H4H1

JBIC Annual Report 2016

reen
ties.
r.

2 0 16 Annual Report

H2

H3

JBIC 2016
Japan Bank forInternational Cooperation
Annual Report1

Profile of JBIC

Access to JBIC Head Office and West Japan Office

1

1 Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Interview with the Governor  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

JBIC Head OfficeWest Japan Office

4-1, Ohtemachi 1-chome, Chiyoda-ku,
Tokyo 100-8144, Japan

3-5, Sonezaki 2-chome, Kita-ku, Osaka city,
Osaka 530-0057, Japan

3 Directors, Managing Executive Officers and Corporate Auditors  . . . . . . . . . . . . . . . 8
4 Medium-term Business Plan (FY2015–2017)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5 Amendment of the Japan Bank for International Cooperation Act  . . . . . . . . . 14
6 Outline of Operations in FY2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Nishikichogashi

Hitotsubashigashi

1 Energy and Natural Resources Finance Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

KKR

Hirakawa-

eba

shi

Exit 3b

sta

.

35

a.

Keidanren
Nikkei JA
Inc. Building Kaikan

KDDI
Corp.

Kishochomae
Tokyo Fire
Defense Agency

nE

Daimaruxp

Kandabashi
ressw

Osaka ekimaeayOtemachi Joint
Government
Office Bldg, No.3

Osaka ekimae-Nishi

Keidanren
Nikkei JA
Inc. Building Kaikan

Exit C2b

OtemachiFinancial City
Grand Cube

KDDI
Corp.

sta.
eda
Hanshin-mae
UmDaimaru
Sonezaki Police Station

HiltonOsaka
Umeda 1

EkimaeExit 8
Building No. 4 (F54)*

Umeda 1 Higashi

Exit F-92

ta.

* From the Umeda Underground shopping mall.

Umeda 155

Enterprises and SME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
69

1 Corporate Governance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2 Risk Management  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3 Public Information and Disclosure  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Data 1

Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Data 2Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Data 3

Corporate Data .......................................................................................................149

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 treatedas follows. Commitments are converted into yen at the Basic Rate of Exchange (revised semi-annually by the Minister of Finance, based on the prevailingmarket rates during the preceding six months) at the time financing contracts are concluded. Disbursements, repayments, and outstanding balances arecalculated 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 thatfrom the International Financial Account of the then-JBIC in the second half. From FY2000 to FY2007, data came from the International Financial
Account of the then-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 fromthe 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 the Japan Bank for International Cooperation.

EkimaeExit 8
Building No. 4 (F54)*

Umeda 1 Higashi* From the Umeda Underground shopping mall.

2 Framework for Supporting Globalization Efforts of Mid-tierOperational and Administrative Policies

(UMESHIN

Exit 7 (H8
Umeda
OS Ho
Tsuyu
Shrine (OTenjin S

EkimaeEkimaeEkimaeBuilding No. 1 Building No. 2 Building No. 3 Exit
F-82
Umeshin-Higashi
Exit 7B
Kitashinchi Sta.
Route 1
Umedashinmichi
Sakurabashi
Exit F-92 Umed

Exit
F-82

1 Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

5Sonezaki Po

JBIC Head Office
4-1, Ohtemachi 1-chome, Chiyoda-ku,
Tokyo 100-8144, JapanFor further information, please contact
Press and External Affairs Division at the JBIC Head OfficeTel: (+81-3) 5218-3100
Fax: (+81-3) 5218-3955
Annual reports, news releases and bulletins, etc. areavailable on the JBIC website.
Website (URL) http://www.jbic.go.jp/en/

suji
Mido

ta.

Exit 7 (H82)*
Osaka
Umeda
Marubiru
OS HotelTsuyuten
HiltonShrine (Ohatsu
Tenjin Shrine)Osaka

EkimaeEkimaeEkimaeBuilding No. 1 Building No. 2 Building No. 3
Exit 7B
Kitashinchi Sta.

Sakurabashi

achi sHankyu-mae

sta.

eda
Hanshin-mae
Um
shin
n
a
H
Hanshin
Osaka ekimae-Nishi Department Store(UMESHIN DAI-ICHI SEIMEI BUILDING 10F)
Osaka ekimae-Minami

Hanshin
Department Store

Osaka
Marubiru

Midosuji Line
HankyuDepartment
Store

Osaka ekimae

Yotsubashisuji
suji
Mido

Otem

shin
Han

Hankyu-mae

Osaka ekimae-Minami

Kandabashi
Ramp

Yotsubashisuji

OtePalace
Imperialmach
i sta.

Japan
Meteorological
Agency

lita

.
sta
ka
sa
O
R
JSonezaki-Higashi

Shin-Midosuji

Exit C2b

OtemachiFinancial City
Grand Cubepo

HankyuDepartment
Store

ta.
da s
Ume
shiHiga

Kandabashi
Ramp

tro

achi sFinancial Instruments

i stOtemachi Joint
Government
Office Bldg, No.3

ta.

4

Tak
ay ebashsw

achi sand Collaboration with Overseas Governmental Organizations
and International Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

res

Me

Exit 3b

Otem

Imperial Palace

xp

Otem

5 Examples of Business Outcomes Relating to Studies,Tokyo Fire
Defense AgencynE

Midosuji Line

Nishi-Umeda sta.

Enterprises and SME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4 Examples of Business Outcomes Relating to Environment . . . . . . . . . . . . . . . . . . . . . . . . 51

Kishochomae

lita

KKR
HirakawaJBIC
mon
Kandabashi

ri
orido
Uchib

3 Examples of Business Outcomes Relating to Support for Mid-tierJapan
Meteorological
Agency

ri
orido
Uchib

2 Examples of Business Outcomes by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

poNishi-Umeda sta.

1 Overview of Business Outcomes by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

tro

ta.
as
ak
s
O
JR

ta.
da s
Ume
shiHiga

Examples of Business Outcomes in FY2015

Me

JBIC

 . . . . . . . . 26
2 Infrastructure and Environment Finance Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .mon
3 Industry Finance Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .T . .a .k . . . . 30

3

Hitotsubashi
Ramp

Ramp

ta.
da s
Ume

21
The Environment Surrounding JBIC and Its ChallengesHitotsubashi

ta.
da s
Ume

2

Nishikichogashi

Hitotsubashigashi

1Profile of JBIC
1

Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2Interview with the Governor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3

Directors, Managing Executive Officers andCorporate Auditors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4Medium-term Business Plan (FY2015–2017) . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5

Amendment of the Japan Bank for International
Cooperation Act  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6

Outline of Operations in FY2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

JBIC  Annual Report 20161

1 Profile
The Purpose of JBIC

1
Profile of JBICJBIC is a policy-based f inancial institution wholly owned by the Japanese government, which has the objective ofcontributing to the sound development of Japan and the international economy and society, by conducting 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 by such disruptions

1 Profile

Corporate Slogan

Corporate Philosophy
The objective of JBIC, as set forth in its statutory law, is to “contribute to the sound development of Japan and theinternational 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 wellfocused 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
private-sector 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
the international 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.

2

JBIC  Annual Report 2016

JBIC Code of Conduct1

 Act consistently in the public interest. Contribute to Japan and the international community by pursuing our Mission.

Profile of JBIC

 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
1 Profile

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

October 2008

April 2012

Japan Finance Corporation
(JFC)
JBIC
(International Wing)

October 1999

December 1950
Export-Import Bank ofJapan (JEXIM)

Japan Bank forInternational Cooperation(JBIC)(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

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)

ProfileName

Japan Bank for International Cooperation (JBIC)

Office4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan

Capital*¥1,391.0 billion (wholly owned by the Japanese government)

Outstanding Loans and Equity Participations*¥13,843.9 billion

Outstanding Guarantees*¥2,464.7 billion* As of March 31, 2016

JBIC  Annual Report 20163

2 Interview with the Governor
On behalf of the Japan Bank for International Cooperation (JBIC), I would like to express my sincerest
appreciation for your continued support for and understanding of JBIC.
The global economy remains vulnerable to downside risks that could jeopardize economic growth. The
risks include the impact of monetary policy normalization in the U.S., an uncertain economic outlook in China
and other emerging countries in Asia, as well as falling crude oil prices.
Japan is also facing significant changes in the global environment. In the energy and natural resources
sector, following the idling of all domestic nuclear power stations, initiatives to diversify overseas energy
suppliers, acquire upstream interests, strengthen relations with resource-rich countries, as well as to reduce
procurement costs, while diversifying energy sources, have become critically important as these initiatives
directly affect the lives of Japan’s citizens.
Japanese industries, meanwhile, have been globalizing entire value chains to capture demand from growthmarkets. However, amid intensifying competition from companies in both leading emerging-markets anddeveloped countries, Japanese businesses cannot rely only on proprietary products and constituent
technologies to expand overseas. They must also develop systems that integrate management know-how with
their operations and maintenance services.
In particular, for infrastructure projects, the promotion of public–private partnerships has become
important, given that such projects require a longer time to generate investment returns and face considerable
business risks, while local governments hold considerable authority in the projects. Furthermore, in an era
when achieving a balance between environmental conservation and economic development is recognized as auniversal challenge, it is necessary for individual projects to respond to the need for reduced environmental andsocial impacts. Such expectations thus apply to those renewable energy projects that utilize Japan’s advanced
environmental technologies.
As a response to changes in thedomestic and overseas environment, the Act
for Partial Amendment of the Japan Bank forInternational Cooperation Act was enacted
on May 11, 2016. The Act enables JBIC totake further risks regarding overseas
infrastructure and other foundations ofsocioeconomic activities, and to diversify its
financing methods so that it might proffer
additional support to Japanese companies
expanding overseas.
As a policy-based financial institution,
JBIC is committed to better buttressing
Japanese companies as their presence
overseas grows, in line with the expectations
and needs of the Japanese government andJapanese industries.

1
Profile of JBIC
2 Interview with the Governor

Akira Kondoh
Governor
Japan Bank for International Cooperation(JBIC)

4

JBIC  Annual Report 2016

Would you briefly explain your objectives as
the newly appointed governor?

Having been involved in managing JBIC as an outside
director over the past four years, I am confident that wehave been adequately fulfilling our role as an organization
within a certain, defined framework. This commitment
will continue to inform all our actions, including theimplementation of our medium-term business plan.
Meanwhile, as demand for infrastructure projects
overseas grows, we have significantly increased our risk
exposure, in addition to changing the way in which we
provide support. Specifically, the May enactment of the
Act for Partial Amendment of the Japan Bank forInternational Cooperation Act has enabled us to become
more involved in projects that we could not previously
support. But, at the same time, the revision has opened
up a new set of challenges for JBIC, based on a fresh setof expectations stemming from the amended law. This
makes it necessary for us to further strengthen our risk
management framework, taking advantage of the
network, expertise and experience we have developed
over the years.

2 Interview with the Governor

What challenges do you anticipate?

1
Profile of JBIC

It is important to remain cognizant of JBIC’s purpose andto bear in mind that, as a policy-based financial institution
wholly owned by the Japanese government, JBIC serves
the role of complementing the functions of Japanese
private-sector financial institutions. JBIC strives to securea stable supply of natural resources that are vital for
Japan, improve the international competitiveness ofJapanese industries, while conserving the global
environment and maintaining international financial
stability, with the aim of contributing to the sounddevelopment of Japan as well as the international
economy and society. These imperatives are rooted in thelaws that govern JBIC’s incorporation.
JBIC comprises a small but incredibly talented teamof professionals. In terms of business execution, we arestill informed by conventional policies, but I plan to focus
on three areas for the management of this organization.
First of all, for the organizational management which
stands in the very center of our business operations, I
would like to foster an open workplace that encourages
mutual communication and affirms the value of ouremployees and their families.
Second, we must accurately respond to the needs ofcustomers. In a broad sense, our customers are notlimited to Japanese companies. Thus, working within alegal framework, it is imperative that we meet the needsof customers around the world, including governments ofvarious countries, local financial institutions, andcompanies which are involved in projects.
Third, JBIC must be accountable to the people ofJapan who, as taxpayers, are effectively its major
shareholders. I will endeavor to manage the organization
while not losing sight of the level of satisfaction requiredby each of our major stakeholders: our employees andclients, as well as the people of Japan.

Please summarize JBIC’s FY2015 performance.
In FY2015, JBIC provided ¥2,397.4 billion in loans,guarantees, and equity participation approvals. This wasa high level of commitment, despite it being 26.2% lessthan the amount we had extended in FY2014, when there
had been several large-scale natural resource andchemical plant projects.
On a project basis, in FY2015, JBIC contributed to
298 projects, representing a year-on-year increase of 27,
reflecting the bank’s dedication to bolstering thestrategic efforts of Japanese companies expanding
abroad. Besides supporting overseas mergers andacquisitions (M&A) by Japanese enterprises, JBIC also
has backed the push overseas by mid-tier enterprises
and small and medium-sized enterprises (SME). The
outstanding amount of loans and guarantees was¥16,308.6 billion. Despite Provisions of Allowance for
Loan Losses and Loss on Investments in Partnership, Net
Income of ¥42.7 billion enabled JBIC to remain profitableand pay ¥21.3 billion into the national treasury.
 Loans, Equity Participations and Guarantees (Commitments)(Amount)(Number)(Billions of yen)
5,000
271

4,240.9242

4,000(Number)
300
298

239

250
3,249.3

3,000

200
146

2,000

2,397.4

2,206.1150

1,595.9

1,000

0

100

FY2011FY2012FY2013

FY2014FY201550

What have been JBIC’s major achievements?
JBIC is making steady progress with regard to each of the fivebusiness areas highlighted in the Medium-Term Business
Plan (FY2015–2017): energy and natural resources;
infrastructure; manufacturing and other industries; mid-tierenterprises and SME; and the environment.
In the energy and natural resources sector, in
FY2015, JBIC provided loans, guarantees, and equity
participation approvals for 12 projects, totaling ¥489.2
billion. Both the number of projects and amount involved
were down year on year, but I believe this was due to themore cautious stance of Japanese companies regarding
new investments—bearing in mind the stagnant prices
for natural resources, including crude oil—and the declinethat might be expected following several large projects inthe previous fiscal year.
For Japan, which imports most of its natural
resources from overseas, securing a stable long-term

JBIC  Annual Report 20165

supply of natural resources remains a critical issue, since
it directly impacts the lives of Japanese citizens. Thus, in
FY2015, JBIC aggressively increased its country-risk
exposure and, as part of its plan to strengthen its
relationship with resource-rich countries, provided a loan
to Abu Dhabi National Oil Company (ADNOC) and project
financing for Trinidad and Tobago. JBIC also continues toinvest in projects that will assist in reducing procurement
costs of liquefied natural gas (LNG).
In terms of infrastructure, particularly in the power
sector, JBIC supported the participation of Japanesebusinesses in new growth markets, investments by
Japanese companies in major private power generation
projects and the export of equipment for renewableenergy-based power generation. Such projects include
funding to support the participation of Japanesecompanies in a natural gas-fired power generation anddesalination project in Qatar; an offshore wind power
generation project in the Netherlands; the export ofthermal power generation facilities to the Bangladesh
Power Development Board and to the Indonesian stateowned power company, PT PLN (Persero); as well as theexport of geothermal power generation equipment to an
Icelandic national power company and a Turkish company.
In the telecommunications sector, through anexport loan to Banco de Desenvolvimento de Angola(BDA), the state-owned development bank of Angola,
JBIC supported the export of a complete system to lay
the world’s first optical submarine cable across theSouth Atlantic, directly linking the African and SouthAmerican continents.
JBIC also utilized its equity participation function tosign a shareholders agreement giving it an equity interest
in Dawei Special Economic Zone Development Company
Limited in Myanmar. The purpose of this capital
contribution is to enable JBIC to begin supporting project
formulation in Myanmar from the early stages.
In the industrial sector, there continues to be robust
demand for funds to finance the overseas acquisition ofbusinesses by Japanese companies. JBIC supported
projects included the acquisition of a beer production
and sales business in Myanmar, as well as a logistics
business in Singapore through a credit line for a
Japanese financial institution.
JBIC also continues to provide firm support for
initiatives in new growth fields, including for overseas
M&A by Japanese companies targeting such expanding
areas as agriculture, foods, and IT (big data).
In the mid-tier enterprises and SME sectors, due tothe success of ongoing measures to increase
collaboration with regional financial institutions and acommitment to satisfy the need for local-currency loans,
JBIC approved financing for 133 commitments,
representing ¥42.9 billion in loans, guarantees and equity
participation. This was a new record in terms of thenumber of commitments.
Mid-tier enterprises and SME expressed optimismwith the inauguration of the new JBIC in 2012 and, having

1
Profile of JBIC
2 Interview with the Governor

6

JBIC  Annual Report 2016

expanded its initiatives, the bank has been increasing its
commitments. One particular highlight has been theincrease in cofinancing arrangements with regional
financial institutions. As part of its efforts to support theoverseas expansion of mid-tier enterprises and SME,
JBIC signed in FY2015 memoranda of understanding(MOU) for business cooperation with the Mexican state
governments of Aguascalientes, Jalisco, Guanajuato, andNuevo León, as well as with BANCO NACIONAL DE
MÉXICO, S.A., INTEGRANTE DEL GRUPO FINANCIERO
BANAMEX (Banamex), a Mexican bank.
Mexico is an important operating base, particularly
for the automotive industry, and more Japanesecompanies are expected to set up operations and invest
in the country. By partnering with regional financial
institutions, JBIC is building a framework to support theentry of Japanese mid-tier enterprises and SME invarious Mexican states.
In terms of the environment, JBIC has supported
measures to reduce the effects of climate change indeveloping countries. As part of the Global action for
Reconciling Economic growth and ENvironmental
preservation (GREEN) initiative, JBIC established new credit
lines for Brazil’s Banco Nacional de Desenvolvimento
Econômico e Social (BNDES), Mexico’s Banco Nacional deComercio Exterior, S.N.C. (BANCOMEXT), and Latin
America’s development bank, Corporación Andina de
Fomento (CAF). Through these lines of credit, JBIC has
provided loans to support renewable energy and energyefficient projects in several Latin American and Caribbean
countries. These are also in line with an initiative announced
by the Japanese government in November 2015, “Actions
for Cool Earth: ACE2.0.”

 Commitments to Mid-tier Enterprises and SME

AmountNumberNumber of cooperation with Japanese regional
financial institutions1（Billion of yen）
120

111.7 2

96

(Number)
150

429
133

120

109

72

90

48
34.1
24

0

16
3.6

4

FY2011

34

54

43

42.9
43

23

60

30

8
18.0
FY2012FY2013

FY2014FY20150

Notes
1. Includes separate loan agreements based on SME-supporting two-step loans
for regional banks.
2. Commitments in FY2014 include loans amounting to approximately ¥75.4
billion to fund the Mizkan Group’s acquisition of a pasta sauce business from a
Unilever subsidiary in the U.S.

Please summarize JBIC’s initiatives for thisfiscal year and the future outlook.

1
Profile of JBIC
2 Interview with the Governor

FY2016 is the second year of the medium-term businessplan, and I believe that our initiatives continue toemphasize our five business areas.
In the energy and natural resources sector,
investments by Japanese companies are partly influenced
by the future outlook of commodity prices. On the upside,
the major private and state-owned natural resources
companies are structuring their portfolio, and this hascreated a favorable opportunity for Japanese companies
to acquire valuable assets on the chance that such assets
become available for sale. Should a Japanese company
have the opportunity to acquire resource interests, JBIC’s
policy would be to consider providing financing, since its
task is to prioritize initiatives that aim to diversify natural
resource suppliers and secure a stable supply of
resources. I believe that JBIC would strive to provide
quality support, while managing the appropriate countryrisk exposure to resource-rich countries.
I n t h e i n f r a s t r u c t u r e s e c t o r, t h e J a p a n e s egovernment’s Partnership for Quality Infrastructure
underlines the importance of quality infrastructure
exports. Reflecting this, JBIC will make greater use of its
ability to negotiate with foreign governments and key
players overseas, as it strives to participate in project
formulation from the early stages, and take advantage ofopportunities that entail higher risks by applying its riskcontrol expertise.
In the industrial sector, as well as in the mid-tierenterprises and SME sector, JBIC will contribute tostrengthening the international competitiveness andprofit opportunities of Japanese companies. Further,
given the national importance of such projects, JBIC will
step up those initiatives that enable it to of fer
consultations and to participate in strategy formulationfrom the early stages, and to supply risk money for agreater variety of projects. JBIC will also provide morevigorous support for the global expansion of such
Japanese companies as mid-tier enterprises and SME, as
well as M&A activities aimed at further enhancing theirinternational competitiveness.
In the environment sector, JBIC will continue toexchange information and views with domestic andoverseas governmental organizations, as well asinternational establishments. It will also continue tocollaborate with them, while expanding and deepening its
project support, in order to advance international
measures and fund policies designed to mitigate climatechange, including the Conference of the Parties (COP).

sources for most of its natural resources—securing such
resources is an ongoing challenge in which JBIC must
continue to be involved.
Second, based on the government’s Partnership for
Quality Infrastructure initiative, JBIC will need to beaggressively involved in Japan’s efforts to make a global
contribution. Asia has been joined by Latin America andAfrica in realizing strong growth, but these regions lackthe infrastructure to drive their development. Their social
lifelines—including railways and roads, as well as power
generation, energy, and water—are insufficient.
Agriculture may also become an issue in the near future.
The major priorities are identifying business
opportunities that these regions offer Japaneseindustries, the contributions the Japanese industries canmake, and what kind of support JBIC should provide. The
key lies in “high quality.” While achieving the highstandards of functionality, durability, and safety which
are required of infrastructure, Japan’s competitiveness isalso attributed to its ability to deliver projects onschedule, as well as its consideration for theenvironmental and social impact of its projects.
As the ability to communicate those strengths
becomes increasingly important, JBIC has been
operating within a new framework since this year’s partial
amendment of the Japan Bank for International
Cooperation Act. By participating in projects from theformulation stage and fulfilling a more diverse range offunding functions, such as supplying financing for highrisk investments, JBIC will continue to contribute to thedevelopment of Japan and the global economy.

