2 0 1 8 Annual ReportHighlights of JBIC’s Activities in FY2017
Loans, Equity Participations, and Guarantees(Commitments)

1,193.2
130¥

billioncommitments(FY2017)

Accumulated Financial
Commitments

Approx.

71.5
26,966¥(End of FY2017)

trillioncommitments

Loans Outstanding per
Employee

23,502¥(End of FY2017)

millionAccumulated Commitment
Amount for Natural
Resources Projects in theLast Decade

Approx.

7.9¥

Financial Commitments
to Mid-tier Enterprises
and SMEs

15.4
74
¥

trillionbillioncommitments(End of FY2017)(End of FY2017)

Accumulated Commitment
Amount for GREEN
Operations

Regions / Countries ofLoans and Equity
Participations Outstanding

Approx.

92

2,645

US$

(As of end of FY2017)

millioncountries and regions(End of FY2017)

JBIC 2018

1 Profile of JBIC · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ······· 1
1 Profile · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ······· 22 Interview with the Governor · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ······· 4
3 Directors, Managing Executive Officers, and Corporate Auditors · · · · · · · · · · · · · · · · · · · · · · ······· 8
4 Medium-term Business Plan (FY2018–2020) · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 10
5 Outline of Operations in FY2017 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 16Japan Bank forInternational Cooperation
Annual Report

2 The Environment Surrounding JBIC and Its Challenges · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 23
1 Energy and Natural Resources Finance Group · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 24
2 Infrastructure and Environment Finance Group· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 28
3 Industry Finance Group · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 32
4 Equity Finance Group· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 36

3 Examples of Business Outcomes in FY2017 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 39
1 Overview of Business Outcomes by Region · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 40
2 Examples of Business Outcomes by Region · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 42
3 Examples of Business Outcomes Relating to Support for Mid-tierEnterprises and SMEs · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 52

4 Examples of Business Outcomes Relating to Environment· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 56
5 Examples of Business Outcomes Relating to Studies, and Collaboration
with Overseas Governmental Organizations and International Organizations · · · · · · ···· 58

4 Financial Instruments · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 61
1 Financial Instruments· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 62
2 Prominent Initiatives in Recent Years· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 72
3 Framework for Supporting Globalization Efforts of Mid-tierEnterprises and SMEs · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 74

5 Operational and Administrative Policies · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 77
1 Corporate Governance · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 78
2 Risk Management · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 82
3 Public Information and Disclosure · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ····· 85
Data

Data

Data

1 Statistics · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ···· 87
2 Financial Statements · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 103
175
3 Corporate Data

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

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

4 Medium-term Business Plan (FY2018–2020) ············· 10
5 Outline of Operations in FY2017 ·························· 16

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1

1

ProfileThe Purpose of JBIC

Profile of JBIC

Japan Bank for International Cooperation (JBIC) is a policy-based financial institution wholly owned by the Japanese
government, which has the objective of contributing to the sound development of Japan and the international economy
and society, 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 causedby such disruptions

Corporate Slogan

1ProfileCorporate Philosophy
The objective of JBIC, as set forth in its statutory law, is to “contribute to the sound development of Japan and the international
economy and society” by executing a variety of financial functions. To pursue this objective, we have set out the following
corporate philosophy, which espouses three core values: “Hands-on Policy,” “Customer-1st Approach,” and “Forwardlooking 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 theinternational creditworthiness and confidence gained by JBIC over the years.
4. Conducting business operations by drawing on its expertise and initiatives
JBIC shall conduct operations by drawing on its own expertise and initiatives on international finance.

2

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JBIC Code of Conduct

Profile of JBIC

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

History
JBIC was established on April 1, 2012 in accordance with the Japan Bank for International Cooperation Act (JBIC Act),
which was promulgated and came into effect on May 2, 2011.
October 2008

1

April 2012

ProfileJapan Finance Corporation
(JFC)

JBIC
(International Wing)(Domestic Finance Units)

October 1999

December 1950

Export-Import
Bank of Japan(JEXIM)

Japan Bank forInternational
Cooperation (JBIC)

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
OfficeCapital*Outstanding Loans and Equity Participations*
Outstanding Guarantees*

Japan Bank for International Cooperation (JBIC)
4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan
¥1,765.2 billion (wholly owned by the Japanese government)¥13,919.4 billion¥2,260.2 billion* As of March 31, 2018

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2

1

Interview with the Governor

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

Profile of JBIC

The world economy is on a moderate recovery path driven largely by the buoyant U.S. economy boosted by the
Trump administration’s tax-reduction policies. On the other hand, as 10 years have passed since the collapse of Lehman
Brothers, new concerns such as mounting trade frictions between the U.S. and China and the EU are now arising. Also,
close attention is required for economic trends in emerging countries and the impact of geo-economic approaches taken bylarge nations. In the energy and natural resources sector, for example, the rise of emerging countries has weakened Japan’s
negotiating position in resources acquisition and caused uncertainty about a global energy supply and demand balance.
Under such circumstances, it is important for Japan to ensure energy security of the Asian region by participating in theenergy value chain in Asia while responding to robust demand in the region.
Looking at the domestic situation in Japan, a declining birthrate and the aging population put a strain on medium-tolong-term economic growth. To address this situation, Japan needs to push up its potential growth rate by encouraging
wider workforce participation via work style reforms and to increase productivity through innovation. Against this backdrop,
Prime Minister Shinzo Abe announced the Future Investment Strategy 2018 (Cabinet decision on June 15, 2018), aiming tosignificantly raise the potential growth rate of the Japanese economy and improve Japan’s international competitiveness byadopting technological innovations such as IoT, Big Data, and AI. In reaction to this strategy, Japanese industries are making
their efforts to boost productivity across different sectors. Quality infrastructure investment and climate change measures
are also promising fields. There are expectations for projects that will help to improve and protect the global environment

2with high efficiency utilizing Japan’s advanced infrastructure and environmental technologies.

Interview with the Governor

Amid rapidly changing environments
in Japan and overseas, we will proactively
support Japanese companies in expanding
overseas, with the focus on growth areasand new fields to address the key challenges
facing Japan as explained above, in addition
to our conventional business activities in theareas of natural resources development andinfrastructure export.
To contribute to the sound developmentof Japan and the international economy
and society amid changes in the globalized
economy, JBIC is increasingly required toprovide future-oriented support in a moreproactive and flexible manner by expanding
its existing financial support framework in
response to trends in the fields of diplomacy,
industry, and finance. As Japan’s policy-based
financial institution, JBIC will strive to fulfill
these responsibilities by meeting the needs
and expectations of Japanese industrial andfinancial communities.

Tadashi Maeda
Governor
Japan Bank for International Cooperation(JBIC)

4

JBIC

Annual Report 2018

Japanese companies renewing their existing concessions inoffshore oilfields.
Looking at the infrastructure sector, JBIC provided
project finance and a political risk guarantee to a hospital
public-private partnership (PPP) project in Turkey. The
government of Turkey is currently promoting policies that
direct private-sector funds toward the enhancement of
medical services in the country. This is the first PPP hospitalproject involving a Japanese company and it draws
attention as a project which is expected to encourage
Japanese companies to roll out their advanced medical
systems and services in foreign countries.
In the environmental field, JBIC provided project
finance to the Rantau Dedap Geothermal Power
Project in Indonesia. JBIC also supported Japanese midtier enterprises and SMEs in expanding overseas incollaboration with Japanese regional banks, including abusiness that manufactures concrete products for use in
India’s infrastructure.

2
Interview with the Governor— Can you please explain JBIC’s business results for
FY2017?
In FY2017, JBIC made 130 financial commitments totaling¥1,193.2 billion in loans, equity participations, andguarantees, reflecting a decline in the number of M&A
deals overseas and loans to Japanese mid-tier enterprises
and SMEs due to external factors.
By business field, beginning with the energy andnatural resources sector, project finance for construction of
the Nacala Railway and Port infrastructure in Mozambiqueand Malawi deserves special mention. As JBIC’s largestever financial commitment to Africa, this project intends
to supply Japan with high-quality coking coal from inland
Africa and contribute to economic development ofregions in interior Africa. With the 7th Tokyo International
Conference on African Development (TICAD VII) scheduled
to convene in Yokohama in 2019, JBIC will proactively
support economic growth in Africa through the promotionof trade investments by Japanese companies in the region.
Meanwhile, as part of efforts to strengthen strategic
relations with oil-producing countries, JBIC provided
financing to Abu Dhabi National Oil Company (ADNOC) toensure stable imports of crude oil to Japan, with an eye to1Profile of JBIC

— You assumed the position of Governor in June
2018. Could you explain the challenges facing JBIC
and the directions JBIC will pursue?
JBIC has undertaken a wide range of financing operationsin accordance with the Japan Bank for International
Cooperation Act. These operations include providing
financial support for infrastructure and natural resource
development projects involving country risk, and forJapanese companies with plans to expand overseas,
including mid-tier enterprises and small and medium-sizedenterprises (SMEs), in addition to responding to global
financial instabilities.
Nonetheless, major shifts in international affairs andsocial issues make it increasingly difficult for JBIC to meetthe expectations of industry and the financial community
by simply performing operations in accordance with its
legally mandated mission.
In view of this, we formulated the JBIC Third Mediumterm Business Plan (FY2018–FY2020) in June 2018 basedon our belief that JBIC should operate with a moreproactive role. Under this business plan, JBIC aims “toserve as a ‘navigator’ for Japanese companies to expand
overseas business in an uncertain world” and fulfill its roleof opening a path to a new era.
Specifically, JBIC will provide support to the following
areas in the form of loans, equity participations, andguarantees: the overseas deployment of new industries forthe next generation, investments in quality infrastructure
overseas, and securing of a resource supply to Japan.
JBIC will take a lead in projects in relation to these areas
by participating from the early stage of the project
development process. I believe this approach will help
boost Japan’s economic growth and raise its presence in
the international community.
To fulfill this new role, JBIC also needs to build a strongorganization and develop talented human resources. As
JBIC’s new Governor, I will draw on my own experiences
and promote work style reforms for enhancing operational
competencies and management capabilities and forstrengthening our organizational foundation.

— Could you sum up the Second Medium-term
Business Plan (FY2015–FY2017)?
Under the previous Medium-term Business Plan, JBIC madefinancial commitments totaling ¥5,830.4 billion during
the plan’s three-year implementation period. These were
aimed at “contributing to exploring and creating new
business opportunities that will lead to the sustainablegrowth of Japan, through supporting the strengthening ofJapanese companies’ overseas business deployment andresource acquisition by exercising the financial intermediaryfunctions unique to JBIC.”
During this three-year period, JBIC establisheda framework for strengthening its capacity to supply
funding for projects with relatively high risk profiles, whichbecomes increasingly important in the execution of Japan’s
growth strategy of benefitting from overseas growing
markets. In October 2016, JBIC launched its new financing
operations called the Special Operations to increase its
risk-taking ability in investing in overseas infrastructurebusiness. At the same time, JBIC established the Equity
Finance Group and the Equity Investment Department toenhance its capability in the area of equity financing. In
June 2017, JBIC established JBIC IG Partners (JBIC IG) to
provide investment advisory services, in collaboration with
Industrial Growth Platform, Inc. (IGPI).
The aim of JBIC IG is to provide long-term, continuous

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Annual Report 20185

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Mid- to long-term vision set in the Third Medium-term Business Plan and background

Profile of JBIC

Mid- to Long-term Vision Setting
JBIC sets out a “Mid- to Long-term Vision” that provides a picture of where or what JBIC wishes to be or become in
10 years, in light of the environment surrounding JBIC and its view of the future environment.
The Mid- to Long-term Vision bridges the corporate philosophy. (Positioned at the crossroads of global business
opportunities, JBIC is opening new venues to the future for the Japanese and global economy.)
To serve as a “navigator” for Japanese companies to expand overseas business in an uncertain world

2
Interview with the Governor

Changes in the environment

Social Issues

Global populationand economic
growthi) Increasing demand for energy, water, food, andhealthcare servicesii) Increasing global demand for infrastructureiii) An ongoing global effort for environmental issues,
including greenhouse gas reductions• Increase global supplies and establish and improve supply
chains• Supply funds to fill the gap in financial demand and supply• Achieve the international commitment for the environment

Specific issues inJapanA fast-aging population with a low birthrate anddeclining labor force• Boost the productivity of domestic industries• Benefit from overseas economic growth

Progress in the Fourth Industrial Revolution• Japanese industries to collaborate across different sectors
to generate new products and businesses• Pursue new technological development through innovation

Industry

assistance to Japanese companies with plans to expand
overseas, by capitalizing on the respective strengths of
JBIC and IGPI. As Japan’s policy-based financial institution,
JBIC has built up an excellent network of contacts withgovernment agencies in other countries and invested inmany projects overseas. IGPI has significant experience inproviding companies with hands-on support for long-termand sustainable growth in corporate and business value.
JBIC IG started providing investment advisory services tothe US$1 billion Russia-Japan Investment Fund (RJIF) in
cooperation with the Russian Direct Investment Fund(RDIF) to invest in Russian companies that are expected toboost Japan-Russia economic cooperation.
— Can you explain the Third Medium-term Business
Plan (FY2018–FY2020) that was formulated in June2018?
Under the Third Medium-term Business Plan (FY2018–
FY2020), we aim “to serve as a ‘navigator’ for Japanesecompanies to expand overseas in an uncertain world,”
which is also our mid- to long-term vision that expresses
where or what JBIC wishes to be or become in 10 years.
This plan identifies eight key focus areas and 21 actionplans under three basic business policies which are:i) To enhance JBIC’s risk-taking capability by capitalizing
on its strength as a policy-based financial institution,ii) To respond to changing social situations and clients’needs in a flexible manner, while having the objective ofsupplementing the financial transactions implemented byprivate-sector financial institutions, and iii) To strengthenorganizational competency. (For details, please see
page 11.)

