mid-tier enterprises and SMEs bycollaborating with local financial institutions
JBIC concluded a loan agreement with Joyo Bank, Ltd. This is an individual agreement based on
an investment credit line to support the overseas business deployment of mid-tier enterprises and
SMEs that was concluded with Joyo Bank in November 2016.5 The loan will be used for funds
required for the manufacture and sale of plastic pallets for logistics carried out by KOEI TODA
INDUSTRIES Co., Ltd., a Vietnamese subsidiary of Koei Industries Co., Ltd.
Under this credit line, the loan will ﬂexibly provide through Japanese ﬁnancial institutions
long-term foreign currency funds needed for projects carried out by mid-tier enterprises and SMEs
in developing regions. The loan will contribute to maintaining and strengthening the international
competitiveness of Japanese industry by supporting the overseas business deployment of Japanese
mid-tier enterprises and SMEs.

4. DWT stands for Dead Weight Tonnage and refers to the total carrying capacity of a vessel, including freight, fuel, food, drinking water, ship crew, and theirpersonal effects.
5. Investment credit line for Joyo Bank: JBIC established a credit line for Joyo Bank for funds needed when Japan’s mid-tier enterprises and SMEs expand businessin developing regions. With its main base of operation in Ibaraki Prefecture, Joyo Bank has a wide range of business relationships with Japanese mid-tierenterprises and SMEs and actively supports their overseas business expansion. JBIC will provide mid-tier enterprises and SMEs and their overseas subsidiaries withmedium- to long-term funds in U.S. dollars through Joyo Bank to actively support their overseas business deployment.

JBIC ■ Annual Report 201741

■ Asia3

Vietnam

Examples of Business Outcomes in FY2016

Buyer’s Credit for Vietnam Electricity
Supporting export of facilities for Vietnam’s first ultra-supercritical coal-fired power plant
JBIC concluded a loan agreement on buyer’s credit (export loan) with Vietnam Electricity (EVN) in March 2017. This loan is intended to ﬁnance
EVN’s purchase of a whole set of Japanese machinery and equipment including steam turbines to build the country’s ﬁrst ultra-supercriticalcoal-ﬁred power generation plant (600 MW x 1 unit) in Binh Thuan Province, Southern Vietnam.
In Vietnam, demand for electricity is rapidly increasing backed by steady economic growth and causing the country to face supply
constraints. It has become particularly urgent to solve the problem of power shortages in Southern Vietnam. In response to this situation, theVietnamese government has set the enhancement of power supply capacity as a national priority. Through JBIC’s support for exporting steam
turbines and other equipment made by Japanese companies, this loan is expected to advance Vietnam’s economic development through steadypower supply, as well as contribute to maintaining and strengthening the international competitiveness of Japanese companies.
The Japanese government positions the ultra-supercritical coal-ﬁred power generation technologies as technologies vital for “quality
infrastructure” in the Partnership for Quality Infrastructure. This project is thus in line with the aforementioned initiative of the government.

2

Vietnam

Examples of Business Outcomes by Region

Loan for the Manufacturing and Sales Business of Automobile
Electronic Components
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded a loan agreement with TOYODENSO CO., LTD. This loan is intended to ﬁnance
VIETNAM TOYODENSO CO., LTD. (VTD), a Vietnamese subsidiary of TOYODENSO, for the
manufacturing and sales business of automobile electronic components. The funds are used
for the expansion of factory facilities of VTD. TOYODENSO established VTD in November 2006
as the manufacturing and sales base in North America and other regions. As demand forautomobiles is expanding in North America and other regions, TOYODENSO plans to further
expand its business by strengthening the production capacity of VTD and thereby expand sales toautomobile manufacturers doing business globally. Thus, this loan contributes to maintaining andstrengthening the international competitiveness of Japanese industries through support for theoverseas business deployment of TOYODENSO.

India
Loan for the Steel Coil Center BusinessSupporting overseas business deployment of steel processing and distribution
business
JBIC concluded a loan agreement with JSW MI STEEL SERVICE CENTER PRIVATE LIMITED (JSWMI),an Indian company. JSWMI was established as a ﬁfty-ﬁfty joint venture between Marubeni-Itochu
Steel Inc. and JSW Steel Limited, a major Indian steel manufacturer. This loan is intended to ﬁnancethe necessary equipment funds for JSWMI to operate a coil center (steel processing and distribution
center) in the northern part of India.
Demand for local procurement of high-quality steel sheet is increasing in India, where
Japanese car and electronic manufacturers continue to expand their presence. Marubeni-Itochu
Steel seeks to develop a new business in India by providing a steady supply of high-quality steel
sheet to Japanese manufactures expanding into northern India, as well as to other companies in
the region.

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Asian countries

Examples of Business Outcomes in FY2016

JBIC Signs MOU with Asian Exim Banks to Revitalize Trade andInvestment
Promoting partnerships with Asian Exim Banks amid increasing economic
collaboration among Asian countries
JBIC signed an MOU for mutual cooperation toward revitalization of trade and investment, with
10 Asian export-import (Exim) banks and export credit agencies (ECAs)1 constituting the member
institutions of the Asian EXIM Banks Forum2, at its 22nd Annual Meeting in November 2016.
The participating members agreed to utilize credit lines and enhance cooperation in
coﬁnancing, as well as in local currency loans, in order to achieve revitalization of trades andinvestments among the Asian countries.
Asian economies have developed deeper interdependence helped by the recent remarkableeconomic development of Asian countries. In this context, a stronger cooperative framework
which is being established by Asian Exim Banks and ECAs, including JBIC, for addressing Asia’s
enormous demand for infrastructure development, as well as energy and environmental issues,
will contribute to sustainable growth in the entire Asian region.

2
Examples of Business Outcomes by Region■ Europe
RussiaExport Credit Line to Joint Stock Company UniCredit Bank
Supporting exports by Japanese companies to Russia and neighboring countries
JBIC concluded in 2016 a general agreement with Joint Stock Company UniCredit Bank (UCB) to establish an export credit line3 to Russia andcertain CIS countries (Azerbaijan, Belarus, Kazakhstan, Turkmenistan, and Uzbekistan).
The credit line, offered to UCB, is intended to provide medium- and long-term funds in Japanese yen, U.S. dollars, and Euros to ﬁnancethe import of machinery and facilities by Russian and other local companies from Japanese exporters.
In Russia, even with the economic impact of declining oil prices, further investments are planned. Japanese companies continue to beinterested in Russia as a promising export market. This was the ﬁrst time that JBIC has set a credit line for a commercial bank of Russia. This
credit line is supporting ﬁnancially the expansion of exports from Japan to Russia.

1. Members of the Asian Exim Banks Forum are: Export Finance and Insurance Corporation of Australia, The Export-Import Bank of China, Export-Import Bank ofIndia, Indonesia Eximbank, Export-Import Bank of Malaysia Berhad, The Philippine Export-Import Credit Agency, The Export-Import Bank of Korea, The ExportImport Bank of Thailand, The Vietnam Development Bank and Export Credit Bank of Turkey.
2. The Asian EXIM Banks Forum meeting has been held annually since 1996, as a mutual consultation forum on information exchange and common concern among
the export credit agencies of the Asian region.
3. An export credit line is a form of export ﬁnancing in which JBIC makes a commitment to provide a maximum amount of credit to be extended to the borrower(foreign banks or other entities) to ﬁnance exports of machinery, equipment, and services from Japan.

JBIC ■ Annual Report 201743

■ The Middle East

3

Iraq

Examples of Business Outcomes in FY2016

Buyer’s Credit for Government of Iraq
Supporting export of substation facilities by Japanese companies
JBIC concluded loan agreements on buyer’s credit (export loans) with the government of Iraq.
These loans are the ﬁrst project under the Special Operations1 launched by JBIC in October 2016.
These loans are intended to ﬁnance the purchase of a set of substation facilities fromToyota Tsusho Corporation by the Ministry of Electricity of Iraq in order to construct substationsat 16 domestic sites in Iraq. Toyota Tsusho will undertake all engineering, procurement, andconstruction of the equipment, while TOSHIBA CORPORATION and MEIDENSHA CORPORATION
will manufacture the substation equipment.
In order to increase the capacity and meet the demand, the government of Iraq is planningto improve and develop facilities for power generation, transmission, and transformation. Theseloans will help promote Iraq’s independent reconstruction through enhancement and stabilizationof the power supply by introducing high-quality infrastructure, and at the same time, contribute tomaintaining and strengthening the international competitiveness of Japanese industries.

2
Examples of Business Outcomes by Region

KuwaitBuyer’s Credit for Oil Refineries
Supporting export of Japanese-made equipment for upgrading oil refineries fromJapanese company
JBIC concluded a loan agreement on buyer’s credit (export loan) with Kuwait National Petroleum
Company K.S.C. (KNPC), which is a subsidiary of state-owned Kuwait Petroleum Corporation(KPC) and engages in oil reﬁning and other business in Kuwait.
KNPC is undertaking a project to upgrade the Mina Al-Ahmadi and Mina Abdullah reﬁneries
in Kuwait’s Ahmadi Governorate and to produce low environmental impact fuel with low
sulfur content that conforms to European and other standards. A joint venture, in which JGC
CORPORATION participates, has received the turnkey order for the upgrading of the Mina
Al-Ahmadi reﬁnery, and JBIC provides part of the funds for this reﬁnery’s EPC (Engineering,
Procurement, and Construction) contract, including the export of equipment made by Japanesecompanies.
In Kuwait, capital investment and plant construction plans are actively carried out with the aimof industrial diversiﬁcation. Through JBIC’s support for the export of Japanese-made equipment to
be used for upgrading oil reﬁneries, this loan will lead to new business opportunities for Japanesecompanies in the oil reﬁning sector in Kuwait.

JBIC Holds Conference Celebrating 10th Anniversary of Dubai Representative Office
JBIC established its Dubai Representative Ofﬁce at Dubai International Financial
Centre (DIFC) in January 2006, becoming the ﬁrst Japanese ﬁnancial institution to
open an ofﬁce in Dubai. The Ofﬁce is in charge of JBIC’s operations in 16 countries
in the Middle East and North Africa. Taking advantage of its 10th anniversary,
JBIC’s Dubai Representative Ofﬁce held a conference in Dubai on the theme of“Japan’s continuing challenge to partner with Middle Eastern countries in achieving
development ‘Visions’.” The conference was attended by government ofﬁcials
and members from the ﬁnancial institutions of several Middle Eastern and Africancountries, as well as representatives from Japanese companies. The conference
provided an opportunity for both parties to develop a mutual understanding forbuilding even stronger relations between JBIC and Middle Eastern countries.

1. Special Operations: To further promote the expansion of Japanese companies in the overseas infrastructure business, the Special Operations reinforce the riskassuming function for overseas infrastructure projects (see page 68).

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United Arab Emirates

Examples of Business Outcomes in FY2016

Loan for Development of New Oilfield (Hail) in Abu Dhabi
Contributing to stable supply of energy resources for JapanJBIC concluded a loan agreement with Abu Dhabi Oil Co., Ltd. (ADOC). This loan is intended toﬁnance necessary funds for ADOC to develop a new oilﬁeld “Hail oilﬁeld” in the Emirate of Abu
Dhabi, the United Arab Emirates. The concession of this oilﬁeld was acquired by ADOC in 2011.
ADOC owns 100% of the concession rights of the three oilﬁelds located in the ofﬁng of
Abu Dhabi. ADOC has conducted the oilﬁeld development and production as the operator andshipped all of the produced crude oil to Japan, contributing to the stable supply for Japan. The
company also holds 100% of the concession of Hail oilﬁeld located adjacent to the existing three
oilﬁelds and plans to carry out its development and production. This loan thereby contributes tothe stable supply of crude oil to Japan and is in line with Japan’s energy resource policy targetingan increase in the self-development ratio2 of oil and natural gas to 40% or more by 2030 underthe “Basic Energy Plan.”■ Africa

2

JBIC Signs MOU with IsDBG
Promoting cooperation toward African development and new business opportunities between Japan and Islamic
countries
JBIC signed an MOU with the Islamic Development Bank Group (IsDBG), taking the opportunity of the 6th Tokyo International Conference on
African Development (TICAD VI). The objectives of this MOU are to promote development in Africa and to strengthen relationships for creating
business opportunities between Japan and the IsDBG member countries.
IsDBG is a regional development ﬁnancial institution with the aim to ﬁnancially support economic growth and social development ofIslamic countries. It leads several organizations, including Islamic Development Bank (IsDB), which provides support through Islamic ﬁnance;
Islamic Corporation for the Development of the Private Sector (ICD), which enhances investments in private businesses; and Islamic Corporation
for the Insurance of Investment and Export Credits (ICIEC), which underwrites various insurances for facilitating investments and trade.
Through this MOU, JBIC seeks to utilize ICIEC’s insurance function in order to enhance the possibilities for supporting Japanese companies’
business expansion in African countries, as well as in ICIEC member countries. JBIC also seeks to increase the possibilities of cooperation withIsDBG in the Islamic ﬁnance sector.

■ North America
United States
Loan for Acquisition of Interest in Morenci Copper Mine
Contributing to steady procurement of base metal by Japanese companies
JBIC concluded a loan agreement with Sumitomo Metal Mining America Inc. (SMMA), a whollyowned U.S. company of Sumitomo Metal Mining Co., Ltd. (SMM). The loan is co-ﬁnanced withJapanese private-sector ﬁnancial institutions and provides necessary funds to SMMA in orderfor SMM to acquire 13% interest in Morenci Copper Mine in the U.S. state of Arizona from an
afﬁliated company of Freeport-McMoRan Inc. (Freeport) of the U.S. through SMMA’s subsidiary.
Copper is used for a wide variety of purposes and indispensable metal resources for Japaneseindustries, and thus it is an urgent task for Japan to ensure a long-term steady supply of copper
resources. This acquisition of interest will enable SMM to receive 62 thousand tons of copper,
which account for 13% of copper produced by Morenci Copper Mine (annual average of purecopper over the next ﬁve years). The loan will thereby contribute to the long-term steady supply ofcopper, one of vital metal resources for Japan.