From a long-term perspective, could you briefly
explain JBIC’s role and the issues it is likely toface in the future?
I believe that JBIC has two broad responsibilities. First, it
must procure a stable, long-term supply of natural
resources for Japan. Natural resource prices tend tofluctuate, and for Japan—which depends on overseas

JBIC  Annual Report 20167

3 Directors, Managing Executive Officers andCorporate Auditors(As of August 1, 2016)

1
Profile of JBIC
3 Directors, Managing Executive Officers and Corporate Auditors(Back row, from left)
Managing Director

Managing Director

Masaaki Amma

Shinichi Koizumi(Front row, from left)
CEO, Executive Managing Director

Tadashi Maeda

Governor

COO, Senior Managing Director

Akira Kondoh

Nobumitsu Hayashi(Back row, from left)
Managing Executive Officer

Shigeki KimuraManaging Executive Officer

Yasuhiko Yoshida(Front row, from left)
Managing
Executive Officer

Managing
Executive Officer

Managing
Executive Officer

Kazuhiko Amakawa Kenichiro Hayashi Hideo Naito

Corporate Auditor

Tatsuo Igarashi

8

JBIC  Annual Report 2016

Corporate Auditor

Yasuo Ota

Corporate Auditor

Yuko Tamai Directors

Akira Kondoh

CEO, Executive Managing Director

Tadashi Maeda

COO, Senior Managing Director

Nobumitsu Hayashi

Managing Director

Masaaki Amma

Managing Director (Outside Director)

Shinichi Koizumi

1Profile of JBIC

Governor

3 Directors, Managing Executive Officers and Corporate Auditors

 Managing Executive Officers

Managing Executive Officer
Global Head of Corporate Group

Kenichiro Hayashi

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

Kazuhiko Amakawa

Managing Executive Officer
Global Head of Infrastructure and Environment Finance Group

Hideo Naito

Managing Executive Officer
Global Head of Industry Finance Group

Shigeki KimuraManaging Executive Officer
Global Head of Credit, Assessment, and Systems Group

Yasuhiko Yoshida Corporate Auditors

Corporate Auditor (Full-time Corporate Auditor)

Yasuo Ota

Corporate Auditor (Outside Corporate Auditor)

Tatsuo Igarashi

Corporate Auditor (Outside Corporate Auditor)

Yuko Tamai

JBIC  Annual Report 20169

4 Medium-term Business Plan
(FY2015–2017)

JBIC, since its inception in April 2012, has beenproactively supporting Japanese companies’ overseas
operations, including acquisition of energy and natural
resources, infrastructure projects, M&A, as well as
overseas business deployment of Japanese midtier enterprises and SME, utilizing a diverse array offinancial schemes, including involvement in projects
from the formation stage and performing risk-assuming
functions. As a result, under JBIC’s three-year Mediumterm Business Plan (FY2012–2014), the loans, equity
participations, and guarantees carried out during theperiod amounted to a cumulative total of ¥9,700 billion.
At present, Japan is grappling with such structural
challenges as population decline, a low birth rate, andpopulation aging. Despite these challenges, the country is in
the process of breaking free from more than two decadesof economic stagnation as it works to regain its dynamism.
To put the Japanese economy on a sound growth track andfurther lift society’s level of affluence, it is essential to improve1
Profile of JBIC
4 Medium-term Business Plan (FY2015–2017)

the productivity of the economy as a whole and strengthen the
country’s earning power. As one of the keys to achieving thisgoal, what is called for is the building of a new growth engine
for the Japanese economy, particularly through opening up
new frontiers. For example, this includes Japanese enterprises
taking up the challenge of creating new businesses and thepromotion of international project development.
Based on this recognition, JBIC has formulated its
Medium-term Business Plan (FY2015–2017) as a meansof contributing more actively to the sustainable growth of
the Japanese economy. As Japan’s policy-based financial
institution, JBIC will—as it has in the past—implement
efforts to support the overseas business deployment ofJapanese companies, and, through these efforts, JBIC will
focus on supporting the building of a new growth engine
for the Japanese economy. Hence, JBIC’s operations aim
to further contribute to the sound development of Japan,
the global economy, and the international community.

Our Goal
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 intermediary functions
unique to JBIC.

Our Goal and Key Action Plans
 Established our “Goal” to conduct business more proactively and further contribute toward Japan’s sustainable
future growth.

 Identified 5 “Business Areas” which JBIC needs to focus on.
 Identified 4 “Institutional Capabilities” to be demonstrated and strengthened, which are essential to better perform
JBIC’s function in the 5 “Business Areas”.

 Identified “Key Action Plans” to “contribute to exploring and creating new business opportunities (country, region, area,
sector, 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”.

Key Action Plans

10

1

Energy and Natural Resources

2

Infrastructure

3

Manufacturing and Other Industries

4

Mid-tier Enterprises and SME

5Environment

JBIC  Annual Report 2016

In these three business areas, JBIC will emphasize
activities with higher difficulty levels such as those that
require mid-to-long term project formation.

In these two areas, JBIC will emphasize the whole rangeof activities of the Key Action Plans.

1

Our GoalBusiness Areas
1

Energy and Natural Resources

2

Infrastructure

3

Manufacturing and Other Industries

4

Mid-tier Enterprises and SME

5Environment

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

Institutional Capabilities
Financial Structuring for Business Implementation
Realization of Projects Bankability
4 Medium-term Business Plan (FY2015–2017)

Providing Information and Policy Recommendations
Mobilization of Private Sector Finance

Key Action Plans

Supporting JapaneseCompanies’ Energy
and Natural
Resources BusinessSupporting Promotion
for Diversification andAdvancement of JapaneseCompanies’ Overseas
Infrastructure Development

Supporting the
Improvement of JapaneseIndustries’ Competitive
Advantage and Growth
Opportunities in theWorld Market

Supporting Overseas
Business Expansionof Japanese Mid-tierEnterprises and SME

Positive Contribution to Preserving the Global Environment, including Measures to Mitigate Climate Change
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
Strengthening of Human Resources Development for the Further Improvement of Organizational Capability
Improvement of Efficient Organizational Operation and Workflow

JBIC  Annual Report 201611

Details of Key Action Plans*1 1. Supporting Japanese Companies’ Energy andProfile of JBIC

Natural Resources Business

4 Medium-term Business Plan (FY2015–2017)

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-richcountries, utilizing its knowledge of risk management/
allocation and developing a dialogue with overseas
counterparties such as the governments of hostcountries, state-owned oil & gas companies and theinternational 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.

Industries’ Competitive Advantage and Growth
Opportunities in the World Market
3-1 Strengthening support for the overseas businessdeployment of various industries which are the basisof the Japanese economy
 JBIC supports further opportunities for Japanesecompanies in various industries, which are the basisof the Japanese economy, to increase their earnings
through overseas investment, by strengthening
overseas risk-taking and communication from thedevelopment stage of corporate strategy.

1-2 Promoting projects that reduce LNG procurement costs
 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.

3-2 Contributing to the development of competitive Japanesetechnologies and business models into growing industries
through overseas business deployment
 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 oversea markets, aiming tocreate Japan’s new growth industries.

 2. Supporting Promotion for Diversification and 4. Supporting Overseas Business Expansion ofAdvancement 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 the overseas counterparties andinternational 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 and schemes, andpromoting JBIC’s involvement from an early stage inthe project’s framework development and formation.
2-2 Strengthening efforts for smooth implementation of
power generation projects
 JBIC supports the overseas deployment of advanced
technology and the participation of Japanesecompanies 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 hostcountry’s governments and overseas key-players, andutilizing its knowledge of risk control/allocation anddrawing on various financial facilities and schemes.

12 3. S u p p o r t i n g t h e I m p rove m e n t o f J a p a n e s e

JBIC  Annual Report 2016

Japanese Mid-tier Enterprises and SME
Supporting mid-tier enterprises and SME overseas
business expansion utilizing JBIC’s characteristics
 In collaboration with private financial institutions,
JBIC supports Japanese mid-tier enterprises and SME
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 with climate change
 JBIC supports the efforts of Japanese companies
and overseas counterparties to preserve the global
environment including measures to tackle with climatechange, considering the international discussions
and policies of the Japanese and host country
governments in this field, by taking advantage of close
relationships with host country governments andutilizing its knowledge of risk management/allocation
and a wide range of financial facilities and schemes
such as Global action for Reconciling Economic growthand ENvironmental preservation (GREEN).

 6. Enhancing Mobilization of Private Sector Finance1

through Strengthened Collaboration with Private
Financial Institutions

Profile of JBIC
4 Medium-term Business Plan (FY2015–2017)

Further enhancement of private sector financemobilization
 JBIC expands efforts to promote its initiatives ofcredit securitization, including assignment of its loan
portfolio.
 JBIC promotes the mobilization of private sector
finance in a variety of ways, including providing
funds in the form of equity, subordinated loans andproviding LBO financing.
 JBIC pursues appropriate cofinancing taking into
account the uniqueness of individual projects and thesurrounding financial environment.

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

JBIC  Annual Report 201613

5 Amendment of the Japan Bank forInternational Cooperation Act

Enhancing JBIC’s functions to support the overseas business expansion ofJapanese companies

1
Profile of JBIC

Following economic growth and rapid urbanization in
emerging economies, global demand for infrastructuredevelopment is expected to continue expanding.
Responding to this trend, the Japanese government
announced the “Partnership for Quality Infrastructure.”
This initiative intends to promote “Quality Infrastructure
Investment,” referring to infrastructure investment underwhich life-cycle costs,* safety, resilience against natural

disasters, environmental and social impacts, andcontributions to the local society and economy areadequately taken into account.
As part of this initiative, the Act for Partial
Amendment of the Japan Bank for International
Cooperation Act was enacted on May 11, 2016, to further
support the overseas business expansion of Japanesecompanies by strengthening JBIC’s functions.

* A life-cycle cost (LCC) is the sum of all costs accumulated throughout a project’s life, including not only the initial costs (such as those for planning, design, andconstruction), but also the cost of operation and maintenance, final dismantling and other costs.

5 Amendment of the Japan Bank for International Cooperation Act

JBIC’s Executive Managing Director and CEO summarized his views on key amendments and issues concerning theamendment of the JBIC Act.

 Please briefly explain the act and its purpose.
Amid a significant increase in the demand for infrastructuredevelopment due to economic growth in emerging
countries, capturing global infrastructure demand has
become an important strategy for Japanese industries. In
response to this trend, the Japanese government
announced a “Partnership for Quality Infrastructure” at the“21st International Conference on the Future of Asia” in May
2015. The initiative, which focused on Asia, was led by Japanand was created to promote quality infrastructure
investment that is made towards durable, safe, and sociallyand environmentally friendly infrastructure. Under thisinitiative, Japan aimed to boost funds for infrastructure
investments by 30% over the next five years.
At the May 2016 G7 Ise-Shima Summit, the importanceof “Quality Infrastructure Investment” was reaffirmed, andthe target area expanded from Asia to the entire world. The
initiative plans to raise the supply of funds to approximately
USD 200 billion over the coming five years. As one of thepillars supporting such initiatives, the amendment of the
JBIC Act is designed to further facilitate the expansion ofJapanese businesses overseas, by strengthening JBIC’s
ability to supply risk money and improve other functions.
 P lease

CEO, Executive Managing Director

Tadashi Maeda

14

JBIC  Annual Report 2016

describe the principal content of theamendments.
The amendments largely impact three areas. The first areais the Special Operations. Under the account for Special
Operations, it is expected to provide deepened support for1Profile of JBIC

Three primary enhancements were made to JBIC’s functions by this amendment .
 Establishment of Special Operations

The Operations enable JBIC to take further risks to support overseas infrastructure projects.
 Expansion of JBIC’s operations in local currency

JBIC has introduced long-term borrowings in foreign currencies to further promote loans denominated in local
currencies, for which there is strong demand from infrastructure projects carried out in developing countries.
 Improvement of JBIC’s financial tools

JBIC has introduced new financial tools to further support the overseas deployment of Japanese companies.

 What do you view as the future challenges?

I believe that the most important challenge lies in JBIC’s
risk management framework. Even though types of risks
and their impacts vary, no project is completely free ofrisk. It is, thus, imperative that we understand how tomeasure, analyze and control risks.
To that end, it is important to participate in project
formulation from the early stages, and to manage
projects adequately to minimize risks. So, for example,
when dealing with railroad projects, JBIC is expected toutilize its status as a public institution to have an
intensive discussions with projects’ host country

5 Amendment of the Japan Bank for International Cooperation Act

overseas infrastructure projects that have relatively higher
risk profiles, such as projects offered by local governmentsin emerging countries with lower credit.
The second area concerns long-term borrowings that
JBIC is now allowed to make in currencies other thanJapanese yen. Infrastructure projects basically generate
revenues in local currencies and, since local currency-basedloans are less sensitive to forex fluctuations, there long has
been a great need for such loans. By introducing local
currency borrowing, JBIC can more flexibly respond torequests from Japanese companies for local currency loans.
The third area that derives from the amendments
concerns JBIC’s financial tools. These will allow us tobroaden our financial support, making it possible for JBIC,
for example, to purchase bonds issued for particular
overseas infrastructure projects (project bonds).

governments regarding their transportation policies, andconfirm the importance and priority of projects to beundertaken. Conducting more detailed examinations of a
project’s feasibility is also of great importance. Thisentails continuing to introduce more sophisticatedanalytical methods to eliminate uncertainty associatedwith, for instance, a ridership risk.* I believe it is vital that
JBIC take advantage of the networks and skills it has
cultivated through previous projects, and further refinesuch expertise.
Further, as JBIC’s role is to supplement financialtransactions conducted by the private sector, it must
always consider ways to play a catalytic role inintroducing private financing wherever possible.
Infrastructure projects face higher risks during theconstruction phase. It is therefore important for JBIC toparticipate in project formulation from early stages and,once a project reaches an operational phase where acertainty of proper revenue generation can be reasonably
well confirmed, JBIC should encourage the participationof private financial institutions and institutional investors
by liquidating loan assets in the form of bonds or by othermeasures. If the considerable liquidity accumulating inJapan is channeled to overseas infrastructure projects,
even greater results can be achieved.

* Ridership risk refers to the risk of being unable to secure the minimum numberof passengers or users that is necessary to secure project profitability.

JBIC  Annual Report 201615

6 Outline of Operations in FY2015
Operational Highlights

1

to secure steady imports of crude oil. JBIC also supported
the Sakhalin-I Odoptu Field Stage-2 Development Projectin Russia, as well as the offshore FPSO1 project in Brazil,
and financed the shipping businesses of LNG tankers.
Furthermore, JBIC financed a methanol and dimethyl
ether 2 production project in Trinidad and Tobago, and atitanium sponge production and sales business in Saudi
Arabia. The businesses in both countries are being
conducted by Japanese companies.

Profile of JBIC

The total amount of commitments JBIC made during
FY2015 in loans, guarantees and equity participation was¥2,397.4 billion, which is 26.2% less than that of FY2014.
The outstanding amount of loans and guarantees asof March 31, 2016, was ¥16,308.6 billion.
The following is a report on JBIC’s major operations ineach sector during FY2015.

6 Outline of Operations in FY2015

 Efforts in the Energy and Natural Resources Sector
Through the acquisition of upstream resource interests,
diversification of supply sources, enhancement of the fuelvalue chain, and strengthening of relationships withresource-rich countries, JBIC contributes to securing astable long-term supply of resources.
JBIC provided necessary support to Abu Dhabi
National Oil Company (ADNOC) for Japanese companies

1. A floating production, storage, and offloading (FPSO) unit is a floating vesselthat conducts primary refining of crude oil (removing gas and water mixed in
the crude oil straight from a well), then stores and offloads the oil.
2. Dimethyl ether can be used as a substitute for LPG or as a substitute for diesel
in automobiles or in power generation, and has therefore been receiving a lotof attention as a next-generation source of clean energy.

 Commitments by Purpose of Financing (FY2015; unit: billions of yen)

 Commitments by Region

Equity Participations 14.3 (1%)
Guarantees
Export Loans
106.6 (4%)
141.0 (6%)
Untied Loans
24.8 (1%)
Import Loans
252.3
(11%)

(FY2015; unit: billions of yen)

Others 15.5 (1%)
Asia 332.9
Latin America andthe Caribbean
507.3

(14%)

(21%)

¥2,397.4

Oceania 6.9(0%)¥2,397.4 (25%)
North America
493.6

(78%)

(18%)

Africa 14.9 (1%)

Overseas Investment Loans
1,858.1

Europe 598.3(21%)

The Middle East
427.6

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

1.0(2%)
60.3

FY1955¥ 61.3(98%)

31.1(6%)402.8

FY1970

33.3

(74%)

(6%)

7.4(1%)

68.5¥ 543.0(13%)

14.2(2%)356.4

FY1985

182.4

233.5

(40%)

101.4

¥ 888.4

(11%)

(21%)

(26%)

Guarantees 0.5(0%)

174.0

FY2000

(14%)

321.4

523.7

(27%)

(43%)

141.0(6%)

FY2015

67.4

(6%)

118.3

106.6(4%)
252.3

1,858.1(11%)¥ 2,397.4(78%)

24.8(1%)
 Export Loans16¥ 1,204.7(10%)

 Import Loans

JBIC  Annual Report 2016

 Overseas Investment Loans Untied Loans Governmental Loans Guarantees

14.3(1%)
 Equity Participations Supporting the Overseas Deployment of Infrastructure

Business Deployment
JBIC provided loans for the manufacturing and sales
business of large-diameter welded steel pipes for oil/gas
pipelines in Abu Dhabi, by a Japanese company, and an
overseas satellite communications project participated inby a Japanese company.
Furthermore, JBIC signed a shareholders’ agreement
to acquire preferred shares in a Taiwanese petrochemicalcompany, and provided financing to a private equity fundthat invests in companies in Asian countries, as well as
rapidly growing unlisted Chinese firms.

1

6 Outline of Operations in FY2015

 Support for Japanese Companies’ Strategic Overseas

Mexico by Japanese companies.
Furthermore, JBIC signed MOU with four Mexican
state governments and a Mexican financial institution,
respectively, to support Japanese mid-tier enterprises andSME, who are clients of Japanese regional financial
institutions, expand their businesses to Mexico by actively
utilizing Japan desks established in the country. These
MOU enhance the “Development and Strengthening ofSupport System by Financial Institutions for Small andMedium Enterprises’ Entry into Asia through Coordination
among Japanese Regional Financial Institutions, Japan
Bank for International Cooperation (JBIC) and Japan
External Trade Organization (JETRO),” a joint press
release issued by the Financial Services Agency, theMinistry of Finance, and the Ministry of Economy, Tradeand Industry in December 2010. They contribute to theJapanese government’s “drastic measures to enhance thecomprehensive support system for the overseas
development of mid-tier enterprises and SME” as part of
the “Comprehensive TPP-related Policy Framework.”
In addition, JBIC established investment credit lines
with Japanese regional financial institutions and overseas
subsidiaries of Japanese leasing companies, to support
the overseas business deployment of mid-tier enterprises
and SME.

Profile of JBIC

Business by Japanese Companies
In the power sector, JBIC provided loans on a project
financing basis for the Facility D natural gas-fired power
generation and desalination project in Qatar, as well as for
the Luchterduinen (Q10) offshore wind power generation
project in the Netherlands, both of which are invested inby Japanese companies. JBIC also supported Japanesecompanies in their efforts to export thermal power
generation facilities to the Bangladesh Power
Development Board and PT PLN (Persero), a state-owned
power company in Indonesia, and geothermal power
generation equipment to an Icelandic national powercompany and a Turkish company.
In the telecommunication sector, JBIC supported theexport of a complete system needed for the opticalsubmarine cable systems construction project byproviding an export loan to Banco de Desenvolvimento deAngola (BDA), the development bank of Angola. The
project will lay the world’s first optical submarine cable
across the South Atlantic, directly linking the African
continent to South America.
JBIC also signed a shareholders agreement for
equity participation in Dawei Special Economic Zone
Development Company Limited in Myanmar, enabling
JBIC to support the formulation of projects from theearly stages.

 Supporting Japanese Companies with Local Currency

Loans
JBIC provided 18 local currency loans 3 totaling theequivalent of approximately ¥7.4 billion. They included
JBIC’s first Indian rupee loan to fund the automotive,
appliance, commercial, and industrial motors
manufacturing and sales businesses in India by Japanesecompanies; and a Thai baht loan to fund the hygienic
products manufacturing and sales business in Thailand.
 Supporting Issuance of Samurai Bonds

JBIC agreed to provide a guarantee for and to acquire apart of the Samurai bonds (Japanese yen-denominatedforeign bonds)4 issued by the Indonesian government.

 Supporting Exports by Japanese Companies P romoting Renewable Energy and Conserving the

To support the export of equipment and facilities byJapanese companies, JBIC used an export credit line
to provide necessary funds for exporting mining
machinery to Mongolia, and also arranged an export
credit line for a Turkish company that imports and sells
construction equipment.
As for shipbuilding, JBIC also supported the export ofships built by Japanese shipbuilding companies throughbuyers’ credit.

Global Environment
JBIC established credit lines with policy-based financial
institutions of Mexico and Brazil under Global action for
Reconciling Economic growth and ENvironmental
preservation (GREEN) operations, and also providedloans for a national power company in Iceland, as well as
a Turkish company, to purchase machinery andequipment related to geothermal power generation fromJapanese companies.

 S upporting Overseas Business Deployment ofJapanese Mid-tier Enterprises and SME
To support the overseas business expansion of mid-tierenterprises and small and medium-sized enterprises(SME), JBIC made a total of 133 commitments, in
cofinance with regional financial institutions and Shinkinbanks. The support included loans for rice products
manufacturing and sales businesses in Thailand, and theautomotive parts manufacturing and sales businesses in

3. In currencies other than JPY, USD and EUR.
4. Samurai bonds are yen-denominated bonds issued by a foreign government orcompany in the Tokyo bond market.

JBIC  Annual Report 201617

Operational Results

1

JBIC made total disbursements of ¥2,103.8 billion in FY2015.
Profile of JBIC

Planned and Actual Lending and Investments(Unit: billions of yen)

FY2012FY2013

FY2014FY2015

PlannedActualPlannedActualPlannedActualPlannedActual

200.0

143.1

190.0

112.5

200.0

112.0

200.0

148.8

1,879.0

2,307.4

1,971.0

2,162.5

1,900.0

2,071.2

1,450.0

1,867.9

Untied Loans

100.0

132.0

50.0

88.5

50.0

64.3

70.0

44.5

Equity Participations

100.0

17.2

100.0

85.4

100.0

30.9

100.0

42.4

Securitization

19.0

—

—

—

—

—

—

—

2,298.0

2,599.8

2,311.0

2,449.0

2,250.0

2,278.6

1,820.0

2,103.8

Export Loans
Import Loans
and Overseas
Investment Loans

6 Outline of Operations in FY2015

Total

Financial Results
Pursuant to the Companies Act and Article 26 of theJapan Bank for International Cooperation Act, JBIC
prepares financial statements and submits them to the
Minister of Finance. The report on the final settlement ofaccounts is submitted to the government of Japan,
together with the financial statements and, after
examination by the Board of Audit of Japan, to the Diet.

 Statement of Operations

In FY2015, JBIC recorded ¥213.8 billion in Interest Incomeand ¥240.0 billion in Ordinary Income. This was forvarious reasons including support to promote theacquisition of interests and development of natural
resources, and to expand the overseas operations ofJapanese companies, such as infrastructure projects. On

The Fourth Term for JBIC (FY2015)
Statement of Operations

Balance Sheet(April 1, 2015–March 31, 2016; unit: millions of yen)Accounts

Amounts(As of March 31, 2016; unit: millions of yen)

Assets
Accounts

240,005

Cash and Due from
Banks

Interest Income

213,806

Securities Note 3

Fees andCommissions

22,091Other Ordinary
IncomeLoans and Bills
Discounted Note 4

141

Other Income

3,965

Ordinary Expenses

197,276

Ordinary Income

Interest Expenses

123,779

Liabilities and Net Assets

Amounts

Accounts

1,220,187

Borrowed Money

9,438,450

236,602

Bonds Payable Note 52,668,558

13,540,661

Other Liabilities

528,890

Other Assets

256,188

Provision for Bonuses

516

Property, Plant andEquipment Note 627,804

Provision for Directors’
Bonuses6

Intangible Assets

2,737

Provision for
Retirement Benefits

7,090

Provision for Directors’
Retirement Benefits

39

Fees and Commissions
Payments

1,653

Customers’ Liabilities
for Acceptances andGuarantees

2,464,703

Other Ordinary
Expenses

1,310

Allowance for Loan
Losses(168,262) Acceptances and Guarantees

2,464,703

General and
Administrative Expenses

17,631

Total Liabilities

15,108,255

Other Expenses

52,901

Capital Stock

1,391,000

42,728Retained Earnings

Ordinary Profit
Extraordinary Income
Net Income

Total Shareholders’ Equity

43

Valuation Difference on
Available-for-sale Securities

42,772

Total Assets

17,580,622

JBIC  Annual Report 2016

972,140
2,363,140
4,303

Deferred Gains or
Losses on Hedges

104,923

Total Valuation andTranslation Adjustments

109,226

Total Net Assets

2,472,367

Total Liabilities and Net Assets

17,580,622

Note: See pages 105 to 106 for details of Notes 3 to 6.