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Annual Report 2018

In key focus areas concerning operations, we will
pursue our business plan for “growth areas, new fields.”
For example, JBIC will work to broaden its vision to extend
support to start-up companies expected to play key roles
in growth fields exemplified by IoT and Big Data analysis,
which are driving the Fourth Industrial Revolution. These
companies require funding for investing in their new
businesses, and when providing assistance to thesecompanies in the form of equity financing, JBIC will
diversify its risk through equity participation in various
investment funds. JBIC will also utilize JBIC IG to play arole of a general partner who proactively invests in various
businesses.
Next, let me turn to overseas infrastructuredevelopment. In the past, I used to serve as Special Advisor
to the Japanese Cabinet and was involved in formulating
the Japanese government’s previous growth strategy andthe Strategy on Infrastructure Export. Nonetheless, Japan’s
infrastructure system exports are still only at the midway
point. Although Japanese infrastructure manufacturers
have excellent technologies and products, they have
limited experience in exporting entire infrastructure
systems. This means they miss out on potential business
opportunities. To break through this situation, JBIC will leadthe way in helping Japanese companies to export quality
infrastructure, by participating in projects from the earlystage of project development process while proactively
assuming risk in those projects.
Turning to global environmental protection,
we launched JBIC Global Facility to Promote Quality
Infrastructure Investment for Environmental Preservationand Sustainable Growth (QI-ESG)” in July 2018 to provide

2Interview with the Governor— Could you describe JBIC’s organizational reforms
and work style reforms?
For organizational reforms, we aim for the enhancementof operational functions such as by promoting theformation of projects that are geo-economically important,responding to the changing business environment, andstrengthening collaboration with private-sector financial
institutions. Besides, we will strive to improve ourmanagement capabilities by making prompt decisionmaking and enhancing the financial and risk management
systems. In August 2018, we set up the Strategic Research
Department as part of efforts to provide support forstructuring financing schemes for geo-economicallyimportant projects. JBIC will also cooperate with specialist
organizations and specialists from around the world in
performing advanced information analysis such as risk
forecast management to promote accurate and quick
decision-making in financial areas and business execution.
The management team will take the lead in promoting
work style reforms that encourage employees to choose
how to work. Specifically, we will strive to enhance theefficiency of operations by re-evaluating our operational
processes and utilizing various IT technologies, including
RPA (Robotic Process Automation). JBIC aims to build aresilient organization by having employees spend timeon improving or learning new skills during work hours,
while asking them to think about what they can do forJapan. I expect JBIC’s employees to meet more companies
and people to enter new business areas and acquire newclients, thereby becoming more aware of developments infinancial markets and utilizing their knowledge and insights
to help the Japanese government formulate policies.

1(Far East JPPV) to promote Japanese investment in the
Russian Far East region through a joint investment with
Russian government agencies. JBIC will further support
the overseas business strategies of Japanese companies,
including the cultivation of growth fields for the next
generation, and will create environments where moreprivate-sector financial institutions can provide financing
to Japanese companies in collaboration with JBIC.
JBIC will continue to strive to conduct balanced andsound business activities by strengthening its governancestructure such as risk management alongside enhancing
its operational competencies. JBIC will also carry out its
responsibilities to contribute to the Japanese economy
as well as the international economy and society bycapitalizing on its human resources, global network ofcontacts, and policy recommendation capacity as a publicfinancial institution.

Profile of JBIC

a wide range of support for infrastructure developmentthat is expected to help protect the global environment,such as renewable energy and green mobility. Throughthe QI-ESG facility, JBIC aims to promote export of Japan’s
world top-level environmental technologies.
Regarding M&As by Japanese companies, I believethat acquiring overseas companies with technologies
that Japanese companies do not have will enable themto accelerate their business and adapt quickly to evolving
overseas markets. This M&A approach will help Japanesecompanies expand into the “growth areas, new fields”
that I mentioned previously. JBIC will continue to support
the strategic overseas M&As by Japanese companies.

— What is your message to stakeholders?
Amid increasing demand for large infrastructure
investment across the world, the needs for raising funds
are expected to rise further. In response to this, PPP-based
projects mobilizing private-sector funds are expected to bepromoted not only in the electric power sector but also
in the transportation and communications sectors. To
ensure that Japanese companies can participate widely inthese projects, JBIC will increase opportunities for policy
dialogue with government agencies of countries aroundthe world and further strengthen its continued efforts tobuild relationships that generate mutual benefits. These
efforts include development of cooperative projects in the
Indo-Pacific based on a memorandum of understanding
with Overseas Private Investment Corporation (OPIC)in the U.S. in November 2017 and the establishment in
February 2018 of Far East Limited Liability Company

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3

Profile of JBIC

1

Directors, Managing Executive Officers,
and Corporate Auditors (As of August 1, 2018)3
Directors, Managing Executive Officers, and Corporate Auditors(Back row,from left)(Front row,from left)

8

JBIC

Managing Director

Senior Managing Director

Senior Managing Director

Senior Managing Director

Managing Director

Shinichi Koizumi

Kuninori Kuroishi

Yasushi Hasegawa

Tatsuhiko Takesada

Yoshinori Kawamura

Deputy Governor

Governor

Executive Managing Director

Nobumitsu Hayashi

Tadashi Maeda

Kazuhiko Amakawa

Corporate Auditor

Corporate Auditor

Corporate Auditor

Mitsuaki Tsuchiya

Yasuo Ota

Yuko Tamai



Annual Report 2018

1

 Directors

Tadashi Maeda

Deputy Governor

Nobumitsu Hayashi

Executive Managing Director

Kazuhiko Amakawa

Senior Managing Director

Yasushi Hasegawa

Senior Managing Director

Kuninori Kuroishi

Senior Managing Director

Tatsuhiko Takesada

Managing Director (Outside Director)

Shinichi Koizumi

Managing Director (Outside Director)

Yoshinori Kawamura

Profile of JBIC

Governor3
Directors, Managing Executive Officers, and Corporate Auditors

 Corporate Auditors

Corporate Auditor (Full-Time Corporate Auditor)

Yasuo Ota

Corporate Auditor (Outside Corporate Auditor)

Mitsuaki Tsuchiya

Corporate Auditor (Outside Corporate Auditor)

Yuko Tamai

 Managing Executive Officers

Managing Executive Officer, Global Head of Corporate Planning Group

Shigeto Hashiyama

Managing Executive Officer, Global Head of Credit, Assessment and Risk Management Group

Yutaka Funada

Managing Executive Officer, Global Head of Treasury and Systems Group

Tsuyoshi Nishitani

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

Masaaki Yamada

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

Kazuhisa Yumikura

Managing Executive Officer, Global Head of Industry Finance Group

Kazuhiko Tanaka

Managing Executive Officer, Global Head of Equity Finance Group

Shinji Fujino

JBIC



Annual Report 2018

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4

1

Medium-term Business Plan (FY2018–2020)

Profile of JBIC

Since its establishment in April 2012, JBIC has provided
proactive support for the projects such as natural resources
and infrastructure development projects overseas, M&A
transactions involving Japanese companies and theoverseas businesses of Japanese SMEs. The Bank
participates from the early stages of projects, and provides
funds for projects with relatively high risk profiles throughvarious financial instruments. Under its medium-termbusiness plan for FY2015–2017, JBIC has aimed to“contribute to exploring and creating new business
opportunities that will lead to the sustainable growth ofJapan, through supporting the strengthening of Japanesecompanies’ overseas business deployment and resource
acquisition, by exercising the financial intermediaryfunctions unique to JBIC.” As a result, JBIC has madefinancial commitments in loans, equity participation andguarantees totaling JPY 5,830.4 billion.
The environment surrounding Japan is changing
significantly. In addition to progress in the Fourth Industrial
Revolution, increasing geo-political risks and international
efforts to address global environmental problems, there
are structural issues, such as a declining workforce and afast-aging population with a low birthrate in the domestic

4

market. These factors further increase the uncertainty inthe surrounding environment. Under such circumstances,
Japanese industries are facing urgent tasks, such as
collaboration across different sectors to boost productivity
and pursuing new technological development throughinnovation. Japanese industries are also continuing andstrengthening their efforts to benefit from the growth ofoverseas markets, while managing increasing businessrisks in a proper manner.
JBIC’s third medium-term business plan for FY2018–2020 identifies eight key focus areas and sets out 21 actionplans. Accomplishing these will allow the Bank toaccurately navigate increasingly uncertain domestic andinternational situations and to provide support in responseto the new tasks and challenges faced by Japaneseindustries.
JBIC will create new additional value and contribute to
the sound development of Japan and the international
economy and society under its third medium-term businessplan by capitalizing on its relationships with stakeholders
and its overseas networking and information-gathering
abilities.

Medium-term Business Plan (FY2018–2020)

Mid- to Long-term Vision Setting
In its third medium-term business plan, JBIC sets out a“mid- to long-term vision” that provides a picture of whereor what JBIC wishes to be or become in 10 years, in lightof the environment surrounding JBIC and its view of the

future environment. The mid- to long-term vision bridges
the corporate philosophy. (Positioned at the crossroads ofglobal business opportunities, JBIC is opening new venues
to the future for the Japanese and global economy.)

JBIC’s mid- to long-term vision

To serve as a “navigator” for Japanese companies to expand overseas
business in an uncertain world

JBIC’s view of the international environment
There are growing uncertainties in the international environment,such as complex international relations and the emergence of anti-globalization andprotectionism, which will bring the world amplified risks and challenges.
Changes in the environment surrounding JBIC
1. As a result of global population and economic growth,i) Increasing demand for energy, water, food and healthcare services raises the need to increase global
supplies and establish and improve supply chains;ii) Increasing global demand for infrastructure raises the need to supply funds to fill the gap in financial
demand and supply;iii) An ongoing global effort for environmental issues, including greenhouse gas reductions, is required
to achieve the international commitment for the environment.
2. A fast-aging population with a low birthrate and declining labor force, which are issues specific to Japan,
raise the need to boost the productivity of domestic industries and benefit from overseas economic growth.
3. The progress in the Fourth Industrial Revolution requires Japanese industries to collaborate acrossdifferent sectors to generate new products and businesses, or pursue new technological development
through innovation.

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1

Principles, Key Focus Areas and Action Plans

Profile of JBIC

JBIC’s medium-term business plan identifies eight key focus areas and 21 action plans to be pursued following the threeprinciples.

Principles
1. Enhance JBIC’s risk-taking capability by capitalizing on its strength and attributes as a policy-based
financial institution
2. Respond to changing social situations and clients’ needs in a flexible manner, while having the objectiveof supplementing the financial transactions implemented by private-sector financial institutions
3. Strengthen organizational competency

Key Focus Areas

Action Plans

Growth areas, new fields

1. To take strategic actions to promote innovation
2. To support Japanese companies in expanding into frontiermarkets
3. To promote energy and natural resource projects in responseto the new market environment

Business area
II

Overseas infrastructuredevelopment

1. To support infrastructure projects that are highly importanton the policy front
2. To help geo-economically important countries to establish
frameworks for promoting infrastructure development

Business area
III

Global environmental
preservation

1. To contribute to global efforts for the transition to a lowcarbon society
2. To further promote global environmental preservation

Business area
IV

M&As

1. To support overseas M&As that are important on the policy
front
2. To support overseas M&As in collaboration with private
financial institutions

Business area
V

Consistent implementationof policy-based finance andrestructuring of operations

1. To implement policy-based finance in a consistent manner
2. To restructure operations in response to the changing
external environment
3. To support Japanese SMEs in expanding overseas

Organizationalarea
I

Enhancement ofoperational functions

1. To promote formation of projects that are geo-economicallyimportant
2. To improve operational functions to quickly respond to thechanging business environment
3. To further mobilize private funds amid the changing
business model of the financial sector

Organizationalarea
II

Enhancement ofmanagement capabilities

1. To ensure an executive management system that facilitates
speedy and decisive operation
2. To further enhance the financial and risk management
systems to support top management decisions

Organizational
area
III

Strengthening oforganizational foundation

1. To promote work-style reform
2. To streamline operational workflow
3. To ensure stability and safety while performing operations
4. To enhance human capital

JBIC



Annual Report 20184
Medium-term Business Plan (FY2018–2020)

Business area
I

11

1

Details of Action Plans for Business Performance

Profile of JBIC

I

Growth areas, new fields

Action plan I-1. To take strategic actions to promote innovation(1) Taking up innovation, Creating new business and rolling them out worldwide
Amid the progress in the Fourth Industrial Revolution, where industrial society is transforming into “Connected
Industries” which are connecting humans, machines and technologies across firms and borders to create new value,
JBIC will support Japanese companies in taking in innovation from overseas, creating new business through innovation
and rolling them out worldwide.
(2) Building relationships with key entities/organizations
JBIC will promote relationships with new entities/organizations, such as start-up companies, venture companies
established within universities as well as foreign companies and funds that engage in generating and developing new
products and businesses through innovation, while re-building relationships with Japanese companies with a focus onadvancing innovation.