Provided by: Sumitomo Metal Mining Co., Ltd.

2. The self-development ratio is the proportion of oil and natural gas purchased from those granted to Japanese entities to the total sum of imported anddomestically produced oil and natural gas.

JBIC ■ Annual Report 201745

Examples of Business Outcomes by Region

Africa■ Latin America and the Caribbean

3

BrazilExamples of Business Outcomes in FY2016

Loan for the Sales Financing Business of Motorcycles and Cars
Supporting overseas business deployment of Japanese motorcycle and car industry
JBIC concluded a loan agreement with Banco Honda S.A. (BHB), a Brazilian subsidiary of Honda
Motor Co., Ltd. (Honda). This loan is intended to ﬁnance part of the necessary funds for BHB toconduct the sales ﬁnancing business of Honda-branded motorcycles and cars in Brazil.
Honda entered the Brazil market with its motorcycles in the 1970s and now holds about
80% of the country’s motorcycle market. Its share of cars is also gradually expanding in the world’s
fourth largest market for car sales. In order to maintain and further expand its share in this market,
however, the sales ﬁnancing has become a strategically important tool. Through the supportof such overseas business deployment of Honda, this loan will contribute to maintaining andstrengthening the international competitiveness of Japanese industries. This loan will also support
the enhancement of BHB’s strategy to diversify its funding sources.

2

MexicoExamples of Business Outcomes by Region

Loans for the Manufacturing and Sales Business of Automotive
Parts
Supporting overseas business deployment of Japanese mid-tier enterprises and
SMEs
JBIC concluded a loan agreement with Beyonz Co., Ltd. to extend funds needed for the automotive
parts manufacturing and sales business conducted by its Mexican subsidiary, the BEYONZMEXICANA, S.A. de C.V. (BM). This loan will be co-ﬁnanced by The Bank of Tokyo-Mitsubishi UFJ,
Ltd. and used to expand its facilities.
Beyonz is a mid-tier enterprise engaged in the automotive parts manufacturing and sales
business. In Mexico, where automobile parts manufacturers are entering in waves on the backof automobile demand from North America and other regions, Beyonz plans to further expand
its business there by increasing the manufacture and sales of automobile parts through BM. This
will contribute to maintaining and strengthening the international competitiveness of Japaneseindustries through support for Beyonz’s overseas business deployment.

MexicoGuarantee for Yen-denominated Privately Placed Foreign Bonds Issued by Petróleos Mexicanos
Revitalizing the Samurai bond market and strengthening multi-layered relations with the resource supplier
JBIC signed a set of agreements on guaranteeing yen-denominated foreign bonds (Samurai bonds) issued in Japan by the Mexican state-owned
petroleum company Petróleos Mexicanos (PEMEX). This guarantee is provided under JBIC’s Guarantee and Acquisition toward Tokyo market
Enhancement (GATE) facility1 for the issue of Samurai bonds. Supporting PEMEX’s issue of Samurai bonds in the Tokyo market through credit
enhancement due to this guarantee from JBIC will create wide-ranging investment opportunities for Japanese investors and contribute tomaintaining and strengthening the competitiveness of Japan’s capital markets. It will also assist PEMEX in diversifying its sources of ﬁnancing.
JBIC had previously concluded an MOU and cooperation with PEMEX to establish and develop long-term cooperative ties, and it has been
engaging in annual policy dialogue meetings with the Mexican government in an effort to establish multi-layered relations with the resourcesupplying country of Mexico. The latest set of agreements can be expected to further strengthen relations with PEMEX and Mexico, and to offer
lateral support to Japanese companies pursuing business opportunities in Mexico’s resource and energy markets through the energy reforms
resulting from the amendments made to the Mexican constitution in 2013.

1. The Guarantee and Acquisition toward Tokyo market Enhancement (GATE) facility supports the issuance of Samurai bonds through partial guarantees by JBIC,
and JBIC itself purchases some of these bonds when necessary.

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Latin America and the Caribbean Region

Examples of Business Outcomes in FY2016

JBIC Signs MOU with IDB and IIC
Promoting quality infrastructure and environment projects
JBIC signed an MOU with the Inter-American Development Bank (IDB) and the Inter-American
Investment Corporation (IIC).
The purpose of this MOU is to strengthen the cooperative relationship among the threeorganizations—JBIC, IDB, and IIC—by sharing expertise and know-how of the infrastructureand environmental sectors, as well as exchanging opinions on project development, in orderto promote high-quality infrastructure and environmental projects in Latin America and the
Caribbean region.
The IDB Group, which is an international organization that ﬁnancially assists projects
necessary for economic development of the Latin American and the Caribbean region, plays animportant role in the promotion of infrastructure development and environmental businesses. The
cooperation with the IDB Group, including information sharing, will enable the establishment of aspeedy and effective support system.

2
Examples of Business Outcomes by Region

Participation in Wise Group for the Strategic Economic Partnership between Japan and Brazil
Brazil is not only an important resource supplier for Japan; it is a country withpotential infrastructure demand and diverse business demand from Japanesecompanies, and therefore it is important to build a multi-layered relationship. Japanand Brazil hold the annual Wise Group for the Strategic Economic Partnership
between Japan and Brazil (Wise Group), consisting of business leaders from Japanand Brazil.
In October 2016, the 6th Wise Group was held in Tokyo. As priority ﬁelds inthe strategic economic partnership between Japan and Brazil, the Group discussed
the strengthening of the Japan-Brazil economic partnership, competitiveness of
the industry, infrastructure, renewable energy, new technologies, and cooperationin third countries. Participating from JBIC as a member of the Group was COO,
Senior Managing Director Nobumitsu Hayashi, who introduced the JBIC initiative
GREEN and talked about the current state of Japan-Brazil economic activities inthird countries such as some in Africa and future possibilities. These initiatives are
expected to lead to further strengthening of the economic relationship between
both countries.

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47

3
3

Examples of Business Outcomes Relating toSupport for Mid-tier Enterprises and SMEs

JBIC supports SMEs in a wide range of industries with their overseas business deployment.

Examples of Business Outcomes in FY2016

China

Myanmar

MORROW Co., Ltd.

RYOBI HOLDINGS Co., Ltd.

Sportswear Manufacturing and Sales BusinessDistribution Warehouse Business

Since its establishment in 1969, MORROW has been
manufacturing sportswear products. Following strong
economic growth in China, the company established theChinese subsidiary QINGDAO MORROW APPAREL CO., LTD.
in 2005, as the apparel markets, including sportswear, areexpected to grow in China, the company aims to expand its
business. JBIC provided MORROW with the funds necessary
for the manufacture and sales of sportswear products by
its Chinese subsidiary. The funds were used for additional
capital investments of the subsidiary.

RYOBI HOLDINGS has expanded its business in a wide rangeof sectors including logistics and tourism. In May 2016, it
established the subsidiary Ryobi Myanmar Distribution
Service Company Limited in Myanmar, where Japanesesupermarkets are opening new stores. RYOBI HOLDINGS
seeks to gain market share in the multi-temperature(refrigerated, frozen, constant temperature and room
temperature) warehouse business by providing highquality cold chain services which are indispensable for the
distribution and sale of fresh food products. JBIC provided
RYOBI HOLDINGS with the funds necessary for the multitemperature controlled distribution warehouse operated byits subsidiary.

Philippines

Philippines

Himeji Mekki Kougyosyo

SYTECS CORPORATION

Automotive Parts Plating Business

Plastic Products Manufacturing and Sales BusinessWith its strength in plating technology for steel and industrial
parts, Himeji Mekki Kougyosyo has been increasingly
dealing in industrial machinery parts and automotive parts.
The company established the subsidiary HIMEJI ELECTRIC
PLATING PHILIPPINES INC. in response to a request from an
automobile-related manufacturer with a production base in
the Philippines. The company seeks to expand its businessin Southeast Asia, where market growth is expected. JBIC
provided Himeji Mekki Kougyosyo with the funds necessary
for the plating business for automotive parts conducted byits subsidiary in the Philippines.

SYTECS manufactures and sells plastic products. In
June 2016, SYTECS established the subsidiary SYTECSMANUFACTURING PHILIPPINES, INC. in the Philippines,
which is expected to play the role as a production baseon the grounds of future expansion of the ASEAN market.
JBIC provided SYTECS with the funds necessary for the
manufacture and sales of plastic products for building
materials and automotive parts carried out by its subsidiary
in Batangas Province, Philippines.

3
Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs
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Indonesia

HANYA Seisakusho Co., Ltd.

Daiki Aluminium Industry Co., Ltd.

Automotive Parts Manufacturing and Sales Business

Secondary Aluminium Alloy Ingot Manufacturing and Sales
Business

HANYA Seisakusho is engaged in the business of manufacturing and selling automotive parts, mainly steel platepressed parts. Following the expansion of the ASEAN
market, the company established the subsidiary P.T.
HANYA KARYA BAHANA in 2013 as a manufacturingbase in Indonesia, where the automobile-related market
is expected to grow. The company aims to expand sales
channels through its subsidiary. JBIC provided HANYA
Seisakusho with the funds necessary to build a new plantfor its subsidiary.

Daiki Aluminium Industry (Daiki), which started businessin 1922, is a pioneer among secondary aluminium alloy
ingot manufacturers and has long held a top share of thedomestic market. Daiki seeks to further expand its market
share by strengthening the manufacturing and sales systemof its subsidiary, PT. Daiki Aluminium Industry Indonesia,
established in 2010 in Indonesia, where demand from theautomobile and related industries is expected to grow. JBIC
provided Daiki with the funds necessary for the aluminium
secondary alloy ingot production and sales business of its
subsidiary in Indonesia.

Examples of Business Outcomes in FY2016

Indonesia

3

ThailandOSP HOLDINGS CO., LTD.

RKC INSTRUMENT INC.

Business Assistance for OSP Group Companies

Metal Heat Treatment Processing Business

Since its founding in 1927, Osaka Sealing Printing Co.,
Ltd. (OSP) has been a leading company in the adhesive
label industry, with an integrated production system frombase paper production to planning, design, and printing.
OSP HOLDINGS is the holding company, including OSP
as the core company. Seeking to expand business to the
ASEAN region, the company established the subsidiary OSPLABEL (THAILAND) CO., LTD. as its manufacturing base in
Thailand. JBIC provided OSP HOLDINGS with Thai bahtdenominated ﬁnancing required by the subsidiary to install
new plant equipment.

RKC INSTRUMENT performs heat treatment processing,paint processing, and surface processing of metallic
materials with a focus on parts related to bicycles andautomobiles. RKC established the subsidiary RIKA JTW HEATTREATMENT CO., LTD. in Thailand under a joint venture witha local company in 2013. The company seeks to expand
sales channels to Japanese companies that have entered
the Thai market and to local companies. JBIC provided thecompany with Thai baht-denominated ﬁnancing required
for expansion of production equipment for the metal heat
treatment processing business carried out by the subsidiaryin Chonburi Province in central Thailand.

JBIC ■ Annual Report 2017

Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs

Thailand49

3
Examples of Business Outcomes in FY2016

Thailand

Vietnam

TOYO ELECTRONICS CO., LTD.

SAKURAI Ltd.

Communication Optical Module Manufacturing andSales Business

Clothing Manufacturing and Sales Business

TOYO ELECTRONICS is primarily engaged in the
manufacturing and sale of semiconductor products andcommunications modules. The company seeks to secure
new sales channels and develop markets through its
subsidiary Toyo Electronics (Thailand) Co., Ltd. in emerging
countries, especially Asia including China, where theInternet is spreading and demand for communications
modules is growing, as well as Africa. JBIC provided TOYOELECTRONICS with the funds necessary to expand plants
and facilities operated by its Thai subsidiary.

SAKURAI has strength in sewn product processing
technology. Sakurai is responsible for sewn productprocessing of clothing, especially underwear sold by major
Japanese clothing manufacturers. The company seeks
to expand business to Asia, where future market growthis expected, by expanding the production capacity of its
subsidiary SAKURAI VIETNAM CO., LTD. established in
Vietnam in 2008. JBIC provided SAKURAI with the funds
necessary for additional capital investments by its subsidiary.

VietnamVietnamAkebono Kasei CO., LTD.

KYODO SEIHAN PRINTING CO., LTD.

Resin Molding Manufacturing and Sales Business

Package Printing and Sales Business

Established in 1980, Akebono Kasei is engaged in the
manufacturing and sales of resin molding. The company’s
main products are automobile-related parts and home
appliances, and it manufactures molds tailored to customers’
needs. Akebono Kasei has an order acceptance systemthat is integrated from planning to manufacturing. Sinceestablishing its subsidiary, AKEBONO KASEI VIETNAM CO.,LTD., in Vietnam in 2007, orders for resin molded products
have been strong, and the company seeks further growth.
JBIC provided Akebono Kasei with the funds necessary to
expand the plant facilities of its subsidiary.

KYODO SEIHAN PRINTING performs color commercial
printing, publication printing, and form printing and sales.
In recent years, KYODO SEIHAN PRINTING has provided
high value-added services including high-speed and variable
digital printing. The company has recently entered Vietnam
and seeks to expand the package printing business for
clothing and food products. JBIC provided KYODO SEIHANPRINTING with the funds necessary for its subsidiary,
VIETNAM KYODO SEIHAN PRINTING CO., LTD., to conduct
the package-related printing and sales business.

3
Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs
50

JBIC ■ Annual Report 2017

3
India

MARUHISA CO., LTD.

Shinichi Kato Office Co., Ltd.

Clothing Manufacturing and Sales BusinessResin Additive Manufacturing and Sales Business

MARUHISA is engaged in the manufacturing and sales ofchildren’s, women’s and men’s clothing. The company’s
strength is as an integrated autonomous producer, fromproduct planning to manufacturing. MARUHISA seeks toexpand sales channels in Europe where clothing demandis strong by increasing the production capacity of Maruhisa
Paciﬁc Co., Ltd, established in 2009. JBIC provided
MARUHISA with the funds necessary for additional capital
investments of its subsidiary.