18

Amounts Balance Sheet

Total Assets reached ¥17,580.6 billion. This was due
primarily to a decrease in Loans and Bills Discounted(declined by ¥892.2 billion to ¥13,540.6 billion comparedwith FY2014) because of a reduced yen-equivalent valueof loans denominated in foreign currencies due to the
yen’s appreciation.

Total Liabilities was ¥15,108.2 billion. This was due
in part to Bonds Payable (declined by ¥380.9 billion to¥2,668.5 billion compared with FY2014) as the amountof redemptions exceeded new issuances, and areduced yen-equivalent value of foreign bonds becauseof the yen’s appreciation.
Total Net Assets was ¥2,472.3 billion on Net Incomeof ¥42.7 billion.

1
Profile of JBIC

the other hand, JBIC recorded ¥197.2 billion in Ordinary
Expenses as a result of posting ¥123.7 billion in funding
costs, such as interest expenses. Therefore, Ordinary
Profit was ¥42.7 billion, and Net Income totaled ¥42.7
billion, which included Extraordinary Income.

6 Outline of Operations in FY2015

Funding Sources
JBIC finances its operations through various sources,
including borrowings from the Fiscal Investment and
Loan Program (FILP) Fiscal Loan, GovernmentGuaranteed Foreign Bond issuance and FILP Agency
B o n d i s s u a n c e, c a p i t a l c o n t r i b u t i o n s f r o m t h egovernment, and borrowings from the Foreign Exchange
Fund Special Account.
As JBIC provides long-term financing, its operations
are financed by long-term funds to match maturities

between funding and lending instruments.
Borrowings from FILP Fiscal Loan, Governmentguaranteed Foreign Bond issuance, capital contributions
from the government, etc., are included 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
FY2016 are shown in the table below.

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

FY2012 Actual

FY2013 Actual

FY2014 Actual

FY2015 Actual

FY2016 Planned

Capital Contribution from FILP Industrial
Investment

69.0

—

31.0

—

33.0

Borrowing from FILP Fiscal Loan

400.0

555.1

239.7

244.9

467.0

Borrowing from Foreign Exchange Fund
Special Account

1,744.9

1,581.3

1,273.2

1,595.8

800.0

Government-guaranteed Foreign Bonds*

205.3

658.6

374.8

419.0

800.0

—

—

10.0

—

60.0

180.6

(345.9)349.8(155.9)(100.0)2,599.8

2,449.0

2,278.6

2,103.8

2,060.0

FILP Agency Bonds*
Other Sources of Funds, Including
Repayments
Total* Figures for bonds are indicated at face value.

JBIC  Annual Report 201619

1

 Funding Sources

Financial Market

Profile of JBICFILP Bonds
Special Account for Fiscal
Investment and Loan
Program Fund

Foreign Exchange
Fund Special
Account

Investment Fund
Account

Fiscal Loan Fund
Account

CapitalContribution

Loans

Governmentguaranteed
Foreign Bonds

Loans

FILP Agency
Bonds

Internal Funds** Repayments, etc.

6 Outline of Operations in FY2015

Loans /
Investments
Japanese and foreign companies, foreign financial institutions, foreign governments andgovernment agencies, multilateral financial institutions

 Government-guaranteed Bonds
JBIC raises part of its funds by issuing governmentguaranteed bonds in international capital markets.
Outstanding government-guaranteed bonds at the end of
FY2015 amounted to ¥2,393.9 billion at face value, which
accounts for 19.8% of the total outstanding borrowings
and bonds. JBIC provides foreign currency loans whennecessary to effectively implement policy, and funds
raised by issuing government-guaranteed bonds are used
as a source 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 governmentguaranteed foreign bonds denominated in Canadiandollars in March 2013 and similar bonds denominated in
British pounds in March 2014.
In the FY2016 budget, JBIC plans to issue in the totala m o u n t of u p to ¥ 8 0 0.0 b i l l i o n i n gove r n m e n tguaranteed bonds.
JBIC’s government-guaranteed bonds receive thesame ratings as the Government of Japan from the rating
agencies (A1 from Moody’s and A+ from Standard &Poor’s as of July 31, 2016). Since they are treated asassets for which the Bank for International Settlements(BIS) assigns zero risk weight in calculating the capital
adequacy ratio for depository institutions, these bonds
provide a quality investment opportunity for investors ininternational capital markets.

20

JBIC  Annual Report 2016

 FILP Agency Bonds

In compliance with the government policy to reform the
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 FY2016.
FILP agency bonds that JBIC has already issued
received the same ratings as the government of Japan(as of July 31, 2016) as shown below. They are treated asassets for which BIS assigns 10% risk weight incalculating 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
Standard & Poor’s: .................................................. A+

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

JBIC  Annual Report 201621

1 Energy and Natural Resources
Finance Group2

A Message from the Global Head of the GroupThe Environment Surrounding
JBIC and Its Challenges

As Japan is poorly endowed with natural resources, the stable procurement ofenergy resources, such as oil, natural gas and other mineral resources fromoverseas is indispensable in order to maintain and develop Japan’s economy.
Among JBIC’s four business fields, the Energy and Natural Resources
Finance Group— which consists of the Oil and Gas Finance Department andthe Mining and Metals Finance Department—is responsible for promoting
efforts to develop and acquire overseas natural resources which are essential
for Japan. Projects for overseas natural resource development requiremassive, long-term investments and entail various risks, including geopoliticaland price fluctuation risks. JBIC provides long-term funds through financing
and equity participation to supplement private-sector funds and, as a policybased financial institution, focuses on creating an environment which enables
smooth implementation of projects by actively engaging in dialogues with local
governments and state-run oil companies.
JBIC will continue to contribute to securing a stable supply of natural
resources through such efforts.

1 Energy and Natural Resources Finance Group

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

Business Environment and Priority Issues
The global balance of energy supply and demand isaffected by macroeconomic trends and various otherfactors. In recent years, oil production has come toexceed demand, mainly due to two factors: the tappingof unconventional energy sources that has boosted oil
production in the U.S., and OPEC’s strategy emphasizing
market share. By contrast, energy consumption in Asia is
growing at a faster pace than in any other region. Thus,
for example, in the case of Indonesia—one of the leading
oil and gas producers in Asia—it is exporting less energy
resources because of its increasing domestic demand forenergy, as a result of its remarkable economic growth.
For the entire Asian region, this means a surge in importsof oil and natural gas.
Meanwhile, because Japan imports from the Middle
East over 80% of the crude oil it requires, such imports
continue to be exposed to high geopolitical risks. Thus,
from the perspective of energy security, it is critical thatJapan should maintain and strengthen its relationshipwith Middle East countries, while also securing stable oil
imports from other regions.
With Japan being the largest global importer ofliquefied natural gas (LNG), and both China and India
having increased their imports of the gas in the past few
years, Asia now accounts for more than 70% of global
LNG transactions. Thus, it is imperative that Japan, whichcurrently relies heavily on natural gas as an energy
source, ensure it has access to a stable supply of LNG. To
this end, it is important that the participation of Japanesecompanies in overseas LNG projects be supported andlinked to long-term LNG deals. In addition, it is important

22

JBIC  Annual Report 2016that Japan keeps the medium and long-term purchaseprices of LNG in check by diversifying the pricing system
for imported LNG.
Japan also faces a major challenge in the mineral
resources sector. Despite a temporary slowdown,
demand in China, India, and other emerging countries
continues to increase, and thus it remains vital to securea stable supply of those mineral resources which have abroad range of applications in Japanese industries.
In terms of iron ore imports, besides attaining therequired volume, an increasingly critical issue is securinghigh-quality ore, since the overall quality of the ore fromexisting mines is deteriorating. Meanwhile, recent pricesof copper have caused a slowdown in the development of
new copper ore mines, and the supply of copper is
expected to tighten over the medium to long term. Thus
it is essential that Japan secure a steady supply ofcopper ore.
Despite the greater challenges involved in the
securing of natural resources as a result of the changes
in the global balance of the supply and demand of energy
and other resources, the increased activity of extremists
and heightened geopolitical risks, it is becoming
increasingly important to proactively support Japanesecompanies in acquiring interests in, and securing thelong-term purchase of, natural resources.

2

JBIC’s Activities

1 Energy and Natural Resources Finance Group Oil and Natural Gas
By providing the necessary funds—through project
finance 1—for shipping business of LNG carriers to be
used for transporting LNG from the U.S. Cameron andthe Freeport LNG Projects to Japan, JBIC has supported
both projects, the first projects to export LNG based onlong-term contracts from the U.S. mainland to Japan.
Traditionally the LNG price for Japanese buyers has
been calculated based on crude oil prices. On the other
hand, the price of the LNG in both of these projects isbased on a formula linked to the U.S. gas market index.
Thus, supporting these projects should contribute to thediversification of both LNG sources and prices.
JBIC will strengthen ties with countries that are vitalfor Japan’s resource strategy, and will make available
financial support to secure energy resources and a stableenergy supply. In FY2015, JBIC provided the necessary
funds for Japanese companies to secure a long-term,
steady supply of crude oil from the Emirate of Abu Dhabi,

one of the United Arab Emirates (UAE), and funding to
Russian Sakhalin-I Odoptu Field Stage-2 development.
Approximately 60% of the oil field concession rights
owned by Japanese companies in Abu Dhabi arescheduled to expire in 2018, and JBIC’s funding will
indirectly support the renewal of the rights for thesec o n c e s s i o n s . F u r t h e r, t h e J a p a n e s e c o m p a n yparticipating in the Sakhalin-I project is entitled toreceive a quantity of crude oil produced from the projectin proportion to its participating interest. It is expectedthat this crude oil will be sold primarily to Japan.
At present, Japan depends on the Middle East forover 80% of its crude oil, but JBIC’s support to develop
the Sakhalin-I project further is expected to contribute to
the diversification of Japan’s energy supply. The projectis also considered vital to Japan’s energy security, giventhat the fields are located in the Russian Far East, whichis geographically close to Japan.
Turning to the Caribbean, JBIC has provided a
project financing loan to support a joint venture in the
Republic of Trinidad and Tobago. The company willproduce methanol and dimethyl ether,2 two raw materials
derived from natural gas. Methanol is used as a gasoline
additive, fuel for fuel cells, and raw material in chemical
products, such as adhesive agents and synthetic resins.
Since Japan depends entirely on imported methanol, it isvital that its procurement sources be diversified. The
project is expected to result in expanding and diversifying
those methanol production bases in which Japanesecompanies invest, and securing a stable supply of energy
resources for Japan.

The Environment Surrounding
JBIC and Its Challenges

During FY2015, JBIC took on the following efforts toaddress the issue of securing a stable supply of energy
and mineral resources from overseas.

Production of methanol and dimethyl ether in Trinidad and Tobago

LNG carriers to transport gas from the U.S. Freeport LNG Project.
Source: Artist’s rendition.

1. Project finance is a financing scheme in which repayments are made solely
from cash flows generated by a project and secured only by project assets.
2. Dimethyl ether can be used as a substitute for LPG or diesel in automobiles, orfor power generation. The gas has been receiving a significant amount ofattention as a next-generation source of clean energy.

JBIC  Annual Report 201623 Mineral Resources

2
The Environment Surrounding
JBIC and Its Challenges
1 Energy and Natural Resources Finance GroupJBIC supports the overseas business deployment ofJapanese companies in the steel industry, and has
financed Japanese companies in Indonesia that
manufacture and sell steel products for construction andautomotive steel sheets. Given that demand for theseproducts is expected to expand, driven by the country’s
economic growth, JBIC supports the expansion ofJapanese companies’ sales bases, and endeavors tocontribute to maintaining and strengthening their global
competitiveness. JBIC has also provided a loan to financeJapanese companies’ join t ven ture business ofmanufacturing and sales of large-diameter welded steel
pipes for oil and gas pipelines in the UAE. JBIC expects
that, by producing high-quality steel pipes for pipelines
locally, Japanese companies will enhance their ability torespond to customer needs and improve costcompetitiveness in the Middle East, the world’s leading
producer of oil and natural gas.

its status as Japan’s policy-based financial institution,
JBIC holds discussions, and works to strengthen bilateralties, with the governments and government agencies ofresource-rich countries. It thereby facilitates theacquisition of interests in resources and resource
development projects by Japanese companies.
Specifically, JBIC concluded a memorandum of
understanding (MOU) with state-run oil company wholly
owned by the Abu Dhabi government, Abu Dhabi National
Oil Company (ADNOC), which has been Japan’s stablesource of crude oil for more than 30 years. This MOU isintended to reinforce cooperation in the oil and gas
sectors. The MOU reaffirms for both parties theimportance of extending existing oil field concessions heldby Japanese companies operating in Abu Dhabi, and thesignificance of their acquiring new concessions.

Signing of an MOU with ADNOC to cooperate in the oil and gas sectors.
 Looking Ahead

Manufacturing and sales business of cold-rolled and hot-dip galvanized steel
sheets for automobiles in Indonesia.

 Strengthening Ties with Resource-rich Countries
To secure stable supplies of natural resources, it isnecessary to strengthen relationships with the countries
and major companies supplying the resources. Leveraging

Manufacturing and sales business of large-diameter welded steel pipes foroil/gas pipelines in the UAE

24

JBIC  Annual Report 2016

In both the Strategic Energy Plan and Japan
Revitalization Strategy, endorsed and revised in FY2014
and FY2015, respectively, the Japanese government sets
“diversification of natural resources and the sources ofsuch resources” as a measure to secure a stable andinexpensive (economical) resource supply. JBIC, in its
FY2015–2017 Medium-term Business Plan (announced
in June 2015), lists supporting Japanese companies’
energy and natural resources business as a priority task
in the area of natural resources, and has committed itself
to focusing on promoting projects that secure anddiversify the supply of resources as well as promoting
projects that reduce LNG procurement costs.
Following a sharp drop in, and the stagnation of,
natural resource prices, investment in natural resource
development by major resource companies and Japanesecompanies came to a standstill, and there is concern thatthe supply of natural resources could tighten in themedium- to long-term. This situation has squeezed thefinances of resource-producing countries, but it has also
created a favorable opportunity for the acquisition ofvaluable resource interests. JBIC has been supporting
the acquisition and development of such resource
interests by Japanese companies, thereby contributing   Major Projects over the Last 10 Years 

As of June 30, 2016

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

Norwegian North Sea Oil Field

British North Sea Oil Field

Tungsten Mine,
Portugal✚

Kashagan Field,
Kazakhstan ◉◉Tempa Rossa
Oil Field, Italy◉ Sakhalin I, Russia✚✚◉● Sakhalin II, Russia

Kharassan Uranium Mine, Kazakhstan◉ BTC Pipeline◉ ACG Field,
Azerbaijan

Advance Payment Loan to
LNG, Qatar ● ADNOC◉●
Amic-Toho, Saudi Arabia✚
Oil Field, UAE

■

◆✚

✚
✚

Assmang Iron, Zinc,
Chrome Ore Mine,
South Africa

Petra Nova CO2-EOR Project, U.S.

● ●◉● Cameron LNG, U.S.
Eagle Ford Shale Oil & Gas, U.S.◉
Trinidad Methanol,
Freeport LNG, U.S.
Trinidad and Tobago

Tiga LNG, Malaysia
Taganito Nickel Project, Philippines●✚

West Angelas Mine

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

Jimblebar Mine
Ambatovy Nickel, Madagascar

Roy Hill Mine
Enfield/Vincent Oil Field

Stock Acquisition of Anglo American Sur, Chile
Esperanza Mine, Chile

1 Energy and Natural Resources Finance Group

Woodchip,Mozambique

Shale Gas, U.S.

Morenci Mine, U.S. ▲METOR Methanol, Venezuela●
Drummond Project, Columbia ■●◉ Purchashing Oil Product
Donggi-Senoro LNG, Indonesia
from PDVSA, Venezuela
Woodchip, Indonesia
AMAZON Alumina Refinery/
Tangguh LNG, Indonesia✚✚
Aluminum Smelter, Brazil✚●
PNG LNG, Papua New Guinea✚ ●Bayovar Phosphate Mine, Peru ✚Forestation,●
Kangean Oil & Gas Field, Indonesia ●Prelude FLNG
BrazilCerro Verde Mine, Peru
Browse LNG● ● Bayu-Undan LNG
Quellaveco Mine,Peru▲✚ CENIBRA●
Wheatstone LNG▲◆
Ichthys
LNG
Pulp,
San Cristobal Zinc Mine, Bolivia◉●●●●◆ Brazil▲✚
Gorgon LNG✚▲▲◆
Curtis LNG✚●
SierraGorda
CopperMine,
Chile
Pluto LNG◆◆
Shark Bay Salt Field ✚▲■ Rolleston Mine◆
Antucoya Copper Mine, Chile✚▲■ Boggabri Mine
Worsley Bauxite Mine &Promoly Project, Chile✚ ■▲Moolarben
Mine
Alumina Refinery◉
Escondida Mine, Chile▲
Caserones Copper Mine, Chile
Cape Lambert✚ Forestation, New ZealandLos Pelambres Mine, Chile
Iron Ore Shipping Port
Frade Oil Field,

Tayan Alumina Project, Indonesia
MOZAL
Aluminum Smelter,
Mozambique●●●■◉ Hangingstone Oil Sands, Canada■ Grande Cache Coal Mine, Canada
Coal Bed Methane, Canada ●Alouette Aluminium
Similco Mine, Canada ▲✚ Smelter, Canada● Marcellus

Suska Sukunka Mine,
CanadaAdvance Payment Loan to
VINACOMIN, Vietnam

Vijachip, Vietnam ✚Montney Shale Gas, Canada✚West Mynkuduk Uranium Mine, Kazakhstan

The Environment Surrounding
JBIC and Its Challenges

Pogo Gold Mine, U.S.

◉◉

2

Resources, etc.

BrazilNAMISA Mine, Brazil
MUSA Mine, Brazil

Rasp Zinc & Lead Mineto the securing of a stable supply of natural resources.
To enable Japan to diversify its procurement sources,
JBIC is willing to support natural resource development
projects in connection with the interests and transactionsof Japanese companies, particularly those in Africa which
is viewed as the last frontier for natural resources.
Non-African countries have started investing in thoseprojects. As acknowledged at the Tokyo International
Conference on African Development (TICAD), natural
resource development projects in Africa help support
African countries’ economies. They create domestic
employment where the project is implemented, facilitate
f o r e i g n c u r r e n c y i n f l o w s, a n d p r o m o t e r e l a t e dinfrastructure and industry development.
LNG production currently outstrips demand, anduncertainty lingers regarding future demand. In response,
Japanese electric and gas companies are seeking todiversify their LNG procurement sources and the pricing
system for LNG transactions, and to withdraw fromdestination clauses to realize the liquidity and flexibilityof the transaction.
In addition to the previously mentioned Cameronand Freeport LNG projects in the U.S., there are alsoplans for shale gas-based LNG projects in other parts ofNorth America which will be exported to Japan and other

Asian countries. Since the projects are expected tosatisfy the needs of the Japanese electric and gas
companies mentioned above, JBIC will proactively
consider support for these projects.
JBIC will also continue its efforts to create anenvironment which enables the formulation and smooth
implementation of resource development projects byholding dialogues with various parties, including thegovernments and governmental agencies of resource-richcountries. The key to strengthening the relationship withthese countries lies in the cooperation in resource
development projects, but also in the establishment ofcomprehensive and sustainable cooperative relationshipsthat meet the needs of these countries in various fields,
including infrastructure construction, industrial
development, employment creation, technology transfer,and reduced environmental burden through the use ofrenewable energy and energy efficiency.
JBIC will not only maintain, but also work tostrengthen, its multilayered and positive relationships
with governments of resource-rich countries throughcomprehensive efforts that encompass support for
infrastructure, manufacturing, and various other projects
in the countries.

JBIC  Annual Report 201625

2 Infrastructure and Environment
Finance Group2

A Message from the Global Head of the GroupThe Environment Surrounding
JBIC and Its Challenges

It is often noted that there is a huge gap globally between the demand andsupply of investment in infrastructure projects. The matter was in fact evenmentioned in the G7 Ise-Shima Leaders’ Declaration. Since a stable supply ofhigh-quality long-term funds is required to alleviate the gap, JBIC is prepared
to provide long-term financing and to work for the further mobilization of longterm private financing.
In terms of project formulation, it is expected that high-quality projects will
attract long-term investment by private-sector investors, especially in the case of
public–private partnership (PPP) projects. JBIC will strive to develop suchprojects by partnering with host country governments, international institutions,and other entities.
Under its Medium-term Business Plan (FY2015–2017), JBIC will support thediversification and advancement of overseas infrastructure projects in which
Japanese companies participate. JBIC will focus particularly on the power sector,
where support shall be extended to what currently is beyond the ability ofcountries, schemes, and structures to provide. At the same time, JBIC will pursue
stronger engagement with social infrastructure projects, such as those involving
railroads and water supply, and aggressively work to preserve the global
environment by, among other things, mitigating climate change.

2 Infrastructure and Environment Finance Group

Hideo Naito
Managing Executive Officer
Global Head of Infrastructure and Environment Finance Group

Business Environment and Priority Issues Japan’s Growth Strategy and the Need to Tap into

Overseas Infrastructure Demand
Global demand for infrastructure development is
projected to increase, reflecting economic growth andrapid urbanization in emerging-market countries.
Overseas infrastructure demand in the power, nuclear
p o w e r, p o r t s , a s w e l l a s t h e i n f o r m a t i o n a n dcommunications technology sectors is expected toincrease at an annual rate of about 2.2%, 2.4%, 5%, and
4%, respectively.1
Such demand can be met by expanding Japanesecompanies’ investment in the projects abroad andproviding integrated infrastructure systems that involve
not only the delivery of infrastructure-related equipmentfrom Japanese companies with advanced and ecofriendly technologies, which they have gained throughinfrastructure projects in Japan, but also the transfer ofexpertise in designing, constructing, operating, andmanaging infrastructure.
Providing such infrastructure systems andinvestments will contribute to the development of quality
economic infrastructure that is necessary for the stability
and growth of the global economy. At the same time, itwill help Japanese companies expand their business andsecure greater market share overseas.
With this in mind, the Japanese government set up
three strategic policies: (1) the Japan Revitalization
Strategy, endorsed by the Cabinet in June 2013, andrevised in June 2016; (2) the Infrastructure Systems

26

JBIC  Annual Report 2016

Participation by a Japanese company in a natural gas-fired combined cycle
power plant project and desalination project in Qatar

Export Strategy, adopted in May 2013 at the Ministerial
Meeting on Strategy Relating Infrastructure Export andEconomic Cooperation, and revised in May 2016; and (3)the Basic Policy on Economic and Fiscal Management
and Reform, endorsed by the Cabinet in June 2013, andrevised in June 2016.
The objective is to lead efforts to attain sustainable
and robust economic growth in Japan by aggressively
capturing the huge global demand for infrastructure
through the maximum use of Japan’s leading
technologies and know-how.
Under these policies, in May 2015, Japanese Prime
Minister Shinzo Abe announced the Partnership for1. According to the Infrastructure Systems Export Strategy (2014 revised
edition), adopted at the Ministerial Meeting on Strategy Relating Infrastructure
Export and Economic Cooperation, held on June 3, 2014.