Action plan I-2. To support Japanese companies in expanding into frontier markets(1) Creating business opportunities for Japanese companies through support for identification and formationof projects
JBIC will support Japanese companies in expanding to regions which are expected to further strengthen relationships
with Japan—such as Africa, the Mekong Region and South Asia—by enhancing its risk-taking capability andcollaborations with international organizations and state financial institutions around the world.

4
Medium-term Business Plan (FY2018–2020)(2) Strengthening efforts to facilitate business in Africa towards TICAD VII
JBIC will promote the formation of projects by formulating strategies to encourage Japanese companies to find business
opportunities in Africa.

Action plan I-3. To promote energy and natural resource projects in response to the new market
environment(1) Structuring financing schemes to respond to changing markets
JBIC will provide financial support in response to more diversified pricing formulas and contracts in the LNG market,
which is at a turning point in its supply and demand balance.
(2) Supporting projects that are expected to help to establish an energy value chain
JBIC will support infrastructure projects, such as projects for Gas-to-Power and LNG receiving terminals, aiming tocontribute to Japan’s energy security.
(3) Ensuring new resources and energy sources
JBIC will provide support to secure strategic natural resources to be used for innovation, as well as support to secure
new energy sources and establish supply chains to facilitate the transition to a low-carbon society.
II

Overseas infrastructure development

Action plan II-1. To support infrastructure projects that are highly important on the policy front
JBIC, in collaboration with the Japanese government and its agencies, will proactively lead project formation to support
Japanese companies in participating in overseas infrastructure projects that are highly important on the policy front (e.g.
high-speed railways and ports).

Action plan II-2. To help geo-economically important countries to establish frameworks for promoting
infrastructure development
JBIC will help geo-economically important countries with high potential as destinations for infrastructure exports toestablish a public-private partnership (PPP) framework, through policy dialogue with the governments of those countries
and workshops to share knowledge of PPP.

12

JBIC



Annual Report 2018

III

1

Global environmental preservation

Action plan III-1. To contribute to global efforts for the transition to a low-carbon society

Profile of JBIC

Taking account of the policies of host governments and their needs, JBIC will support the transition toward lowcarbonization of thermal power generation and encourage Japanese companies to develop low-carbon infrastructure
projects such as renewable energy projects.

Action plan III-2. To further promote global environmental preservation
To respond to social demand for clean air and water, and waste disposal considering environmental impact, JBIC willcontribute to sustainable economic growth by promoting the use of Japanese companies’ superb environmental
technology and expertise such as desulfurization and denitration equipment, waste water treatment equipment andwaste-to-energy generation technology.
IV M&As

Action plan IV-1. To support overseas M&As that are important on the policy front
JBIC will support overseas M&As by Japanese companies, while considering the importance of their business strategies
and Japanese government policy.

Action plan IV-2. To support overseas M&As in collaboration with private financial institutions
JBIC will provide financing for overseas M&A transactions in the form of two-step loans, in collaboration with Japanese
private financial institutions which have broad customer bases.

4

Consistent implementation of policy-based finance and restructuring of operations

Medium-term Business Plan (FY2018–2020)

V

Action plan V-1. To implement policy-based finance in a consistent manner(1) Fulfilling JBIC’s mission by enhancing its risk-taking capability
Amid a changing environment surrounding Japan in terms of geo-economic aspects such as the emergence of newentities/organizations, JBIC will support the business activities of Japanese companies particularly in the areas ofdeveloping and acquiring interests in strategically important energy and natural resources overseas as well as ofmaintaining and increasing the international competitiveness of Japanese industries. JBIC will carry out its mission byenhancing its risk-taking capability and utilizing its various financial tools, while considering the needs of host countries’
governments.
(2) Responding to the changing international financial environment
JBIC will take measures in a proactive and flexible manner to prevent global financial disorder or respond to financial
turmoil by monitoring the international financial environment and corporate funding activities.

Action plan V-2. To restructure operations in response to the changing external environment
JBIC will restructure its existing operations for increased efficiency, in order to quickly respond to the changes ininternational situations, the financial environment as well as in the Japanese government’s policies and clients’
expectations for policy-based finance.

Action plan V-3. To support Japanese SMEs in expanding overseas
JBIC will provide its unique support to Japanese SMEs which plan to expand overseas, in close cooperation with Japanese
private-sector financial institutions such as regional banks and Shinkin (credit) banks.

JBIC



Annual Report 201813

1

Details of Action Plans for Organizational Competency

Profile of JBIC

I

Enhancement of operational functions

Action plan I-1. To promote formation of projects that are geo-economically important(1) Promoting projects that are geo-economically important, through JBIC’s strategic research capability
JBIC will offer strategic information to the Japanese government and other stakeholders and help to structure financing
schemes for projects that are geo-economically important by utilizing its strategic research capability.
(2) Collaborating with bilateral and international organizations
JBIC will materialize strategic project formation and appropriate risk sharing with bilateral and international organizations,while contributing to rulemaking for the financing of public agencies.
(3) Strengthening relationships with foreign governments and companies
JBIC will enhance relationships with governments and companies in host countries in order to form projects taking into
account the Japanese government’s foreign policy and the importance of geo-economic aspects.

Action plan I-2. To improve operational functions to quickly respond to the changing businessenvironment
JBIC will improve operational flows, launch new financial instruments and prepare operational conditions in order todeliver services in response to the changing business environment.

4
Medium-term Business Plan (FY2018–2020)

Action plan I-3. To further mobilize private funds amid the changing business model of the financial
sectorConsidering a changing financial environment due to factors such as the Basel requirements, JBIC will supplement thefinancial transactions implemented by private financial institutions through various means including co-financing, twostep loans and loan guarantees. JBIC will also strive to create new investment opportunities for private financial
institutions by offering opportunities to purchase receivables related to the loans granted by JBIC or by other measures
such as investment information sharing through seminars.
II

Enhancement of management capabilities

Action plan II-1. To ensure an executive management system that facilitates speedy and decisive
operation(1) Strengthening capability to execute corporate strategy
JBIC will enhance its capability to address organizational issues in an effective manner by establishing a structure underwhich Group-wide planning agendas are integrated.
(2) Reviewing decision-making processes
JBIC will eliminate/consolidate internal committees, increase/decrease the number of committee members dependingon the purpose of the committees, as well as review decision-making processes.

Action plan II-2. To further enhance the financial and risk management systems to support top
management decisions(1) Enhancing capital adequacy to strengthen risk-taking capability
JBIC will enhance its capital adequacy to exert its risk-taking capability in large projects.
(2) Improving capacity to raise funds in a diversified and stable manner, and preparing a more effective
financial reporting system
JBIC will diversify the means to raise funds over the long term, such as borrowing foreign currencies, and establish its
accounting and financial reporting system in response to the changes in its operations and market regulations.
(3) Strengthening the risk management system
To increase risk tolerance, JBIC will improve its overall risk management process and risk analysis ability by, for example,
strengthening its risk monitoring practices, increasing its analytical capabilities for asset-liability management andprofitability, improving its credit risk management system used for evaluating the creditworthiness of its clients, andcollecting data for credit analysis.

14

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Annual Report 2018

III

1

Strengthening of organizational foundation

Action plan III-1. To promote work-style reform

Profile of JBICJBIC will develop and implement its “Plan for Work Style Reform.”

Action plan III-2. To streamline operational workflow(1) Ensuring implementation of operational procedures without errors or omissions
JBIC will streamline its operations by using IT technologies and promote other streamlining measures to implement
operations in a more accurate and flexible manner.
(2) Ensuring safe and stable operation of IT system
JBIC will renovate its core IT system and upgrade existing IT infrastructure.

Action plan III-3. To ensure stability and safety while performing operations
JBIC will ensure the effectiveness of its business continuity plan (BCP) and strengthen its responsiveness to information
security incidents.

Action plan III-4. To enhance human capital
JBIC will secure and develop human resources to correspond to diversified operations.

4
Medium-term Business Plan (FY2018–2020)

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Annual Report 2018

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5

1

Outline of Operations in FY2017

Operational Highlights

Profile of JBIC

The total amount of commitments JBIC made during
FY2017 in loans, equity participations, and guarantees was¥1,193.2 billion, which is 46.7% less than that of FY2016.
The outstanding amount of loans and equity participations
and guarantees as of March 31, 2018 was ¥16,179.6
billion.
The following is a report on JBIC’s major operations ineach sector during FY2017.

■ Efforts in the Energy and Natural Resources
Sector

JBIC provided project finance1 to fund the constructionof the Nacala railway and port infrastructure in Mozambiqueand Malawi, which is needed to transport and export
coal produced from a coal mine. JBIC also signed a loan
facility agreement with Abu Dhabi National Oil Company(ADNOC) in the Emirate of Abu Dhabi in the United ArabEmirates. This facility is intended to ensure to ADNOC thestable import of crude oil by Japanese companies. Other
projects that received financing from JBIC included a zincand silver mine development project in Los Gatos, Mexico.

As Japan depends on imports from overseas for most of its
resources, it is important that the country secures a stablesupply of energy and mineral resources in the medium
to long term by increasing the ratio of self-development
resources. In FY2017, JBIC made a total of nine financial
commitments in the natural resources sector, amounting
to ¥494.6 billion in loans, equity participations, andguarantees for projects.

■ Supporting Overseas Infrastructure Business
Deployment by Japanese Companies

Commitments by Purpose of Financing

Commitments by Region

In the power sector, JBIC provided project finance toinfrastructure projects involving Japanese companies, suchas a photovoltaic power project in India, an onshore wind
power generation project in Egypt, and a geothermal
power project in Indonesia.
In other sectors, JBIC provided support in the form of

5
Outline of Operations in FY2017(FY2017; unit: billions of yen)

Guarantees
48.1 (4%)

Equity Participations
77.7 (7%)

Untied Loans
30.0 (3%)

20%

Export Loans
34.7 (3%)
Import Loans
238.0¥1,193.2(FY2017; unit: billions of yen)

Others 16.1 (1%)
Asia 174.3

Latin America
and the Caribbean
201.2
North America
180.6

Europe60.0 (5%)¥1,193.2

15%

34%

12%

64%

Oceania18.2 (2%)

15%

17%

Africa138.4

Overseas Investment
Loans 764.4

The Middle East
404.0

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

60.3

FY1955

¥61.3

(98%)

1.0 (2%)402.8

FY1970

33.3

(74%)

356.4

FY1985

174.0
(14%)

238.0
(20%)
34.7 (3%)

FY2017

101.4

(11%)
14.2 (2%)
Guarantees 0.5 (0%)

523.7

(27%)

¥543.031.1 (6%)
7.4 (1%)

(21%)

(26%)

321.4

68.5

(13%)

182.4

233.5

(40%)

FY2000

(6%)

(43%)

67.4
(6%)

764.4
(64%)

30.0 (3%)
48.1 (4%)¥888.4118.3¥1,204.7

77.7¥1,193.2

(10%)

(7%)

■ Export Loans ■ Import Loans ■ Overseas Investment Loans ■ Untied Loans ■ Governmental Loans ■ Guarantees ■ Equity Participations

16

JBIC



Annual Report 2018

project finance with a political risk guarantee to a hospital
public-private partnership (PPP) project in Turkey, in which
a Japanese company participated.

Business

In overseas M&A by Japanese companies, JBIC supported
the acquisition of overseas companies by providing credit
lines to Japanese financial institutions.
Additionally, JBIC provided loans to finance wharf
development and operation by a Japanese company inVietnam and the manufacturing and sales of automobile
parts by a Japanese company in India.
Furthermore, JBIC, in collaboration with Japanesecompanies, implemented equity participation in a fundthat invests in advanced IT companies, including those
based in Silicon Valley.

■ Supporting Exports by Japanese Companies■ Supporting Overseas Business Deployment ofJapanese Mid-tier Enterprises and SMEs
To support the overseas business expansion of Japanese
mid-tier enterprises and small and medium-sized enterprises(SMEs), JBIC made a total of 74 financial commitments,
in cofinancing with Japanese regional banks and Shinkin(credit) banks. The support included loans for a broiler
meat processing business in Myanmar and an automobile
maintenance and sales business in Vietnam.
In financing Japanese mid-tier enterprises and SMEs,
JBIC is bolstering cooperation with Japanese regional banks
and organized the High-level Workshop on International
Finance as a venue for exchanging opinions for thoseregional banks to further strengthen the cooperative
relationship between the regional banks and JBIC. Top
executives and officials from more than 60 Japaneseregional banks and foreign banks participated in theworkshop and exchanged their opinions and views.

■ Supporting Japanese Companies with Local
Currency Loans
JBIC provided 14 local currency loans2 totaling theequivalent of about ¥6.8 billion. The loans included
a Russian ruble loan to fund a Japanese company’s
automobile sales finance business in Russia and a Mexican
peso loan to support the manufacturing and sales ofautomotive parts in Mexico.