Shinichi Kato Ofﬁce is engaged in the sales of rubber raw
materials. The company established the subsidiary INDOJAPAN POLYMERS PRIVATE LIMITED (IJP) in 2010. Because
demand for resin additives used in colored plastic products
such as automotive parts is expected to expand in India, thecompany seeks to further expand business by increasing the
production capacity of its subsidiary. JBIC provided Shinichi
Kato Ofﬁce with the funds necessary for the construction ofa new plant of its subsidiary.

Examples of Business Outcomes in FY2016

Bangladesh

3

MexicoYamada Bee Company, Inc.

Miyazaki Seiko Co., Ltd.

Health Food and Cosmetics Manufacturing and Sales Business

Secondary Processing and Sales of Specialty Steel Bars andWire BusinessYamada Bee is engaged in the manufacturing and sales ofhealth food products and cosmetics made from honey bees.
LifeSeasons, Inc. of the U.S. is a company that develops andsells supplements containing raw materials derived fromnature. JBIC provided partial ﬁnancing for Yamada Bee toacquire LifeSeasons. The acquisition will enable Yamada Bee
to obtain LifeSeasons’ supplement compound technology
and know-how, as well as its customer base and sales
network in the U.S., the world’s largest health food market.

Miyazaki Seiko is engaged in the manufacturing and sales ofsecondary processing of specialty steel bars and wire used in
key safety components of automobiles. The company seeks
to further expand its business through the establishmentof its subsidiary, MIYAZAKI SEIKO DE MEXICO, S.A. DE
C.V., in Mexico, where automotive parts manufacturers are
rapidly making inroads. JBIC provided Miyazaki Seiko withthe funds necessary for the secondary processing and salesof special steel bars and wire carried out by its subsidiary.

JBIC ■ Annual Report 2017

Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs

United States

51

4
3

Examples of Business Outcomes Relating
to Environment

Supporting Environmental Conservation and Improvement Projects

Examples of Business Outcomes in FY2016

Achieving both environmental preservation and economic
development is at present universally recognized as acommon challenge for developed and developing countries
alike. Given this awareness, there are growing expectations
across the world on implementing projects which lead toenvironmental conservation and improvement.
Various efforts in this ﬁeld are underway throughout theworld, including energy-saving projects to increase energy
efﬁciency; renewable energy projects such as solar and wind
power generation; projects involving highly efﬁcient, highperformance coal-ﬁred power generation and natural gasﬁred combined-cycle power generation that reduce carbon
dioxide (CO2) emissions; urban transportation projects suchas railroads that help alleviate trafﬁc jams and air pollution;
smart grid projects that supply electricity efﬁciently using

IT technology; and eco-city projects that aim to realize
environmentally sustainable cities.
Amid such developments, JBIC not only takes into
consideration the environmental and social aspects ofindividual projects, but is also committed to support
environmental conservation and improvement projects,
such as measures against global warming. For its Global
action for Reconciling Economic growth and ENvironmental
preservation (GREEN) operations, JBIC focuses its support
on efforts to conserve the global environment, including
projects that are expected to dramatically reduce greenhousegas (GHG) emissions, while keeping in mind the global
dissemination of Japan’s internationally acclaimed leading
environmental technologies (see page 61).

4
Examples of Business Outcomes Relating to Environment

Supporting of Renewable Power Generation Businesses in Indonesia
JBIC signed a loan agreement for project ﬁnance with PT. Supreme Energy Muara Laboh (SEML), an Indonesian company invested in
by SUMITOMO CORPORATION and other entities for the Muara Laboh Geothermal Power Project. In this project, SEML will construct,own, and operate a geothermal power plant with a capacity of 80 MW in the South Solok Regency in West Sumatra, Indonesia, andwill sell electricity generated by this plant to PT PLN (Persero), a state-owned
power utility in Indonesia, for a period of 30 years.
In order to respond to the country’s surging electricity demand, which has
increased in line with steady economic growth, the Indonesian government
has committed to promoting its “35 GW power plants development plans”
for ﬁve years, from 2015 to 2019, and this project is positioned as a part ofthat plan. In addition, the government has been actively promoting geothermal
power generation, which taps into the country’s rich geothermal resources,
including the issuing of a new law for geothermal power production in 2014.
By generating a steady power supply, which contributes to climate change
mitigation, this loan is expected to support Indonesia’s economic development
as well.

Supporting Renewable Energy and Energy Efficiency Projects in Latin America and the
Caribbean Region
JBIC signed a loan agreement to establish a credit line with Corporación Andina de Fomento (CAF). The credit line is intended toﬁnance through CAF the necessary funds for renewable energy and energy efﬁciency projects in CAF’s shareholding countries in Latin
America and the Caribbean region under the GREEN operations.
CAF, whose main shareholders are its 19 member countries in Latin America
and the Caribbean region, aims to achieve economic integration, as well as
to promote economic development and trade ﬁnance in the region. Major
Latin America and the Caribbean countries had announced climate actions
they intend to take under a new international agreement ahead of COP21,and have been taking vigorous steps to implement measures to cope withclimate change. Amid these developments, CAF has been actively supporting
environment-related projects with a focus on renewable energy and energy
efﬁciency projects, and thus this credit line is expected to contribute to reducing
GHG emissions in Latin America and the Caribbean region. This is also in linewith an initiative announced by the Japanese government in November 2015,“Actions for Cool Earth: ACE 2.0.”

52

JBIC ■ Annual Report 2017

3

Supporting Japanese Companies’ Solar Power Generation Business in Mongolia

Examples of Business Outcomes in FY2016

JBIC concluded a loan agreement with Farmdo Corporation’s Mongolian subsidiary, Everyday Farms LLC (EDF). The loan will provide
funding needed for the solar power generation business operated by EDF in Ulaanbaatar, Mongolia. EDF will sell the power to
Mongolia’s national power transmission and distribution company over the next 20 years.
Farmdo is an SME that sells agricultural materials and products andvarious kinds of food, and operates an electricity sales business by solar power
generation. In recent years, Farmdo has been focusing on the solar farm businessthat conducts solar power generation and produces vegetables simultaneously.
Farmdo seeks to expand its solar farm business through EDF in Mongolia where
demand for clean energy and fresh agricultural products is expected to grow.
The Japanese government is facilitating the diffusion of leading low-carbon
technologies through the Joint Crediting Mechanism (JCM) in “Actions for Cool
Earth: ACE 2.0.” This project has been adopted as a JCM Model Project by the
Ministry of the Environment, Japan and this loan will be the ﬁrst time JBIC has
supported JCM projects.

4
Examples of Business Outcomes Relating to Environment

Supporting Waste Treatment and Power Generation Project in the U.S.
JBIC signed a loan agreement with Kompogas SLO LLC (Kompogas SLO), a U.S. subsidiary of Hitachi Zosen Corporation (Hitachi Zosen)Group. This loan is intended to ﬁnance the necessary funds for Kompogas SLO to construct a waste treatment and power generation
plant in California in the U.S., and to conduct waste treatment, biogas power generation, and sales of compost1 over a period of 20
years. This is the ﬁrst loan for JBIC to provide to a waste treatment business.
Hitachi Zosen is a leading company which boasts a world-class trackrecord in the number of EPC (engineering, procurement, and construction)orders for waste treatment and power generation plants. This project is anoverseas infrastructure business in which Hitachi Zosen Group invests in theﬁeld of waste treatment and power generation for the ﬁrst time in the U.S.,
and is involved in long-term operation and management of the plant using
its advanced technologies. It is thus positioned as an important milestone infurther developing the company’s overseas business. This loan will support suchoverseas business expansion of Hitachi Zosen Group, and at the same time
contribute to maintaining and strengthening the international competitivenessof Japanese industries.

Supporting Renewable Energy Projects in the Philippines
JBIC signed a general agreement for establishing a credit line with BDO Unibank, Inc. (BDO), a Philippine entity. This credit line isintended to ﬁnance, under the GREEN operations, necessary funds for environment-related projects which contribute to reducing GHG
emissions, with a focus on renewable energy projects in the Philippines. This will be the ﬁrst time for JBIC to provide GREEN ﬁnanceto the Philippines.
The Philippine government submitted the Intended Nationally Determined
Contributions (INDCs) in October 2015 ahead of the COP21 agreement. With
these pledges, the Philippines government has been taking vigorous steps to
implement measures to cope with climate change, which include setting thegoal of reducing GHG emissions by 2030. This credit line is expected to assist the
reduction of GHG emissions and promotion of the government’s environmental
policy while propagating advanced Japanese environmental technologies whichhave received high international recognition.

1. Compost is a fertilizer made by fermenting organic matter, such as food waste.

JBIC ■ Annual Report 201753

3Partnerships and Knowledge Sharing in the Environmental Sector

Examples of Business Outcomes in FY2016

Amid growing expectations for the implementation ofenvironment-related projects toward global environmental
conservation and a low-carbon society in various parts of theworld, JBIC supports Japanese overseas business deployment
as well as efforts being made by foreign governments inthis ﬁeld, not only through ﬁnancing but also by sharing

information and providing knowledge through activities
such as holding seminars and participating in relevant
events. JBIC also simultaneously forms close partnerships
with foreign governments and government agencies,
domestic prefectural and municipal governments, and otherstakeholders both in Japan and abroad.

Participation in the Green Investment Financing Forum and Discussion of Climate Finance with
International Organizations
The 3rd OECD Green Investment Financing Forum (GIFF) sponsored by the Organization for Economic Cooperation and Development(OECD) was held in Tokyo in October 2016. Government ofﬁcials, international organizations, public and private ﬁnancial institutions
and companies from around the world attended the forum and discussed how to ﬁnance various initiatives to combat global warming.
This marks the ﬁrst time that an OECD-sponsored international environmental ﬁnance conference was held in Japan.
JBIC’s Director of Global Environment Division and Deputy Director General of New Energy and Power Finance Department II,
Infrastructure and Environment Finance Group, Tsutomu Sato, participated as a commentator in Session 11’s “International public
climate ﬁnance: Mobilising private investment to bridge ﬁnancing gaps” and introduced JBIC’s environmental approach. Amid thechallenge of scaling up low-carbon investment in developing countries, JBIC stated that it will continue to make efforts to promote
low-carbon activities as an incentive to attract private funds.

4
Examples of Business Outcomes Relating to Environment
54

JBIC ■ Annual Report 2017

5

Examples of Business Outcomes Relating to Studies,
and Collaboration with Overseas Governmental
Organizations and International Organizations

Survey Report on Overseas Business Operations
by Japanese Manufacturing Companies

In FY2016, JBIC held seminars in cities such as Tokyo,
Osaka, Kyoto, and Nagoya based on the theme “Overseas
Investment Seminar: Overseas Business Operations by
Japanese Manufacturing Companies.” JBIC also hosted
explanatory meetings for Japanese chambers of commerce
and industry located overseas, as well as for foreign
governments, and the survey’s results have been effectively
utilized in policy recommendations to foreign governments.

Collaboration with Overseas Governmental
Organizations and International Organizations
On two occasions, in May 2016 and January 2017, JBIC, thegovernment of India, and NTPC (the country’s largest power
utility) held conferences on the further development of theinvestment environment for electric power projects in India.
The conference participants shared their views on current
limitations and issues in India’s electric power sector from theperspective of overseas investors and ﬁnancial institutions.
Discussions were also held on policies for stably mobilizing
overseas funds from a medium-to-long-term perspective.
JBIC, the government of India, and NTPC jointly compiled
the details of these discussions into a report that was sharedwith parties associated with the government of India.
The parties agreed to continue these discussions toward
the introduction of speciﬁc measures in the future. JBIC plans

Meeting with the President of the Republic of Panama

In August 2016, JBIC held a policy dialogue with the
Ministry of Planning and Investment (MPI) of Vietnam
regarding the formation and promotion of public-private
partnerships (PPP). JBIC has regularly held similar dialogues
since an agreement was signed between JBIC and MPI
in March 2013, setting the framework to hold speciﬁc
discussions on a system for facilitating PPP activities inVietnam. This 6th working-level meeting was themed on
the promotion of PPP in the environmental sector, including
renewable energy. JBIC presented, in addition to its activities
in environmental preservation, the respective roles of thehost country government, project operator, and ﬁnancial
institutions in the project formation stage. Meanwhile, MPI
presented its efforts in developing the PPP-related policy, as
well as renewable energy projects in the country, indicating
their expectation for JBIC’s future cooperation in forming
PPP projects.
In November 2016, a commemorative ceremonymarking the 60th anniversary of the establishment of theInternational Finance Corporation (IFC) was held in Tokyo.
At this event, JBIC Governor Akira Kondoh held a dialogue
with Philippe Le Houérou, Chief Executive Ofﬁcer of IFC. The

JBIC ■ Annual Report 2017

55

5
Examples of Business Outcomes Relating to Studies, and Collaboration with Overseas Governmental Organizations and International Organizations

The term FY2016 marks the 28th year of the Survey Reporton Overseas Business Operations by Japanese Manufacturing
Companies, an annual survey that has been conducted
by JBIC since 1989. The survey attempts to identify thestrategies and challenges of Japanese manufacturing
companies expanding overseas and appeals to a broad
audience for its originality and continuity. In addition to
publishing the survey’s results externally through brochures
and its website, JBIC holds seminars in collaboration with thechambers of commerce and industry and banks of various
regions across Japan.

to contribute to the further development of the investment
environment in India’s electric power sector, as well as to thefurther expansion in opportunities for Japanese companies
to participate in independent power producer (IPP) projects
in India.
In April 2016, JBIC received a courtesy call fromPresident Juan Carlos Varela of the Republic of Panama. Mr.
Varela expressed his appreciation for JBIC’s support in the
Panama Canal Expansion Project, as well as for providing
a guarantee for yen-denominated foreign bonds issued by
the government of Panama in the Japanese bond market(Samurai bonds). He also expressed his hope to receive
continued support from JBIC for infrastructure development
in Panama. The Governor of JBIC, in turn, expressed his wish
to contribute, together with Japanese companies, to thedevelopment of infrastructure and the economic growth ofPanama, while referring to the signiﬁcance of the Panama
Canal. Accordingly, Mr. Varela and the Governor of JBIC
both agreed to further enhance the economic relationshipbetween the Panamanian government and JBIC, and thus
the relationship between Panama and Japan.