   JBIC’s Financing for Infrastructure Projects As of July 31, 2016
◉ Power● Water■ Transport Infrastructure

Iceland▼ Geothermal Power Plant Project(ports, railways, roads, etc.)

Morocco◆ Broadcasting,◉ Export of Gas-fired Power Generation Plant

Telecommunication▼ Renewable Energy✚ Others

United Kingdom■ Intercity Express Programme▼ Offshore Wind Power Generation Project

Jordan◉ Power Transformer Manufacturing
and Sales Project

Turkey

■▼

▼

▼■
◉

◉

▼

Kuwait◉● Power and
Desalination Project

Qatar◉ IPP Project◉● IWPP Project

◆

◉●
◉◉●
◉ ◉●◉
◉
●

◉
■▼
◉
●

◉

◆ Export ofCommunication
Equipment▼
UAE◉● IWPP Project◉ IPP ProjectSouth Africa▼ TSL for Renewable
Energy-related Project

Tanzania◉ Gas-fired Combine
Power Plant Construction

Oman◉ IPP Project● IWPP Project▼●

Myanmar✚ Establishing
Vehicle to Promote
Private Sector
Projects✚ Dawei SEZ
Development
Project◉

Laos▼ Hydro Power
Plant Project

◆
◉◉
◉◉
▼▼

Malaysia▼ TSL for Renewable
Energy-related Project

The Philippines◉ Portfolio Acquisition of
Existing IPP Projects

Viet Nam◉ Export ofGas-fired Power Generation Plant◉ Super Critical Coal-fired
Power Plant Expansion▼◉◉

Mexico◉ Export of High Energy
Efficient Coal-fired Power Plant◉ Portfolio Acquisition of
Existing IPP Projects▼ TSL for Renewable
Energy-related Project◉▼■2 Infrastructure and Environment Finance Group

◆

India
■ Delhi-Mumbai Industrial
Corridor (DMIC) Project◉ Combined Gas-fired
Power Plant Project◉ Export forSuper Critical Pressure
Coal Thermal Power Plant▼ TSL for Renewable
Energy-related Project◉ ◉ Export of Combined Gas-fired✚✚Power Plant

Saudi Arabia◉ Export for Oil Thermal
Power Plant Project◉

Bangladesh▼◉◉ ◉▼ TSL for Renewable
Energy-related
Project◉ Export of Gas-fired Power Generation Plant

Uzbekistan◆ Export of Terrestrial
Digital broadcasting Equipment

Latin America andthe Caribbean region

Korea◉ ◉ Export of Gas-fired Power Generation Plant▼ Offshore Wind
Power Generation
Project▼ Renewable Energy Power
Generation Project▼

Kazakhstan

Netherlands

AngolaCanada▼ TSL for Renewable Energy-related Project■ Export for Ports Facility Construction◉
and Expansion Project◉ Export for Geothermal Power Plant Project

The Environment Surrounding
JBIC and Its Challenges▼ Photovoltaic Power Generation Project▼2

Russia◆Ecuador◆ Export for Terrestrial
Digital Broadcasting Project

Colombia▼ ■◆■◉ Export of Hydraulic Power
Generation Facilities▼ TSL for Renewable Energy-related Project

Venezuela

Thailand■ Exports of Railway Cars

◉ Natural Gas-fired Combined Cycle Power Plant Project

Singapore

Indonesia● Export of Seawater Desalination Plant◆ Export of Telecommunication Machineryand Equipment◉ Submarine Cables Replacement Project◉ Export of Transmission and Substation Equipment▼ Geothermal Power Plant Project▼ Hydro Power Plant Project◉ Export of Thermal Power Generation Plant

Maldives● Water Supply and Sewerage System

Quality Infrastructure and, in the lead-up to the G7 IseShima Summit in May 2016, the Expanded Partnershipfor Quality Infrastructure initiative. This latter initiative
aims to contribute to the development of high-quality
infrastructure around the world, and to facilitate Japan’s
economic growth through the promotion of
infrastructure exports by providing approximately USD
200 billion in funding over the coming five years. Throughthese initiatives, the Japanese government will strive to
make sufficient infrastructure investment in terms ofboth quality and quantity, by further mobilizing privatesector funds and know-how, in collaboration with various
countries and international organizations.
JBIC will continue to actively support theparticipation of Japanese companies in overseas
infrastructure projects by taking advantage of its
experience with such projects in a range of fields,
including electric power systems, railroads, and watersupply systems, and the trusting relationships JBIC has
built with host countries over the years. Through such
efforts, JBIC will translate the Japanese government’s
policies into action and contribute to the stability anddevelopment of the global and Japanese economy.
 P ublic–Private Partnership-based Infrastructure

System Export Strategy
The export of infrastructure systems generates various

Brazil■ São Paulo Beltway (RODOANEL) Project■ Cargo Railway Network Development Project◆ Equipment Export for Digital Broadcasting▼ TSL for Renewable Energy-related Project

benefits: orders; footholds for Japanese companies;
enhanced supply chains through the development oflocal infrastructure; and, eventually, local market share.
These exports also entail some major challenges:
exposure to fierce international competition; the need forlarge upfront investments; substantial business risks, suchas long recovery periods; and the need to negotiate withhost-country governments. It is difficult for private-sector
companies to handle these challenges on their own.
Taking these factors into consideration, theJapanese government has promoted integrated public–
private efforts and, in the above-mentioned Japan
Revitalization Strategy and Infrastructure Systems
Export Strategy, it has set a clear target of raising thetotal value of infrastructure system orders received by
Japanese companies to some ¥30 trillion by 2020.
Further, since the government has called on theprime minister and other cabinet ministers to conduct
vigorous sales promotions, they have gone so far as tointegrate economic missions into their visits to ASEAN
member states, the Middle East, North America, Africa,and India. This has resulted in the winning of orders forinfrastructure systems and, in FY2014, the total value oforders was approximately ¥19 trillion.2
The Infrastructure Systems Export Strategy divides
2. The Fourth Infrastructure Systems Export Strategy Follow-up (Twenty-fourth
Ministerial Meeting on Strategy Relating to Infrastructure Export andEconomic Cooperation, May 23, 2016).

JBIC  Annual Report 201627

2
The Environment Surrounding
JBIC and Its Challenges

Participation by a Japanese company in a geothermal power generation
project in Iceland© Mr. Hreinn Hjartason

2 Infrastructure and Environment Finance Groupemerging-market countries targeted for overseas
infrastructure development into three groups: (1) China
and ASEAN; (2) Southwest Asia, the Middle East, Russia,
the Commonwealth of Independent States (CIS), as well
as Central and South America; and (3) Africa.
Designating China and ASEAN as top-priority regions, thestrategy states that Japan will encourage theintroduction of high-quality and robust infrastructure
systems that lead to greater connectivity within the
ASEAN region.
In addition, the Infrastructure Systems Export
Strategy calls for promoting Japan’s advanced low-carbon
technologies overseas, and steadily implementing Actions
for Cool Earth: ACE 2.0, a strategy that seeks to provide
assistance to developing countries and encourage
innovation. These efforts will not only contribute to theeconomic growth of those countries and the reduction ofgreenhouse gas (GHG), but also promote the overseas
development of infrastructure systems, in which area
Japan has a comparative advantage.
 T hree Challenges Japanese Companies Face inOverseas Infrastructure Projects
As discussed earlier, the Infrastructure Systems Export
Strategy, which unites the activities of public and private
sectors, is underway and is beginning to produce somepositive outcomes. Many Japanese companies face
several difficulties when implementing infrastructure
projects overseas. These concerns are: (1) the ability tooffer competitive prices; (2) a shortage of versatile
operators; and (3) the lack of schemes to ensure project
feasibility in emerging and developing countries.
The first challenge, the ability to offer competitive
prices, can be addressed by shifting the production basefor noncore parts to countries where costs are lower, andcombining the parts with core parts produced in Japan,
as many Japanese companies have already done. Anotherapproach is not to stick to the “All Japan” principle ofmobilizing only Japanese entities but to adopt the “Japan
Initiative” strategy, by which the best mix of Japanese andforeign products is achieved by using the core part ofplants made mainly by Japanese companies with atechnological competitive edge, while managing the other

28

JBIC  Annual Report 2016

parts in cooperation with foreign companies.
The second challenge is most evident in theJapanese water and railway sectors, in which knowledge
and expertise related to construction and operation are
spread among several companies, including public
corporations. There is a shortage of Japanese companies
that possess the experience to comprehensively conductbusiness from upstream operations (creation of masterplans) to downstream operations (operation andmaintenance of facilities and collection of charges andfees). Therefore, Japanese companies are not always
able to adequately meet the needs of host countries thatcall for integrated plans of infrastructure systems. In the
sectors where Japanese companies lack expertise incomprehensive business operations, effective measures
may involve establishing international alliances or
acquiring overseas companies that will help themaccumulate such expertise.
The third challenge is best represented byinfrastructure projects in emerging and developing
countries, in which there are cases where the system
places excessive risks on project owners. These risks
include inadequacies in the legal system related to the
responsibilities of local governments and state-owned
companies in electricity purchase agreements, andinsufficient compensation by the local government
regarding ridership risks 3 in transportation projects.
Furthermore, for construction projects that involve
several governments agencies or occur in several local
governments, it is not uncommon for the central
government to lack the ability to coordinate relatedparties and monitor the project. Under these conditions,
it has to be said that , when looked at from theperspective of a private-sector company considering
participating in the project, the feasibility of the projectscheme is extremely low, which makes it difficult toobtain private investment for the project.
In these situations, the expected approach is for the
public and private sectors to have an extensive exchangeof opinions and to form a partnership from the earlystages of the project, so that the project will be feasible
in the eyes of both parties. By engaging in activities of
the host country government as early as the project
formulation phase (the early stage when the businessplan and risk distribution are proposed by thegovernment) through, for example, creating a company
to facilitate project formulation or regular dialogues withthe host country government, the Japanese side will beable to offer appropriate support to the host country
government in such aspects as the project’s basic
scheme, as well as its implementation and management.
It will also allow the adoption of bidding criteria covering
all aspects of the project, including life-cycle costs.4
These actions will, in turn, increase the probability ofdeveloping highly feasible projects that meet the realities
and needs of all participants.
3. Ridership risk refers to the risk of being unable to secure the minimum numberof passengers or users that is necessary to secure project profitability.
4. Life-cycle cost is the sum of all costs throughout a project—including those ofmaintenance, final dismantling, and disposal—not only for planning, design,and construction, or other costs that emerge in the initial phase of a project.

2

JBIC’s Activities

Environment
Achieving economic development compatible with

2 Infrastructure and Environment Finance Group J BIC’s Commitment to Preserving the Global

The Environment Surrounding
JBIC and Its Challenges

 Support for Export of Infrastructure Systems
Expectations are rising for JBIC’s role in the Japanese
government’s Infrastructure Systems Export Strategy andExpanded Partnership for Quality Infrastructure initiative.
In response to such expectations, JBIC is creating andreinforcing its support system to help Japanese companies
overcome any of the above challenges they may confront.
JBIC tries to ensure project feasibility by (1)establishing companies to promote project formulationfrom the early stages and (2) holding regular dialogues
with host country governments.
In the first scheme, JBIC invested in the DelhiMumbai Industrial Corridor Development Corporation
Limited (DMICDC), which is responsible for developing
master plans for the Delhi–Mumbai industrial corridor
and conducting feasibility studies for individual projects
in the region. JBIC also has set up project development
promotion companies in Myanmar and Thailand to play asimilar role. Currently, JBIC is holding discussions withthe governments of Myanmar and Thailand with regard
to day-to-day management of those companies.
Turning to the second scheme, a representative
example is the Financial Policy Dialogue held between
JBIC and the government of Indonesia. JBIC is expanding
the same scheme to other countries (a similar dialogue
scheme has already been established with thegovernments of Mexico and Vietnam). As part of its
efforts to ensure the feasibility of infrastructure projects
with a long payout time and whose revenues are
generated in the local currency, JBIC provides loans inlocal currencies in order to reduce exchange risks
associated with foreign-currency loans borrowed by
Japanese project owners, and thus supports stable
operations of the projects over the long term.
The Act for Partial Amendment of the Japan Bank forInternational Cooperation Act (Act No. 41 of 2016) was
enacted in May 2016, to enable JBIC to take further risks
regarding overseas infrastructures and other foundations
for socioeconomic activities; expand its ability to provide
loans in local currencies and diversify JBIC’s assistancetools. With the strengthening of these functions, JBIC will
step up its support for Japanese companies to further
facilitate their deployment overseas.
JBIC will remain committed to upgrading andreinforcing its financing functions, which constitute itscore business, to better accommodate markets andneeds. Also, as an entity that coordinates the needs ofthe public and the private sector, JBIC will continue tosupport Japanese companies in a variety of aspects, sothat the growing demand for infrastructure overseas will
create and increase business opportunities for them.

Participation by a Japanese company in a offshore wind power generation
project in the Netherlands

environmental sustainability is now recognized as acommon issue facing both developed and emerging
countries alike. Thus, there are hopes throughout theworld for the implementation of projects that will lead toenvironmental preservation and improvement. The Paris
Agreement was adopted at the 21st Session of theConference of the Parties to the United Nations
Framework Convention on Climate Change (COP 21) inDecember 2015. It is a new international framework to
reduce green house gas, and an alternative to the Kyoto
Protocol. It is expected that the agreement will further
advance initiatives that seek to combat global warming.
In this field, a wide range of efforts are being
undertaken across the world. They include: (1) energy
efficiency projects; (2) renewable energy projects using
solar, wind, or other renewable sources of power; (3)highly-efficient coal-fired power generation projects that
reduce CO2 emissions; (4) urban transportation projects,
that help alleviate traffic congestion and air pollution,
including rail transit projects; and (5) smart-grid projects
aimed to efficiently supply electricity using IT technology,
as well as smart-city projects aimed at realizing
environmentally sustainable cities.
JBIC supports these efforts through its globalp r o m o t i o n o f J a p a n ’s a d v a n c e d e n v i r o n m e n t a ltechnologies under the Infrastructure Systems Export
Strategy. JBIC’s support also goes to (1) projects fordeveloping solar power plants and energy-efficient power
plants in emerging-market countries that take advantageof advanced environmental technologies; and (2)projects that entail significant environmental
preservation effects, such as those that introduce
energy-efficient equipment. JBIC supports these projects
with loans, equity participation, and guarantees whilemobilizing private financing under the Global action for
Reconciling Economic growth and ENvironmental
preservation (GREEN) operations.
In addition to supporting the business activities byJapanese companies, JBIC will continue to provide
financial support for efforts aimed at global environmental
preservation by making most of the GREEN operations.

JBIC  Annual Report 201629

3 Industry Finance Group2

A Message from the Global Head of the GroupThe Environment Surrounding
JBIC and Its Challenges

The Industry Finance Group focuses primarily on maintaining andstrengthening the international competitiveness of various industries in Japanthrough wide-ranging methods of financing. The Group comprises the
Corporate Finance Department, Finance Office for SME, the Marine andAerospace Finance Department, and the West Japan Office.
Amid a continuing strong appetite for overseas investment by Japanesecompanies, particularly for overseas mergers and acquisitions (M&A), theGroup provided loans, equity participations, and guarantees amounting to¥1,580.2 billion for 264 commitments in FY2015.
JBIC is in the second year of the Medium-term Business Plan (FY2015–2017). The plan calls for JBIC to step up measures targeting “priority issues.” In
the area of Manufacturing and other industries, JBIC will focus further effortson (1) strengthening support for the overseas business deployment of various
industries which are the basis of the Japanese economy; and (2) contributing
to the development of competitive Japanese technologies and businessmodels into growing industries through overseas business deployment, and, in
the area of mid-tier enterprises and small and medium-sized enterprises(SME), on supporting mid-tier enterprises and SME overseas businessexpansion, utilizing JBIC’s characteristics.

3 Industry Finance Group

Shigeki KimuraManaging Executive Officer
Global Head of Industry Finance Group

Business Environment and Priority Issues
 Japanese Companies Targeting Larger M&A
Despite the slowdown sparked by the global financial crisis
in 2008, direct investment by Japanese companies
overseas exceeded ¥100 billion in 2011 in consequence ofthe sudden appreciation of the yen. Subsequently, the yen
has turned to fall in exchange rate from 2013, but thedirect investment overseas by Japanese companies hasremained steady, reaching ¥128.6 billion in 2015 (Figure 1).
Amid steady direct investment overseas by Japanesecompanies, their overseas M&A have surged since 2009,
on the back of declining acquisition prices due to thestrong yen. This level of activity has continued,
irrespective of subsequent forex trends. The RECOF
Corporation M&A database has recorded an ongoing risein M&A: from 519 in 2012 to 561 in 2015.
This trend of M&A activities shows that Japanesecompanies are seeking to substitute shrinking domestic
market by businesses in new markets. M&A aimed
at achieving an edge on global competitors throughscale has also been a major business strategy forJapanese companies.
While 20% of M&A held by Japanese companies

Figure 1. Value of Japanese Foreign Direct Investment
Exchange rate (left axis)

Japanese foreign direct investment (right axis)(USD/JPY)(Billions of U.S. dollars)

130

160

120

140
120

110

100

100

80
90

60

80

40

70

20
0

60
(Year) ’01

’02

’03

’04

’05

’06

’07

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

30

JBIC  Annual Report 2016

’08

’09

’10

’11

’12

’13

’14

’15

exceeded ¥5.0 billion between 2001 and 2005, thepercentage doubled to 40% in the 2011–2015 timeframe (Figure 2). Such M&A deals, especially in thetelecommunications and healthcare industries, areincreasing in size, encouraged by diversified procurement
methods and lower funding costs.

Figure 2.

The Environment Surrounding
JBIC and Its Challenges

(%)
100
90
80

 Stagnant Exports from Japan70

Global export transactions gradually increased from2011 to 2014, reaching $18.9 trillion. However, 2015
saw a 13.2% year-on-year decrease to $16.4 trillion,
due to a decline in Chinese demand and weak natural
resource prices.
From 2012 to 2015, Japan’s export transactions
gradually declined in dollar terms, despite the continued
yen depreciation, falling 9.4% year-on-year to $624.9
billion (Figure 3). According to the UN Conference on
Trade and Development (UNCTAD), Japan’s sluggish
exports can be attributed to external factors such as a
slowdown in global trade growth, but also to the internal
factors such as Japanese companies’ establishment oflocal production structures in a bid to tap growthoverseas, which resulted in a steady, successful
development of Japanese supply chain systems abroad.

2

Ratio of Overseas M&A by JapaneseCompanies by Value

60
50
40
30
20

0
(Year) ’01−’05’06−’103 Industry Finance Group10’11−’15
Value of M&A in
Billions of yen

Source: RECOF Corporation(Only identified amounts tallied)

0–4.9
5.0–9.9
10.0–49.9
50.0–100.0
100.0+

other hand, the number of mid-tier enterprises and SMEwith the same response has steadily risen since 2012 andis now at 75.2% (Figure 4).
Diversification has been seen in the mid-tierenterprises and SME willing to take on the challenge ofgoing overseas, the countries they target, and theirfunding needs. Nevertheless, the two types of tierenterprises tend to face greater constraints than larger
companies on various fronts, such as fund procurement
and information gathering for the operation of overseas
businesses. It is, therefore, incumbent on us to further
enhance the support provided to these companies.

 Boosting Overseas Business for Mid-tier Enterprises

and SMEA growing number of mid-tier enterprises and SME aretrying to create new business opportunities, both bycapturing demand in overseas markets and meeting local
procurement needs of major Japanese companies thathave launched operations in emerging-markets seeing
economic growth, particularly in Asia.
According to the FY2015 Survey Report on Overseas
Business Operations by Japanese Manufacturing
Companies , the 27th such study, companies that
intended to “strengthen/expand” overseas operations
over the medium-term declined slightly to 80.5%. On the

Figure 3. Global and Japanese Export Value
Global export value (left axis)

Japanese export value (right axis)(Billions of U.S. dollars)(Billions of U.S. dollars)

20,000900

18,000800

16,000700

14,000600

12,000500

10,000

400

8,000

300

6,000
4,000

200

2,000

100

0
(Year) ’01

’02

’03

’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

0

Source: UNCTAD.

JBIC  Annual Report 201631

2

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

Maintain present level

Scale back / withdraw

The Environment Surrounding
JBIC and Its Challenges

Mid-tier enterprises / SME 3

Total responding companies
(%)
100

(586)
0.2

(588)
0.9

(610)
1.5

(602)
0.7

(594) 2
1.5

12.6

14.8

16.1

18.4

18.0

(%)
100

80

80

60

60

40

87.2

84.4

82.5

80.9

80.5

20

3 Industry Finance Group0(FY) ’11

40

(163)
0.0

(153)
1.3

(169)
2.4

(166)
0.0

(157)
1.9

21.5

26.1

23.7

25.3

22.9

78.5

72.5

74.0

74.7

75.2

’12

’13

’14

’15

20

’12

’13

’14

’15

0
(FY) ’11

Notes
1. “Overseas Operations” is defined as production, sales and R&D activities at overseas bases, as well as the outsourcing of manufacturing andprocurement overseas.
2. The numbers in the parentheses above the bar graphs indicate the numbers of responding companies to the question.
3. Mid-tier enterprises/SME are companies whose paid-in capital is less than 1 billion Japanese yen.
Source: Results of the JBIC FY2015 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies .

JBIC’s Activities S upporting Overseas Business Expansion using

Various Instruments
JBIC supports the overseas M&A activities of Japanesecompanies, overseas infrastructure, and natural resourcerelated projects. In particular, JBIC’s Industry FinanceGroup provides a flexible form of long-term funding
required for the M&A activities of Japanese companies
targeting overseas companies in various fields, including
the food, beverages, human resource dispatch, finance,
chemical, iron casting, media, and IT industries.
Furthermore, JBIC provided project financing for along-term, floating production, storage, and offloading(FPSO) system chartering service project to develop oilfields, and a loan for a satellite communications projectin which a Japanese company was participating; and also
helped Japanese companies procure funds in thecurrency of the countries in which they operate. This
includes Mexican peso-denominated and Indian rupeedenominated loans, the latter being a first for JBIC.
JBIC made a capital contribution to a fund thattargets investments in growing, unlisted Chinesecompanies and companies in Asian countries. It also
provided support from the early stages for a Japanesecompany that, after having split off from, and become
independent of a Japanese investment fund, set up a
joint venture with a leading Taiwanese company todevelop its petrochemicals business in Taiwan.
 Supporting Japanese Exports, Overseas Businesses

JBIC signed an MOU to strengthen its relationship with Japanese company
and leading local company to invest in a petrochemicals business.