■ Efforts to Develop Future Projects
As part of its efforts to develop future projects, JBIC signed
a memorandum of understanding (MOU) with Overseas
Private Investment Corporation of the U.S. for promoting
projects in sectors such as infrastructure, energy, andnatural resources in the regions of Asia, the Indo Pacific,
the Middle East, and Africa. JBIC also concluded amemorandum of cooperation with the Washington State
Government, the United States, aiming to contribute to
the sustainable economic development of Washington
State through supporting projects in the infrastructure
sector. In addition, JBIC held joint conferences with Export
Credit Bank of Turkey and with Export-Import Bank ofIndia to promote bilateral cooperation for exports to andinvestments in third countries.

5■ Supporting Samurai Bond Issuance
JBIC acquired a part of the Samurai bonds3 (privately
placed Japanese yen-denominated foreign bonds) issued
by the Government of Turkey.

Outline of Operations in FY2017

As the second project for the Special Operations launchedin October 2016 (refer to page 73 for details), JBIC offeredfinancing for export of automatic railway stop systems bya Japanese company to the Government of Argentina.
JBIC also supported a Japanese company in exporting
construction machinery to Africa by utilizing the export
credit line offered to the Eastern and Southern African
Trade and Development Bank, a regional developmentbank in Africa. Other export support extended by JBIC
included project finance to fund the export of vessels
manufactured by a Japanese shipbuilder.

JBIC provided project financing to renewable energy
projects involving Japanese companies, such as aphotovoltaic power project in India, onshore wind power
generation project in Egypt, and geothermal power projectin Indonesia.

Profile of JBIC

■ Supporting Strategic Overseas
Activities by Japanese Companies

1■ Efforts in the Environment-related Sector■ Establishment of JBIC IG Partners
JBIC established JBIC IG Partners (JBIC IG) in June 2017
in collaboration with Industrial Growth Platform, Inc.
(IGPI). The objective of JBIC IG is to provide investment
advisory services regarding overseas investment funds byapplying the respective strengths of JBIC and IGPI. While
JBIC executes overseas business as Japan’s policy-based
financial institution, IGPI has extensive experience inproviding companies with hands-on support for long-term,
sustainable growth in corporate and business value.
In September 2017, JBIC launched the Russia-Japan
Investment Fund (RJIF) in cooperation with the Russian
Direct Investment Fund (RDIF), Russia’s sovereign wealthfund. The aim of establishing the RJIF is to jointly invest
in projects and companies which are expected to help
enhance economic cooperation between Japan and Russia.
JBIC IG administers and manages the RJIF along with theRDIF. As of the end of March 2018, the RJIF decided tomake three investments.

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

JBIC



Annual Report 201817

1

Operation Results

Profile of JBICJBIC made total disbursements of ¥1,726.9 billion in FY2017.
Planned and Actual Lending and Investments(Unit: billions of yen)

FY2014
PlannedFY2015FY2017

PlannedActualPlannedPlannedActual

200.0

112.0

200.0

148.8

290.0

227.2

315.0

279.4

1,900.0

2,071.2

1,450.0

1,867.9

1,560.0

1,922.4

2,115.0

1,357.2

Untied Loans

50.0

64.3

70.0

44.5

90.0

32.2

50.0

50.3

Equity Participations

100.0

30.9

100.0

42.4

120.0

18.5

130.0

39.8

2,250.0

2,278.6

1,820.0

2,103.8

2,060.0

2,200.4

2,610.0

1,726.9

Export Loans
Import Loans and Overseas
Investment Loans

Total

Actual

FY2016
ActualFinancial Results■ Principles of Accounting(1) Separate Accounting
Pursuant to Article 26-2 of the Japan Bank for International
Cooperation Act, JBIC shall apply separate accounting toOperations other than the Special Operations (Ordinary
Operations) and Special Operations.

5
Outline of Operations in FY2017(2) Preparation of Financial Statements
Pursuant to the Companies Act and Article 26 of the Japan
Bank for International Cooperation Act, JBIC prepares
financial statements and submits them to the Minister ofFinance. The report on the final settlement of accounts is
submitted to the government of Japan, together with thefinancial statements and, after examination by the Board ofAudit of Japan, to the Diet.
Pursuant to the Companies Act, JBIC prepares
consolidated financial statements and pursuant to Article
5 of the Ordinance of the Ministry of Finance regarding
Japan Bank for International Cooperation, JBIC submits theconsolidated balance sheet and the consolidated statementof operations to the Minister of Finance.

■ Ordinary Operations(1) Statement of Operations
In FY2017, JBIC recorded ¥336.7 billion in Interest Incomeand ¥389.5 billion in Ordinary Income. This was for various
reasons including support to promote the acquisition ofinterests and development of natural resources and to
expand the overseas operations of Japanese companies,
such as infrastructure projects. On the other hand, JBIC
recorded ¥327.3 billion in Ordinary Expenses as a resultof posting ¥249.2 billion in funding costs, such as Interest
expenses. Therefore, Ordinary Profit was ¥62.2 billion,
and Net Income totaled ¥62.3 billion, which included
Extraordinary Income and others.

18

JBIC



Annual Report 2018

(2) Balance Sheet
Total Assets amounted to ¥17,747.3 billion. This wasdue primarily to a decrease in Loans and Bills Discounted(decreased by ¥796.4 billion to ¥13,512.6 billion comparedwith FY2016) mainly because of a reduction in the yenvalue of loans in foreign currencies as a result of yen
appreciation in the exchange rate as of March 2018. Total
Liabilities amounted to ¥15,465.2 billion. This was mainly
due to an increase in Bonds Payable (increased by ¥1,091.0
billion to ¥4,392.5 billion compared with FY2016) as theamount of new issuances exceeded redemptions while on
the other hand, Borrowed Money decreased (decreasedby ¥1,537.9 billion to ¥8,370.7 billion compared with
FY2016) due to the repayment of borrowings from theGovernment Fund for Fiscal Investment and Loan Program(FILP) and borrowings from the Foreign Exchange Fund
Special Account. Total Net Assets was ¥2,282.0 billion.
This was due mainly to the capital increase and net incomeof ¥62.3 billion, despite the payment to national treasury
through appropriation of retained earnings in FY2016.

■ Special Operations(1) Statement of Operations
In FY2017, Ordinary Income was ¥2 million. This was due
mainly to the receipt of interest and fees on loans. On
the other hand, Ordinary Expenses of ¥207 million wererecorded since general and administrative expenses suchas personnel expenses were incurred. As a result, Ordinary
Loss and Net Loss amounted to ¥204 million, respectively.
(2) Balance Sheet
Total Assets amounted to ¥251,110 million. This was due
mainly to capital increase and the execution of new loans.
Total Liabilities was ¥222 million. This was due mainly tothe recognition of accepted collateral such as financial
instruments. Total Net Assets was ¥250,888 million. Thiswas due mainly to a capital increase and a Net Loss of ¥204
million.

The Sixth Term for JBIC (FY2017)[Consolidated Financial Statements]
Consolidated Statement of Operations(As of March 31, 2018; unit: millions of yen)

AssetsAmounts

Accounts

Liabilities and Net Assets
Amounts

Accounts

Ordinary Income

390,060

Cash and Due from Banks

Interest Income

336,768

Securities

Fees and Commissions

23,914

Other Ordinary Income

128

Loans and Bills Discounted
13,513,680 Other Liabilities
Notes 7

Other Income

29,248

Ordinary Expenses

327,996

Interest Expenses

249,256

Fees and Commissions
Payments

2,043

Other Ordinary Expenses

5,363

General and
Administrative Expenses

19,660

Other Expenses

51,672

Ordinary Profit

Note 6

Other Assets

Note 8Extraordinary Income

9

Extraordinary Loss

8

351,605 Bonds Payable

3,472 Net Defined Benefit Liability

9
6,785

Customers’ Liabilities for
Acceptances and Guarantees

Provision for Directors’
2,259,369
Retirement Benefits

Allowance for Loan Losses(273,564) Acceptances and Guarantees

2,259,369

Total Liabilities

15,465,589

Capital Stock

1,765,200

25

Retained Earnings

883,601

Total Shareholders’ Equity

2,648,801

Valuation Difference on
Available-for-sale Securities
Deferred Gains or Losses on
HedgesForeign Currency Translation
Adjustment
Total Accumulated Other
Comprehensive Income (Loss)(114,658)
13,309(102,558)
227

Total Net Assets
Total Assets

5(1,209)Non-controlling Interests(17)
62,081

546

Intangible Assets

62,064

Loss Attributable toNon-controlling Interests
Net Income Attributable to
Owners of Parent

435,498

28,401 Provision for Directors’ Bonuses

0

Net Income

4,392,597

377,809 Provision for Bonuses0

Total Income Taxes

Note 8Property, Plant and Equipment
Note 962,065

Income Taxes – Current

8,370,758

Outline of Operations in FY2017

Net Income Before Income
Taxes

Amounts

1,751,287 Borrowed Money62,063

Profile of JBIC

Accounts

1

Consolidated Balance Sheet(April 1, 2017–March 31, 2018; unit: millions of yen)

2,546,471

18,012,060 Total Liabilities and Net Assets 18,012,060

Note: See Notes 6 to 9 on pages 113 to 114 for details.

[Non-consolidated (JBIC only)]Statement of Operations

Balance Sheet(April 1, 2017–March 31, 2018; unit: millions of yen)Accounts(As of March 31, 2018; unit: millions of yen)

AssetsAmounts

Accounts

Liabilities and Net Assets
Amounts

Accounts

Ordinary Income

389,589

Cash and Due from Banks

Interest Income

336,748

Securities

Fees and Commissions

23,722Other Ordinary Income

128

Loans and Bills Discounted
13,513,680 Other Liabilities
Note 4

Other Income

28,989Ordinary Expenses

327,495

Interest Expenses

249,256

Note 3

Amounts

1,750,821 Borrowed Money

8,370,758

338,928 Bonds Payable

Note 5

4,392,597
435,385

Other Assets

377,370 Provision for Bonuses

Property, Plant and Equipment

28,355 Provision for Directors’ Bonuses

546
9Intangible Assets

3,464 Provision for Retirement Benefits

6,785

Customers’ Liabilities for
Acceptances and Guarantees

Provision for Directors’
2,259,369
Retirement Benefits

Allowance for Loan Losses(273,564) Acceptances and Guarantees

2,259,369

25

Fees and Commissions
Payments

1,807

Other Ordinary Expenses

5,410

General and Administrative
Expenses

Total Liabilities

15,465,477

19,429

Capital Stock

1,765,200

Other Expenses

51,592Retained Earnings

62,094

Total Shareholders’ Equity

Ordinary Profit
Extraordinary Income

9

Extraordinary Loss8

Net Income

62,095

Total Assets

883,615
2,648,815

Valuation Difference on
Available-for-sale Securities
Deferred Gains or Losses on
HedgesTotal Valuation and Translation
Adjustments(114,658)

Total Net Assets

2,532,947(1,209)(115,868)

17,998,424 Total Liabilities and Net Assets 17,998,424

Note: See Notes 3 to 5 on pages 142 to 143 for details.

JBIC



Annual Report 201819

1

[Ordinary Operations Account]
Statement of Operations

Balance Sheet(April 1, 2017–March 31, 2018; unit: millions of yen)

Profile of JBIC

Accounts

Amounts

Accounts

Ordinary Income

389,599

Cash and Due from Banks

Interest Income

336,747

Securities

Fees and Commissions

23,722Loans and Bills Discounted

Other Ordinary Income

128

Liabilities and Net Assets
Amounts

Accounts

8,370,758

338,928 Bonds Payable

4,392,597

13,512,657 Other Liabilities

435,186

Other Assets

377,190 Provision for Bonuses

29,000Property, Plant and Equipment

28,355 Provision for Directors’ Bonuses

9

Ordinary Expenses

327,300

Intangible Assets

3,464 Provision for Retirement Benefits

6,779

249,256

Customers’ Liabilities for
Acceptances and Guarantees

Provision for Directors’
2,259,369
Retirement Benefits

Allowance for Loan Losses(273,542) Acceptances and Guarantees

2,259,369

Fees and Commissions
Payments

1,792

Other Ordinary Expenses

541

25

5,410

Total Liabilities

15,465,266

General and
Administrative Expenses

19,272

Capital Stock

1,514,200

Other Expenses

51,569Ordinary Profit

Retained Earnings
Total Shareholders’ Equity

62,298Extraordinary Income

8Outline of Operations in FY2017

Net Income

62,300Total Net Assets
Total Assets[Special Operations Account]
Statement of Operations

2,398,101(1,209)(114,833)(116,042)
2,282,059

17,747,325 Total Liabilities and Net Assets 17,747,325

Balance Sheet(April 1, 2017–March 31, 2018; unit: millions of yen)Accounts

883,901

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

9Extraordinary Loss

Amounts(As of March 31, 2018; unit: millions of yen)

Assets
Accounts

Liabilities and Net Assets
Amounts

Accounts

249,919 Other Liabilities

Amounts

Ordinary Income

2

Cash and Due from Banks

Interest Income

1

Loans and Bills Discounted
Other Assets

190 Provision for Directors’ Bonuses

0

Allowance for Loan Losses(22) Provision for Retirement Benefits

6

1,023 Provision for Bonuses

Other Income

1

Ordinary Expenses

207

Interest Expenses

0

Provision for Directors’
Retirement Benefits

14

Total Liabilities

169

Capital Stock

Fees and Commissions
Payments
General and Administrative
Expenses
Other Expenses

Retained Earnings

22

Ordinary Loss

204

Net Loss

204

Total Shareholders’ Equity
Deferred Gains or Losses on
HedgesTotal Valuation and Translation
Adjustments
Total Net Assets
Total Assets

20

Amounts

1,500,902 Borrowed Money

Other Income

Interest Expenses

5(As of March 31, 2018; unit: millions of yen)

AssetsJBIC

Annual Report 2018

251,110 Total Liabilities and Net Assets

210
4

0
222
251,000(286)
250,713174
174
250,888
251,110

1

Funding Sources
Borrowings from FILP Fiscal Loan, Governmentguaranteed Foreign Bond issuance, Governmentguaranteed Long-term Loans in Foreign Currency, andCapital Contributions from FILP Industrial Investment,
etc., are included in the national budget (either as an itemin the General Account budget or the Special Accountbudget), and requests for them are submitted to the Diet
for approval along the operating budget of JBIC. Recent
funding results and plans for FY2018 are shown in thetable below.