Examples of Business Outcomes in FY2016

JBIC conducts research and surveys related to overseas
investment and international ﬁnance. These efforts include
collection and analysis of a wide range of information, as
well as knowledge sharing, while interacting with overseas
government organizations, foreign and domestic research
institutes, and experts in various ﬁelds.

3

3
Examples of Business Outcomes in FY2016

IFC was established in 1956 for the purpose of supporting
the private sector in developing countries and Japan has
contributed to the support of IFC during these past 60 years
as a founding member.
During the dialogue, Governor Akira Kondoh stated,“JBIC’s mission is to support the overseas activities ofJapan’s private sector, ﬁnancial institutions, and industries.”
The Governor also emphasized, “In the future, JBIC willseek to further broaden its close collaborative relationshipwith IFC to boost the advance of Japanese companies indeveloping regions, including Africa, as well.” Meanwhile,
Chief Executive Ofﬁcer Philippe Le Houérou expressed his
opinion that “JBIC is an important partner in aiming tocreate markets in new frontier markets.” He also expressed
an awareness by both parties that “Japan and IFC will utilize
a variety of funds and together will strive to contribute to theadvancement of developing countries.”

5
Examples of Business Outcomes Relating to Studies, and Collaboration with Overseas Governmental Organizations and International Organizations

Dialogue between Governor Kondoh and Chief Executive Ofﬁcer Le Houérou

In November 2016, the “TICAD VI Follow-up Seminar:
Business Prospects in Africa and Support Schemes”
was held. The seminar was organized by the African
Development Bank (AfDB) External Representation Ofﬁce
for Asia, African Diplomatic Corp (ADC), and the United
Nations Industrial Development Organization’s Investment
and Technology Promotion Ofﬁce, Tokyo (UNIDO ITPOTokyo), and co-organized by JBIC, the Japan External Trade
Organization (JETRO), Japan International Cooperation
Agency (JICA), World Bank Tokyo Ofﬁce, and the United
Nations Development Programme (UNDP) Representative
Ofﬁce in Japan. The captioned seminar targeted both private
sector representatives and members of the public interested
in business development in Africa, with the purpose of
sharing the achievements of the 6th Tokyo International

Conference on African Development (TICAD VI) held in
Nairobi, Kenya, in August 2016 as well as introducing
measures to support businesses in Africa by internationalorganizations and Japanese government agencies. JBIC
participated in the session entitled “Achievements ofGovernmental / International Organization in TICAD VI and
Support Schemes for the Private Sector” as a panelist. In
its presentation, JBIC explained the outline of JBIC Facility
for African Investment and Trade Enhancement 2 (FAITH2),
as well as loan agreements that JBIC has signed with the
African Export-Import Bank (Afreximbank) and the Easternand Southern African Trade and Development Bank (TDB),
respectively, for setting up an export credit line.

Collaboration with Private-sector Financial
Institutions
JBIC held the second “JBIC Project Finance* Seminar” (three
two-day sessions), starting in April 2016, for regional banks
and other ﬁnancial entities. The contents of this seminar
were further enhanced from those of the ﬁrst seminar held
last year and were presented for not only the regional banks
but also insurance companies. JBIC and regional banks
have been involved in coﬁnancing projects to support theoverseas business expansion of Japanese mid-tier enterprises
and SMEs, as well as the promotion of active collaboration
by holding seminars and providing information on overseas
investment. In addition to such efforts, there have recently
been increasing opportunities for cooperation with both
the regional banks and insurance companies in the formof assuming the risk of overseas projects, and thus further
cooperation in project ﬁnancing (PF) is expected to expandin the future.
In the three sessions, JBIC staff in charge of PF gave
lectures on the following subjects: 1) Fundamentals of PF
market trends, risk analysis, and risk control techniques;
2) Practice with a focus on points of screening each PF
project; and 3) Case studies of examples of JBIC’s PF projects.
Emphasis was given in particular, along with examples, tothe evaluation viewpoint for overseas PF projects, which saw
great interest from participants at the seminar last year.

Scene of the seminar* Project ﬁnance is a ﬁnancing scheme in which repayments are made solely
from the cash ﬂows generated by the project and secured only on the
project assets.
Participants in the TICAD VI Follow-up Seminar

56

JBIC ■ Annual Report 2017

4

Financial Instruments
1 Financial Instruments········································ 58
2 Prominent Initiatives in Recent Years························ 68
3 Framework for Supporting Globalization Efforts of
Mid-tier Enterprises and SMEs ····························· ··· 70

JBIC ■ Annual Report 201757

1

Financial Instruments

Export Loans

4
Financial Instruments

Export loans are provided to overseas importers and ﬁnancial
institutions to support ﬁnance exports of Japanese machinery,equipment, and technology mainly to developing countries. In
particular, products such as marine vessels, power generation
facilities, and other types of plant equipment incorporate asigniﬁcant amount of advanced technology, and their export
will be instrumental in enhancing the technological base ofJapanese industries. Furthermore, Japanese shipbuilding andplant facilities industries have a broad range of supporting
industries, including SMEs producing parts and components,
and thus the loans are expected to positively contribute to thebusiness of these Japanese companies. Export loans in speciﬁc
sectors are also available to developed countries (see note).
Terms and conditions of export loans are determinedbased on the Arrangement on Ofﬁcially Supported Export
Credits (OECD Arrangement). In principle, the loan amount1
Financial Instruments

Privatefinancial
institutions

should not exceed the value of an export contract ortechnical service contract, and excludes the down payment.
Local costs may be covered provided that the amount iswithin the scope prescribed by the OECD Arrangement.

Note: Eligible Sectors of Export Loans in Developed Countries (as of July 31,
2017)[Integrated Infrastructure System Projects]
Railways (high-speed, inter-city projects and projects in major cities),
road business, water business, biomass fuel production, renewableenergy power generation, nuclear power generation, powertransformation, transmission and distribution, highly efﬁcient coalﬁred power generation, coal gasiﬁcation, carbon capture and storage(CCS), highly efﬁcient gas-ﬁred power generation, petrochemical
production, waste incineration and waste to energy, smart grid
[Other Export Transactions]Ships, satellites, aircraft, medical positron beam therapy equipment

Loan (B/L)1

Financial institution, etc.,
in foreign country
Loans

Loan (B/C)2

Japanese exporter(s)Exports of plants, etc.

Importer(s) in foreigncountry(ies)

1. Loan to foreign ﬁnancial institutions (bank-to-bank loan or “B/L”)
2. Loan to foreign importers (buyer’s credit or “B/C”)

Supporting Export of Facilities for Gas-fired Combined Cycle Power Plant by Japanese Companies
JBIC concluded a loan agreement inbuyer’s credit (export loan) with PT PLN(Persero) (PLN), a state-owned powercompany in Indonesia. The loan isintended to provide ﬁnancing for PLN
to purchase a complete set of facilities,
including a gas turbine and steam
turbine (MITSUBISHI HITACHI POWER
SYSTEMS, LTD.) and power generator(Mitsubishi Electric Corporation), from
Mitsubishi Corporation and other entities
for the construction of the Muara Karang
gas-ﬁred combined cycle power plant in

Jakarta on the island of Java, Indonesia.
In order to respond to the country’s
surging electricity demand which has
risen in line with continued economic
growth, the Indonesian government has
committed to promote its “35 GW power
plants development plans.” The Muara
Karang gas-ﬁred combined cycle power
plant is part of this power development
plan. This loan is expected to support
Indonesia’s economic development byrealizing steady power supply.

Supporting Export of LNG Carriers Built by Japanese Shipbuilders
JBIC concluded a loan agreement for
the export of a ship, based on projectﬁnancing, with San Isidro LNG I B.V.
(San Isidro), a Dutch entity in which
IMABARI SHIPBUILDING CO., LTD.
(IMABARI SHIPBUILDING) and Mitsubishi
Corporation each holds a 50% stake.
The loan is intended to provide the funds
for San Isidro to purchase one LNG carrier
constructed by IMABARI SHIPBUILDING.
The purchased LNG carrier will be

58

JBIC ■ Annual Report 2017

chartered to Gas Natural Fenosa Group,
the largest gas company in Spain.
This loan is intended to support theexport of ships constructed by a Japanese
shipbuilder which serves a signiﬁcant rolein the regional economy and its associatedindustries. The loan will thus contributeto maintaining and strengthening theinternational competitiveness of theJapanese shipbuilding industry.

Import Loans4sound development of the Japanese economy, such as
for the import of aircraft. (See page 63 for the scheme ofguarantees for imports of manufactured products.)

Products Eligible for Import Loans (Natural
Resources)

Financial Instruments

Import loans support imports of strategically important
goods including natural resources. They are extended toJapanese importers or foreign exporters. As Japan is poorly
endowed with natural resources, stable imports of natural
resources over the long term are one of the key factors
underpinning domestic economic activity. Import loans
ﬁnance the development and import of energy resources,
including oil and LNG, and mineral resources, including ironore, copper, and other rare materials.
In addition to natural resources, JBIC provides aguarantee facility for goods and services essential to theOil, petroleum gas, LNG, coal, uranium, metallic ores, metals,
mineral phosphate, ﬂuorite, salt, lumber, wood chips, pulp,
and other materials

1
Financial Instruments

Privatefinancial
institutions

Loan

Loan

Imports of natural resources

Japanese importer(s)Foreign exporter(s)Securing Long-term Supply of Crude Oil
JBIC concluded a loan agreement with Abu
Dhabi National Oil Company (ADNOC) in
the United Arab Emirates (UAE). The UAE
is vital to Japan’s energy resource strategy
as it has been a stable source of crude
oil for more than 30 years, and because
the UAE allows foreign oil companies
to acquire and develop oil ﬁelds on thebasis of concession agreements. ADNOC,
a state-run oil company wholly owned by
the Abu Dhabi government, conducts oil

and gas business in the Emirate of Abu
Dhabi, which produces most of the oil andgas in the UAE. This is the fourth time JBIC
has provided funding to ADNOC with theaim of securing a long-term oil supply forJapan.

JBIC ■ Annual Report 201759

Overseas Investment Loans

4
Financial Instruments

Overseas investment loans support Japanese foreign
direct investments. The loans can be provided to Japanesecompanies (investors), overseas Japanese afﬁliates (including
joint ventures), and foreign governments or ﬁnancial
institutions that have equity participations in or provide loans
to such overseas afﬁliates.
Direct loans to Japanese companies are intended for
mid-tier enterprises and SMEs, as well as to projects aimed
at developing or securing interests in overseas resources thatare strategically important to Japan, and projects that support
merger and acquisition (M&A) activities (these projects include
those of large companies). Moreover, JBIC provides two-steploans (TSL) to support the overseas business deployment ofJapanese companies, including mid-tier enterprises and SMEs,
as well as TSL intended to support M&A activities by Japanesecompanies. JBIC is also able to provide short-term loans foroverseas business operations when bridge loans are required

to ﬁll the ﬁnancing gaps before that offers long-term loans.
Moreover, JBIC is empowered to provide investment loans for
projects in developed countries for speciﬁc sectors (see note).

Note: Eligible Sectors of Overseas Investment Loans in Developed Countries(as of July 31, 2017)
Railways (high-speed, inter-city projects and projects in major cities),
road business, water business, biomass fuel production, renewableenergy power generation, nuclear power generation, powertransformation, transmission and distribution, highly efﬁcient coal-ﬁred
power generation, coal gasiﬁcation, CCS, highly efﬁcient gas-ﬁred
power generation, smart grid, development of telecommunications
network, shipbuilding and marine transport, satellite launching andoperation, aircraft maintenance and sales, medical business (related topositron beam therapy facility), petrochemical production, waste
incineration and waste to energy, M&A activities, etc.

1
Financial Instruments

Privatefinancial
institutions

Loan

Government, financial
institution, etc., in foreigncountry, Japanese bank

Loan

Loan
Loan

Japanese company

Japanese affiliate(s)Loans and/or equity participations

Equityparticipations

Loan

Project(s) in foreigncountry(ies)

Loan

Joint venture partner(s)Supporting LNG Projects in Which Japanese Companies Participate
JBIC concluded a loan agreement withJapan International Finance Management(Tangguh) Corporation (TPM). The projectis carried out by Mitsubishi Corporation,
INPEX CORPORATION, JX Nippon Oil& Gas Exploration Corporation, LNG
JAPAN CORPORATION (a joint-subsidiaryof Sojitz Corporation and SUMITOMOCORPORATION), MITSUI & CO., LTD.,
and Japan Oil, Gas and Metals National
Corporation (JOGMEC) as the Japanese60

JBIC ■ Annual Report 2017

sponsors. The project will conduct additional
development and production of gas ﬁelds
located in the Berau Bay, West Papua
Province, Indonesia, while expanding theexisting gas liquefaction facilities. The
Japanese sponsors have a combined total of
about 46% interest in the gas ﬁelds, and theKansai Electric Power Company, Incorporated
will offtake 1 million tons per year of the LNG
produced by the project (total production
capacity: 3.8 million tons/year).

Untied Loans

4
Financial Instruments

stable supplies of energy and mineral resources for Japan;
promote business activities of Japanese companies; maintainand expand trade and direct investment from Japan; ﬁnanceprojects having signiﬁcant effects on global environmental
preservation; and ﬁnance projects maintaining order ininternational ﬁnancing.

Untied loans are intended to ﬁnance projects and the importof goods by developing countries, or for such countries
to achieve equilibrium in their international balance of
payments, or to stabilize their currencies. Loans are notconditional on investments or procurement of equipment
and materials from Japan.
Capital procured from untied loans is used to: secure

Privatefinancial
institutions
Loan

Government,
financial institution, etc.,
in foreign country

Project(s) in the recipient
country(ies)

Foreign importer(s)1Financial Instruments

Imports ofequipment andtechnology

Exporter(s)Promoting the overseas business having the purpose of preserving the
global environment, such as preventing global warming

GREEN Operations
Under its GREEN (Global action for Reconciling Economic
growth and ENvironmental preservation) operations, JBIC
provides support for projects with a focus on environmental
conservation, such as those anticipated to make aconsiderable reduction in GHG, taking into account ofpropagating Japanese advanced environmental technologies
to the world.