32

JBIC  Annual Report 2016

JBIC is committed to supporting exports and overseas
sales by Japanese companies. During FY2015, JBIC
supported Japanese companies as they sought toincrease their exports of fertilizer and other plants byapproaching buyers, such as the governments of hostcountries, with finance-related proposals to coverprojects from the early stage, conducting direct
negotiations and structuring project finance.
JBIC also maintains relationships with many mid-tierenterprises and SME, and supports the Japanese
shipbuilding industry by offering flexible funding in theform of buyer’s credit to support the export of bulk
carriers, offshore support vessels, and other ships madeby Japanese shipbuilding companies which contributesignificantly to regional economies.

JBIC Head Office and the West Japan Office, as well as
overseas representatives.

2
The Environment Surrounding
JBIC and Its Challenges

Export financing is used for offshore support vessels built by
Japanese companies.

tier Enterprises and SME
Since FY2012, JBIC has been working more aggressively tosupport the overseas business deployment of mid-tierenterprises and SME through business units dedicated tothis purpose at its Head Office and West Japan Office. JBIC
made 34 commitments to such companies during FY2012
and sharply higher 133 commitments during FY2015.
To facilitate the support of mid-tier enterprises andSME, JBIC has strengthened cooperation with Japaneseregional financial institutions and overseas subsidiaries
of lease companies by establishing investment credit
lines (financing facilities) through private financial
institutions. JBIC also sought to complement private
financing by providing, in addition to seamless funding in
the form of loans denominated in hard currencies (U.S.
dollars and euros), loans denominated in othercurrencies—such as the Thai baht, Indonesian rupiah,and Mexican peso—in order to meet the needs ofoverseas subsidiaries for funds in local currencies.
Furthermore, in FY2015, JBIC signed MOU with four
Mexican state governments and a Mexican financial
institution, respectively. This was intended to further
develop the framework, “Development and Strengtheningof Support System by Financial Institutions for Small andMedium Enterprises’ Entry into Asia throughCoordination among Japanese Regional Financial
Institutions, Japan Bank for International Cooperation(JBIC) and the Japan External Trade Organization(JETRO).” This framework was announced by a jointpress release issued in December 2010 by the Financial
Services Agency, the Ministry of Finance, and the Ministryof Economy, Trade and Industry. JBIC will support
Japanese mid-tier enterprises and SME expanding into
Mexico by actively utilizing Japan desks (desks providing
services exclusively for Japanese companies) set up by
Mexican state governments and a Mexican financial
institution as agreed on the MOU.
JBIC has also held seminars and consultations
across Japan to provide information on the foreign
investment environment for mid-tier enterprises and
SME seeking to expand their businesses abroad. The
events have been conducted by members of staff from3 Industry Finance Group Supporting Overseas Business Deployment of Mid-

The MOU with Mexican states will support Japanese mid-tier enterprises
and SME.

 Meeting the needs of Japanese companies

Japanese companies continue to confront ever-changing
economic conditions, such as the economic slowdown in
China and anemic global trade growth. However, guided by
the policies of the Japanese government, JBIC continues
to provide support aimed at maintaining and improving
the international competitiveness of Japanese industries.
JBIC’s financing options—including project finance,
subordinated loans, and loans denominated in local
currencies—are set to further diversify following the May
2016 enactment of the Act for Partial Amendment of theJapan Bank for International Cooperation.
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 needsof Japanese companies.

JBIC  Annual Report 2016

33

3

Examples of BusinessOutcomes in FY2015
1

Overview of Business Outcomes by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

2

Examples of Business Outcomes by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

3

Examples of Business Outcomes Relating toSupport for Mid-tier Enterprises and SME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

4

Examples of Business Outcomes Relating
to Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

5

Examples of Business Outcomes Relating toStudies, and Collaboration with Overseas
Governmental Organizations and International
Organizations ...............................................................................................................................53

JBIC  Annual Report 201635

1 Overview of Business Outcomes by Region
 Geographical Distribution of Loan and Equity Participation Commitments (FY2015; unit: billions of yen)

3

Switzerland 3.8 (1%)
Examples of BusinessOutcomes in FY2015

Russia 50.3 (8%)

Spain 23.3 (4%)

Finland 7.0 (1%)
France 0.6 (0%)

Netherlands
41.5
(7%)

Italy 8.1 (1%)

Luxembourg
85.6
(14%)

Germany
90.0(15%)

Europe¥598.3

Ireland 0.3 (0%)
1 Overview of Business Outcomes by Region

Iceland 4.1 (1%)
United Kingdom
283.1
(47%)
China 4.0 (1%)
Hong Kong 1.0 (0%)
Mongolia 0.2 (0%)
Cambodia 0.2 (0%)

Others 11.9 (4%)

The Middle East

Qatar
152.4
(36%)

¥427.6
United Arab Emirates
265.4
(62%)

Bangladesh
18.5 (7%)
Vietnam
4.5 (2%)
Saudi Arabia
2.7 (1%)
Turkey 7.0 (2%)

Uganda7.5(50%)

Africa

¥14.9

India
2.4 (1%)

Angola7.3(49%)

Indonesia
53.4
(19%)

Uzbekistan
41.5
(15%)

Thailand
18.2(7%)

JBIC  Annual Report 2016

Malaysia
0.2 (0%)Asia¥275.1
Singapore
76.9
(28%)

Oceania¥6.9
Australia
6.9(100%)36

Laos
0.2 (0%)

Myanmar
40.6(15%)

The Philippines
0.8 (0%)

3
Examples of BusinessOutcomes in FY2015

Mexico 22.4 (5%)¥455.3

The Bahamas 15.0 (3%)
Trinidad and Tobago
57.7 (12%)

United States
455.3(100%)

Brazil67.5(14%)

Chile 0.3 (0%)

Latin America
andthe Caribbean¥496.8

 Transition in Composition of Commitments

by Region (Loans, Equity Participation andGuarantees) over the Last 5 Years (Unit: billions of yen)
The Middle East 232.4 (15%)

FY2011¥1,595.9

International Organizations 12.3 (1%)
Oceania 170.4 (11%)
Others 161.5 (10%)

FY2012

Asia
513.6
(12%)

Oceania
1.005.7(24%)

The Middle East 305.9 (7%)

Asia
472.7
(21%)

Oceania
292.9
(13%)

Europe350.3(16%)

FY2014

Asia
610.5
(19%)

North America
710.8
(17%)
Latin America and the Caribbean 209.1 (9%)
Others 40.8 (2%)

North America
654.0
(30%)

Oceania 173.8 (5%)

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

Oceania 6.9 (0%)

FY2015

Europe598.3(25%)

The Middle East
427.6
(18%)

¥3,249.3
Others 21.2 (1%)

Europe 228.8 (7%)

Asia
332.9
(14%)

¥4,240.9¥2,206.1

Africa 195.6 (6%)

The Middle East
493.6
(15%)

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

Africa 84.3 (2%)

Europe660.6(16%)
The Middle East 104.8 (5%)
Africa 81.1 (4%)

FY2013

British Virgin Islands
333.6
(67%)

Africa 3.3 (0%)
North America 113.6 (7%)
Latin America and the Caribbean 415.5 (26%)

Europe
216.6
(14%)

Asia
269.9
(17%)

1 Overview of Business Outcomes by Region

North America

Africa 14.9 (1%)

Others 15.5 (1%)

North America
493.6
(21%)

¥2,397.4
Latin America and the Caribbean
507.3 (21%)

JBIC  Annual Report 201637

2 Examples of Business Outcomes by Region
 Asia3
Examples of BusinessOutcomes in FY2015

China
Loan for Organic Solvent Purification and Sales BusinessSupporting new production base expansion by Japanese mid-tier enterprises and SME

2 Examples of Business Outcomes by Region

JBIC concluded two loan agreements with Nippon Refine Co., Ltd. (Nippon Refine)
These loans are intended to finance the organic solvent purification and sales
business conducted by Hefei Refine Co., Ltd. (Hefei Refine), a Chinese subsidiary of
Nippon Refine, in the city of Hefei in China. Nippon Refine is a small and mediumsized enterprise (SME) engaged in the used organic solvents purification and sales
business, as well as the environmental equipment engineering business.
In China, where environmental awareness is on the rise, there is a growing
demand for solvent recycling. Nippon Refine established the Hefei Refine production
base in February 2015 with the intention of expanding this market in China. Throughthe support of such overseas business deployment of Nippon Refine, this financing
will contribute to maintaining and strengthening the international competitiveness ofJapanese industries.

Suzhou Refine, a group company of
Nippon Refine.

Mongolia
Individual Agreement Related to the Export of Mining Equipment
Supporting exports by Japanese companies by utilization of an export credit line
JBIC concluded a loan agreement based on a credit line extended to the governmentof Mongolia in June 2013. The loan is intended to provide, through the Ministry of
Finance of Mongolia, the necessary funds for Khishig Arvin Industrial LLC, a
Mongolian company, to purchase from SUMITOMO CORPORATION mining machinery
made by Komatsu Ltd. and related services.
The governments of Japan and Mongolia signed the “Agreement between Japanand Mongolia for an Economic Partnership” in February 2015, which is expected tofurther vitalize the two countries’ economies in a wide range of fields and facilitate
trade and investment between the two countries. In addition, the “ERCH InitiativePlus” 1 was agreed by the two countries’ leaders to promote financing utilizing thiscredit line in accordance with measures in both countries.

Indonesia
Loan for the Manufacturing and Sales Business of Automotive Steel Sheets
Supporting Japanese steel industry’s overseas business deployment
JBIC concluded a loan agreement with PT Krakatau Nippon Steel Sumikin (KNSS), an
Indonesian subsidiary of NIPPON STEEL & SUMITOMO METAL CORPORATION(NSSMC). This loan is intended to provide the necessary funds for the manufacturing
and sales of cold-rolled, hot-dip galvanized, and galvannealed steel sheets forautomobiles (production capacity: 480 thousand tons/year) conducted by KNSS,
which was jointly established by NSSMC and a state-owned Indonesian steel
manufacturing company, PT KRAKATAU STEEL (Persero) Tbk. The Indonesian
automobile market is expected to continue growing backed by the country’s
economic growth. NSSMC aims to respond promptly and appropriately to the needsof its customers in Indonesia by setting up a state-of-the-art automotive steel sheet
production line and producing locally through KNSS.

1. ERCH Initiative Plus: “The ERCH Initiative” is aimed at promoting economic relations between Japan and Mongolia consisting of two pillars: (1) the development of aninvestment 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 Initiative Plus” was proposed byPrime Minister Abe for the promotion of Mongolian exports and industrial diversification that was agreed on by both leaders.

38

JBIC  Annual Report 2016

3
Shareholders Agreement for Equity Participation in Dawei SEZ Development Company
Supporting infrastructure project participation by Japanese companies

2 Examples of Business Outcomes by Region

JBIC concluded a shareholders agreement with Myanmar’s Foreign Economic Relations Department (FERD) and Thailand’s
Neighbouring Countries Economic Development Cooperation Agency (NEDA) to participate in Dawei Special Economic Zone
Development Company Limited (“Company”). The Company was jointly established in June 2013 by FERD and NEDA with theaim of providing support, including advice, to the Myanmar government on the comprehensive development of the Dawei
Special Economic Zone (“Dawei SEZ”) in Myanmar.
Japanese companies have high expectations for Myanmar’s growth potential. Through the equity participation in the
Company, JBIC will assist Japanese companies to participate in infrastructure projects in the Dawei SEZ from an early stage ofits development, and this will lead to increasing opportunities for them to be involved in future infrastructure business. The
Dawei region, which faces the Indian Ocean, is also important in terms of ASEAN connectivity and will contribute to the businesspromotion of Japanese companies which have expanded into the ASEAN region, including Thailand.
JBIC will contribute to further deepening and developing economic relations between Myanmar and Japan.

Examples of BusinessOutcomes in FY2015

Myanmar

The Philippines
Loan for the Manufacture and Sales Business of Medical Device
Supporting overseas business deployment of mid-tier enterprises and SME
JBIC concluded a loan agreement with Tokai Medical Products, Inc. (Tokai Medical).
This loan is intended to finance the medical device manufacturing and sales businessof Tokai Medica’s Philippine subsidiary, TOKAI MEDICAL PRODUCTS PHILIPPINES
INC. (TMPPI). Tokai Medical is an SME that manufactures and sells medical devices.
In light of growing demand in North America, Europe and the ASEAN region, Tokai
Medical established TMPPI in the Philippines, which has geographical advantages as
a production base. The company seeks to secure stable supplies and expand its
overseas sales channels through TMPPI’s local production. The loan is in line with the“Healthcare and Medical Strategy” and the “Infrastructure Export Strategy” endorsedby the Japanese government, which are designed to promote the global expansion ofJapanese medical technologies.

SingaporeSupporting the Export of Multipurpose Vessels Built in Japanese Shipyards
Supporting exports from Japan utilizing buyer’s credit for the export of ships
JBIC concluded buyer’s credit agreements with IMC Holdings Limited (IMC) Group, amajor shipping operator in Singapore, to fund the purchase of four multipurpose
vessels. Based in Singapore, IMC is one of the major integrated shipping operators in
Asia. These loans are intended to finance IMC’s purchase of a total of four vessels,
comprising two 64,400 DWT 2 and two 64,300 DWT multipurpose vessels, to be built
by Oshima Shipbuilding Co., Ltd., a Japanese shipbuilding company. These loans areintended to support the export of ships built in a Japanese shipyard that performs asignificant role in the regional economy and associated industries, including mid-tierenterprises and SME.

2. Dead weight ton (DWT) refers to the total carrying capacity of a vessel, including freight, fuel, food, drink, water, ship’s crew and their personal effects.

JBIC  Annual Report 201639

 Asia3
Examples of BusinessOutcomes in FY2015

Thailand
Loans for the Manufacture and Sales Business of Cosmetics Containers
Supporting overseas business deployment of mid-tier enterprises and SME

2 Examples of Business Outcomes by Region

JBIC concluded two loan agreements with GLASEL CO., LTD. (GLASEL). These loans
are intended to finance the manufacture and sales business of cosmetics containers
by GLASEL (THAILAND) CO., LTD. (GTCL), a subsidiary of GLASEL in Thailand.
GLASEL is an SME that plans, designs, and sells a wide range of containers forcosmetics, medicine, reagents, and health foods.
In the ASEAN region demand is increasing, as the middle-income class is growing
in line with economic development. GTCL was established to capture market sharerelated to cosmetics in ASEAN. As Japan’s policy-based financial institution, JBIC willcontinue to financially support the overseas business deployment of Japanesecompanies in growing markets such as Thailand.

Vietnam
Loan for Refrigerated Warehouse BusinessSupporting the establishment of a high-quality food logistics system leveraging Japan’s strengths
JBIC concluded a loan agreement with RYOBI HOLDINGS Co., Ltd. (RYOBI HD). Thisloan is intended to finance the refrigerated warehouse business conducted by Ryobi(Vietnam) Distribution Service Company Limited (RDSC), a Vietnamese subsidiary of
RYOBI HD, in an industrial park in Ho Chi Minh City. RYOBI HD, a company which hasdeveloped a business spanning a wide-range of sectors, including logistics andtourism, established RDSC in February 2015 in Vietnam, where Japanese department
stores continue to open new branches amid steady economic growth. RYOBI HD
seeks to gain market share in the refrigerated warehouse business by providing highquality cold chain services which is indispensable for the distribution and sale of fresh
food products, including Japanese food, in Vietnam.

Bangladesh
Buyer’s Credit for Bangladesh Power Development Board
Supporting export of facilities for gas-fired combined cycle power plant by Japanese company
JBIC concluded a buyer’s credit agreement with the Bangladesh Power Development Board (BPDB). The loan is intended toprovide financing for BPDB to purchase a complete set of facilities, including gas turbines (MITSUBISHI HITACHI POWER
SYSTEMS, LTD.) and steam turbines (FUJI ELECTRIC CO., LTD.) from Marubeni Corporation for the construction of a new 400
MW gas-fired combined cycle power plant in the northeast of Bangladesh.
Despite growing demand for electricity in Bangladesh due to steady economic growth, the power supply has not caught up
with this demand, and the country has been experiencing a chronic power shortage. Given these circumstances, theBangladesh government has been promoting the enhancements of power supply under its Power System Master Plan. Thisloan is expected to support Bangladesh’s economic development by realizing steady power supply, and, at the same time,
contribute to maintaining and strengthening the international competitiveness of Japanese industries through financial support
for the export of infrastructure-related facilities.

40

JBIC  Annual Report 2016

3
Loan for Manufacture and Sales Business of Engine Valves
Supporting overseas business deployment of Japanese automotive parts industry with local currency loan

2 Examples of Business Outcomes by Region

JBIC concluded a loan agreement with Nittan India Tech Private Limited (NIT), an
Indian subsidiary of NITTAN VALVE CO., LTD. (NITTAN VALVE). This loan is intended
to finance the expansion of manufacturing and sales of engine valves for four-wheel
and two-wheel vehicles by NIT, through providing investment capital in the local
currency (Indian rupee).
NITTAN VALVE provides engine valves, precision forgings and a various products
to a wide range of sectors, including automobiles. This loan is aimed at enhancing
NIT’s manufacturing facilities in response to the growing demand for engine valves byJapanese automobile manufacturers in India, and will lead NIT to gaining a stronger
customer base as well as a larger share of the local market. This local currency loan
will contribute to maintaining and strengthening the international competitiveness ofJapanese industries.

Examples of BusinessOutcomes in FY2015

India

Asian countries
Support for Japanese Company Business Deployment in Asia
Equity participation in fund that invests in companies in Asia
JBIC signed an agreement for equity participation in the Advantage Partners Asia Fund, L.P. (“the Fund”), which is jointly
managed by Advantage Partners, Inc. (AP) and MITSUI & CO., Ltd. (Mitsui).
The Fund is a private equity fund that invests in companies (mainly in the manufacturing, retailing, service, and information
technology industries) in Asian countries, such as China, Thailand, and Malaysia.
The Fund aims to discover, through the networks of AP and Mitsui, companies in Asia which have the potential to formbusiness partnerships with Japanese companies and to increase the corporate value of those local portfolio companies bypromoting their new business partnerships. The Fund’s investment in the Asian companies will give more opportunities forJapanese companies to enter the overseas business market or to form a capital tie-up with the portfolio companies, as well as
boost the business deployment of Japanese companies in Asia. JBIC will continue to actively contribute to maintaining andstrengthening the international competitiveness of Japanese industries by drawing on various financial schemes, including
equity participation.

JBIC  Annual Report 201641

 Europe

3
Examples of BusinessOutcomes in FY2015

Netherlands
Project Financing for Offshore Wind Power Generation Project
Supporting participation of Japanese company in renewable energy project creating sustainable environmental value

2 Examples of Business Outcomes by Region

JBIC concluded a loan agreement with Clusius C.V. (CLUSIUS), a limited partnershipin the Netherlands invested in by Mitsubishi Corporation (MC) providing project
financing1 for an offshore wind power generation project. The loan is intended toprovide the long-term financing that is necessary for CLUSIUS, jointly established by
MC and Dutch power and energy company Eneco Holding N.V. (Eneco) to operate theLuchterduinen (Q10) offshore wind farm and sell the generated electricity to Eneco
Energy Trade B.V.2 over a period of 20 years.3 This project is in line with the Japanese
government’s “Infrastructure Systems Export Strategy” and the initiative “Actions for
Cool Earth: ACE 2.0,” which promotes the advancement of low-carbon technologies.

1. 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.
2. Eneco Energy Trade B.V. is a wholly owned subsidiary of Eneco Holding N.V., one of the largest Dutch power and energy companies.
3. MHI Vestas Offshore Wind The Netherlands B.V., the supplier of wind power generation equipment for this project, is wholly owned by MHI Vestas Offshore Wind A/S, a
Danish company. JBIC has provided financing for the establishment of the Danish company, which is invested in by Mitsubishi Heavy Industries, Ltd.

42

JBIC  Annual Report 2016 The Middle East3

Project Finance for Facility D Natural Gas-fired Power Generation and Desalination Project
Supporting Japanese companies’ participation in overseas IWPP project2 Examples of Business Outcomes by Region

JBIC concluded a project finance loan agreement with Umm Al Houl Power (UHP) of
Qatar for the Facility D IWPP 4 project. UHP was established by Mitsubishi Corporation(MC) and Tokyo Electric Power Company, Incorporated (TEPCO) together with Qatar
Petroleum, Qatar Electricity & Water Company Q.S.C., and the Qatar Foundation for
Education, Science and Community Development. This project involves theconstruction, ownership, and operation of a natural gas-fired combined cycle power
plant (capacity: approximately 2,400 MW) and a desalination plant (capacity:
approximately 590 thousand cubic meters per day) under the BOOT5 in Qatar, where
demand for electric power and water has been increasing due to rapid population
growth and economic development. The electricity and water generated by the
project will be sold to Qatar General Electricity and Water Corporation for 25 years
after the completion of the plants.

Examples of BusinessOutcomes in FY2015

Qatar

United Arab Emirates
JBIC Signs MOU with Abu Dhabi National Oil Company
Supporting acquisition of new concessions and renewal of existing concessions involving Japanese oil companies
JBIC signed a memorandum of understanding (MOU) with Abu Dhabi National Oil Company,a state-run oil company wholly owned by the government of Abu Dhabi.
JBIC has signed with ADNOC a succession of MOU in the oil and gas sector, as
well as the environmental sector. This MOU is intended to further expand and develop
such a cooperation agreement in the oil and gas sector. Above all, it allowed bothparties to mutually recognize that the granting of new concessions to and the renewalof existing concessions involving Japanese entities are significant objectives for Japan.
The UAE is vital to Japan’s energy resource strategy because the UAE allows theentry of foreign oil companies to operate on the basis of concession agreements
regarding oil fields. The strengthening of this relationship through the MOU is in linewith Japan’s energy resource policies targeting an increase in the self-development
ratio6 of oil and natural gas to 40% or more by 2030 under the “Basic Energy Plan.”

United Arab Emirates
Loan for the Manufacturing and Sales Business of Large-diameter Welded Steel Pipes in Abu Dhabi
Supporting overseas business deployment by Japanese companies
JBIC concluded a loan with Al Gharbia Pipe Company LLC (AGPC), an Abu Dhabi, UAE
company. The loan is intended to finance the manufacturing and sales of largediameter welded steel pipes for oil/gas pipelines by AGPC, a joint venture company
owned by JFE Steel Corporation (JFE), Marubeni-Itochu Steel Inc. (MISI) and a UAE
company. The Middle East region is the world’s largest producing area for oil and gas,in which a stable demand for high grade pipes for delivery of oil and gas is expected.
JFE and MISI aim to enhance their ability to respond to customer needs in the Middle
East region, as well as to maintain cost competitiveness, by producing high-quality
steel pipes for pipelines locally through the joint venture.

4. IWPP (independent water and power producer) is a form of an independent water and power producer builds and operates power generation and water desalinization
plants on its own, and sells the electricity and water produced from them.
5. BOOT (Build, Own, Operate, and Transfer) is a form of financing program in which a private company builds, owns, and operates the project facility during the contract
term, and then transfers ownership to the public sector after the project completion.
6. The ratio of self-development is defined as the percentage of the trade volume of petroleum and natural gas (including domestic production) which is under the controlof Japanese companies out of the total of the import volume and domestic production volume of petroleum and natural gas.