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

FY2014 Actual

FY2015 Actual

FY2016 Actual

FY2017 Actual FY2018 Planned

31.0

—

142.0

82.2

62.4

Borrowing from FILP Fiscal Loan

239.7

244.9

530.5

209.5

290.0

1,273.2

1,595.8

1,142.7

854.4

800.0

—

—

40.0

1,106.2

1,629.7

1,680.0

Borrowing from Foreign Exchange Fund Special
Account
Government-guaranteed Long-term Loans in Foreign
Currency
Government-guaranteed Foreign Bonds*

374.8

419.0

FILP Agency Bonds*

10.0

—

—

60.0

60.0

Other Sources of Funds, Including Repayments

349.8(155.9)(721.0)(1,108.9)(675.5)2,278.6

2,103.8

2,200.4

1,726.9

2,256.9

Total

5Outline of Operations in FY2017

Capital Contribution from FILP Industrial Investment* Figures for bonds are indicated at face value.

Funding Sources

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

CapitalContribution

Loans

Foreign
Exchange Fund
Special Account
Loans

Governmentguaranteed
Foreign Bonds

FILP Agency
Bonds

Governmentguaranteed
Long-term
Loans in Foreign
Currency

Internal Funds** Repayments, etc.

Loans /
Investments

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

JBIC



Annual Report 201821

Profile of JBIC

1

5Outline of Operations in FY2017
22■ Government-guaranteed Bonds■ FILP Agency Bonds

JBIC raises part of its funds by issuing governmentguaranteed bonds in international capital markets.
Outstanding government-guaranteed bonds at the end of
FY2017 amounted to ¥4,211.9 billion at face value, which
accounts for 32.98% of the total outstanding borrowings
and bonds. JBIC provides foreign currency loans whennecessary to effectively implement policy, and funds raisedby issuing government-guaranteed bonds are used as asource of those loans.
As Japanese companies have been moving forwardwith their overseas business deployment, there are
greater expectations for JBIC to provide financial support
denominated in local currencies. To properly meet demand
for such funds, JBIC issued government-guaranteed
foreign bonds denominated in Canadian dollars in March2013 and similar bonds denominated in British pounds in
March 2014.
In the FY2018 budget, JBIC plans to issue in the
total amount of up to ¥1,680.0 billion in governmentguaranteed bonds.
JBIC’s government-guaranteed bonds receive thesame ratings as the Government of Japan from the rating
agencies (A1 from Moody’s Japan K.K. (Moody’s) and A+
from S&P Global Ratings Japan Inc. (S&P) as of July 31,2018). Since they are treated as assets for which the Bankfor International Settlements (BIS) assigns zero risk weightin calculating the capital adequacy ratio for depository
institutions, these bonds provide a quality investment
opportunity for investors in international capital markets.

In compliance with the government policy to reform FILP,JBIC has issued bonds without government guarantees (FILP
agency bonds) in the Japan’s capital market since FY2001,
thereby raising funds based on its own creditworthiness.
JBIC plans to issue up to ¥60.0 billion in FY2018.
FILP agency bonds that JBIC has already issued received
the same ratings as the government of Japan (as of July
31, 2018) as shown below. They are treated as assets forwhich BIS assigns 10% risk weight in calculating the capital
adequacy ratio for depository financial institutions.

JBIC



Annual Report 2018

Rating & Investment Information, Inc. (R&I) ....... AA+
Japan Credit Rating Agency, Ltd. (JCR) ..............AAA
Moody’s ...............................................................A1
S&P .................................................................... A+The Environment Surrounding
2 JBIC and Its Challenges
1 Energy and Natural Resources Finance Group ·········· 24
2 Infrastructure and Environment Finance Group ········ 28
3 Industry Finance Group ····································· 32
4 Equity Finance Group ······································· 36

JBIC



Annual Report 2018

23

1

2

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

As Japan depends on overseas sources for most of its natural
resources, the stable procurement of energy resources, such as oiland natural gas and mineral resources from overseas is indispensable
in order to maintain and strengthen the stable lives of Japanesecitizens and the country’s industrial infrastructure. The Energy andNatural Resources Finance Group is responsible for promoting thedevelopment and acquisition of overseas natural resources which
are essential for Japan.
In the global environment surrounding energy and natural
resources, JBIC is facing important challenges such as: i) developmentof financing schemes to respond to the turning point in the liquefied
natural gas (LNG) market, for example, by diversifying LNG pricing
structures and contracts, ii) establishment of an energy value chain
especially in Asia, and iii) securing of strategic natural resources tobe used for innovation and of new energy sources to facilitate thetransition to a low-carbon society.
JBIC focuses on creating an environment which enables thesmooth implementation of projects through active engagement in
dialogues with the governments of resource countries and major
resource companies in the world. JBIC will continue to contribute tosecuring a stable supply of natural resources essential for Japan byproviding long-term funds, while supplementing private-sector funds.

1
Energy and Natural Resources Finance Group

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

Business Environment and Key Challenges
Global energy supply and demand balance is affected bymacroeconomic trends and various other factors. In recent
years, the global energy supply and demand balance has
temporarily loosened due to increased shale oil productionin the U.S. However, the OPEC’s production cut agreement
and regional conflicts have pushed oil prices higher,
increasing uncertainty over energy supply in the world. On
the other hand, energy demand in Asia continues to growsteadily. In particular, Indonesia—one of the leading oil andgas producers in Asia—is exporting less energy resources
due to its increasing domestic demand for energy as aresult of rapid economic growth. As demonstrated bythis, demand for oil and natural gas is increasing acrossthe entire Asian region. There is growing concern about
global warming, as evidenced by the adoption of the Paris
Agreement at the 21st annual session of the Conferenceof the Parties (COP21) to the United Nations Framework
Convention on Climate Change. Under this agreement
on climate change, all participating countries are required
to submit greenhouse gas reduction targets. Against thisbackdrop, there has been increased attention to the use ofnatural gas, which produces less CO2 compared with otherthermal power-generating fuels.
Over 80% of Japan’s crude oil imports come from
the Middle East and such imports remain highly exposedto geopolitical risks in the region. Therefore, from theperspective of Japan’s energy security, it is important todiversify its crude oil procurement sources to areas otherthan the Middle East, while maintaining and strengthening

24

JBIC



Annual Report 2018its relationship with oil-producing countries in the region.
The LNG market will continue to have an excess
supply over the short and medium terms as the large-scale
LNG projects, which have started in the U.S. and Australia,
are expected to boost production of LNG. In contrast, on
the demand side, China and India are increasing theirimports of LNG, and other Asian countries are also moving
to commence or increase LNG imports. In view of this,Japan is required to create its strategic initiatives which
are aligned with global trends in LNG supply and demand,
including the trends in Asia, in order to ensure Japan’s
medium- and long-term LNG supply security.
As for mineral resources, which are used for various
purposes in Japanese industries, it is increasingly needed
to secure a stable supply of the resources amid growing
demand in emerging countries such as China and India andincreasing new needs for the transition to a low-carbon
society and next-generation industries. With regards toiron ore, along with securing the required quantities ofiron ore, it is important to secure high-quality iron ore amid
the deteriorating quality of that obtained from existing
mines. Furthermore, it is an important challenge to minehigh-quality copper ore under current worsening mining
conditions such as the development of mining areas which
are located in remote, high altitude ranges and deeper
underground. While the global supply and demandbalance in energy and mineral resources is changing, there
is growing uncertainty about the environment surrounding
energy supply such as intensifying trade frictions and2agreements of energy and mineral resources, but also in
making additional investments including infrastructure
for resource development, with aim of eliminating majorbottlenecks in existing mine operations.

The Environment Surrounding JBIC and Its Challenges

increasing geopolitical risks. Under such circumstances,in order to secure a stable supply of resources to Japan,
it is highly necessary to support Japanese companies
not only in acquiring interests in and long-term off-take

JBIC’s Activities
In FY2017, JBIC made the following efforts to securea stable supply of energy and mineral resources fromoverseas.

■ Oil and Natural Gas

Signing ceremony with ADNOC■ Mineral Resources

1

The Japanese government formulated the Strategy for
Securing Natural Resources in June 2012 based on the
Guidelines for Securing Natural Resources (approvedby the Cabinet on March 28, 2008). This strategy aims
to make strategic efforts to secure mineral resources by
maximizing the use of public-private resources based on
the recognition that securing the stable supply of low-costmineral resources is necessary for Japan’s high addedvalue and sophisticated manufacturing technology that is
expected to create national wealth.
JBIC provided project finance for construction andmaintenance of the Nacala railway and port infrastructure
in Mozambique and Malawi as the project is expected tocontribute to the diversification of the supply of coking
coal needed for the production of steel. This project
finance will support this natural resource infrastructure
project undertaken by a Japanese company and Vale S.A.
(VALE), a Brazilian major resource company. The aim of thisproject is to secure a stable supply of high-quality coking
coal produced at the Moatize coal mine in Mozambique.
This is JBIC’s largest-ever financial commitment to Africa.
Furthermore, JBIC provided a loan for the Escondida
copper mine expansion project in Chile to maintain the
production of high-quality copper concentrate at the
Escondida copper mine, where Japanese companies
hold interests. Copper is required in Japanese industries
because it can be used for various products including

Energy and Natural Resources Finance GroupThe Japanese government set a goal of increasing its selfdevelopment ratio of oil and natural gas to 40% or moreby 2030 in the Basic Energy Plan approved by the Cabinet
on July 3, 2018. To this end, JBIC is providing financial
support for securing Japan’s stable energy supply.
For example, in the Emirate of Abu Dhabi (Abu Dhabi),the United Arab Emirates (UAE), which is a vital country inJapan’s resource strategy, JBIC provided a loan to financenecessary funds for the acquisition of interests in onshore
oilfields by a Japanese company. These oilfields, in which
the Japanese company acquired a 40-year concession (5%participating interest) in April 2015, produce about 1.6
million barrels a day, making it one of the world’s largest
oilfields. Additionally, JBIC agreed to provide a credit
facility to Abu Dhabi National Oil Company (ADNOC),
with the aim of providing support for a Japanese company
with plans to renew existing concessions in offshore
oilfields in the UAE that were scheduled to expire in March2018. This facility is cofinanced by private-sector banks,
bringing the total cofinancing amount to $3 billion. In
addition to international major oil companies, Chineseand Indian companies were also interested in this renewalof concessions, which intensify global competition tosecure concessions. Thanks to collaborative publicprivate resource diplomacy including financing from JBIC,
Japanese company INPEX CORPORATION successfully
renewed existing concessions and acquired additional
concessions in the oilfield in Abu Dhabi.
Turning to the LNG field, at the LNG ProducerConsumer Conference, which is held annually to bring
together both LNG producers and consumers, JBIC gave apresentation to LNG consumers in Asia about the following
three main points regarding the establishment of a natural
gas and LNG value chain in Asia. These points consisted of“L: Logistics: provide financing for logistics development

and raise bankability in cooperation with private-sector
financial institutions and international organizations”;“N: New Entrants: promote the participation of new LNG
consumers in LNG projects under JBIC’s Special Operations
which enables it to assume risk in projects with relatively
high risk profiles”; and “G: Government Policy andCommitment: support governments of countries planning
to use LNG.” During the conference, JBIC also expressed
its intention to utilize the knowledge and experience
gained through its activities in the area of resources andinfrastructure development.

Mozambique/Malawi Nacala railway and port infrastructure project(provided by Vale S.A.)

JBIC



Annual Report 201825

2
The Environment Surrounding JBIC and Its Challenges

electric cables and automobile equipment. Meanwhile, on
a global basis, the number of projects for the developmentof new high-quality copper mines is decreasing and thequality of copper extracted from existing mines is further
deteriorating. Under such circumstances, JBIC’s financing
to expanding the Escondida copper mine, the world’s
largest copper mine, will help Japan to secure its longterm, stable supply of copper concentrate.
JBIC also provided a loan to finance the zinc and silvermine development project called Los Gatos in Mexico
undertaken by DOWA METALS & MINING CO., LTD. Thisloan is intended to provide finance for securing a longterm, stable supply of zinc and silver, which are important
metallic resources for Japan. Zinc is used for various
purposes, including corrosion-resistant galvanizationof automobile steel sheets, construction materials, andhousehold electric appliances, as well as for corrosionresistant parts of ships and bridges.