Guarantees
Equity participations/Loans

PrivateFlows

Eligible Entity:
Foreign government, governmental agencies or local governments,
public enterprises such as utilities operating closely with government,
foreign financial institution, multilateral institution
Eligible Projects:
1. Favorable impact on preservation of the global environment, such as
significantly reducing GHG emissions
2. Accepting J-MRV* process on the effect of the environmental preservation(e.g., Energy efficiency improvement, Renewable energy, etc.)* JBIC original methodology for Measurement, Reporting, and Veriﬁcation.

Supporting Energy Efficiency Projects in Ecuador
JBIC concluded a loan agreement with
the Ecuador government. This is the ﬁrst
loan for JBIC to provide to the Ecuador
government under the GREEN operations
and will be used as necessary funds forenergy efﬁciency projects in the country.
The Ecuador government has been taking
vigorous steps to implement measures tocope with climate change. This loan is
expected to contribute to the reductionof GHG emissions through the supportof Ecuador’s energy efﬁciency project
while propagating advanced Japaneseenvironmental technologies which havereceived high international recognition.
This is also in line with an initiative
announced by the Japanese government
in November 2015, “Actions for Cool
Earth: ACE 2.0.”

JBIC ■ Annual Report 201761

Equity Participations

4
Financial Instruments

Equity participations are capital contributions to companies
where Japanese companies have equity stakes to undertake
overseas projects, as well as funds where Japanese companies■ Japanese companies make equity
participations in an overseas project

perform signiﬁcant roles. In principle, equity participations
take the following forms.

■ Japanese companies participate in a fund (and perform sucha major role as general partner in their management andinvestment decisions)
Major role

Japanesecompany(ies)1

Equityparticipations

Overseas
project

Japanesecompany(ies)

Equityparticipations

Financial Instruments■ Japanese companies acquire equity
interests in a foreign company toform business alliance

Equityparticipations

Fund

Equityparticipations

Other
investor(s)Equityparticipations■ Japanese companies form a consortium and participate in aninternational fundBusiness allianceJapanesecompany(ies)

Equityparticipations

Foreigncompany

Japanesecompany(ies)

Equityparticipations

Consortium

Fund

Equityparticipations

Other
investor(s)Equityparticipations

Supporting Japanese Companies’ Overseas Business Expansion by Local Currency Investment
JBIC signed a shareholders agreementwith companies including Toyota
Tsusho Corporation (Toyota Tsusho) andTechnoTrends AutoPark Private Limited(TTAP), an Indian company. The agreement is intended for the acquisition of
TTAP’s preferred shares. The objectiveof this investment is to support theoperation of an industrial park inthe state of Gujarat in western India
through TTAP, which was established62

JBIC ■ Annual Report 2017

by Toyota Tsusho through its Indiansubsidiary. The supply of local currencydenominated risk money by JBIC,
through its equity participations, will
support the business expansion of
Toyota Tsusho and Japanese companies
in the region, thereby contributing
to maintaining and strengthening
the international competitiveness ofJapanese industries.

Guarantees

4■ Guarantees for Imports of Manufactured
Products
JBIC has a guarantee facility for the borrowings
made by Japanese companies to ﬁnance theimport of aircraft and other manufactured
products that are vital for Japan.

Financial Instruments

overseas Japanese companies, as well as for currency swap
transactions. JBIC also issues reassurance for guarantees
from export credit agencies in other countries.

In addition to loans and equity participations, JBIC provides
support through its guarantee facility. Guarantees areprovided for loans extended by private ﬁnancial institutions,bonds issued by governments of developing countries orPrivate financial
institution, etc.

Guarantee

Foreignexporter(s)LoanImport of products

1
Financial Instruments■ Guarantees for Corporate Bonds Issued
by Japanese Affiliates
JBIC supports Japanese afﬁliates operating
overseas by providing guarantees for the bonds
they issue in local capital markets.

Japaneseimporter(s)Investor(s)Guarantee
Counterguarantee

Sub-guarantee
Issue
of bonds

Japanese company(parent company,
private financial
institution, etc.)

Guarantees

Japaneseaffiliate (issuer)■ Guarantees for Cofinancing, Overseas
Syndicated Loans and Public Sector Bonds
Loans to developing countries involve, among
others, currency conversion and transfer risks, aswell as country risks. Guarantees that JBIC issues
to cover such risks will enable Japanese private
ﬁnancial institutions to provide medium- andlong-term ﬁnancing for developing countries,
and contribute to developing countries tobringing in private capital and facilitating privatecompanies to expand international businessactivities.

Investor(s)Guarantee
Loan

Issue ofpublicbonds, etc.

Guarantee

Private financial
institution, etc.

Loan

Government,
etc., in foreigncountry

JBIC ■ Annual Report 2017

63

4
Financial Instruments

1■ Guarantees for Currency Swaps
JBIC provides guarantees for swap
transactions to support the local currency
ﬁnancing of overseas infrastructure
projects and other projects undertaken
by Japanese companies.

Japanesecompany(ies)Guarantee

Swapcounterparty
overseas

Financial Instruments■ Counter Guarantees for Export
Credits
In the cases where Japanese companies
export machinery and equipment jointlywith companies of another country, JBIC
provides a counter guarantee for theguarantee provided by that country’s
export credit agency (ECA). Thisfunction enables JBIC to ﬂexibly support
export projects by Japanese companies
collaborating with foreign companies
through multilateral mutual guarantee
schemes.

Operation

Private financial
institution
Localcurrency
loan

Currency
swap
contract

Counterguarantee

Overseas
infrastructure
projects, etc.

Japanese Foreigncompany company
(ies)
(ies)

Foreign ECAGuarantee

Private financial
institution(s)Investment

Loan

ExportForeignimporter(s)Bridge Loans
JBIC provides short-term ﬁnancing for governments ofdeveloping countries to meet their foreign currency needs
for external transactions when they face balance-of-payment
difﬁculties.
JBIC provided bridge loans (short-term bridging loans)
Loanfor Myanmar in January 2013 to support the clearance ofarrears of past loans from the Asian Development Bank
(ADB) and the International Development Association (IDA),
a member of the World Bank Group.

Government,(Conditionality)
financial
Loans from theinstitution, etc.,
IMF, World Bank, etc.
in foreign country

Import orother externaltransaction(s)64

JBIC ■ Annual Report 2017

Acquisition of Loan Assets and Public and Corporate Bonds

4

funding in international capital markets.

* The scope of assets and securities acquired includes public bonds, corporate
bonds, debt securities, and trust beneﬁciary rights.

Financial Instruments

When JBIC provides export loans, import loans, overseas
investment loans, and untied loans, JBIC can also provide
credits, in addition to providing loans and guarantees, bypurchasing loan assets and acquiring public and corporate
bonds* issued by borrowers for funding. The objective ofsuch operations is to promote private ﬁnancial institutions’loans in international ﬁnance and Japanese companies’

Research and Studies
After the research and studies are completed, follow-up
reviews are conducted at least once each year to conﬁrm theprogress of the project.
Research and studies are conducted in the following
sequence.
1. Selection of a research and study subject
2. Selection of the contractor to conduct research andstudies
3. Conduct of the research and studies
4. Completion of the research and study report
5. Follow-up

JBIC ■ Annual Report 2017

65

1
Financial Instruments

JBIC conducts research and studies on individual projects
during their initial stage, as well as those focused on
speciﬁc regions or industry sectors that may be conductive
to speciﬁc projects. This is an effective means of identifying
potentially quality projects, and is expected to lead toincreasing exports of materials and services from Japan, as
well as expand opportunities to participate in projects by
Japanese companies. Research and studies are conducted ateach stage necessary for realization of the project, including
preparation of a master plan for an individual project,conducting of prefeasibility and feasibility studies (Pre-F/S,
F/S), front-end engineering design (FEED), and studies ofregions and industry sectors conductive to speciﬁc projects.

Securitization and Other Financial Instruments

4
Financial Instruments

JBIC provides support for securitization and an increase in liquidity in order to complement and encourage the activities ofprivate ﬁnancial institutions.

1. Securitization (Guarantees)

2. Securitization (Acquisition of Securities)

In cases where special purpose companies (SPC) or trust
companies issue asset-backed securities (ABS) or otherﬁnancial products with loans or other assets as collateral,
JBIC guarantees the payment of such ABS to reduce country
and structure risks, thereby supporting the issuance of bondsin the emerging capital markets.

JBIC supports bond issues by acquiring a portion of the ABS
issued by SPC or trust companies with loans or other assets
as collateral. JBIC’s acquisition will support the securitizationneeds of the originators* and is expected to help invigorate
the bond market by circulating the acquired bonds back into
the market when market conditions allow.

* An originator is the original owner of assets to be securitized and obtainfunding through securitization.

Originator
Private financial
institutions, etc.

1

Transfer of loans

SPC

Financial Instruments

Guarantee

Loans

ObligorOverseas Japaneseaffiliates

Issue of ABS

Purchase of ABS

Investors(in Japan andoverseas)* The above diagram depicts a scheme where SPC are used, but the clients can also use schemes where trusts areused or JBIC acquires or provides guarantees for assets backed by securitization.

3. Securitization and Liquidation of Receivables
JBIC provides guarantees for the receivables and othermonetary claims held by overseas subsidiaries of Japanesecompanies in order to facilitate the purchase of such

Overseas Japaneseaffiliates

Accounts receivable, etc.

Guarantee
Proceeds

JBIC ■ Annual Report 2017

Overseas local
companies
Guarantee

Assignment of accounts
receivable

Private financial
institutions

66

receivables by banks (an increase in their liquidity). JBIC
is also able to provide guarantees for securities issued by
SPC or trust companies in cases where these securities
have monetary claims acquired from overseas Japanesesubsidiaries on collateral.

ABS

SPC or Trust

Investors
Proceeds

Japan Bank for International Cooperation Guidelines for
Confirmation of Environmental and Social Considerations
Cooperation Guidelines for Conﬁrmation of Environmental
and Social Considerations” (Environmental Guidelines).
The Environmental Guidelines set out the procedures,
criteria, and requirements that JBIC-ﬁnanced projects mustmeet in conﬁrming environmental and social considerations.
When JBIC judges that the project proponents have notmade appropriate environmental and social considerations,
it will encourage them to take remedial measures. If
appropriate environmental and social considerations havenot been taken, JBIC may decide not to extend funding.

■ Procedure for Confirmation of Environmental and Social Considerations

Project
Proponent

Screening Form is submitted at
the time of funding request.

Information necessary for
the Environmental Review
is submitted.

Status report is presented on
implementation of measuresfor environmental and social
considerations (monitoring).

For Category A projects, an environmentand social impact assessment (ESIA)
report must be submitted.

Category A
Category B
Categorization
Category FI

Environmental Review(site inspections are, in
principle, conducted for
all Category A projects.)
Environmental Review*

Funding
Commitment

Confirmation of
Monitoring(site inspections
conducted asnecessary)

Category C

Disclosure

The project outline, category
and ESIA report (required forCategory A) are, in principle,
disclosed on the JBIC website.

The Environmental Review
and Screening Form aredisclosed on the JBIC
website (with the exceptionof Category C projects).

In cases where the project
proponent discloses themonitoring report, the reportis, in principle, also disclosed
on the JBIC website.

* For Category FI projects, JBIC conﬁrms through the ﬁnancial intermediary that the proper environmental and social considerations indicated in the Environment
Guidelines have been followed for the project.

Projects are classiﬁed into one of the following four categories in relation to the degree of environmental impact, based on theinformation provided by the project proponent during the screening process.

Category A

Project with the potential for a serious and adverse impact on the environment

Category B

Project with the potential for an adverse impact on the environment, but less than that of Category A projects

Category C

Project with the potential for minimal or no adverse impact on the environment

Category FI

Project for which JBIC provides funding to a ﬁnancial intermediary, and after acceptance of JBIC funding, the ﬁnancial
intermediary selects and conducts screenings for speciﬁc subprojects, in cases where subprojects cannot be determined priorto acceptance of JBIC funding, and where such subprojects are anticipated to have an impact on the environment

JBIC ■ Annual Report 2017

67

1
Financial Instruments

Prospective projects are screened prior to funding and classiﬁed into categories according to the degree of potential
environmental impact. An Environmental Review is then conducted to verify that the environmental and social impacts havebeen considered in a proper manner. After funding has been approved, projects are monitored to assess the actual impact.

Financial Instruments

Growing interest in environmental conservation has led toa worldwide trend toward more rigorous environmental
regulations. There are more than a few cases, especially inoverseas projects, in which insufﬁcient risk managementof possible environmental and social impacts has seriously
affected project implementation or undermined its social
reputation.
In conducting these operations, JBIC conﬁrms whether
the borrower has made appropriate consideration for local
communities and the natural environment in all the JBICﬁnanced projects based on the “Japan Bank for International4

2

Prominent Initiatives in Recent Years

Launch of the Special Operations regarding Overseas
Infrastructure Project4
Financial Instruments

As part of the enhancement of JBIC functions based on
the “Act for Partial Amendment of the Japan Bank forInternational Cooperation Act,” on October 1, 2016, JBIC
launched the Special Operations, enabling JBIC to takefurther risks regarding overseas infrastructure projects,

with the aim of providing more support toward Japanesecompanies’ overseas infrastructure businesses.
JBIC supported the export of substation facilities tothe Iraq government as the ﬁrst loan provided under the
Operations (see page 44).