JBIC  Annual Report 201643

 Africa

3
Examples of BusinessOutcomes in FY2015

AngolaExport Credit Line for Development Bank of Angola
Supporting export of high-quality communications infrastructure equipment to Africa

2 Examples of Business Outcomes by Region

JBIC concluded a loan agreement in buyer’s credit (export loan) with Banco de Desenvolvimento de Angola (BDA), the stateowned development bank of Angola. The loan is intended to provide part of the financing, through BDA, necessary for Angola
Cables S.A.,1 an Angolan telecom operator, to construct a complete optical submarine cable system, measuring a total length ofapproximately 6,200 km, for a project directly connecting Angola and Brazil. This project will lay the world’s first opticalsubmarine cable across the South Atlantic, directly linking the African continent to South America, manufactured and laid by
NEC Corporation (NEC) and its subcontractors, applying the latest technologies with the world’s highest standards in datatransmission capacity, connectivity, and amplification.
This loan is provided as financial support under the JBIC Facility for African Investment and Trade Enhancement (FAITH),
which was established in accordance with the Fifth Tokyo International Conference on African Development (TICAD V), and isalso in line with the Japanese government policy pertaining to “Infrastructure System Export Strategy” (revised in FY2015).

1. Angola Cables S.A.: 51% of the company’s shares are held by state-owned Angola Telecom, and the rest by four private Angolan telecommunications companies.

44

JBIC  Annual Report 2016 North America

3

Project Financing for Shipping Business of LNG Tankers for Freeport LNG Project
Support for strengthening LNG value chain to ensure long-term and stable LNG supplies

2 Examples of Business Outcomes by Region

JBIC concluded two loan agreements in project financing with a special purpose
company (SPC) funded 50% by CHUBU Electric Power Co., Inc. (Chubu Electric) and
50% by Nippon Yusen Kabushiki Kaisha (NYK LINE) together with two loan
agreements with an SPC funded 50% by Chubu Electric and 50% by Mitsui O.S.K.
Lines, Ltd.2 These loans are intended to finance the shipping business of liquefied
natural gas (LNG) tankers by both SPC. These LNG tankers are scheduled to be usedmainly for transporting LNG produced by the U.S. Freeport LNG Project in which
Chubu Electric2 participates. These loans support the efforts of Japanese companies
to strengthen their energy value-chains, from participating in LNG projects throughtransporting LNG.

Examples of BusinessOutcomes in FY2015

United States

United States
Project Financing for Shipping Business of LNG Tankers for Cameron LNG Project
Support for securing long-term LNG supplies
JBIC concluded two loan agreements in project financing with Singaporean entities
DIAMOND LNG SHIPPING 1 PTE. LTD. (DLS1) and DIAMOND LNG SHIPPING 2 PTE.
LTD. (DLS2) funded 50% by Mitsubishi Corporation (MC) and 50% by Nippon Yusen
Kabushiki Kaisha (NYK LINE). These loans are intended to finance the procurement
by DLS1 and DLS2 of LNG tankers to be used mainly for transporting LNG producedby the Cameron LNG project located in the U.S. in which MC, NYK LINE, and otherJapanese companies participate. These loans will contribute to securing for Japan along-term and stable supply of LNG that has become increasingly important in recent
years as fuel for power generation, while utilizing the Japanese shipping companies’
wide experience in the area of LNG shipping business.
As Japan’s policy-based financial institution, JBIC will continue to financially
support the promotion of acquisition and development of energy resources byJapanese companies, by drawing on its various financial facilities and schemes forstructuring projects, and performing its risk-assuming function.

2. JERA Co., Inc., funded 50% by Chubu Electric and 50% by TEPCO Fuel & Power, Incorporated has succeeded participation rights for the U. S. Freeport LNG project andshares in each SPC held by Chubu Electric.

JBIC  Annual Report 201645

 Latin America and the Caribbean

3
Examples of BusinessOutcomes in FY2015

Trinidad and Tobago
Project Financing for Methanol and Dimethyl Ether Production Plant
Contributing to strengthening relationships with resource-rich countries and securing energy resources

2 Examples of Business Outcomes by Region

JBIC concluded a loan agreement for project financing with Caribbean Gas Chemical
Limited (CGCL). This loan is JBIC’s first project financing provided to a project inTrinidad and Tobago. CGCL is a joint venture established by Mitsubishi Gas Chemical
Company, Inc. (MGC), Mitsubishi Corporation (MC) and Mitsubishi Heavy Industries,
Ltd. with Trinidad and Tobago’s state-owned company, The National Gas Company ofTrinidad and Tobago Limited, and other. In this project, CGCL plans to produce one
million tons of methanol per annum, as well as dimethyl ether (DME).1 MGC and MC
will off-take the majority of the methanol produced and sell it to various countries
including Japan. As Japan depends on entirely on imported methanol, JBIC aims topromote the diversification of import sources of methanol by supporting the project,
thereby reducing the supply risk of methanol.

MexicoLoan for the Manufacture and Sales Business of Automobile Parts
Supporting overseas business deployment by Japanese companies
JBIC concluded a loan agreement with G-TEKT MEXICO, CORP S.A. DE C.V. (G-MEX),a Mexican subsidiary of G-TEKT CORPORATION (G-TEKT). The loan is intended tofinance the automobile parts manufacturing and sales business of G-MEX in the stateof Guanajuato, Mexico. G-TEKT conducts manufacture and sales of automobile parts,
mainly automotive body frames and transmission components, and has been in
operation for more than 70 years. G-TEKT is globally deploying overseas business toestablish a mobile parts supply system for customers who are finished car
manufacturers and parts manufacturers, backed by the recent expansion of overseas
production capacity by Japanese automobile and parts manufacturers. G-MEX wasestablished in September 2013 and plans to expand local operations.

Mexico
MOU for Business Cooperation with Four Mexican State Governments
Supporting the deployment of Japanese mid-tier enterprises and SME
JBIC signed MOU with the four Mexican states of Aguascalientes, Jalisco, Guanajuato
and Nuevo León aimed to support the deployment of Japanese mid-tier enterprises
and SME in these regions. These MOU, whose main purpose is to support Japanese
mid-tier enterprises and SME with whom Japanese financial institutions have business
relations, agree to JBIC acting as an intermediary between the four state governments
and Japanese financial institutions, and actively utilizing a Japan desk (a desk
providing services exclusively for Japanese companies), which is scheduled to beestablished by the state. It also agrees on provision of advisory services to mid-tierenterprises and SME from both JBIC and the state.
These areas are now regarded the most important automobile production sites in
Mexico for Japanese companies. JBIC will support the overseas deployment of Japanese
mid-tier enterprises and SME business in cooperation with financial institutions.
1. Dimethyl ether can be used as a substitute for LPG or as a substitute for diesel in automobiles or in power generation, and has therefore been receiving a lot of attention
as a next-generation source of clean energy. A part of the methanol produced from this project will be used to manufacture DME.

46

JBIC  Annual Report 2016

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

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

3

EPOCH CO., LTD.

HASO Ltd.

Manufacturing and Sales Business of Toys

Production and Sales Business of Hygiene and Cleaning Products

EPOCH, a well-established toy maker, is expanding its
global business by developing sales networks in the
U.S., Singapore, and the Netherlands, and its own
manufacturing facility in China. Amid active demand fortoys in the upper-income class in North America, Europe
and Asia, EPOCH plans to expand manufacturing andsales of its toys in the diverse region by strengthening
the manufacturing capacity of its Chinese subsidiary,
EPOCH INDUSTRIAL CO., LTD (EPI). JBIC provided
EPOCH with funds necessary for additional facilities of its
EPI’s plant in China.

HASO is engaged in the production and sales of hygieneand cleaning products, including dust-collecting wipes
and wet tissues. As demand for hygiene and cleaningproducts is expected to increase in developed countries
given their growing consciousness of hygiene HASO
e s t a b l i s h e d , i n A u g u s t 2 0 0 1 , H A S O S A N I TA R Y
MATERIALS (SUZHOU) CO., LTD. (HSM) as a production
and sales base in China. HASO intends to further expand
the business through increasing its production capacity
and sales to daily-use product manufacturers and retailstores. JBIC provided HASO with funds necessary for the
expansion of HSM’s production facilities.

Indonesia

Indonesia

YUTAKA INDUSTRY CO., LTD.

BOLTZ Corporation Limited

Automotive Parts Manufacturing and Sales Business

Automobile and Motorcycle Fastenings Manufacturing andSales Business

YUTAKA INDUSTRY is engaged in the manufacturing andsales of automotive parts. It established PT. YTKINDONESIA (YTK) in 2011 as a production and sales hub
for the Indonesian market. YUTAKA INDUSTRY seeks tofurther expand its business by enhancing YTK’s
production capacity and increasing sales to global automakers in Indonesia, where the need for automotive
parts is expected to continue to be strong in the future
backed by the increasing demand for automobiles. JBIC
provided YUTAKA INDUSTRY with funds necessary forthe expansion of YTK’s production facilities.

BOLTZ manufactures and sells fastenings, such as highstrength bolts and piston pins, for automotive parts,
including engines, steering wheels, and transmissions.
BOLTZ established PT. BOLTZ INDONESIA (PT. BZI)in Indonesia, where demand for automobiles andmotorcycles is expected to increase. BOLTZ seeks toincrease its overseas fastening product market sharethrough local production. JBIC provided PT. BZI withfunds denominated in the Indonesian rupiah for its
business operation.

JBIC  Annual Report 2016

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

China

Examples of BusinessOutcomes in FY2015

China

47

3
Examples of BusinessOutcomes in FY2015
3 Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SME

48

Malaysia

The Philippines

HIROYUKI CO., LTD.

MARUYONE CO., LTD.

Manufacturing and Sales Business of Packaging Products

Fishing Tackle Manufacturing and Sales Business

HIROYUKI is engaged in the wholesale business of
packaging products. Logistic needs are increasing in Asia
against the backdrop of economic growth in the region,and the demand for packaging products is expected
to expand accordingly. Taking into account suchcircumstances, HIROYUKI seeks to expand its businessvia its Malaysian subsidiary, HIROYUKI INDUSTRIES (M)
SDN. BHD. (HISB). JBIC provided HISB with funds
necessary for the expansion of its production facilities for
manufacturing and selling packaging products in Johor
State, Malaysia.

MARUYONE is not only engaged in the build-to-ordermanufacturing as an original equipment manufacturer(OEM), but also in the development and sales of its original
brand of products, such as KANJI. The company has
recently been exporting products to the U.S., Australia,
and New Zealand. By enhancing its Philippine subsidiary,Day 1 Craft Philippines Inc.’s (DCP’s) production capacity,
MARUYONE seeks to expand its business in the Southeast
Asian market. JBIC provided funds necessary for DCP’sfishing tackle manufacturing and sales business in theProvince of Laguna, the Philippines. The funds will be used
to expand its plant facilities.

The Philippines

Thailand

Goto Denshi Co., Ltd.

Saraya Co., Ltd.

Electronic Component Manufacturing and Sales Business

Health and Sanitation Products Manufacturing and Sales
Business

Goto Denshi is engaged in the manufacturing and salesof electronic components. Given growing worldwide
d e m a n d fo r e l e c t ro n i c e q u i p m e n t , G o t o D e n s h iestablished, in February 2015, GOTO DENSHI MFG.
PHILS., INC. (GDMP) in the Philippines, which has
geographical advantages as a production hub. The
company seeks to secure stable supplies for major
electronic component manufacturers and expand its
overseas sales channels through local production. JBIC
provided Goto Denshi with funds necessary for theelectronic component manufacturing and sales businessconducted by GDMP in the Province of Pampanga, thePhilippines.

Saraya has been engaged in the manufacturing and salesof health and sanitation products since it was establishedin 1959. In 2004, it established a Thai subsidiary, Saraya
MFG. (Thailand) Co., Ltd. (SMTC). As demand for various
sanitation products such as liquid soap, detergent anddisinfectant is expected to increase backed by steadyeconomic growth of Thailand and neighboring countries,
the company plans to expand its market share of thehealth and sanitation products market through SMTC.
JBIC provided SMTC with funds denominated in the Thaibaht necessary for the expansion of its facilities.

JBIC  Annual Report 2016

3
KAIHARA CORPORATION

Nagoyashokuryo Co., Ltd.

Denim Fabric Manufacturing and Sales Business

Rice-related Products Production and Sales Business

KAIHARA has manufactured and sold denim fabrics since
it was founded in 1893. The company is Japan’s largest
denim fabric maker and has established an integrated
denim production system from the spinning of raw cotton,
dyeing, weaving, up to finishing of fabrics. KAIHARA is
well-known and highly rated globally for the Aizen (indigo
dyeing) technology it has developed since its inception,and the company supplies high quality denim to domestic
and overseas apparel manufacturers. The company
established its first overseas base, KAIHARA (THAILAND)
CO., LTD. (KTC), in March 2014. JBIC provided KAIHARA
with funds necessary
for the establishment
and operation of KTC.

Nagoyashokuryo, established in 1996, is primarily a ricewholesaler which is also engaged in the production ofprocessed rice food products, as well as food retailingand restaurant management. In 2014, the company
established RICE CREATION (THAILAND) CO., LTD. in
Thailand, where the Japanese food market is expected to
ex pa n d b e ca u se of t h e e n t r y of m o re J a pa n ese
companies and an increase in the number of Japaneserestaurants, and plans to further increase its sales sharethrough local manufacturing. JBIC provided RICECREATION with funds denominated in the Thai baht
necessary for expanding its production facilities.

VietnamVietnam

NAKAGAWA MFG. CO., LTD.

YOTSUGI CO., LTD.

Label Paper Production and Sales BusinessInsulating Equipment Production and Sales Business

NAKAGAWA MFG produces and sells label paper. The
company established NAKAGAWA MFG. VIETNAM CO.,LTD. (NMV) in 2011 as a label production and export
base, such as for address labels to the U.S. and othercountries. In response to a growing demand for label
papers in the U.S., the company plans to further expand
its business through the enhancement of NMV’s
production capacity and the expansion of sales to officesupply manufacturers. JBIC provided NAKAGAWA MFG
with funds necessary for expanding NMV’s factory andproduction facilities.

YOTSUGI is engaged in the production and sales of
insulating equipment. In anticipation of increasing
demand for insulating equipment backed by Asia’s
economic growth, YOTSUGI established YOTSUGIVIETNAM CO., LTD. (YSV), its first overseas base, with agoal to expand its business in the ASEAN region. JBIC
provided YOTSUGI with funds necessary to finance YSV’s
insulating equipment production and sales business inHung Yen Province, Vietnam.

JBIC  Annual Report 2016

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

Thailand

Examples of BusinessOutcomes in FY2015

Thailand49

3
Examples of BusinessOutcomes in FY2015

India

MexicoFuji Concrete Industry Co., Ltd.
Toyota Kohki Co., Ltd.

GOHSYU CORPORATION
Forged Automotive Parts Manufacturing and Sales Business

Concrete Products Manufacturing and Sales Business

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

FUJI CONCRETE INDUSTRY and TOYOTA KOHKI are
engaged in the manufacturing and sales of concrete
products and molds for concrete products, respectively.
Based on an expected increase in demand forinfrastructure investments against the backdrop of
economic growth in India, the companies jointly
established Fuji Silvertech Concrete Private Limited(FSC) 1 in India as a joint venture with an Indian company.
FSC manufactures and sells pre-cast concrete products2
used in various infrastructure projects. JBIC provided
FSC with funds necessary for concrete products
manufacturing and sales business.

GOHSYU, established in 1946, is engaged in the
manufacturing and sales of high-precision forged partsf o r a u t o m o b i l e s, m o t o r c y c l e s, a n d a g r i c u l t u r a lmachinery. In anticipation of continued growth ofdemand for automotive parts, particularly in the U.S. and
Latin America, GOHSYU established GOHSYUMEXICANA, S.A. DE C.V. (GMX) in Mexico in 2014 tomeet the needs of its major clients. JBIC provided GMX
with funds denominated in the Mexican peso necessary
to finance GMX’s business operation in the state ofAguascalientes in central west Mexico.

MexicoMexicoMINO Industry Co., Ltd.

SURTECKARIYA Co., Ltd.

Die-cast Aluminum Parts Manufacturing and Sales Business

Automotive Parts Surface Treatment Business

MINO Industry is engaged in the manufacturing and salesof die-cast aluminum parts for automobiles. MINO
Industry established MINO INDUSTRY MEXICO S.A. DE
C.V. (MIMX) in Mexico, which is experiencing a continuing
inflow of automotive parts manufacturers due to thegrowing demand for automobiles in the North American
market. By increasing the sales of its products through
MIMX, MINO Industry seeks to further expand its
business in Mexico. JBIC provided MINO Industry withfunds necessary to finance MIMX’s automotive die-castaluminum parts manufacturing and sales business.

SURTECKARIYA is involved in the automotive parts
surface treatment business. The company has beenbuilding a global production network with local
subsidiaries in China and Southeast Asia. The company
aims to expand its business through its local subsidiary,
SURTEC & SUZUKI TECHNOLOGY MEXICANA S.A. DE
C.V. (SSM) in Mexico, which serves as a manufacturingbase for North America and is expected to experience
growing demand for auto parts. JBIC provided SSM withfunds necessary for the construction of a new factory inthe state of San Luis Potosí, Mexico.

1. FUJI CONCRETE and TOYOTA KOHKI hold FSC through Fuji-Toyota Precast Technology Japan Co. Ltd., a Japanese company which is jointly invested in by the twocompanies.
2. The pre-cast concrete products are produced with high precision and in large quantities at a factory, not at a construction site.

50

JBIC  Annual Report 2016

4 Examples of Business Outcomes
Relating to Environment

Supporting Environmental Conservation and Improvement Projects

3

4 Examples of Business Outcomes Relating to Environment

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 andENvironmental preservation (GREEN) operations, JBIC
focuses its support on efforts to conserve the global
environment, including projects that are expected todramatically reduce greenhouse gas (GHG) emissions,while keeping in mind the global dissemination of Japan’sinternationally acclaimed leading environmental
technologies (see page 59).

Examples of BusinessOutcomes in FY2015

Achieving both environmental preservation andeconomic development is at present universally
recognized as a common challenge for developed anddeveloping countries alike. Given this awareness, there
are growing expectations across the world on
implementing projects which lead to environmental
conservation and improvement.
Various efforts in this field are underway throughout
the world, including energy-saving projects to increaseenergy efficiency; renewable energy projects such as
solar and wind power generation; projects involving
highly efficient, high-performance coal-fired power
generation and natural gas-fired combined-cycle power
generation that reduce carbon dioxide (CO2) emissions;urban transportation projects such as railroads that help
alleviate traffic jams and air pollution; smart grid projects
that supply electricity efficiently using IT technology; andSupporting the Export of Geothermal Power Generation Plant Facilities to Iceland
JBIC conducted a buyer’s credit agreement (export loan)
with Landsvirkjun (LV), the largest state-owned powercompany in Iceland. The loan is intended to provide
financing for LV to purchase machinery and equipment
related to geothermal power generation from FUJI
ELECTRIC CO., LTD. and other companies for theconstruction of a new geothermal power station (installedcapacity: 90 MW) in Theistareykir, northeast Iceland. Thisloan marks JBIC’s first financing provided to a company
in Iceland. The project is expected to further enhance thewide range of cooperation in the power infrastructure
sector between Japanese companies and LV, which owns
hydro, geothermal, and wind power generation facilities,
as well as a majority in the transmission grid, andgenerates about 70% of Iceland’s electricity.
Iceland supplies most of its domestic electricity byrenewable energy. Furthermore, with its competitive cost
power supplies, the country actively attracts foreign

enterprises in power-intensive industries. The project is
expected to increase business opportunities for Japanesecompanies, who boast advanced technologies and holdapproximately 70% of the global market share of turbines
for geothermal power generation.

© Mr. Hreinn Hjartason

Supporting Export of Geothermal Power Generation Equipment to Turkey
JBIC has signed a loan agreement with Turkiye Is Bankasi
A.S. (Isbank), a commercial bank in Turkey, based on acredit line that supports the export of machinery andequipment related to renewable energy and climatechange control. The loan is intended to provide financing,through Isbank, for Gurmat Elektrik Uretim A.S. (Gurmat)
to i m p o r t m a c h i n e r y a n d e q u i p m e n t re l a te d togeothermal power generation, such as steam turbines
made by MITSUBISHI HITACHI POWER SYSTEMS, LTD.,
from Mitsubishi Corporation, TIX-IKS Corporation and
TIX-TSK Corporation.

The Turkish government has intensified its efforts to
propagate power generation harnessing renewableenergy as part of its environmental policy, and has set atarget for the share of renewable energy to reach 30% of
total generated energy by 2023. As a result, many
renewable energy projects and projects in related fields,
including geothermal power generation, are expected toincrease in the future. This loan will lead to the creation ofbusiness opportunities for Japanese companies in thefield of renewable energy in Turkey.

JBIC  Annual Report 2016

51

3

Supporting Renewable Energy and Energy Efficiency Projects in Mexico

Examples of BusinessOutcomes in FY2015
4 Examples of Business Outcomes Relating to Environment

JBIC has signed a loan agreement with Banco Nacional deComercio Exterior, S.N.C. (BANCOMEXT) as part of
GREEN operations, establishing a credit line to financerenewable energy and energy efficiency projects in Mexico
through BANCOMEXT.*BANCOMEXT is a governmental financial institution
in Mexico with a mission to promote foreign trade andattract foreign capital. The Mexican government has been
vigorously implementing measures to cope with climatechange, including setting a quantitative goal of reducing
GHG emissions to 50 percent of the level in 2000 by
2050. This credit line is thus expected to reduce GHG
emissions in Mexico, and provide opportunities tointroduce Japan’s advanced environmental technologies
in the country. This is in line with an initiative announced

by the Japanese government in November 2015, “Actions
for Cool Earth: ACE2.0.”

Partnerships and Knowledge Sharing in the Environmental Sector
Amid growing expectations for the implementation ofenvironment-related projects towards global
environmental conservation and a low-carbon society invarious parts of the world, JBIC supports Japanese
overseas business deployment as well as efforts being
made by foreign governments in this field, not only
through financing but also by sharing information and* This loan follows similar loans made to BANCOMEXT in October 2011 and July 2014.

52

JBIC  Annual Report 2016providing 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.

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

 Survey Report on Overseas Business Operations by

3

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

Japanese Manufacturing Companies
FY2015 marks the 27th year of the “Survey Report on
Overseas Business Operations by Japanese
Manufacturing Companies,” an annual survey that has
been conducted by JBIC since 1989. The survey attempts
to identify the strategies and challenges of Japanesemanufacturing companies expanding overseas, andappeals to a broad audience for its originality andcontinuity. In addition to publishing the survey’s results
externally through brochures and its website, JBIC holds
seminars in collaboration with the chambers ofcommerce and industry and banks of various regions
across Japan.

members of the Indonesian Ministry of National
Development Planning on economic growth targets,necessary investment and financing for such investment,
then from Bank Indonesia (central bank of Indonesia) on
the status of initiatives and issues that they face as theyseek to strengthen the financial system. From the Japanside, specialists from participating institutions gave
presentations on the trade settlement characteristics
of Japanese companies in Indonesia and other ASEAN
countries, and issues when deepening the financial
system. JBIC explained the possibilities of utilizing
crowdfunding for public investment as an example offinancial products linked to business. The subsequent
general discussion resulted in a consensus among
participants that financing will play a major role instimulating the investment vital for Indonesia’s economic
growth, and that joint cooperation and action in carryingout the policies among the relevant government
ministries will be in need to secure this financing.
In January 2016, JBIC received a courtesy call fromthe Rt Hon Philip Hammond MP, then U.K. Secretary ofState for Foreign and Commonwealth Affairs. Mr.
Hammond expressed his appreciation for JBIC’s support
for investment by Japanese companies in infrastructure
projects in the U.K., as well as his expectations for JBIC
to continue providing support for future projects, such as
in the railway and power sectors. JBIC in turn expressed
its wish to collaborate with Japanese companies incontributing to infrastructure and economic
development in the U.K. to further strengthen therelationship between the two nations, underscoring thecommitment of JBIC and the U.K. government tostrengthening their cooperative relationship.