1
Energy and Natural Resources Finance Group

Escondida copper mine expansion project in Chile (provided by Minera
Escondida Limitada)■ Strengthening Ties with Resource Countries
and Major Global Resource Companies
JBIC continues to hold consultations and dialogues withthe governments and agencies of resource countries aswell as with major global resource companies in order toencourage Japanese companies to acquire interests in anddevelop resources in those countries.
As one of its efforts to strengthen bilateral ties
with important resource countries for Japan, JBIC
signed memoranda of understanding (MOUs) with thegovernmental institutions of Russia and Russian oil andgas companies in an effort to support the initiatives forthe “eight-point cooperation plan”1 proposed by JapanesePrime Minister Shinzo Abe to Russian President Vladimir
Putin during the Japan-Russia Summit in May 2016. The
purpose of these MOUs is to reinforce the relationships
with the Russian government and companies, with a viewto creating future projects which are expected to acceleratebusiness between Japan and Russia.
Regarding financing to ADNOC which is mentioned
earlier, JBIC and ADNOC signed an MOU for businesscooperation prior to concluding a loan agreement. ThisMOU aims at strengthening the strategic cooperation
between Japan and Abu Dhabi. Under the MOU, JBIC
and ADNOC have built a mutual understanding of thesignificance of expanding such cooperation to projects
in the midstream and downstream oil sector. Abu Dhabi
shows its interest in adding value to products and services
in the oil sector. Through dialogue with the Abu Dhabi
government, JBIC also engaged in discussions about thepossibility of participating in high-quality infrastructure

26

JBIC



Annual Report 2018

Signing of MOU for business cooperation with Vale S.A.

projects, which is Japan’s strength, in sectors other thannatural resources and energy, with the intention of further
enhancing its relationship between Japan and Abu Dhabi.
In Argentina, JBIC provided a buyer’s credit tofinance the purchase of a set of railway signal systems
from Japanese companies in order for State Company ofAdministration of Railway Infrastructure (Administraciónde Infraestructuras Ferroviárias Sociedad del Estado) tocarry out the installation of automatic railway stop systems
for eight Buenos Aires suburban rail lines. In the future,
Argentina is expected to make large-scale investmentsin the resource and infrastructure sectors. Furthermore,this financing from JBIC was mentioned at the JapanArgentina Summit Meeting held in May 2017, which is
expected to further enhance the relationship between thetwo countries.
JBIC signed an MOU for business cooperation with
VALE, a Brazilian company, in April 2018. VALE is a worldleading supplier of mineral resources such as high-qualityiron ore, nickel, and cobalt. VALE has also establishedexcellent and long-standing business relationships withJapanese companies. JBIC has so far provided several
loans for projects involving VALE, including the previously
mentioned Nacala railway and port infrastructure project inAfrica. JBIC has regular discussions with VALE to exchange
opinions about their projects. VALE continues to develop
iron ore and non-ferrous metal mines, and promotes
business in the field of infrastructure development in themineral resources and rail freight transportation sectors. In
light of such continued development, Japanese companies
are expected to expand and diversify opportunities tocollaborate with VALE in those business areas. With thesigning of this MOU, JBIC will further develop a closer
relationship and alliance with VALE. Furthermore, JBIC willcontribute to a stable supply of mineral resources to Japan,
as well as create opportunities for Japanese companies tomake overseas investments or export infrastructure fromJapan.

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

■ Future Business Strategy

Building an Energy Value Chain and Securing New
Resources and Energy Sources
To promote resource projects in response to the newmarket environment, it is important to make investment
in growth areas and new fields. In particular, JBIC will
support infrastructure development projects, including
construction of Gas-to-Power and LNG terminals in orderto ensure energy security mainly for the entire Asian
region. In addition to conventional resources such as oil,Strengthening Strategies on Economic Frontiers
To diversify resource supply sources, JBIC will proactively
provide financial support to natural resource development
projects particularly in Africa, with the participationof Japanese companies, which is viewed as “TheLast Frontier” for foreign exploration as the region is
expected to be a source of extraction of oil, naturalgas, and minerals, while there are countries which havestarted investing in resource development projects in
Africa. Resource development projects in Africa play animportant role not only in contributing to job creation andacquisition of foreign currencies in African countries where
those projects are implemented, but also in advancing
the initiatives to promote infrastructure and industrial
development in Africa, to which the Japanese government
expressed its commitment at the 6th Tokyo International
Conference on African Development (TICAD VI). In lightof the discussions at TICAD VI, JBIC will support resource
projects in Africa by proactively assuming risk in projects
as well as in collaboration with international organizations
and third countries.
The key to strengthening the relationship with resource
countries lies not only in the cooperation in resource
development projects, but also in the establishment ofcomprehensive and sustained cooperative relationshipsthat meet the needs of these countries in various fields,
including infrastructure development, industrial advances,
employment creation, technology transfer, and reduced
environmental burden through the use of renewableenergy and energy saving. JBIC will maintain andstrengthen the multi-layered and positive relationships
with the governments of resource countries through its
comprehensive efforts to support projects in the areasof infrastructure development and manufacturing in the
resource countries.

1
Energy and Natural Resources Finance Group

Structuring Financing Schemes to Respond to the
Changing LNG Market
Global supply and demand balance of LNG is forecast
to remain loosened for the time being. Also, there is
uncertainty over the outlook for LNG demand due to themix of energy sources in the future and the deregulationof electricity and gas markets. In light of these situations,Japanese electric power and gas companies are seeking
flexibility in the process to secure the supply of LNG andalso liquidity in the LNG market, such as by diversifying
LNG supply sources and the pricing structures, as well as
by removing destination clauses from LNG contracts.
Under these conditions, the Japanese government
released the Strategy for LNG Market Development in
May 2016, highlighting the creation of the LNG market
with high liquidity. The Basic Energy Plan approved by the
Cabinet on July 3, 2018 also emphasizes the continuing
effort to create high liquidity in the LNG market. Against
these backdrops, Japan’s electric power and gas companies
have started new businesses to spur LNG demand in Asian
countries. JBIC will consider providing financial support
to not only upstream investments and LNG projects by
Japanese companies, but also their new businesses toboost LNG demand in Asia.

2

natural gas, and mineral resources, JBIC will also support
the activities of Japanese companies for securing strategic
natural resources to be used for innovation, as well as newenergy sources to transform into a low-carbon society.
Looking ahead, the Fourth Industrial Revolution driven by
robotics and AI, as well as innovation derived from nextgeneration vehicles, are expected to spur a realignment of
the global manufacturing industry and a transformationof the industrial structure. Under such circumstances,
JBIC will consider financing projects which can increase
productivity through the use of cloud services for data andautomated in mining operations, or which can secure newstrategic resources to support innovation.

The Environment Surrounding JBIC and Its Challenges

In the natural resources sector, which is approaching aturning point, there is concern about a tightening supply
and demand balance of resources in the medium tolong term. As resource countries are faced with national
financial difficulties, they expect foreign companies tomake investment in resources. On the other hand, there
is rising uncertainty such as an increase in geopoliticalrisk. Under these circumstances, capitalizing on its status
as Japan’s policy-based financial institution, JBIC willcontribute to the stable supply of natural resources byproactively supporting Japanese companies which plan toacquire interests in and develop resources overseas.

TICAD VI (Provided by Cabinet Public Relations Office, Cabinet Secretariat)

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2

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

There is still a significant gap between global supply and demandin infrastructure investment. In order to reduce the gap in global
infrastructure investment, it is essential to provide a stable andefficient supply of long-term funds. To this end, JBIC strives toproactively offer long-term financing to infrastructure projects, whilefurther mobilizing private-sector funds. It is expected to develop
high-quality projects, especially in a public-private partnership (PPP)
framework, that attract private-sector investors to participate. JBIC
will make efforts to be involved in such projects from the earlystage of the project development process in cooperation with thegovernments of countries where those projects will be implemented,
as well as public financial institutions around the world.
Under its Third Medium-term Business Plan (FY2018–2020),
JBIC will further strengthen its efforts in the area of infrastructuredevelopment, focusing particularly on support for projects toestablish social infrastructure and an energy value chain such as
Gas to Power, as well as to help protect the global environment
such as low-carbon infrastructure. Regionally, JBIC will proactively
work toward formulating projects in frontier countries, such as inAfrica.

2
Infrastructure and Environment Finance Group

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

Business Environment and Key Challenges■ Toward Enhancing International
Competitiveness of Japanese Companies
Having formulated existing policies aimed at promoting
quality infrastructure, the Japanese government announced
in May 2016 an additional initiative called the “Expanded
Partnership for Quality Infrastructure” ahead of the G7 IseShima Summit meeting. The G7 leaders expressed, in the
G7 Ise-Shima Leaders’ Declaration, their agreement to aligninfrastructure investment with the G7 Ise-Shima Principles
for Promoting Quality Infrastructure Investment (see tablebelow). Also, at the 51st Asian Development Bank (ADB)
Annual Meeting, Japanese Deputy Prime Minister and
Finance Minister Taro Aso announced the government’s
intention to support various infrastructure projects that
contribute to global environmental protection, including

renewable energy projects, amid increasing environmental,social, and governance (ESG) investment across the world.
In line with these Japanese government policies,
JBIC will continue its efforts to maintain and increase
the international competitiveness of Japanese companies
by promoting the export of high-quality infrastructure
contributing to global environmental protection backed
by Japan’s advanced technology. Furthermore, JBIC will
strive to address the challenges, as discussed more in detailbelow, in supporting Japanese companies to find more
opportunities to invest in overseas infrastructure businessand to participate in infrastructure development projects
amid increasingly fierce international competition in theinfrastructure field.

G7 Ise-Shima Principles for Promoting Quality Infrastructure Investment

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

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(3) Mobilizing a wide range of private-sector funds
Global demand for infrastructure is expected to continue
growing at a faster pace than actual investments amid

■ Commitment to Low-Carbonization andProtecting the Global Environment
Economic development while protecting the global
environment is now recognized as an internationalcommon issue, as highlighted by the adoption of theParis Agreement in 2015. Against this backdrop, there
is a global hope for implementation of projects thatwill contribute to protecting and improving the global
environment. In this area, JBIC provides support toenvironment projects through its operations called“Global action for Reconciling Economic growth andENvironmental preservation (GREEN)” (refer to page 57 fordetails). JBIC has established these GREEN operations inline with “Actions for Cool Earth: ACE 2.0,” an initiative
announced by the Japanese government in November
2015, aimed at supporting action in developing countries
and the advancement of innovative technologies to address
climate change. Following the announcement by Japanese
Deputy Prime Minister and Finance Minister Taro Aso at
the ADB Annual Meeting, JBIC launched its new global
financing facility called “Global Facility to Promote Quality
Infrastructure Investment for Environmental Preservationand Sustainable Growth (QI-ESG)” in July 2018. The aimof this facility is to provide a wide range of financing
support for infrastructure development which is expected
to help to preserve the global environment by utilizing theknowledge and technologies of Japanese companies.
Under these operations, JBIC will contribute topromote economic growth in developing countries andtackle various global environmental issues that affect the
global economy by implementing measures for greenhousegas reduction and climate change.

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

2

economic and population growth and rapid urbanization,
especially in emerging countries. To reduce the global
demand-supply gap in infrastructure investment, it isindispensable not only to address the above-mentioned
challenges, but also to mobilize a wide range of privatesector funds, such as from life insurance companies,
pension funds, or investment funds. This is because
financing by Multilateral Development Banks (MDBs) andpublic financial institutions alone in each country such
as JBIC is not sufficient to meet the global demand forinfrastructure investment in terms of quantity.

The Environment Surrounding JBIC and Its Challenges(1) Responding to various risks
Infrastructure projects are considered to be exposed tovarious risks as the projects are, in general, large in size andalso require a long time span from the planning and bidding
phases of the project to construction and the recovery ofinvested funds. For example, if the counter party risk ofthe national or local governments of developing countries
with low credit ratings is high due to the risk of failure
to perform their contractual obligations, or if the future
demand or sales of products or services to be delivered by
the infrastructure operators are uncertain, the investment
appetite of parties who are interested in the project might
decline, or long-term funds enough to implement the
project might not be available from financial institutions.
Profits generated by infrastructure projects are, in principle,
denominated in local currencies. On the other hand, while
there is a need especially by developing countries to importleading-edge technologies and management know-how
from overseas, those developing countries might need todepend on private-sector funds from overseas sources inforeign currencies due to the immature domestic financial
systems. Given these situations, it is also important tofind a solution to how currency risks are shared among
parties involved in infrastructure projects, including thegovernments of projects’ host countries.