■ Examples of Projects under the Special Operations
Public sector projects
Finance for governments, governmental agencies, or local governments in foreign countries with relatively high risk proﬁle[Example: Exports of plants for infrastructure project]

2

Loan

Prominent Initiatives in Recent Years

Private ﬁnancial
institutions

Government,
Governmental Agencies,
Local governments,
in foreign country

Exports of plants
and equipments
Japanese company

Public-private partnerships (PPP)
Finance for PPP projects with the principal revenue coming from governments, governmental agencies, or local
governments in foreign countries with relatively high risk proﬁle[Example: Electric power project]

Loan

Payment
Power producer
Equity participations

Private ﬁnancial
institutions

Sell electricity

Government,
Governmental
Agencies,
Local governments,
in foreign country

Japanese company

Public-private partnerships (PPP)
Finance for PPP projects with relatively high risk proﬁle entailed in the ﬂuctuations in demand[Example: Railway project]

Loan
Train operating company
Fare
Equity participations
Private ﬁnancial
institutions

68

JBIC ■ Annual Report 2017

Japanese company

Passenger

Expanding Eligible Sectors in Developed Countries

4

Sectors have been newly added to the scope in the tablebelow.

1. As for the details of speciﬁc eligible sectors, please refer to export loans inpage 58 and overseas investment loans on page 60.

Financial Instruments

Following the revision of the Cabinet Order for Enforcementof the JBIC Act on September 30, 2016, the eligible sectors
for support by the following ﬁnancial instruments werereviewed and expanded: (1) export loans for exporting
Japanese products to developed countries; and (2) overseas
investment loans for projects in developed countries1.

■ Eligible Sectors (Sectors added on September 30, 2016)
Export loans for the exports of Japanese products todeveloped countries
Road / Petrochemical / Waste incineration and Waste toenergyAs for a waste treatment project in developed counties
based on the above revision, in March 2017, JBIC concluded

Investment loans for projects in developed countries
Shipbuilding and Marine transport / Satellite launching andoperation / Medical business related to positron therapy
facility / Road / Petrochemical / Waste incineration and Waste
to energy

a loan agreement for a waste treatment business in the U.S.
(see page 53).

On October 1, 2016, JBIC strengthened its functions as follows:

Strengthening of its Institutional Capacity of
Equity Investments
First, JBIC newly established the Equity Finance Groupand the Equity Investment Department, and renamed
the Marine and Aerospace Finance/Financial Products
Department to Marine and Aerospace Finance Department.
The objective of the establishment of the Equity FinanceGroup and Equity Investment Department is to strengthen
its institutional capacity of equity investments in line withvarious governments’ initiatives. The Marine and Aerospace
Finance/Financial Products Department was renamed upon
the transfer of fund investment operations to the Equity
Investment Department.

Finance Division for SMEs of East Japan), are integrated into
the Finance Ofﬁce for SMEs. This is intended to strengthen
our support for Japanese mid-tier enterprises and SMEs toassist their overseas business.
Meanwhile, the West Japan Ofﬁce continues to be incharge of the support for mid-tier enterprises and SMEs
located in western Japan as before.
For the organizational chart in our company, refer topage 164.
Previous
Industry Finance GroupNew
Industry Finance GroupSpecial Advisor for SMEs
Finance Ofﬁce for SMEs

Realignment to Strengthen Support forJapanese Mid-tier Enterprises and SMEs
Second, JBIC set up the Finance Ofﬁce for SMEs. On the basisof the “Economic Measures for Realizing Investment for the
Future” (decided by the Cabinet on August 2, 2016), theconsultation and loan operations, the former of which had
been conducted under the supervision of the Special Advisor
for SMEs and the latter of which had been handled by the

Finance Division for
SMEs of East Japan
Marine and Aerospace
Finance / Financial
Products Department

Marine and Aerospace
Finance Department

Equity Finance Group
Equity Investment
Department

JBIC ■ Annual Report 2017

69

Prominent Initiatives in Recent Years

Strengthening of JBIC’s Functions and Organizational
Realignment2

3
4
Financial Instruments

3

Framework for Supporting Globalization
Efforts of Mid-tier Enterprises and SMEs

JBIC actively supports Japanese mid-tier enterprises and SMEs
expanding overseas in line with economic globalization.
In the 2000s, following the economic growth of
emerging market countries, especially in Asia, an increasing
number of SMEs are not only meeting the procurement
needs of major Japanese companies with overseas
production operations, but also seeking to expand theirown business in emerging markets. With such change inthe purpose of overseas expansion of SMEs, the need forfunds among SMEs has grown more diverse. In order to
respond to the diversiﬁcation of ﬁnancial needs of SMEs
for their overseas expansion, JBIC is further enhancing
cooperation with Japanese private ﬁnancial institutions, aswell as local ﬁnancial institutions in other countries, and is
expanding its support, including provision of two-step loans
through private ﬁnancial institutions, loans in cooperation
with regional banks and credit unions (shinkin banks), loans
denominated in local currencies, and two-step loans forﬁnance leases. (See page 72 for support new initiative inIndonesia.)

Framework for Supporting Globalization Efforts of Mid-tier Enterprises and SMEs

■ Commitments for Mid-tier Enterprises and SMEs

(5) Support for M&A overseas: Loans for acquisition funds
required when entering overseas markets through M&A(6) Support through information services: Information service on
overseas investment environment; and support for solving
issues with foreign governments while utilizing networks of
JBIC overseas offices■ Example of mid-tier enterprises and SMEs support
schemes(3) For a credit line
Japanese ﬁnancial
institutions(2) For a loan in Japan
Parent company (Japan)(1) For a direct loan
(USD/JPY/EUR/otherlocal currency)
Japan

Equity participations,increase of capital,
parent company/subsidiary loan

Overseas

Overseas subsidiary(Billions of yen)
150

Amount133

Number (Number)
150

114

109

100

100
54
50

111.7

34
34.1

0

FY2012

81.0

50

42.9
18.0
FY20130
FY2014FY2015FY2016

Support for the Overseas Deployment of SMEs
Utilizing the know-how and experience of overseas ﬁnancingthat it has accumulated over the years, JBIC provides longterm ﬁnancing required by Japanese companies, including
SMEs, for overseas investment, export of products, andother activities through coﬁnancing with private ﬁnancial
institutions in the form of overseas investment loans, exportloans, and other loans. The ﬁgure at upper right depicts
speciﬁc support schemes.
JBIC implements the following six measures in order tosupport the overseas business deployment of SMEs.
(1) Application of preferential loan conditions: Long-term loans
with preferential loan conditions (interest rates, etc.)(2) Response to small loans (several tens of millions of yen): In
addition to new capital investment, small loans for
replacement of machinery, etc.
(3) Local currency-denominated loans: Long-term local currency
loans with fixed interest rates(4) Coordination and cooperation with private financial
institutions (regional banks, credit unions, money centerbanks): Support for the overseas business deployment needsof SMEs all through the country

70

JBIC ■ Annual Report 2017

Overseas project

Cooperation with Japanese Regional Financial
Institutions, etc.
Regional ﬁnancial institutions that SMEs work with play animportant role when SMEs seek to expand overseas.
JBIC concludes business cooperation MOUs with regional
ﬁnancial institutions and provides a wide range of support tofacilitate the overseas expansion of local companies, such as
holding joint seminars on overseas business expansion andother issues.
In FY2016, JBIC provided medium- to long-term funding
to SMEs and their overseas subsidiaries through 10 regional
ﬁnancial institutions, including THE HOKURIKU BANK,
LTD. and The Hiroshima Bank, Ltd., concluding generalagreements to establish a credit line at each bank for thefunds necessary to enable Japanese SMEs to promote theirbusinesses in developing regions.

Cooperation with Local Financial Institutions,etc., in Developing Countries
Securing the support of local ﬁnancial institutions indeveloping countries well acquainted with the local area isalso vital for SMEs.
Not limiting itself to supporting overseas subsidiaries ofJapanese companies, JBIC has strengthened its relationshipwith local ﬁnancial institutions, through measures such asprovision of two-step loans, in order to develop and support
local companies that supply the Japanese subsidiaries withmaterials and components.
In addition, JBIC has concluded MOU with the local
ﬁnancial institutions to develop a support system for SMEs’
overseas business expansion that involves regional ﬁnancial

ﬁnancial institutions to regular follow-up seminars to deepen
mutual understanding through discussions on Japan deskmanagement issues (trainee dispatch, etc.) and methods ofcollaboration.

First seminar and exchange meeting on MOUs with local governments of theUnited Mexican States and local ﬁnancial institutions

Local financial institutions /governments

ThailandIndonesia
India

KASIKORNBANK Public Company Limited
PT. Bank Negara Indonesia (Persero) Tbk
State Bank of India
BDO Unibank, Inc. (BDO)
Metropolitan Bank and Trust Company (Metrobank)
Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)
Joint Stock Commercial Bank for Foreign Trade of Vietnam
The State of Aguascalientes
The State of Jalisco
The State of Guanajuato
BANCO NACIONAL DE MÉXICO, S.A.,
INTEGRANTE DEL GRUPO FINANCIERO BANAMEX (Banamex)
The State of Nuevo León

The Philippines
VietnamMexicoJuly 2013
August 2013
October 2015
November 2015
February 2016

Number of participating
Japanese regional
financial institutions
28
33
45
7
45
5
45
68
68
67

February 201657

March 201667

MOU agreement
date

Country

May 2011
July 2011
August 2012
March 2013

■ Schematic Diagram
MOU

Foreign local banks, etc.
Information provision, etc.

Japan desk

Participation

Regional banks, etc.
Transactions

Mid-tier enterprises and SMEs

Customer introduction(Account opening, etc.)
Credit enhancement*
Equity participations(parent company /subsidiary relationship)Japan

Overseas

Information
provision
Loans, etc.*

Overseas subsidiary* For loans from an foreign local bank based on credit enhancement from each Japanese regional bank, individual business cooperation agreements between theforeign local bank and the Japanese regional bank must be concluded separately.

JBIC ■ Annual Report 2017

71

3
Framework for Supporting Globalization Efforts of Mid-tier Enterprises and SMEs

■ Local Financial Institutions/Governments and Participating Japanese Regional Financial Institutions

4
Financial Instruments

institutions in Japan (see chart below). JBIC has been formany years reinforcing its relationships with the local
ﬁnancial institutions, while working with the regional
Japanese ﬁnancial institutions to conﬁrm the needs of
SMEs in their overseas expansion. Under these MOU, JBIC
encourages local ﬁnancial institutions to set up and expand
single contact points “Japan desks” for Japanese companies,
and builds frameworks which enable consultations on
speciﬁc cooperation and coordination together withthe regional ﬁnancial institutions that have business
relationships with the SMEs.
JBIC concluded a business cooperation agreement toestablish “Japan desks” with seven local banks in ﬁve Asian
countries, as well as four local governments and one local
bank in Mexico. The business cooperation agreement, as
JBIC’s most recent initiative, was concluded with the Stateof Guanajuato, Mexico’s Banco Nacional de México S.A. in
Integrante de Grupo Financiero Banamex (Banamex), andthe State of Nuevo León, and has the participation of 67
Japanese ﬁnancial institutions.
In addition, JBIC invited Japan desk staff of participating
Japanese regional ﬁnancial institutions and foreign local

4

Providing Local Currency-denominated Loans

Financial Instruments

In response to expansion of the overseas business of SMEs,
JBIC has provided loans in various local currencies, including
the Thai baht, Indonesian rupiah, and Chinese yuan. SMEs,
when trying to procure local currency funds in developing
countries, face the problems of short repayment periods(basically up to one year) and high interest rates. In order tosolve these problems, JBIC prepares long-term ﬁxed-rate local
currency loans, a preferential measure for SMEs, and provides
coﬁnancing with private ﬁnancial institutions directly to the
local subsidiaries of Japanese companies who are the clientsof those ﬁnancial institutions. The coﬁnancing sometimes
involves JBIC providing local currency-denominated loans andthe private ﬁnancial institutions providing yen-denominatedloans through the parent company in Japan.

entities, including regional ﬁnancial institutions, prefecturaland municipal governments, and local chambers ofcommerce and industry. In addition, it conducts ﬁeld studies
to assess investment climates in countries where Japanesecompanies are actively expanding their business. The ﬁndingsof these studies are compiled into guidebooks, which areavailable in book form and on JBIC’s website.
Moreover, JBIC offers an itinerant advisory service
in many parts of Japan in cooperation with prefecturaland municipal governments, as well as local chambers ofcommerce and industry which support local companies in
expanding their operations overseas. This service, which isavailable on a regular basis in Sendai City, Ota City, Tokyo,
and Nagoya, offers advice on the overseas investment
climate and how to obtain long-term ﬁnancing, among
other topics.

Information Services, Seminars, etc.

Framework for Supporting Globalization Efforts of Mid-tier Enterprises and SMEs

In addition to individual consulting services for SMEs’
overseas expansion, JBIC provides advisory services throughexperts concerning the legal, accounting, and currency
regulations related to tax affairs, employment and labor
issues, contracts, company establishment, and other issues
for China, India, the ten member countries of ASEAN,
North America, Latin America, and the Middle East.
JBIC also organizes seminars and consultations on
overseas business deployment in cooperation with Japanese

Automobile seminar in India for mid-tier enterprises and SMEs

New Support Mechanism in Indonesia
In October 2014, the central bank of Indonesia announced aregulation on foreign debt denominated in a foreign currency
for private-sector companies. In January 2016, the obligation to
obtain a rating for foreign borrowing agreements denominated ina foreign currency began being applied as part of the regulation.
JBIC assists in facilitating the procurement of funds by providing
guarantees when the Indonesian subsidiaries of Japanesecompanies, including mid-tier enterprises and SMEs, borrow
foreign currency-denominated funds from overseas (cross-borderloans) from Japanese regional ﬁnancial institutions.
1. Background
October 28, 2014:
The central bank of Indonesia announced the regulation on
foreign debt denominated in a foreign currency for privatesector companies (central bank directive 16/20/PBI/2014;
hereafter, “Regulation”).
December 29, 2014:
Released a partial revision of the Regulation (central bankdirective 16/21/PBI/2014) and the Circular Letter (16/24/DKEM)
that speciﬁes the details.
January 1, 2015:
Partial enforcement of the Regulation
January 1, 2016:
Obligation to obtain a rating for foreign borrowing agreements
denominated in a foreign currency began to be applied as partof the Regulation.** A regulation that obligates private-sector companies that borrow foreign
currency-denominated funds to obtain a rating of BB- or higher from arating agency registered by the central bank of Indonesia. However, in thecase of foreign borrowing agreements guaranteed by public institutions,

72

JBIC ■ Annual Report 2017

including JBIC, it is stipulated that such agreements are not subject to thisrating obligation (refer to the Regulation Article 7 (d) and Q&A 31
announced by the central bank of Indonesia).