Examples of BusinessOutcomes in FY2015

JBIC conducts researches 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, whileinteracting with overseas government organizations,foreign and domestic research institutes and experts invarious fields.

In FY2015, 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 Japanesechambers 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
In April 2015, JBIC hosted a task force meeting with theIndonesian government on macroeconomic issues undera framework for financial policy dialogue that has been inplace since August 2010. This recent meeting, which
focused on “The Present Status and Issues of Indonesia’s
Bond Market,” was held after having come to therecognition that it is critical to strengthen financial
functions for Indonesia’s economy to sustain growth. The
Indonesian delegation began with a presentation from

From left: JBIC Executive Managing Director, COO, Koichi Yajima; UK
Secretary of State for Foreign and Commonwealth Affairs, the Rt Hon PhilipHammond MP; JBIC Governor, CEO, Hiroshi Watanabe; British Ambassador
to Japan, H.E. Mr. Tim Hitchens; and JBIC Senior Managing Director, Tadashi
Maeda (Note: The above titles are as of the time of the meeting.)

In February 2016, JBIC held a discussion with young
researchers from The Brookings Institution, a renowned
think tank in the U.S., on the overseas business expansion

JBIC  Annual Report 201653

3
Examples of BusinessOutcomes in FY2015
5 Examples of Business Outcomes Relating to Studies, and Collaboration with Overseas Governmental Organizations and International Organizationsof Japanese companies and other topics. The
researchers of the institution were invited to Japan aspart of the KAKEHASHI Project, which is hosted by
Japan’s Ministry of Foreign Affairs and carried out by theJAPAN INTERNATIONAL COOPERATION CENTER (JICE).
The researchers visited central government ministries
and agencies, as well as leading Japanese companies andthink tanks, in addition to JBIC. The KAKEHASHI Project
aims to: 1) promote an understanding of the politics,
society, history, and diplomatic policies of Japan throughpeople-to-people exchanges; 2) expand Japan’s
diplomatic base by identifying people who areknowledgeable about and support Japan; and 3) have theprogram’s participants proactively disseminate
information about Japan’s appeals, creating an evenbetter image of Japan in the international communityand promote sustained interest in Japan. After briefly
explaining its organizational structure and pastachievements, JBIC gave a presentation on Japan’s
foreign economic policies and trend in overseas
expansion by Japanese companies, and JBIC’s activities,
citing a few examples. Discussions were lively, withparticipants from The Brookings Institution proactively
voicing opinions and asking questions on a wide range of
topics, such as the economic policies of Japan, risks andrisk-controlling methods in overseas businesses, and thepresent state of public-private partnerships.

while making reference to Riba (Arabic for “interest”),
Recourse and Risk sharing, that Islamic project finance(PF) would be preferable given the principles of Islam
because lenders in such transactions bear some of therisks associated with projects, rather than the ordinary
full-recourse financing methods in which the borrower iswholly responsible for repayment as well as project risks.
Islamic finance extends beyond Islamic countries in the
Middle East and Southeast Asia and has been developing
across the world, including in non-Islamic countries.
Japanese banks have noticeably begun to be involved inIslamic finance, especially after the 2015 revision of theComprehensive Guidelines for Supervision by theJapanese FSA. Some of the project finance projects that
JBIC has participated in are related to Islamic finance, andJBIC sees Islamic project finance becoming increasingly
significant as a field offering a new risk profile.
 Collaboration with private-sector financial institutions

JBIC held its “JBIC Project Finance Seminar” (three twoday sessions), starting in February 2015, for regionalbanks. In this seminar, JBIC staff in charge of project
finance gave lectures on the following subjects:
1. Fundamentals of project finance: risk analysis and risk
control techniques,
2. Practice of project finance: project finance agreements
and project management, and
3. Case studies: examples of JBIC’s projects.

 Collaboration with Universities

JBIC gave a presentation on Islamic finance at the Third
IIUM-Kyoto University Research Colloquium (IIUM:
International Islamic University Malaysia) held in
Malaysia in December 2015. As part of academic
exchange activities between the Kulliyyah (Faculty) of
Architecture & Environmental Design (KAED) of IIUM andthe Graduate School of Management, Kyoto University,
this was the third such conference and was held basedon the theme “Understanding Shari’ah and Its Applicationin Construction.”
Under the title, “The 3 R’s in Islamic Project Finance:
its relevance under Maqasid al-Shari’ah ,” JBIC explained,
JBIC Project Finance Seminar

JBIC has been co-financing with regional banks tosupport the overseas business deployment of mid-tierenterprises and SME, and also actively promoting
collaboration with them by holding seminars andproviding information on overseas investment. In
addition to these efforts, in recent years, cooperation
with regional banks in the form of taking foreigncompanies’ risk is increasing, and cooperation in project
finance is also expected to expand in the future.

JBIC presentation at the Third IIUM-Kyoto University Research Colloquium

54

JBIC  Annual Report 2016

4

Financial Instruments
1

Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

2

Framework for Supporting Globalization Efforts of
Mid-tier Enterprises and SME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

JBIC  Annual Report 201655

1 Financial Instruments
4

Export Loans

Financial Instruments

Export loans are provided to overseas importers andfinancial institutions to support finance exports ofJapanese machinery, equipment and technology mainly todeveloping countries. In particular, products such as
marine vessels, power generation facilities and othertypes of plant equipment incorporate a significant amountof advanced technology, and their export will be
instrumental in enhancing the technological base ofJapanese industries. Furthermore, Japanese shipbuilding
and plant facilities industries have a broad range of
supporting industries including small and medium-sizedenterprises (SME) producing parts and components, andthus the loans are expected to positively contribute to thebusiness of these Japanese companies. Export loans in
specific sectors* are also available to developed countries.

1 Financial Instruments

Privatefinancial
institutions

Terms and conditions of export loans are determinedbased on the Arrangement on Officially Supported Export
Credits (OECD Arrangement). In principle, the loan
amount should not exceed the value of an export
contract or technical service contract, and excludes
down payment. Local costs may be covered provided
that the amount is within the scope prescribed by theOECD Arrangement.
* Eligible Sectors of Export Loans in Developed Countries (as of October 1, 2016)[Integrated Infrastructure System Projects]
Railways (high-speed, inter-city projects and projects in major cities), roadbusiness, water business, biomass fuel production, renewable energy power
generation, nuclear power generation, power transformation, transmission anddistribution, highly efficient coal-fired 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

Loan
Loan (B/C)

2Japanese exporter(s)Exports of plants, etc.

Importer(s) inforeign country(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 Vessels Built by Japanese Shipbuilder
JBIC concluded buyer’s credit
agreements with Teekay Offshore
Partners L.P. (Teekay Offshore),a c o r e s u b s i d i a r y o f Te e k a y
Corporation, an international
shipping company with its principal
operating office in Canada, topurchase four anchor handling tug(AHT)1 vessels. Based in Canada,
Teekay Offshore is one of theworld’s leading providers ofoffshore logistics and production
services with a world-class fleet of
shuttle tankers,2 floating production
storage and offloading 3 (FPSO)
units and floating storage andofftake4 (FSO) units. The loans areintended to finance the purchaseof four AHT vessels with 300 tons
BP5 pulling capacity, to be built by
Niigata Shipbuilding & Repair,
INC., a Japanese shipbuilder.

1. Anchor handling tug (AHT): A support vessel for offshore oil and gas field development and production, and engages mainly in towing and anchoring oil
production rigs and transporting supplies and workers to and from the rigs.
2. Shuttle tanker: Vessel for the offshore loading of oil from FPSO, etc., and transport to land-based oil storage or oil refining facilities.
3. Floating Production Storage and Offloading System (FPSO): Floating vessel for the first stage processing of crude oil produced at the oil well, which separates
associated gas and water, and for the storage and offloading of oil.
4. Floating Storage and Offloading System (FSO): Floating facility for the storage and offloading of oil where there are no oil and gas production facilities.
5. Bollard Pull (BP): Refers to the towing capacity of a watercraft. These particular vessels have a tractive power of 300 tons.

56

JBIC  Annual Report 2016

Import Loans

4 Products
Eligible for Import Loans (Natural Resources)
Oil, petroleum gas, LNG, coal, uranium, metallic ores,
metals, mineral phosphate, fluorite, salt, lumber, woodchips, pulp and other materials.

1 Financial Instruments

Privatefinancial
institutions

In addition to natural resources, JBIC provides aguarantee facility for goods and services essential to thesound development of the Japanese economy, such as
for the import of aircraft. (See page 61 for the scheme ofguarantees for import of manufactured products)

Financial Instruments

Import loans support imports of strategically important
goods including natural resources. They are extended toJapanese importers or foreign exporters. As Japan ispoorly endowed with natural resources, stable imports ofnatural resources over the long term are one of the key
factors underpinning domestic economic activity. Importloans finance the development and import of energy
resources, including oil and liquefied natural gas (LNG),
and mineral resources, including iron ore, copper andother rare materials.

Loan

Loan

Japanese Importer(s)Imports of natural resources

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 ArabEmirates (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 oilfields on the basis of concession agreements. ADNOC,

a state-run oil company wholly owned by the Abu
Dhabi government, conducts oil and gas business inthe Emirate of Abu Dhabi, which produces most of theoil and gas in the UAE. This is the fourth time JBIC has
provided funding to ADNOC with the aim of securing along-term oil supply for Japan.

JBIC  Annual Report 201657

4

Overseas Investment Loans

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 orfinancial institutions that have equity participations in orprovide loans to such overseas affiliates.
Direct loans to Japanese companies are intended for
mid-tier enterprises and SME, as well as to projects
aimed at developing or securing interests in overseas
resources that are strategically important to Japan, andprojects that support merger and acquisition (M&A)
activities (these projects include those of large
companies). Moreover, JBIC provides two-step loans(TSL) to support the overseas business deployment ofJapanese companies, including mid-tier enterprises andSME, as well as TSL intended to support M&A activities

1 Financial Instruments

Privatefinancial
institutions

by Japanese companies. JBIC is also able to provide
short-term loans for overseas business operations whenbridge 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.** Eligible Sectors of Overseas Investment Loans in Developed Countries (as of
October 1, 2016)
Railways (high-speed, inter-city projects and projects in major cities), roadbusiness, water business, biomass fuel production, renewable energy power
generation, nuclear power generation, power transformation, transmission anddistribution, highly efficient coal-fired power generation, coal gasification,
carbon capture and storage (CCS), highly efficient gas-fired power generation,
smart grid, development of telecommunications network, shipbuilding andmarine transport, satellite launching and operation, aircraft maintenance andsales, medical business(related to positron beam therapy facility),
petrochemical production, waste incineration and waste to energy, M&A
activities, etc.

Loan

Loan

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

Loans
Loan

Japanese company

Loans and/or equity participations

Loan

Project(s) inforeign country(ies)Japanese affiliate(s)Equity participations

Loan

Joint venture partner(s)Loan for Production and Sales Business of Polyvinyl Chloride Stabilizer ofJapanese Company
JBIC concluded a loan agreementwith SUN ACE BRASIL INDUSTRIAQUIMICA E COMERCIO LTDA.
(SABI), a Brazilian subsidiary of
SUN ACE CORPORATION. SUN
ACE has been conducting the
production and sales of industrial
chemical products, including
polyvinyl chloride stabilizer, since
its establishment in 1940. Since its
advancement into Singapore in
1980, it has been expanding the58

JBIC  Annual Report 2016business, such as by setting up
production and sales bases aroundthe globe. With an expectation thatdemand for industrial chemical
products will remain steady in
Brazil, SUN ACE plans to expand its
business. This loan is intended tofinance the polyvinyl chloride
stabilizers production and sales
business of SABI. The funds will be
used for the construction of its
production plant.

Untied Loans4stable supplies of energy and mineral resources for Japan;
promote business activities of Japanese companies;
maintain and expand trade and direct investment fromJapan; finance projects having significant effects on global
environmental preservation; and finance projects
maintaining order in international financing.

Financial Instruments

Untied loans are intended to finance projects and theimport of goods by developing countries, or for suchcountries to achieve equilibrium in their internationalbalance of payments, or to stabilize their currencies.
Loans are not conditional on investments or procurementof equipment and materials from Japan.
Capital procured from untied loans is used to: secure
Privatefinancial
institutions

Government,
financial institution, etc.,
in foreign country

Foreign importer(s)1 Financial Instruments

Loan
Project(s) in the recipient
country(ies)

Imports of equipment
and technology

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

GREEN Operations
JBIC launched Global action for Reconciling
Economic growth and ENvironmental preservation(GREEN) operations in April 2010. Previously, JBIC’s
financing operations had centered mainly on projects
directly aiming to maintain and improve international
competitiveness of Japanese industries, such as
projects involving Japanese companies’ investment
and machinery/equipment exports. Accordingly,
projects dedicated solely to preservation of the
global environment were so far not eligible for JBIC
support. Launching GREEN operations enabled JBIC
to focus its financing on projects seeking to preserve
the global environment, such as those that materiallyreduce greenhouse gas (GHG) emissions, while
propagating advanced Japanese environmental
technologies across 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, suchas 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.

Fourth Credit Line for BNDES under GREEN Operations
JBIC concluded a loan agreement
to set up a credit line with Banco
Nacional de Desenvolvimento
Econômico e Social (BNDES),
Brazilian Development Bank. This
credit line is intended to finance,
through BNDES, environmentre l a t e d p ro j e c t s f o c u s i n g o n
renewable energy in Brazil,
including wind and biomass power

generation projects, as part ofoperations under GREEN
operations. This is the fourth time
JBIC has provided funding to
BNDES. This loan is expected tohelp reduce GHG in Brazil as wellas provide opportunities topropagate Japanese advanced
environmental technologies.

JBIC  Annual Report 201659

4

Equity Participations

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

 Japanese
companies make equity

 Japanese companies participate in a fund (and performparticipations in an overseas projectsuch major role as general partner in their management andinvestment decisions)
Major role

1 Financial Instruments

Japanesecompany(ies)

Equityparticipations

Overseas
project

Japanesecompany(ies)

Equityparticipation

 Japanese
companies acquire equity

interests in a foreign company to formbusiness alliance

Equityparticipations

Fund

Equityparticipations

Other
investor(s)Equityparticipation

 Japanese
companies form a consortium and participate in aninternational fundBusiness allianceJapanesecompany(ies)

Equityparticipations

Foreigncompany

Japanesecompany(ies)

Fund

Equityparticipations

Other
investor(s)Equityparticipation
Consortium

Equityparticipation

Equity Participation in TJOC’s Petrochemicals Business in Taiwan
JBIC signed a shareholders’agreement on the subscription ofpreferred shares with KH Neochem
Co., Ltd. (KH Neochem) toparticipate in Taiwan-Japan Oxo
Chemical Industries Inc. (TJOC), a
Taiwanese company jointly
established by KH Neochem, CPC
Corporation, Taiwan (CPC) andMega International Commercial

60

JBIC  Annual Report 2016

Bank. This transaction is intended
to support the production and salesof isononyl alcohol (INA) by TJOC,
which is the KH Neochem’s firstoverseas production base, from theearly stage utilizing its function ofequity participation.

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.

Guarantee

Private financial
institution, etc.

Financial Instruments

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

Loan
Import of products

1 Financial Instruments

Foreignexporter(s)Japaneseimporter(s) Guarantees
for Corporate Bonds Issued by Japanese Affiliates

JBIC supports Japanese affiliates operating
overseas by providing guarantees for thebonds they issue in local capital markets.

Guarantee

Counterguarantee
Japanese company(Parent company,
private financial
institution, etc.)

Subguarantee

Investor(s)Issue ofbonds

Guarantees Guarantees for Co-financing, Overseas Syndicated Loans and Public Sector Bonds
Loans to developing countries involve,
Guarantee
among others, currency conversion andtransfer risks, as well as country risks.
Guarantees that JBIC issues to cover suchrisks will enable Japanese private financial
Guarantee
institutions to provide medium- and longLoan
term financing for developing countries, andPrivate financial
contribute to developing countries toinstitution, etc.
bringing in private capital and facilitating
Loan
private companies to expand international
business activities.

Japanese affiliate(Issuer)

Investor(s)Issues of
publicbonds, etc.
Government, etc.,
in foreign country

Providing Guarantees for Loan of Private Financial Institutions for Importing Aircraft
JBIC concluded guarantee agreements for the
principal and interests of loans from private financial
institutions to fund the import of aircraft by ANAHOLDINGS INC. and Japan Airlines Co., Ltd. (JAL). The
agreements not only help the ANA Group and JAL toborrow the necessary funds from private financial
institutions to import aircraft (operated by the ANAGroup and JAL) from the U.S.-based Boeing Company,
but also contribute to maintaining and strengthening
the international competitiveness of Japan’s aviationindustry. As Japan’s policy-based financial institution,
JBIC will continue to provide financial support for theimport of aircraft, which are indispensable for the livesof Japanese people.

JBIC  Annual Report 201661

4

 Guarantees for Currency Swaps

Financial Instruments

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)

Swap counterparty
overseas

Currency
swap
contract

Investment

Operation

Guarantee
Private financial
institution

Localcurrency
loan

Overseas
infrastructure
projects, etc.

 Counter Guarantees for Export Credits

1 Financial Instruments

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). This function enables
JBIC to flexibly support export projects by
Japanese companies collaborating withforeign companies through multilateralmutual guarantee schemes.

Counterguarantee

Japanese Foreigncompany company
(ies)
(ies)

Foreign ECAGuarantee
Private financial
institution(s)LoanExportForeignimporter(s)Loan and Guarantee for Sales Financing Business of Automobile in Taiwan
JBIC concluded a loan agreement with Taiwanesecompany Hotai Finance Co., Ltd. (HFC) and provided apartial guarantee on the co-financed portion by private
financial institutions. This loan is intended to financepart of the necessary funds for the sales financing
business of Toyota and Lexus brands automobiles by
HFC in Taiwan. Taiwan’s automobile market is growing
backed by the country’s steady economic growth, andcontinues to be an important market for Japanese

automobile manufacturers that have a large presence
there. In recent years, non-Japanese automobile
manufacturers have been expanding their market
shares in the Taiwanese automobile market, and theloan has become a strategically important tool for
automobile manufacturers. This loan will financially
support the overseas business deployment ofJapanese automobile manufacturers.

Guarantee and Partial Acquisition of Privately Placed Samurai Bonds Issued by theGovernment of Indonesia (GOI)
JBIC signed a set of agreements to provide aguarantee for a portion of a bond issue in the Japanesebond market (Samurai bonds 1 ) by the GOI andacquired a part of the remaining issue without
guarantee. 2 JBIC had previously concluded threesimilar guarantees for Samurai bond issues by the
GOI. This issuance without guarantee was madepossible due to the increased appetite of investors for
GOI (issuer) bonds in the Tokyo bond market. JBIC’s

62

JBIC  Annual Report 2016

support of Samurai bond issues in the Tokyo market
by foreign issuers is expected to contribute to offeringa broad range of investment opportunities to Japanese
investors and help increase activity in the Samurai
bond market.
1. Samurai bonds are yen-denominated bonds issued by a foreign
government or company in the Tokyo bond market.
2. This project is based on the Guarantee and Acquisition toward Tokyo
market Enhancement (GATE) facility.

Bridge Loans

4

Loan

loans) for Myanmar in January 2013 to support clear thearrears of past loans from the Asian Development Bank
(ADB) and the International Development Association(IDA), a member of the World Bank Group.

Government, financial
institution, etc., inforeign country(Conditionality)

Loans from the IMF,
World Bank, etc.

Financial Instruments

JBIC provides short-term financing for governments ofdeveloping countries to meet their foreign currency
needs for external transactions when they face balanceof-payment difficulties.
JBIC provided bridge loans (short-term bridging

1 Financial Instruments

Import or other externaltransaction(s)Acquisition of Loan Assets and Public and Corporate Bonds
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’
funding in international capital markets.

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

Research and Studies
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 meansof identifying potentially quality projects, and is expected
to lead to increasing exports of materials and services
from Japan, as well as expand opportunities to participate
in projects by Japanese companies. Research and studies
are conducted at each stage necessary for realization of
the project, including preparation of a master plan for anindividual project, conducting of prefeasibility andfeasibility studies (Pre-F/S, F/S), front-end engineering
design (FEED), and studies of regions and industry

sectors conductive to specific projects. After the researchand studies are completed, follow-up reviews are
conducted at least once each year to confirm theprogress of the project.
Re s e a rc h a n d s t u d i e s a re c o n d u c t e d i n t h efollowing sequence.
1. Selection of a research and study subject
2. Selection of the contractor to conduct the researchand studies
3. Conduct of the research and studies
4. Completion of the research and study report
5. Follow-up

JBIC  Annual Report 2016

63

4Securitization and other financial instruments

Financial Instruments

JBIC provides support for securitization and an increase in liquidity in order to complement and encourage the activities
of private financial institutions.
1. Securitization (Guarantees)
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 reducecountry and structure risks, thereby supporting theissuance of bonds in the emerging capital markets.

1 Financial Instruments

Originator
Private financial
institutions, etc.

2. Securitization (Acquisition of Securities)
JBIC supports bond issues by acquiring a portion of the
ABS issued by SPC or trust companies with loans orother assets as collateral. JBIC’s acquisition will support
the securitization needs of the originators and is
expected to help invigorate the bond market bycirculating the acquired bonds back into the market
when market conditions allow.

Transfer of loans

SPC
Guarantee

Loans
ObligorOverseas Japaneseaffiliates

Issue of ABS

Purchase ofABS

Investors(in Japan and overseas)

The above diagram depicts a scheme where SPC are used, but the clients can also use schemes where trusts are used 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 ofJapanese companies, in order to facilitate the purchase ofsuch receivables by banks (an increase in their liquidity).

Overseas Japaneseaffiliates

Accounts receivable, etc.

Guarantee
Proceeds

JBIC  Annual Report 2016

Overseas local
companies
Guarantee

Assignment of account receivable

Private financial
institutions

64

JBIC is also able to provide guarantees for securities
issued by SPC or trust companies in cases where thesesecurities have monetary claims acquired from overseas
Japanese subsidiaries on collateral.

ABS
SPC or Trust

Investors
Proceeds

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

Financial Instruments
1 Financial Instruments

Growing interest in environmental conservation has led
to a 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 naturalenvironment in all the JBIC financed projects based on
the “Japan Bank for International Cooperation Guidelines4   Procedure for Confirmation of Environmental and Social Considerations

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
have been considered in a proper manner. After funding has been approved, projects are monitored to assess theactual impact.