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

JBIC’s Activities■ Toward Enhancing International
Competitiveness of Japanese Companies
In FY2017, the Infrastructure and Environment FinanceGroup approved nine financial commitments particularlyin the field of electric power, totaling ¥209.0 billion. JBIC
provided its first project finance for a solar power generation
project in India. Additionally, JBIC provided project financefor an onshore wind power generation project in Egypt,which is also JBIC’s first project finance for a wind power
generation project in Africa. In Indonesia, JBIC financed ageothermal power project, the third geothermal project in
the country funded by JBIC.
In regards to international competitive bidding on
investment projects, JBIC supported Japanese companies

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The Environment Surrounding JBIC and Its Challenges

in bidding for the projects and acquiring operation rights
in the projects. During business negotiations with relatedparties not only in Asia, but also in the Middle East andNorth Africa, JBIC explained its capability to assume risk inprojects and its various financial instruments for structuring
projects.
Our activities to address the three key challenges
mentioned earlier are as follows.
(1) Responding to various risks
As part of efforts to strengthen risk-taking capabilities,
JBIC established its new financing operation called the“Special Operations” in accordance with the enactmentof the Amendment Act of the JBIC Act in May 2016. This
enabled JBIC to take further risk in projects in foreigncountries. The scope of sectors in developed countries
which are eligible for financing from JBIC has also been
expanded through amendment of the cabinet order.
JBIC is also promoting consultations with local
governments and companies in order to coordinate risk
sharing in various projects. JBIC intends to proactively draw
on its financial tools, such as acquisition of project bonds
and Islamic finance, that have become diverse through theimplementation of the Amendment Act of the JBIC Act.

2
Infrastructure and Environment Finance Group(2) Promoting the formulation of bankable projects
JBIC works toward the formulation of bankable projects
through policy dialogues, consultations, and negotiations
with the projects’ host country governments, theirrelated parties, and project operators, and also throughcollaboration with MDBs.
In the policy dialogues, JBIC discusses various aspects,
including: i) the macroeconomic conditions and investment
environment, and financial systems in projects’ hostcountries, which are crucial for the stable operations ofinfrastructure projects, and ii) regulations for infrastructurebusiness, PPP schemes, and project formulation in
infrastructure development in key sectors and major
identified issues. In addition to regular discussions withthe governments of Indonesia, Mexico, and Vietnam, JBIC
responds to individual business negotiations and engages
in discussions with a variety of countries consideringvarious aspects such as the host country’s legal system
and risk sharing of involved parties for business concession
contracts.
Furthermore, JBIC utilizes the knowledge of outside
experts in implementing feasibility studies which areessential for realizing individual projects that will help
maintain and improve the international competitiveness ofJapanese industry.
In addition, JBIC cooperates with MDBs for promoting
the formulation of bankable projects by participating as an
Advisory Partner in the Global Infrastructure Facility (GIF)2
led by the World Bank and joining the Business 203 task
force for the infrastructure field.
(3) Mobilizing a wide range of private-sector funds
JBIC makes various efforts to execute its functions as acatalyst for further mobilizing private sector finance.
In FY2017, JBIC acquired part of privately placed
Samurai bonds issued by the government of Turkey under
JBIC’s financing facility called “Guarantee and Acquisition
toward Tokyo market Enhancement (GATE).” JBIC’s
support for the issuance of Samurai bonds in the Tokyo
market helped provide broader investment opportunities
for Japanese investors.
JBIC provides guarantees to private-sector financial
institutions which support infrastructure projects inthe form of cofinancing with JBIC, depending on therequirements of individual projects. For example, JBIC
encourages private-sector financial institutions toparticipate in long-term financing, by providing risk
guarantees to projects where the private-sector financial
institutions might face high political and counterparty riskof host country governments and their agencies.
JBIC also holds seminars about project finance and
GREEN projects for Japanese regional banks and life
insurance companies. In recent years, JBIC has been

Scenes from the policy dialogue with the government of Indonesia

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The Environment Surrounding JBIC and Its Challenges

expanding the base of financial institutions which intend
to offer financing in collaboration with JBIC. JBIC also
promotes credit securitization of its loan portfolio with theaim of mobilizing private sector finance.

■ Commitment to Protecting the Global
Environment
Under the GREEN operations, JBIC provides financing
to environmental projects, in the form of loans, equity
participations, and guarantees, while mobilizing privatesector funds. The environmental projects in which JBIC
considers participating include: i) projects for solar power
plants and energy-efficient power plants that utilize
advanced environmental technologies, and ii) projects that
ensure significant environmental preservation effects byintroducing energy-efficient equipment. JBIC has so far
made 31 financial commitments4 particularly for projects
aimed at renewable energy and energy efficiency.
Going forward, under its new global financing facility
for QI-ESG established in July 2018, JBIC will also promote
the use of the advanced environmental technologies ofJapanese companies while supporting projects that will
help protect the global environment.

Geothermal power project in Iceland in which Japanese companies are
participating

2
Infrastructure and Environment Finance Group

2. A platform set up and led by the World Bank Group aimed at theformulation of infrastructure projects utilizing PPPs
3. Business 20 (B20) is the official G20 dialogue with the global business
community.
4. As of March 2018

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2

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

The Industry Finance Group (the Group) is composed of four
departments and offices namely the Corporate Finance Department,
Finance Office for SMEs, Marine and Aerospace Finance Department,
and West Japan Office. The Group makes efforts to maintain andincrease the international competitiveness of Japanese industries bycapitalizing on various financial instruments for financing projects
overseas.
Foreign investment by Japanese companies continues to remain
stable. In FY2017, the Group made 102 financial commitments inloans, equity participations, and guarantees, amounting to ¥468.1
billion.
Under JBIC’s Third Medium-term Business Plan (FY2018–2020) commenced in FY2018, the Group will strive to support
Japanese companies including mid-tier enterprises and SMEs in
expanding overseas, and to maintain and increase the international
competitiveness of Japanese industries through its efforts to:i) take strategic action to promote innovation, ii) support Japanesecompanies in expanding into frontier markets, iii) support overseas
M&As, and iv) enhance its risk-taking capability for financing
various projects.

3
Industry Finance Group

Kazuhiko Tanaka
Managing Executive Officer
Global Head of Industry Finance Group

Business Environment and Key Challenges■ Overseas Business Deployment of Diverse
Industries

investment by manufacturers has remained flat (Figure2). Moreover, it has recently been observed that Japanesecompanies moved to expand business to the industries inwhich overseas investment has not been made so far, suchas the healthcare services industry, which is the key focus
area in the Japanese government’s Future Investment
Strategy 2018 (Cabinet decision in June, 2018).
Looking at overseas M&A activities by Japanesecompanies, the value of M&A deals declined in 2017,
falling below ¥8 trillion, compared with the levels of 2015
and 2016 when values exceeded ¥10 trillion on the backof large-scale M&A transactions. On the other hand,the number of M&A deals continues to grow steadily,

Despite the slowdown sparked by the global financial crisis
in 2008, foreign direct investment by Japanese companies
returned to growth at a level exceeding $100 billion in 2011
thanks in part to a rapidly appreciating yen. Subsequently,
the yen depreciated but foreign direct investment by
Japanese companies remained stable, reaching $160.4
billion in 2017 (Figure 1).
Amid favorable growth in foreign direct investment by
Japanese companies, it should be particularly noted that
foreign direct investment by non-manufacturers has beenon an upward trend in recent years, while the growth in

Figure 1. Value of Japanese Foreign Direct Investment(Billions of
U.S. dollars)

Japanese foreign direct investment (left axis)

Exchange rate (right axis)(USD/JPY)

200

150
120

150

90
100
60
50

0

30

’03

’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

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

32

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Annual Report 2018

’15

’16

’17 (Year)0Figure 2. Foreign Direct Investment by JapaneseCompanies (Breakdown by Industry)(Billions of
U.S. dollars)

1.8

2

growth trajectory amid structural issues such as a shrinking
population and an aging society with a falling birthrate andto create a much more affluent society, it is indispensable
to increase the productivity of the entire economy andstrengthen earning power. To this end, it is increasingly
necessary to proactively encourage Japanese companies toenter overseas markets for new businesses.

The Environment Surrounding JBIC and Its Challenges

increasing from 636 in 2016 to 672 in 2017 (Figure 3). Thissuggests that Japanese companies emphasize overseas
M&A activities as their important business strategy for
acquiring new markets replacing the shrinking domestic
market and for expanding the scale of their business toprevail in global competition.
In order to put the Japanese economy back on a

Figure 3. Changes in the Value and Number ofOverseas M&A by Japanese Companies(Trillionsof yen)Manufacturing
Finance/Insurance
WholesaleServices
Other non-manufacturing

1.5
1.2

Value (left axis)

Number (right axis)(Number)

15

1,000

12

800

9

600

6

400

3

200

0.9
0.6
0.3
0

’14

’15

’16

’17

0

(FY)

’09

’10

’11

’12

’13

’14

’15

’16

3

0
’17 (Year)

Source: RECOF Corporation■ Value of Japan’s Exports in a Recovery Trend

Industry Finance Group

Source: Japan External Trade Organization (JETRO)’08

The value of exports in 2017 remained stable, rising 8.3%
year-on-year to $698.1 billion (Figure 4).
On the other hand, Asian emerging countries
particularly China increased their global export share
while that of Japanese industries declined. Amid
growing diversification of Japanese companies’ sales
destinations, evaluation of creditworthiness of importers
in foreign countries and uncertainties about their business
transactions are becoming major concerns for Japanesecompanies which plan to expand into overseas markets. To
ensure that Japanese companies can cope with increasing
business risk in an appropriate manner, JBIC is increasingly
required to participate in projects from the early projectstage and to supply funding for projects with relatively
high risk profiles by capitalizing on its diverse financial
instruments.

Although the value of global export transactions
declined in 2015 and 2016, reflecting stagnant demandin emerging markets and weak natural resource prices,global export transactions in 2017 rebounded to $17.7
trillion, up from $16.0 trillion in 2016, marking the firstyear-on-year increase in three years. This increase wasdue in part to economic expansions driven by monetaryeasing policies in developed countries. The value of Japan’s
export transactions declined from 2012 to 2015 despite
the progressing yen depreciation. This is because theestablishment of local production systems by Japanesecompanies and the development of their own supply chain
systems abroad placed downward pressure on export
growth. Nonetheless, Japan’s export transactions recovered
to $644.9 billion in 2016 thanks to increased demand forautomobile-related goods in developed countries and for
information-related products in Asian emerging countries.

Figure 4. Global and Japanese Export Value(Billions of
U.S. dollars)

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

Global export value (right axis)

1,000

20,000800

16,000600

12,000

400

8,000

200

4,000

0

’03
’04
Source: UNCTAD

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

’17 (Year)

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■ Overseas Business Deployment of Mid-tierEnterprises and SMEs

The Environment Surrounding JBIC and Its Challenges

Mid-tier enterprises and SMEs are accelerating theirmove to expand business opportunities by capturing
demand in overseas markets in addition to responding tolocal procurement needs of major Japanese companies.
According to the Survey Report on Overseas Business
Operations by Japanese Manufacturing Companies,
implemented by JBIC annually as a survey of medium-term
prospects for overseas operations, a majority of mid-tierenterprises and SMEs continued to respond that they will
“strengthen/expand” their overseas business operations.
This suggests they continue to have a strong desire toroll out overseas operations (Figure 5). By region, a highproportion of responses indicated they will “strengthen/
expand” business in the Mekong region countries excluding
Thailand (refer to the frontier countries defined in JBIC’s
Third Medium-term Business Plan (FY2018–2020)1), due
to the growth potential of local markets and a low-cost
workforce (Figure 6).
Diversification has been seen in the fields of business
invested by Japanese mid-tier enterprises and SMEs, theirinvestment destinations, and funding needs. Meanwhile,
compared with larger companies, the mid-tier enterprises
and SMEs might face greater constraints on various

3

fronts, such as fund procurement and the collection of
information about overseas investment. Due to this, it isimportant to provide detailed support to those companies.

1. The frontier countries in the Mekong region which are used in JBIC’s
Third Medium-term Business Plan (FY2018-2020) refer to the following
four countries: Laos, Cambodia, Myanmar, and Vietnam.

Figure 6.
Business Prospects (in the Mekong Region) of Mid-tierEnterprises and SMEs (in the manufacturing sector)
Proportion of response indicating “strengthen/
expand” overseas business
Mid-tier enterprises and SMEs
Laos (4)75.0%

Cambodia (11)81.8%

Myanmar (13)84.6%

Vietnam (45)77.8%

Note: FY2017 response rate. The numbers in parentheses on theright side of country names are the number of mid-tierenterprises and SMEs which responded to the question.
Source: Results of the JBIC FY2017 Survey Report on Overseas
Business Operations by Japanese Manufacturing Companies

Industry Finance Group

Figure 5. Medium-term Prospects (Next Three Years, or So) for Overseas Operations1
Strengthen/expand

Maintain present level

Scale back/withdraw

All companies(%)
100

Mid-tier enterprises/SMEs3

(610)
1.5

(602)
0.7

(594)
1.5

(623)
0.5

(592)2

16.1

18.4

18.0

23.0

26.7

1.2

80

(169)
2.4

(166)
0.0

(157)
1.9

(186)
0.0

(188)2
2.1

23.7

25.3

22.9

31.2

37.2

74.0

74.7

75.2

68.8

60.6

80

60
40

(%)
100

60
82.5

80.9

80.5

76.6

72.1

20

40
20

0

0
’13
’14
’15
’16
’17 (FY)
’13
’14
’15
’16
’17 (FY)
Notes 1. “Overseas Operations” is defined as production, sales, and R&D activities at overseas bases, as well as the outsourcing of
manufacturing and procurement overseas.
2. The numbers in the parentheses above the bar graphs indicate the numbers of responses.
3. Mid-tier enterprises/SMEs are companies whose paid-in capital is less than ¥1 billion.
Source: Results of the JBIC FY2017 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies

JBIC’s Activities■ Supporting Overseas Business Expansion
Using Various Financial Instruments
JBIC worked to support the overseas business deployment
of Japanese companies by providing long-term fundingfor overseas M&A activities, overseas infrastructure, andnatural resource-related sectors. Led by the Industry
Finance Group, JBIC continues to provide support formeeting the high needs for overseas M&A. JBIC provides
a flexible form of long-term funding required for the M&A
activities of Japanese companies in various fields, including
the financial, automotive parts, precision equipment parts,
real estate, apparel, mining machinery, and food industries.