2. Guarantee Scheme
Since JBIC provides guarantees for loans to the Indonesiansubsidiaries of Japanese mid-tier enterprises and SMEs fromJapanese banks, the borrowing company is exempted from theoriginal obligation of obtaining a rating that applies to companies
that borrow foreign currency-denominated funds.
Japanese mid-tierenterprises and SMEs
(parent companies)

Equity participations

Banks(private-sector banks)Long-term loans(loan agreement)(1) Guarantee*

Indonesiansubsidiaries(borrowers)(2) Guarantee commission

3(1) Guarantee agreement (agreement between JBIC and the lendingbank) (Japanese/Indonesian)(2) Guarantee commission agreement (agreement between JBIC andsubsidiary) (Japanese/Indonesian)* The terms and conditions for credit protection related to the JBIC
guarantees are decided under consultation with the coﬁnancing banks.

5Operational and
Administrative Policies
1 Corporate Governance ······································ 74
2 Risk Management ··········································· ··· 78
3 Public Information and Disclosure ··························· 81

JBIC ■ Annual Report 2017

73

1
5

Corporate GovernanceFundamental Approach to Corporate GovernanceOperational and Administrative Policies

JBIC is making efforts to build a corporate governancestructure in conducting operations with particular attention

to integrity and efﬁciency, as it seeks to fulﬁll the mission set
out under the JBIC Act (Law No. 39, 2011) and realize its
corporate philosophy.

Shareholder Meeting
Supervisory and Evaluative Function

Board of Corporate Auditors

Board of Directors

Accounting Auditor

Outside Corporate
Auditors

Outside Director

Management Advisory and
Evaluation Committee

Office of Corporate
Auditor1

Risk Advisory Committee

Corporate Governance

Executive Function
Executive Committee

Credit Committee
Corporate Risk
Management Committee
Compliance andCustomer Protection
Management Committee

Preliminary Credit
Committee

Internal Audit
Committee
Internal Audit
Department

ALM Committee
Global Head Committee
BCP Committee

Personnel
Committee

ICT Promotion Committee[Decision Committees]

Information Security
Committee[Deliberative Committees](As of August 31, 2017)

Involvement of Japanese Government
As JBIC has its shares wholly owned by the Governmentof Japan, it is subject to the control of the Japanese
government, its sole shareholder. Additionally, it is subject
to the budget passed in the Diet, inspections by the Board
of Audit of Japan, by the Competent Minister, and by the
Financial Services Agency whose inspection is delegated by
the Competent Minister.

Supervisory and Evaluation Function and theConduct of JBIC Operations
To strengthen the supervisory and evaluative function of theBoard of Directors as well as conduct speedy and ﬂexible
operations, JBIC has established, in addition to the Board of

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JBIC ■ Annual Report 2017

Directors, the Board of Corporate Auditors and other organs
required by the Companies Act, the Management Advisory
and Evaluation Committee, the Risk Advisory Committee,
the Internal Audit Committee, and the Executive Committee.
Furthermore, a variety of committees were set up by the
Executive Committee that delegates speciﬁc tasks to them.
(1) Board of Directors
The Board of Directors consists of 7 members, of which one
member is an outside director as set forth in the Companies
Act. The external director supervises the conduct of JBIC
operations from the point of view of a corporate outsider,apart from representative directors of JBIC. In addition, theExternal Director contributes to improving the governanceof JBIC as a member of the Management Advisory
and Evaluation Committee as well as the Risk Advisory
Committee.

(3) Management Advisory and Evaluation Committee
The Management Advisory and Evaluation Committee
consists of 3 to 7 external experts, including the outside
director. They make assessment and offer advice on thematters referred to them by the Board of Directors pertaining
to the business operations and management of JBIC.

(5) Internal Audit Committee
The Internal Audit Committee consists of representative
directors and the outside director. They make decisions anddeliberations concerning important matters pertaining tointernal audit, as delegated by the Board of Directors.
(6) Executive Committee
The Executive Committee consists of representative
directors, executive directors, and all the managing executiveofﬁcers. They make decisions and deliberations concerning
important managerial matters, thereby taking responsibility
for conducting ﬂexible JBIC operations, as delegated by the
Board of Directors. Certain decisions such as ﬁnancing to a
speciﬁc project are delegated to the following committees.
(i) Credit Committee
The Credit Committee makes decisions and deliberations
concerning important matters on loans, equity participations,and guarantees by JBIC, as delegated by the Executive
Committee.

■ List of Members of the Management Advisory and Evaluation(As of August 31, 2017)
Committee
Name

Occupation

Shujiro Urata

Professor, Graduate School of Asia-Paciﬁc Studies,
Waseda University

Shinichi Koizumi

JBIC Managing Director (Outside Director)

Yoshikatsu Suzuki Journalist (formerly editor-in-chief Diplomacy)
Yuzo Takagi

Chairman & Representative of Audit Corporation
GODAI, Certiﬁed Public Accountant

Mikiko Fujiwara

CEO of Alpha Associates Co., Ltd.

Sumihiko Yoshie

Executive Auditor of Government Pension
Investment Fund, Japan (former Representative
Director and President of NIPPON STEEL &SUMIKIN INSURANCE SERVICE, INC.)(iii) Compliance and Customer Protection Management
Committee
The Compliance and Customer Protection Management
Committee makes decisions and deliberations concerning
important matters pertaining to the compliance andcustomer protection management of JBIC, as delegated by
the Executive Committee.
(iv) Personnel Committee
The Personnel Committee makes decisions and deliberations
concerning important matters pertaining to the personnel of
JBIC, as delegated by the Executive Committee.
(v) Preliminary Credit Committee
The Preliminary Credit Committee makes deliberations
concerning important matters pertaining to assessment
policies toward loans, equity participations, and guarantees
and credit policy toward large-lot debtors, as delegated by
the Executive Committee.
(vi) ALM Committee
The ALM Committee makes deliberations concerning
important matters pertaining to the asset-liability
management (ALM) of JBIC, as delegated by the Executive
Committee and the Corporate Risk Management Committee.
(vii) Global Head Committee
The Global Head Committee makes deliberations concerning
cross-cutting matters among internal groups, including
operational policy for each country or region, as delegatedby the Executive Committee.
(viii) BCP Committee
The BCP Committee makes deliberations concerningenhancement of JBIC’s business continuity plan (BCP) to be
carried out, for example, upon the occurrence of large-scaledisasters, as delegated by the Executive Committee.

■ List of Members of the Risk Advisory Committee(As of August 31, 2017)

Name

Occupation

Shuhei Abe

President, CEO & CIO of SPARX Group Co., Ltd.

Eiji Ogawa

Professor, Graduate School of Commerce andManagement, Hitotsubashi University

Shinichi Koizumi

JBIC Managing Director (Outside Director)

Toshiki Tomita

Professor, Faculty of Law, Chuo University

Chieko Matsuda

Professor of Management, Graduate School ofSocial Sciences, Tokyo Metropolitan University

Keisuke Yokoo

Advisor of Mizuho Securities Co., Ltd.

(Listed in the order of 50 character kana syllabary, name listed without honoriﬁcs)(Listed in the order of 50 character kana syllabary, name listed without honoriﬁcs)

JBIC ■ Annual Report 2017

75

5

1
Corporate Governance(4) Risk Advisory Committee
The Risk Advisory Committee consists of 3 to 7 external
experts, including the outside director. They offer advice
on the matters referred to them by the Board of Directors
pertaining to risk management and assessment frameworkassociated with large-lot obligors and risk exposure to largescale projects.

(ii) Corporate Risk Management Committee
The Corporate Risk Management Committee makes
decisions and deliberations concerning important matterspertaining to the corporate risk management of JBIC, asdelegated by the Executive Committee.

Operational and Administrative Policies(2) Board of Corporate Auditors
The Board of Corporate Auditors consists of 3 auditors, ofwhich two are outside corporate auditors, as set forth in
the Companies Act. Outside corporate auditors contributeto improving the governance structure of JBIC, as they
cooperate with the full-time auditor in auditing the conductof its operations. As a section helping them execute their
responsibilities, there is the Ofﬁce of Corporate Auditor.

5
Operational and Administrative Policies(ix) ICT Promotion Committee
The ICT Promotion Committee makes deliberations
concerning matters for achieving effective, efﬁcient, andsteady ICT (information and communication technology)
when carrying out various measures required for the ICT
plans and policies which had been determined by the Boardof Directors and Executive Committee, as delegated by the
Executive Committee.
(x) Information Security Committee
The Information Security Committee makes deliberations
concerning important matters pertaining to the use
and management of JBIC’s information assets, as wellas information security, as delegated by the Executive
Committee.

1Mission/Sector-Specific Group Structure
JBIC reconstituted its organization and adopted a mission/sector-speciﬁc group structure. Its objective is to strengthen
the capacity to formulate projects by bringing together
know-how and expertise in each sector and area, thereby
facilitating JBIC to perform the functions in its mission more
ﬂexibly and strategically.
Speciﬁcally, the Corporate Planning Group; Credit,
Assessment and Risk Management Group, Treasury and
Systems Group, Energy and Natural Resources FinanceGroup; Infrastructure and Environment Finance Group;
Industry Finance Group; and Equity Finance Group were
set up, with each Group having departments with special
expertise.

Members of Board of Directors

Corporate Governance

Governor

Akira Kondoh

CEO, Executive Managing Director

Tadashi Maeda

COO, Senior Managing Director

Nobumitsu Hayashi

Senior Managing Director

Yasushi Hasegawa

Senior Managing Director

Kenichiro Hayashi

Senior Managing Director

Tatsuhiko Takesada

Managing Director (Outside Director)

Shinichi Koizumi

Managing Executive Officers
Global Head of Corporate Planning Group

Kazuhiko Amakawa

Corporate Planning Group

Global Head of Credit, Assessment and Risk
Management Group

Yutaka Funada

Credit, Assessment andRisk Management Group

Global Head of Treasury and Systems GroupKuninori Kuroishi

Treasury and Systems Group

Global Head of Energy and Natural Resources
Finance Group

Masaaki Yamada

Energy and Natural Resources
Finance Group

Global Head of Infrastructure andEnvironment Finance Group

Kazuhisa Yumikura

Infrastructure andEnvironment Finance Group

Global Head of Industry Finance Group

Kazuhiko Tanaka

Industry Finance Group

Global Head of Equity Finance Group

Shinji Fujino

Equity Finance Group

Member of Board of Directors

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JBIC ■ Annual Report 2017

Member of Internal Audit Committee

Member of Executive CommitteeFundamental Policy on Internal Control

Protection of Private Information
JBIC has drawn up and disclosed its Privacy Policy (see page178) which stipulates appropriate management of private
information held by JBIC pursuant to the provisions of
the Act on the Protection of Personal Information Held by
Independent Administrative Agencies, etc.

51
Corporate Governance

As an internal control system for overall operations, JBIC has
appropriate internal audit procedures to review as well as
evaluate their appropriateness and effectiveness and makerecommendations to improve them. For these purposes,
JBIC has the Internal Audit Committee, which includes theoutside director, as a decision-making body independent of
the Executive Committee that is responsible for conducting
operations. There is also the Internal Audit Department,
independent of the line departments and directly reportingto the Governor.
The Internal Audit Department exchanges relevant
information and cooperates with the Corporate Auditors
and an Accounting Auditor for executing efﬁcient internal
audit (see pages 175 and 176 for the Basic Policy for theInternal Control System).

To foster an in-depth understanding of compliance, JBIC
makes good use of its Compliance Manual and provides
training sessions for its management and staff members. It
also develops a compliance program every ﬁscal year as abasis for making necessary compliance arrangements andproviding relevant training, and follows up on the progressand completion.
In addition to the reporting procedures in its ordinary lineof business, JBIC has put in place and is properly operating
an internal reporting system such that it is capable of ﬁnding
signiﬁcant compliance issues at an early stage and taking
appropriate remedial action.

Operational and Administrative Policies

For each Group, the responsible board member isappointed, and the managing director or a managing
executive ofﬁcer serves as the Global Head of each Group.
Each Group is managed in an integral manner under the
Global Head of the Group in an effort to conduct speedy,
ﬂexible, and efﬁcient operations.

Maintenance and Control of Information Assets
JBIC sets forth its fundamental “Security Policy” concerning
the use and management of information assets (see page177) in order to secure high standard information security
and implement proper and efﬁcient operations. Based on
the standard, JBIC properly handles, manages, protects, andmaintains information assets.

Compliance
JBIC has set forth in its Code of Conduct to “Maintain highethical standards and a law-abiding spirit. Observe ourmoral code as a JBIC member at all times.” Its management
and staff members are keenly aware of the public missions
and social responsibilities called for in the international
community and in civil society. It is also well recognizedthat any act in violation of laws, regulations, or rules by its
management and staff will lead to denigrating conﬁdence
in JBIC as a whole and have a materially adverse effect on
its operations. Attentive to these needs, JBIC is constantly
striving toward compliance and operational integrity.
JBIC makes efforts to improve compliance, primarily
through the Compliance and Customer Protection
Management Committee and has established the Legal
Affairs and Compliance Ofﬁce as an integrated compliancemanagement unit.
Each Group and Overseas Representative Ofﬁce serving
as a regional headquarter has an Integrated ComplianceOfﬁcer, while each department and overseas representativeofﬁce has a Compliance Ofﬁcer for making efforts incompliance, such as fostering such awareness among JBIC
employees.