Project
Proponent

Screening Form is submitted
at time of funding request.

Categorization

Disclosure

Status report is presented on implementationof measures for environment and social
considerations (monitoring).

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

Category B

Environmental Review (siteinspections are, in principle,
conducted for all Category
A projects)

Category FI

Environmental Review*

Category A

JBIC

Information necessary
for the Environmental
Review is submitted.

Funding
Commitment

Category C

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

The Environmental
Review and Screening
Form are disclosed on the
JBIC website (with the
exception of Category C
projects).

Confirmation of
Monitoring(site inspections
conducted
as necessary)

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

Note: 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, basedon the information 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, thefinancial intermediary selects and conducts screenings for specific subprojects, in cases where subprojects
cannot be determined prior to acceptance of JBIC funding, and where such subprojects are anticipated to havean impact on the environment.

JBIC  Annual Report 201665

2 Framework for Supporting Globalization
Efforts of Mid-tier Enterprises and SME

4
Financial Instruments
2 Framework for Supporting Globalization Efforts of Mid-tier Enterprises and SME

JBIC actively supports Japanese mid-tier enterprises andsmall and medium-sized enterprises (hereinaftercollectively referred to as “SME”) expanding overseas inresponse to economic globalization.
In recent years, following the economic growth of
emerging market countries, especially in Asia, anincreasing number of SME are not only meeting the
procurement needs of major Japanese companies withoverseas production operations, but also seeking to
expand their own business in emerging markets. With suchchange in the purpose of SME’s overseas expansion, theneed for funds among SME has grown more diverse.
In order to respond to the diversification of SME’s
financial needs for their overseas expansion, JBIC is further
enhancing cooperation with Japanese private financial
institutions, as well as local financial institutions in othercountries, and 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, andtwo-step loans for finance leases.

 Cooperation with Japanese Regional Financial

Institutions
Regional financial institutions that SME work with play animportant role when SME seek to expand overseas.
JBIC concludes business cooperation memorandumsof understanding (MOU) 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 businessexpansion and other issues.
In FY2015, JBIC provided medium- to long-term
funding to SME and their overseas subsidiaries throughsix regional financial institutions, including the
Hyakujushi Bank Ltd. and THE SHIGA BANK, LTD.,establishing a credit line at each bank for the funds
necessary to enable Japanese SME to promote theirbusinesses in developing regions.

Commitments for SME
Number

FY2012FY2013

FY2014FY2015

34

54

109

133

Amount ¥34.1 billion ¥18.0 billion ¥111.7 billion ¥42.9 billion

 Support for the Overseas Deployment of SME

Utilizing the know-how and experience of overseas
financing that it has accumulated over the years, JBIC
provides long-term financing required by Japanesecompanies, including SME, for overseas investment,
export of products, and other activities through cofinancing with private financial institutions in the form ofoverseas investment loans, export loans, and other loans.
JBIC implements the following six measures in orderto support the overseas business deployment of SME.
(1) Application of preferential loan conditions: Longterm loans with preferential loan conditions(interest rates, etc.)(2) Response to small loans (several tens of millions ofyen): In addition to new capital investment, smallloans for replacement of machinery, etc.
(3) Local currency-denominated loans: Long-term local
currency loans with fixed interest rates(4) Support for M&A overseas: Loans for acquisition
funds required when entering overseas markets
through M&A(5) Coordination and cooperation with private financial
institutions (regional banks, credit unions, money
center banks): Support for the overseas businessdeployment needs of SME all through the country(6) Utilization of networks of JBIC overseas offices:
Information service on overseas investment environment;
support for solving issues with foreign governments

66

JBIC  Annual Report 2016

Mexico Investment Seminar in Nagoya Cooperation with Local Financial Institutions in

Developing Countries
Securing the support of local financial institutions indeveloping countries well acquainted with the local area
is also vital for SME.
Not limiting itself to supporting overseas subsidiaries
of Japanese companies, JBIC has strengthened its
relationship with local financial institutions, throughmeasures such as provision of two-step loans, in order todevelop and support local companies that supply theJapanese subsidiaries with materials and components.
In addition, JBIC has concluded MOU with the local
financial institutions to develop a support system for
SME’s overseas business expansion that involves
regional financial institutions in Japan. JBIC has been formany years reinforcing its relationships with the local
financial institutions, while working with the regional
Japanese financial institutions to confirm SME’s needs intheir overseas expansion. Under these MOU, JBIC
encourages local financial institutions to set up andexpand single contact points “Japan desks” for Japanesecompanies, and builds frameworks which enableconsultations on specific cooperation and coordination
together with the regional financial institutions that havebusiness relationships with the SME.
In order to support the expansion of such SME into
Mexico through proactive utilization of the Japan desks Information Services, Seminars, etc.

42 Framework for Supporting Globalization Efforts of Mid-tier Enterprises and SME

In addition to individual consulting services for SME’s
overseas expansion, JBIC provides advisory services
through experts concerning the legal, accounting, andcurrency regulations related to tax affairs, employment
and labor issues, contracts, company establishment, andother issues for China, India, and the ten member
countries of ASEAN.
JBIC also organizes seminars and consultations on
overseas business deployment in cooperation withJapanese entities, including regional financial institutions,prefectural and municipal governments, and local
chambers of commerce and industry. In addition, it
conducts field studies to assess investment climates incountries where Japanese companies are actively
expanding their business. The findings of these studies
are compiled into guidebooks, which are available in bookform and on JBIC’s website.
Moreover, JBIC offers an itinerant advisory service inmany parts of Japan in cooperation with prefectural andmunicipal governments, as well as local chambers ofcommerce and industry which support local companies
in expanding their operations overseas. This service,
which is available 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.

Financial Instruments

and the frameworks, JBIC signed MOU with four Mexican
state governments and regional financial institutions,
respectively. These initiatives enhance a framework
jointly announced in December 2010 by the Financial
Services Agency, the Ministry of Finance and the Ministryof Economy, Trade and Industry, the “Development andStrengthening of Support System by Financial Institutionsfor Small and Medium Enterprises’ Entry into Asia throughCoordination among Japanese Regional Financial
Institutions, Japan Bank for International Cooperation(JBIC) and Japan External Trade Organization (JETRO),”and are instrumental in implementing the Japanese
government’s “drastic measure to enhance thecomprehensive support system for the overseas
development of mid-tier enterprises and SME” as part ofthe "Comprehensive TPP-related Policy Framework.”

JBIC signed an MOU with the State of Jalisco in Mexico.
 Seminars for SME Providing Local Currency-denominated Loans

In response to expansion of the overseas business of
SME, JBIC has provided loans in various local currencies,
including the Thai baht, Indonesian rupiah, Chinese yuan,
and Indian rupee, since 2012. Many SME, when trying toprocure local currency funds in developing countries,
face the problems of short repayment periods (basicallyup to one year) and high interest rates. In order to solvethese problems, JBIC prepares long-term fixed-rate local
currency loans, a preferential measure for SME, andprovides co-financing with private financial institutions
directly to the local subsidiaries of Japanese companies
who are the clients of those financial institutions. The cofinancing sometimes involves JBIC providing local
currency-denominated loans and the private financial
institutions providing yen-denominated loans throughthe parent company in Japan.

Providing funds denominated in the Thai baht forthe machinery and equipment assembly andinstallation business of a subsidiary of Sun
Engineering Co., Ltd. in Chonburi Province, Thailand.

The overseas business deployment of Japanese SME
continues to be very active, as evidenced by the morethan 130 JBIC loans in FY2015. In light of this, JBIC plans
and holds seminars responding to the needs of regions
and companies, aiming to contribute to overseas
expansion from not only the financial aspect but also
from the information perspective.
In July 2015, JBIC held a seminar at the Hamamatsu
Chamber of Commerce and Industry titled “Trend ofoverseas business deployment of the Japanese motorcycle
parts industry—challenges in the global motorcycle
market” for SME that are JBIC clients and headquartered in
the Tokai region. In January 2016, JBIC held a seminar at its
head office in Tokyo for SME titled “Forecast of theeconomic and political situation in the Asian market andchallenges in overseas business development.”

Seminars for mid-tier enterprises and SME in Tokyo

JBIC  Annual Report 2016

67

5

Operational and
Administrative Policies
1

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

2

Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

3

Public Information and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

JBIC  Annual Report 2016

69

1 Corporate Governance Fundamental Approach to Corporate Governance

5

JBIC is making efforts to build corporate governancestructure in conducting operations with particularattention to integrity and efficiency, as it seeks to fulfill
the mission set out under the JBIC Act (Law No. 39,
2012) and realize its corporate philosophy.

Operational and
Administrative Policies

Shareholder Meeting
Supervisory and Evaluative Function

1 Corporate Governance

Board of Corporate Auditors

Board of Directors

Accounting Auditor

Outside Corporate
Auditors

Outside Director

Management Advisory and
Evaluation Committee

Office of Corporate
AuditorRisk Advisory Committee

Executive Function
Executive Committee

Credit Committee
Corporate Risk Management
Committee
Compliance andCustomer Protection
Management Committee

BCP Committee[Decision Committees][Deliberative Committees]

Conduct of JBIC Operations
To strengthen the supervisory and evaluative function of
the Board of Directors as well as conduct speedy andflexible operations, JBIC has established, in addition to
the Board of Directors, the Board of Corporate Auditorsand other organs required by the Companies Act, the

JBIC  Annual Report 2016

Global Head Committee

ICT Promotion Committee Supervisory and Evaluation Function and theInternal Audit
Department

ALM Committee

Personnel
Committee

 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 national budget passed in the Diet, inspections by
the Board of Audit of Japan, by the Competent Ministerand by the Financial Services Agency whose inspection isdelegated by the Competent Minister.

70

Preliminary Credit
Committee

Internal Audit
Committee

Management Advisory and Evaluation Committee, theRisk Advisory Committee, the Internal Audit Committee
and the Executive Committee. Furthermore, a variety ofcommittees were set up by the Executive Committeethat delegated specific tasks to them.
(1) Board of Directors
The Board of Directors consists of 5 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 acorporate outsider, apart from representative directors
of JBIC. In addition, he contributes to improving thegovernance of JBIC as a member of the Management
Advisory and Evaluation Committee as well as the Risk
Advisory Committee.

(4) Risk Advisory Committee
The Risk Advisory Committee consists of 3 to 7 external
experts and the outside director. They offer advice on thematters referred to them by the Board of Directors
pertaining to risk management and assessment
framework associated with large-lot obligors and risk
exposure to large-scale projects.
(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 director and all the managing
executive officers. They make decisions anddeliberations 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 projectare delegated to the following committees.

 List of Members of the Management Advisory and

Evaluation CommitteeName(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.
(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 delegatedby the Executive Committee.
(iv) Personnel Committee
The Personnel Committee makes decisions anddeliberations concerning important matters pertaining to thepersonnel 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 loan, guarantee and equity participationand credit policy toward large-lot debtors, as delegatedby 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, asdelegated by the Executive Committee.

 List of Members of the Risk Advisory Committee

Name
Occupation

Shujiro Urata

Professor, Graduate School of Asia-PacificStudies, Waseda University

Shinichi Koizumi

JBIC Managing Director (Outside Director)

Yoshikatsu Suzuki Senior Commentator of Jiji Press Ltd.
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.)

5

1 Corporate Governance(3) Management Advisory and Evaluation Committee
The Management Advisory and Evaluation Committee
consists of 3 to 7 external experts and 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 managementof JBIC.

(i) Credit Committee
The Credit Committee makes decisions anddeliberations concerning important matters on loan,
guarantee and equity participation by JBIC, as delegatedby the Executive Committee.

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

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 of Social
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 2016

71

5
Operational and
Administrative Policies(viii) BCP Committee
The BCP Committee makes deliberations concerningenhancement of JBIC’s business continuity plan (BCP) to
be carried out upon the occurrence of large-scaledisasters, as delegated by the Executive Committee.

1 Corporate Governance Mission-/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 bybringing together know-how and expertise in each sector
and area, thereby facilitating JBIC to perform thefunctions in its mission more flexibly and strategically.
Specifically, Corporate Group; Energy and Natural
Resources Finance Group; Infrastructure and Environment
Finance Group; Industry Finance Group; and Credit,(ix) ICT Promotion Committee
The ICT Promotion Committee makes deliberations
concerning matters for achieving an effective, efficient,and steady ICT (information and communication
technology) when carrying out various measuresrequired for the ICT plans and policies which had been
determined by the Board of Directors and Executive
Committee, as delegated by the Executive Committee.

Assessment, and Systems Group were set up, with eachGroup having departments with special expertise.
For each Group, the responsible board member isappointed, and the Managing Director or a Managing
Executive Officer performs as 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.


Membersof Board of Directors

Governor

Akira Kondoh

CEO, Executive Managing Director

Tadashi Maeda

COO, Senior Managing Director

Nobumitsu Hayashi

Managing Director

Masaaki Amma

Managing Director (Outside Director)

Shinichi Koizumi

Managing Executive Officers

Global Head of Corporate Group

Kenichiro Hayashi

Corporate Group

Global Head of Energy and Natural
Resources Finance Group

Kazuhiko Amakawa

Energy and Natural Resources
Finance Group

Global Head of Infrastructure andEnvironment Finance Group

Hideo Naito

Infrastructure and Environment
Finance Group

Global Head of Industry Finance Group

Shigeki Kimura

Industry Finance Group

Global Head of Credit, Assessment,
and Systems Group

Yasuhiko Yoshida

Credit, Assessment, andSystems Group

Member of Board of Directors

72

JBIC  Annual Report 2016

Member of Internal Audit Committee

Member of Executive Committee Fundamental Policy on Internal Control

line of business, JBIC has put in place and is properly
operating an internal reporting system such that it iscapable of finding significant compliance issues at an
early stage and taking appropriate remedial action.
 Protection of Private Information

JBIC has drawn up and disclosed its Privacy Policy (seepage 164) which stipulates appropriate management ofprivate information held by JBIC pursuant to theprovisions of the Act on the Protection of Personal
Information Held by Independent Administrative
Agencies, etc.

5Operational and
Administrative Policies
1 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 effectivenessand make recommendations to improve them. For these
purposes, JBIC has the Internal Audit Committee, which
includes the outside director, as a decision-making body
independent of the Executive Committee that is
responsible for conducting operations. There is also theInternal Audit Department independent of the line
departments and directly reporting to the Governor.
The Internal Audit Department exchanges relevant
information and cooperates with Corporate Auditors andan Accounting Auditor for executing efficient internal audit.
(see pages 161 and 162 for the Fundamental Policy on
Internal Control)
 Maintenance and Control of Information Assets

JBIC sets forth its fundamental “Security Policy”
concerning the use and management of information
assets (see page 163) in order to secure high standard
information security and implement proper and efficient
operations. Based on the standard, JBIC properly handles,
manages, protects and maintains information assets.
 Compliance

JBIC has set forth in its Code of Conduct to “Maintainhigh ethical standards and a law-abiding spirit. Observe
our moral code as a JBIC member at all times.” Itsmanagement 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 recognized that any act in violation of laws,
regulations or rules by its management and staff will leadto denigrating confidence in JBIC as a whole and have amaterially adverse effect on its operations. Attentive tothese 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
compliance management unit.
Each Group and Overseas Representative Officeserving as a regional headquarter has an Integrated
Compliance Officer, while each department and overseas
representative office has a Compliance Officer for
making efforts in compliance, such as fostering suchawareness among JBIC employees.
To foster in-depth understanding of compliance,
JBIC makes good use of its Compliance Manual andprovides training sessions for its management and staff
members. It also develops a compliance program every
fiscal year as a basis for making necessary compliancearrangements and providing relevant training, andfollows up on the progress and completion.
In addition to the reporting procedures in its ordinary

JBIC  Annual Report 201673

2 Risk Management
5
Operational and
Administrative Policies
2 Risk Management

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
and operational 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 the importance of appropriate
risk management as a financial institution, JBIC has put
in place an institutional system for risk 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 ofconducting operations to ensure the soundness andintegrity of operations and increase transparency. For

this purpose, JBIC has designated the staff responsible
for managing various risks and has a department working
on the overall risk management. In addition, there are the
Corporate Risk Management Committee and the ALM
Committee that make discussions and considerations forthe effective functioning of risk management. JBIC has
also set up the Risk Advisory Committee, which consistsof external experts, to provide the JBIC Board of
Directors with advice on the risk management andassessment system with respect to large-lot debtors andon issues referred to by the JBIC Board of Directors withrespect to risks associated with large-scale projects.
The following sections describe how JBIC manages
representative risks JBIC is facing, among various otheroperational risks, in conducting operations as a policybased financial institution.

Credit Risk
Credit risk refers to the potential loss from a decline orloss of the value of credit assets due to deterioration in
the financial conditions of a debtor. This risk is inherent
in JBIC’s operations 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—a financing structure inwhich 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 andthe project is located). Given the very nature of financial
support JBIC provides for promoting overseas
development and securement of strategically importantresources to Japan, for maintaining and improving theinternational 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 and companies.
Therefore, sovereign and country risks account for aconsiderable share of the credit risks accompanying
JBIC’s operations.
 Managing Credit Risk
The cornerstone of credit risk management at JBIC is theevaluation of an individual borrower’s creditworthiness inthe process leading to credit approval. When a new loan
application is being processed, the relevant finance

74

JBIC  Annual Report 2016

department and the Credit Department collect andanalyze information on the borrower. The overseas
representative offices also play a part in collecting
information on foreign governments and companies. It isbased on this information and its analysis that credit
appraisal takes place, with checks and balances at work
between these different departments throughout thisprocess, leading to the final decision by management.
In providing credit for foreign governments andcompanies, JBIC makes the most of its unique position
as an official financier, as it exchanges views andinformation with the 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
based on a broad range of information collected onborrowing governments, government agencies, andpolitical and economic conditions in their countries.
In providing credit for domestic and foreigncompanies, there is a need to evaluate their
creditworthiness and the appropriateness of thecollateral they offer. In particular, for credit 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
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.

5

2 Risk Management

Japanese private financial institutions undertake theinternal assessment of asset portfolios in accordancewith Inspection Manual for Deposit-Taking Institutions(the “Financial Inspection Manual”) of Japan’s Financial
Services Agency. JBIC is similarly undertaking theinternal assessment of its loan portfolio, based on 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 theCredit 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 the disclosureof 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 toevaluating the risk of the overall loan portfolio. To
quantify credit risks, it is important to take into accountthe characteristics of JBIC’s loan portfolio, which holds asignificant proportion of long-term loans and loans
involving sovereign and country risks. Also to be taken
into account are mechanisms for securing assets, suchas the Paris Club 1 a unique framework for debt
management by official creditor countries. The credit risk
quantification model incorporating these factors
measures credit risks and is utilized for internal control.

Operational and
Administrative Policies

 Internal Assessment of Asset Portfolio

 Quantifying Credit Risk

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

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

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

 Exchange Rate Risk

Foreign currency-denominated loans involve the risk
associated with exchange rate fluctuations. JBIC has aconsistent policy of hedging the full amount of such
ex p o s u re t h ro u g h c u r re n c y s w a p s a n d fo r w a rd
exchange transactions.

(2) Transactions
Derivatives transactions of JBIC include interest rate andcurrency swaps and forward exchange contracts. The
following table gives a summary of these transactions asof March 31, 2016.

 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
such as interest rate swaps are used to hedge interest
rate risk for portions of loans that are thought to havehigh exposures to interest rate fluctuation risk. Interest
rate risks associated with foreign currency-denominatedloan operations and relevant fundings are generally
hedged by managing the funds 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 andprofits and losses.

Credit Risk of Derivatives, etc.
(As of March 31, 2016; unit: 100 million yen)Contract Amounts /Credit Risk Amounts
Notional Amounts

Interest Rate Swaps

33,339

1,012

Currency Swaps

40,823

3,881

Forward Exchange
Contracts

30

Other Derivatives——

Credit Risk Reductions
through Netting
Total(3,312)
74,166

1,580“The credit risk amounts” are calculated under Uniform International Standardsin accordance with the Banking Act of Japan and the related regulations.

JBIC  Annual Report 201675

(3) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.

5(4) Measures to Address These Risks
 Counterparty Credit Risk

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.

JBIC constantly monitors the market value of a derivativein making transaction with each counterparty, credit risk
exposure to it and its creditworthiness. Such informationis then used to assess the appropriateness of making atransaction with it.

 Market Risk

 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.

JBIC utilizes derivatives transactions exclusively for the
purpose of hedging. Therefore, the market risk onderivatives transactions and the risk on hedged (lendingor funding) transactions, in principle, offset each other.

2 Risk Management

Liquidity Risk
Liquidity risk refers to the potential loss resulting fromdifficulties 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 thepotential loss resulting from a failure to make transactionsin the market due to market turmoil or from being forced
to make transactions at a significantly disadvantageous
price compared 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
bond issues in the domestic capital market.

Operational Risks
Operational risk refers to the potential loss resulting frominadequate or failed internal processes, people andsystems or from external events. Apart fromadministrative and computer system risks, JBIC
recognizes that its operations involve various direct andindirect risks. JBIC will proactively identify, assess andmanage such risks.
 Administrative Risk
Administrative risk is the risk of a financial institution
incurring losses from the neglect by officers andemployees to conduct administrative work properly,
accidents caused by them, and violation of laws andregulations caused by them, etc., conducted in thecourse 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.

76

JBIC  Annual Report 2016

 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 by increasing readiness to respond effectively
to emergency situations. Specifically, (a) measures havebeen taken to prevent system malfunctions and leakageof client information; and (b) contingency plans havebeen prepared to respond to system malfunctions causedby accidents and other causes, and disaster-response
drills have been conducted.

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 for investors, andvarious other types of information.
 Information Dissemination for the Media

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

5 D i s s e m i n a t i n g

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

3 Public Information and Disclosure

JBIC publishes its annual operations and activities as wellas its financial conditions in various disclosure materials,
including annual reports, business reports, financial
statements, and Form 18-K, submitted to the U.S.
Securities and Exchange 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
and other relevant issues; and JBIC Profile: Role andFunction , a brochure describing JBIC operations.

 Website

Operational 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 Japan andoverseas through the JBIC website (http://www.jbic.
go.jp/en/).

JBIC Today

JBIC’s Activities forEnvironmental Sustainability (2015)

JBIC website

JBIC  Annual Report 201677 Promoting International Exchange

5Operational and
Administrative Policies

Since 1976, JBIC has held annual JBIC Seminars in Japanto promote mutual understanding with its overseas
business partners and relevant organizations by inviting
officials from foreign governments, government
agencies, private companies, financial institutions, etc.
The cumulative number of seminar participants isapproximately 660 so far.

Osaka University of Economics, based on the theme“Overseas Business Support by Policy-based Finance.”

3 Public Information and Disclosure

JBIC lecture at Department of Economics of Osaka University of Economics

Participants at a JBIC Seminar 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 2015, JBIC set up an exhibition booth at
Eco-Products 2015, which was held at Tokyo Big Sight.
Overseas, in February 2016 JBIC participated in Mining
Indaba in South Africa, one of the world’s largest
mining conferences.
In July 2015, JBIC gave a lecture to students of the
Economics Special Lecture II (a course of Commerce andTrade Policy), Course at Department of Economics ofSource of Information

78

Eco-Products 2015

 Disclosure

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 2016