JBIC ■ Annual Report 2017

77

2
5

Risk Management

Operational and Administrative Policies

In general, the operations of ﬁnancial institutions involve
various risks, including credit risk, market risk (such as
interest rate and exchange rate risk, etc.), liquidity risk, andoperational risk. As a policy-based ﬁnancial institution, JBIC
conducts ﬁnancial operations to achieve policy objectives.
Thus, JBIC differs from private ﬁnancial institutions in its
nature as well as the extent of risks involved in its operations
and ways to deal with them. Nonetheless, recognizing theimportance of appropriate risk management as a ﬁnancial
institution, JBIC has put in place an institutional system forrisk management commensurate with different types of risks
and for addressing integrated risk management.
More speciﬁcally, JBIC deﬁnes the objective of risk
management as identifying, measuring, and monitoring
various risks JBIC is exposed to in the process of conducting
operations to ensure the soundness and integrity ofoperations and increase transparency. For this purpose,

JBIC has designated the staff responsible for managing
various risks and has a department working on the overallrisk management. In addition, there are the Corporate Risk
Management Committee and the ALM Committee that
hold discussions and make considerations for the effectivefunctioning of risk management. JBIC has also set up the
Risk Advisory Committee, which consists of external experts,
to provide the JBIC Board of Directors with advice on therisk management and assessment system with respect tolarge-lot debtors and on issues referred to by the JBIC Boardof Directors with respect to risks associated with large-scale
projects.
JBIC has conducted risk management separated into
the Ordinary Operations Account and Special Operations
Account. The following sections describe how JBIC manages
representative risks JBIC is facing, among various otheroperational risks, in conducting operations as a policy-based
ﬁnancial institution.

2
Risk Management

Credit Risk
Credit risk refers to the potential loss from a decline orloss of the value of credit assets due to deterioration in theﬁnancial conditions of a debtor. This risk is inherent in JBIC’soperations as it primarily engages in lending activities. Credit
risk exposure to JBIC may be classiﬁed into: sovereign risk,
which involves ﬁnancing foreign governments; corporate
risk, which involves ﬁnancing business ﬁrms; project risk,
which occurs when a project ﬁnanced in project ﬁnancing—aﬁnancing structure in which a loan is primarily secured on
the cash ﬂow generated from the project—fails to generate
the planned cash ﬂow; and country risk, which involves
ﬁnancing foreign ﬁrms as well as projects located in foreigncountries (a risk added to corporate risk and project risk
arising from the country where the debtor resides and the
project is located). Given the very nature of ﬁnancial support
JBIC provides for promotion of overseas development
and securement of strategically important resources toJapan, for maintaining and improving the international
competitiveness of Japanese industries, and for promoting
the overseas business for preserving the global environment,such as preventing global warming, JBIC frequently extends
loans to foreign governments, government agencies, andcompanies. Therefore, sovereign and country risks accountfor a considerable share of the credit risks accompanying
JBIC’s operations.

governments and companies. It is based on this informationand its analysis that credit appraisal takes place, with checks
and balances at work between these different departments
throughout this process, leading to the ﬁnal decision by
management.
In providing credit for foreign governments andcompanies, JBIC makes the most of its unique position as anofﬁcial ﬁnancier, as it exchanges views and information withthe governments and relevant authorities in the recipient
countries, multilateral institutions such as the International
Monetary Fund (IMF) and the World Bank, other ofﬁcial
export credit agencies and, furthermore, with private
ﬁnancial institutions in developed countries. Using all thesechannels, JBIC evaluates sovereign and country risks basedon a broad range of information collected on borrowing
governments, government agencies, and political andeconomic conditions in their countries.
In providing credit for domestic and foreign companies,
there is a need to evaluate their creditworthiness and theappropriateness of the collateral they offer. In particular, forcredit provision related to overseas projects, credit evaluation
involves checking and examining the certainty of conducting
transactions to be ﬁnanced, feasibility studies of the projects,
and the industry in which the borrower operates.

Internal Credit Rating
Managing Credit Risk
The cornerstone of credit risk management at JBIC is theevaluation of an individual borrower’s creditworthinessin the process leading to credit approval. When a newloan application is being processed, the relevant ﬁnancedepartment and the Credit Department collect and analyze
information on the borrower. The overseas representativeofﬁces also play a part in collecting information on foreign

78

JBIC ■ Annual Report 2017

JBIC has established an internal credit rating system which
covers, in principle, all the borrowers. Internal credit ratings
are the cornerstone of credit risk management, being used
for conducting individual credit appraisals and quantifying
credit risks.

Quantifying Credit Risk

Japanese private ﬁnancial institutions undertake theinternal assessment of asset portfolios in accordance with
Inspection Manual for Deposit-Taking Institutions (the“Financial Inspection Manual”) of Japan’s Financial Services
Agency. JBIC is similarly undertaking the internal assessmentof its loan portfolio referring to the Financial Inspection
Manual so that the characteristics of its loan assets will
be accurately reﬂected on its assessment. In this process,the ﬁrst-stage assessment is conducted by the relevant
ﬁnancing departments, while the second-stage assessment
is conducted by the Credit Department and the Country
Credit Department, which is then inspected by the Audit
Department. The results of internal assessment conducted on
the portfolio are not only used internally for the continuous
reviews of the loan portfolio but are also reﬂected in thedisclosure of asset quality to enhance the transparency of
JBIC’s ﬁnancial position.

In addition to individual credit risk management, JBIC is
working on quantifying credit risks with a view to evaluating
the risk of the overall loan portfolio. To quantify credit risks, it
is important to take into account the characteristics of JBIC’sloan portfolio, which holds a signiﬁcant proportion of longterm loans and loans involving sovereign and country risks.
Also to be taken into account are mechanisms for securingassets, such as the Paris Club1, a unique framework for debt
management by ofﬁcial creditor countries. The credit risk
quantiﬁcation model incorporating these factors measurescredit risks and is utilized for internal control.

1. The Paris Club is an informal group of ofﬁcial creditors whose role is to ﬁnd
coordinated and sustainable solutions to the payment difﬁculties
experienced by debtor nations. Since the ﬁrst meeting took place in 1956
to resolve the debt problem of Argentina, the meeting has been held inParis, with the French Treasury acting as its secretariat. Hence, it has cometo be called the Paris Club.

5
Operational and Administrative Policies

Internal Assessment of Asset Portfolio

2
Risk Management

Market Risk
Market risk refers to the potential loss from changes in thevalue of assets and liabilities as a result of ﬂuctuations ininterest rates and foreign exchange rates. JBIC manages
speciﬁc market risks as follows.

Derivatives Transactions

Exchange Rate Risk

(2) Transactions
Derivatives transactions of JBIC include interest rate andcurrency swaps and forward exchange contracts. The
following table gives a summary of these transactions as ofMarch 31, 2017.

Foreign currency-denominated loans involve the risk
associated with exchange rate ﬂuctuations. JBIC has aconsistent policy of hedging the full amount of such exposure
through currency swaps and forward exchange transactions.

(1) Basic Policy for Derivatives Transactions
JBIC engages in derivatives transactions exclusively for the
purpose of hedging exchange rate and interest rate risks.

Credit Risk of Derivatives, etc.
(As of March 31, 2017; unit: 100 million yen)Contract Amounts /Notional Amounts

Interest Rate Risk
Funding for yen-denominated loans is mainly managed atﬁxed-rate interest. Interest rate risk for yen-denominatedloans, however, is limited since derivative transactions suchas interest rate swaps are used to hedge interest rate risk for
portions of loans that are thought to have high exposures
to interest rate ﬂuctuation risk. Interest rate risks associatedwith foreign currency-denominated loan operations andrelevant fundings are generally hedged by managing thefunds with ﬂoating interest rates with the use of interest
rate swap transactions. In addition, JBIC carefully calculates
and analyzes projections of its future asset/liability structure
and proﬁts and losses.

Credit Risk
Amounts

Interest Rate Swaps

39,832596

Currency Swaps

39,0403,663

Forward Exchange
Contracts

30

Other Derivatives——

Credit Risk Reductions
through Netting
Total(3,198)78,876

1,061“The credit risk amounts” are calculated under Uniform International
Standards in accordance with the Banking Act of Japan and the related
regulations.

JBIC ■ Annual Report 2017795(3) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.

Operational and Administrative Policies◆ Counterparty Credit Risk
The potential loss from the failure of a counterparty toperform its obligations in accordance with the terms andconditions of the contract governing transactions due tobankruptcy or its deteriorating business performance.

2◆ Market Risk
The potential loss from changes in the market value ofﬁnancial products due to ﬂuctuations in interest rates or
exchange rates in the market.

(4) Measures to Address These Risks◆ Counterparty Credit Risk
JBIC constantly monitors the fair value of a derivative in
conducting a transaction with each counterparty, credit risk
exposure to it, and its creditworthiness. Such information isthen used to assess the eligibility of the counterparty.
◆ Market Risk
JBIC utilizes derivatives transactions exclusively for the
purpose of hedging. Therefore, the market risk on derivatives
transactions and the risk on hedged (lending or funding)transactions, in principle, offset each other.

Liquidity Risk

Risk Management

Liquidity risk refers to the potential loss resulting from
difﬁculties in funding due to a maturity mismatch between
ﬁnancing and funding caused by unexpected cash-outs orfrom being forced to fund at an interest rate signiﬁcantly
higher than in normal circumstances, as well as the potential
loss resulting from a failure to make transactions in themarket due to market turmoil or from being forced tomake transactions at a signiﬁcantly disadvantageous pricecompared to normal circumstances.
JBIC is minimizing liquidity risk through effective cash
ﬂow management and the diversiﬁcation of its funding
sources, including borrowings under the Fiscal Investment
and Loan Program (FILP), government-guaranteed bondissues in international capital markets, and FILP agency bondissues in the domestic capital market.

Operational Risks
Operational risk refers to the potential loss resulting frominadequate or failed internal processes, people, and systems
or from external events. Apart from administrative, computer
system, and information security risks, JBIC recognizes thatits operations involve various direct and indirect risks. JBIC
will proactively identify, assess, and manage such risks.

Administrative Risk
Administrative risk refers to the potential loss resulting
from the neglect by ofﬁcers and employees to conduct
administrative work properly, accidents caused by them,and violation of laws and regulations caused by them, etc.,
conducted in the course of the administrative work process.
JBIC has been minimizing this risk by ensuring soundoperations through scrupulous checks on work processes,
creating operational manuals, improving training programs,
and streamlining and adopting systematic procedures.

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JBIC ■ Annual Report 2017

Computer System Risk
Computer system risk refers to the potential loss from a
breakdown or malfunction in computer systems as well
as from their misuse. JBIC has been minimizing computer
system risk that could be linked to adverse effects on
business operations and the leakage of client information byincreasing its readiness to respond effectively to emergency
situations. Speciﬁcally, (a) measures have been taken tocorrespond to and prevent system malfunctions; and (b)contingency plans have been prepared to respond to system
malfunctions caused by accidents and other causes, anddisaster-response drills have been conducted.

Information Security Risk
Information security risk refers to the potential loss due tothreats to the conﬁdentiality, integrity, and availability of
information assets. JBIC has taken all possible measures tomaintain information security by establishing information
security regulations and a structure encompassing information
management as well as by providing comprehensive
education to management and staff members.

3

Public Information and Disclosure

Publications

The website provides access to JBIC information, including its
ﬁnancial instruments, press releases, invitations to seminars,
reports on various studies, activities on environmental
issues, annual reports, various brochures, IR information forinvestors, and various other types of information.

Information Dissemination for the Media
Aside from information disseminated through various
publications, the website, and other means, JBIC informs thenews media about its operations and activities through press
conferences, meetings, etc.

Disseminating Information from Overseas
Representative Offices
JBIC’s overseas representative ofﬁces are actively contributing
reports and articles to the news media to provide information,such as political, economic, and business trends in overseas
development, etc.

JBIC Today

JBIC’s Activities for Environmental
Sustainability (2016)

5

JBIC website

JBIC ■ Annual Report 2017813
Public Information and Disclosure

JBIC publishes its annual operations and activities as well as its
ﬁnancial conditions in various disclosure materials, including
annual reports, business reports, ﬁnancial statements, andForm 18-K, which is submitted to the U.S. Securities andExchange Commission.
Other publications available to the public include
JBIC Today, a public information magazine that reports
on JBIC’s latest activities and topics on its operations andother relevant issues; and JBIC Profile: Role and Function, abrochure describing JBIC operations.

WebsiteOperational and Administrative Policies

JBIC is providing and disseminating information to abroad range of the domestic and overseas public in aneffort to promote further understanding of its operations
and activities.
The JBIC Information Center at the Head Ofﬁce andthe West Japan Ofﬁce produce various brochures, annual
reports, public relations magazines, and other materials
available to the general public. In addition, a variety
of information about JBIC is provided publicly in Japanand overseas through the JBIC website (http://www.jbic.
go.jp/en/).

5
Operational and Administrative Policies

32017 JBIC participated in Mining Indaba in South Africa, oneof the world’s largest mining conferences.

Promoting International Exchange
Since 1976, JBIC has held annual JBIC Seminars in Japan topromote mutual understanding with its overseas business
partners and relevant organizations by inviting ofﬁcials
from foreign governments, government agencies, privatecompanies, ﬁnancial institutions, etc. The cumulative numberof seminar participants is approximately 670 to date.

Eco-Products 2016
Participants at a JBIC Seminar

Public Information and Disclosure

Disclosure
Participating in Various Events
JBIC actively takes part in events held both in Japan andoverseas in order to explain its role and functions, its support
in the environmental ﬁeld, etc.
In December 2016, JBIC exhibited at Eco-Products 2016,
which was held at Tokyo Big Sight. Overseas, in February

Source of Information

82

JBIC discloses to the public its operational and ﬁnancial
information to promote further understanding of its current
activities, as follows.

AccessReport on Settlement of Accounts

 Available at the Head Ofﬁce and the West Japan Ofﬁce Distributed to the National Diet Library and economic organizations, etc.

Annual Report, Public Relations Magazine, etc.

 Available at the Head Ofﬁce, the West Japan Ofﬁce, and Representative Ofﬁces
 Distributed to interested persons/institutions

Website: Type of Business Operations, Operational Results,
Overview of Organization, Financial Composition, etc.

 On the internet
Address: http://www.jbic. go.jp/en/

JBIC ■ Annual Report 2017