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This funding is provided through direct financing fromJBIC or indirect financing (two-step loans (TSLs)) utilizing
M&A credit lines (credit facilities) established withJapanese private financial institutions. In FY2017, JBIC
approved financial commitments totaling ¥361.1 billion
for overseas M&A transactions. In addition to this, JBIC
provided support through project finance for long-term
FPSO (floating production, storage, and offloading) vessel
chartering services for developing an offshore oilfield. This
also helped strengthen the international competitivenessof Japanese companies in offshore resource development.
As an effort to assist Japanese companies inHospital PPP project in Turkey

JBIC actively supported the ship exports of Japanesecompanies. The shipbuilding industry, which situates its
main shipyards in Japan, plays a significant role in creating
business for regional economies and mid-tier enterprises
and SMEs, including industries related to the manufacturingof materials and components for ships. In supporting ship
exports, JBIC provides funds usually through a buyer’s
credit on a corporate finance basis depending on thecreditworthiness of a foreign importer of the ship built by aJapanese company. On the other hand, JBIC supported theJapanese shipbuilding industry by assuming risk that varies
according to the creditworthiness of a foreign importer.
This financial support includes the first project finance for abulk carrier and a bank loan via a local financial institution.

■ Supporting Overseas Business Deploymentof Mid-tier Enterprises and SMEs
Since FY2012, JBIC has enhanced its capability to support
Japanese mid-tier enterprises and SMEs in expanding
abroad through business units dedicated to this purpose
at its Head Office and West Japan Office. In FY2017, thenumber of financial commitments to mid-tier enterprises
and SMEs totaled 74. By region, 42 commitments weremade to the Mekong region, where mid-tier enterprises
and SMEs indicate they will expand operations as cited
in JBIC’s annual survey of medium-term prospects foroverseas operations. Commitments to the Mekong region
accounted for more than half of total commitments to
the regions invested by mid-tier enterprises and SMEs,
reflecting their willingness to expand into the region.
To facilitate the support of mid-tier enterprises andSMEs, JBIC has strengthened cooperation with Japaneseregional financial institutions and overseas subsidiaries
of lease companies by establishing investment credit
lines through private financial institutions. In addition toseamless funding in the form of loans denominated in
hard currencies (U.S. dollars and Euros), JBIC responded
to the local currency needs of overseas subsidiaries of mid-3
Industry Finance Group■ Supporting Ship
Exports of Japanese Companies

2tier enterprises and
SMEs by providing
loans denominatedin local currencies
such as the Mexican
peso and Thai baht.
Besides support JBIC held business matchings for mid-tierin raising funds, enterprises and SMEs.
JBIC held the Highlevel Workshop on International Finance for Regional
Financial Institutions in April 2017, inviting the presidents
and executive officers of over 60 regional financial
institutions. The Workshop was organized with the aimof further enhancing mutual cooperative relationships
between Japanese regional financial institutions and JBIC.
Additional efforts to support mid-tier enterprises and
SMEs included holding meetings for exchanging views tostrengthen collaboration between: i) governments andlocal financial institutions of developing countries withwhich JBIC signed memoranda of understanding (MOUs) to
support the overseas advancement of mid-tier enterprises
and SMEs and ii) Japanese regional financial institutions
participating in the MOUs. JBIC encouraged mid-tierenterprises and SMEs to expand their sales channels by
utilizing its broad network of contacts around the world,
for example, providing business matching opportunities toautomotive parts manufacturers and overseas automotive
parts suppliers in cooperation with Japanese regional
financial institutions and foreign embassies in Japan.

The Environment Surrounding JBIC and Its Challenges

infrastructure export,
which is also promoted
bytheJapanesegovernment’s Future
Investment
Strategy
2017
and
the
Healthcare
Policy,JBIC provided project
finance and a politicalrisk guarantee for
FPSO project
the largest hospitalproject in Turkey involving a Japanese trading company.
In this project, JBIC took the lead in structuring a project
on a Public-Private Partnership (PPP) basis by engaging
in numerous discussions and negotiations with thegovernment of Turkey and making proposals for financial
instruments.
JBIC also supported
Japanesecompaniesin
acquiring
local
currencies through loans
denominated in Russian
rubles and Indian rupees.

■ Meeting the Needs of Japanese Companies
The international economic conditions surrounding Japan,such as political conditions in each country and economic
trends in emerging countries, are constantly changing.
JBIC continues to provide support to maintain and increase
the international competitiveness of Japanese industries,
while considering the directions of Japanese government’s
policies.
JBIC offers various financing instruments suchas project finance, subordinated loans, and loans
denominated in local currencies.
Capitalizing on these financial instruments, theIndustry Finance Group will provide further support toJapanese companies which plan to expand overseas. On
top of this, the Group will strive to explore and create
new business opportunities that can lead to Japan’ssustainable growth particularly in growth areas and new
fields, as defined by JBIC’s Third Medium-term Business
Plan (FY2018–2020), and will continue to play a role inconnecting Japan to the world by enhancing its risk-taking
capability for financing various projects and responding to
the needs of customers in a timely and accurate manner.

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2

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

FY2017 was the first full year of operations for the Equity FinanceGroup since its establishment in October 2016. One of the growthstrategies of the Japanese government aims to benefit fromoverseas growth markets. To achieve the government’s growthstrategy, it is becoming increasingly significant to supply funding
through strengthening risk-taking capability. For this purpose,
JBIC enhanced the JBIC Group’s capability in the area of equity
financing, for example, by establishing JBIC IG Partners (JBIC IG) to
provide advisory services regarding overseas investment funds. The
first investment fund where JBIC IG provides investment advisory
services was established in September 2017. JBIC also financed
overseas M&A by a Japanese company in the form of an equity
participation. As demonstrated by this, FY2017 was a year in which
the Equity Finance Group built the foundations for supporting
Japanese companies in expanding overseas by utilizing its various
financial methods. Under its Third Medium-term Business Plan
(FY2018–FY2020), JBIC will continue to provide proactive support
to Japanese companies which plan to expand their business tooverseas markets, while considering new trends in Japaneseindustries such as the adoption of innovation and creation of new
businesses.

4
Equity Finance Group

Shinji Fujino
Managing Executive Officer
Global Head of Equity Finance Group

Business Environment and Key Challenges■ Overseas M&A and Technology Innovation
JBIC has encouraged Japanese companies to expand
their business overseas by supplying funding under its
equity financing operations. Through these operations,
JBIC strives to help Japanese companies further expand
their business activities to overseas countries and enable
Japan to benefit from the growth potential of the global
economy.
For Japan, which is facing structural problems such asa declining birthrate, an aging population, and a shrinking
labor force, it is increasingly important to acquire rapidly
growing markets in overseas countries, especially emerging
countries. Amid intense competition for acquiring foreign
markets, overseas M&A activities are firmly positioned
as a key option for Japanese companies as a means ofaccelerating growth. Against this backdrop, overseas M&A
activities by Japanese companies became more vigorous in
2017, marking a record high of 672 deals.
One of the major characteristics of recent overseas
M&A activities by Japanese companies is their intention toacquire new markets and meet demand in foreign countries
amid a decreasing birthrate and an aging population in
Japan. In addition, there has been a pronounced moveby Japanese companies to emphasize the use of open
innovation in their growth strategy and push forward
overseas M&A activity as a way to obtain new technologies
and technical know-how. Japanese industries are going
through a major structural shift to the Fourth Industrial
Revolution which is driven by technological innovation

36

JBIC



Annual Report 2018such as AI, IoT, and other new technologies. The
Japanese government’s Future Investment Strategy 2018
(Cabinet decision on June 15, 2018) also states that it isindispensable for Japan’s future growth to promote socialchange through open innovation such as collaboration in
the use of technologies, human resources, and data acrossdifferent organizations and industries. Looking at overseas
markets, as evidenced by the emergence of IT platformers
in the U.S. and China, competition across different
industries and for access to new innovative technologies
is expected to intensify further. Under such circumstances,
Japanese industries are also required to make strategic
efforts towards promoting innovation.
In light of these changes in the external environment,
JBIC will assist Japanese companies in expanding into
overseas markets by increasing the supply of funding
through its risk-taking capability.

2

JBIC’s Activities

In an effort to enhance its capability in the area of
equity financing, JBIC established JBIC IG in June 2017
in collaboration with Industrial Growth Platform, Inc.
(IGPI) to provide investment advisory services regarding
overseas investment funds. The purpose of JBIC IG is toprovide these investment advisory services by applying
the respective strengths of JBIC and IGPI. JBIC executes
business in international financial markets as Japan’s policybased financial institution. In addition to the knowledgeof investment business, IGPI has significant experiencein providing companies with hands-on support for longterm, sustainable growth in corporate and business value.

■ Promoting Open Innovation and Acquiring
Overseas Technologies by JapaneseCompanies

Japanese industries are urgently required to boost
productivity across sectors, obtain advanced technologies,
and promote innovation. Japanese industries also continue
and accelerate their move to benefit from growing
overseas markets, while coping with increasing businessrisk. Recognizing such circumstances in Japan and abroad,
JBIC’s Third Medium-term Business Plan (FY2018–2020)
strives to provide support that responds to needs ingrowth fields and new areas of industry. As Japan’s policybased financial institution, JBIC will continue to support
Japanese companies in expanding overseas by drawing on
its diverse financial instruments, including equity financing,and by enhancing its risk-taking capability. As part of these
efforts, the Equity Finance Group will actively provide
support across the entire JBIC Group, including JBIC IG,
to Japanese companies which plan to conduct M&As
overseas with the intention of promoting open innovationand creating new businesses.

4
Equity Finance GroupJBIC signed an agreement in March 2018 to make anequity investment in the Geodesic Capital Fund I-S, L.P.,
which invests in advanced IT companies mainly in the U.S.
Japanese companies are responding to the Fourth Industrial
Revolution by creating new added value through open
innovation, in which they can combine external resources
and companies’ own internal strengths in technology
and experience. The aim of the fund, in which Japanesecompanies participate as strategic investors, is not only toinvest in advanced IT companies, mainly in the U.S., butalso to provide those Japanese investors with strategic
services, such as offering opportunities to invest in or formbusiness alliances with advanced IT companies. This fundis expected to promote the growth of Japanese companies
through open innovation.
JBIC also supported an overseas M&A transaction
by a Japanese company, specifically, the acquisition ofGermany-based H.C. Starck Tantalum and Niobium GmbH(HCS TaNb) by JX Nippon Mining & Metals Corporation(JXNMM). JBIC supported JXNMM in purchasing all sharesin HCS TaNb from H.C. Starck GmbH of Germany. JBIC’s
equity participation was undertaken through JX Metals
Deutschland GmbH (JXMD), a special-purpose company of
JXNMM. HCS TaNb is one of the world’s leading companies
in the development, production, and distribution of
tantalum and niobium products (high-purity metal
powder), which are widely used in the Japanese electronics
industry. HCS TaNb has a strong product lineup backed
by its technological and marketing capabilities. Throughthis financing, JBIC supports JXNMM in strengthening
its revenue base and creating synergy effects by bringing
together the management resources of JXNMM Groupand HCS TaNb.

■ Future Business Strategy

The Environment Surrounding JBIC and Its Challenges■ Strengthening JBIC’s Capability of Equity
Financing

JBIC

Annual Report 201837

2

Establishment of JBIC IG Partners (JBIC IG)

The Environment Surrounding JBIC and Its Challenges

JBIC IG is an investment advisory services company
established by JBIC and IGPI in June 2017. JBIC IG applies
the respective strengths of JBIC and IGPI as follows: JBIC
has knowledge and experience of financing international
projects as Japan’s policy-based financial institution;
IGPI has the knowledge of investment business andbroad experience in providing companies with hands-on
support for long-term, sustainable growth in corporate
and business value. JBIC IG aims to create long-term,
sustainable value for Japanese investors and industries
through the development of global business opportunities
and a disciplined investment approach.

About JBIC IG Partners

Strengths■■■

Strengths

Expertise in risk analysis of politics and macro economy
Strong network with governments and public sector inhost countries
Strong presence in international ﬁnancial transactions

■

■

■

4

Founded by former members of Industrial Revitalization
Corporation of Japan (IRCJ), a Japanese government-led
fund focusing on turnaround projects in Japan
Capability backed by broad experience in providing
hands-on management support and making investment
in companies from start-ups to listed companies
Experience in enhancing enterprise value of clients, ranging
from start-ups to companies with $10B+ in revenues

51%

49%

Equity Finance Group

MissionTo create long-term and sustainable value for investors and industries
through the development of global business opportunities anda disciplined investment approach.

Business Model of JBIC IG
JBIC IG composes overseas funds by partnering withforeign sovereign wealth funds (SWF) and international
investors, through investment advisory services to overseas
funds. Through investment advice to overseas funds,
JBIC IG aims to catalyze co-investments in overseas

companies to share risks with Japanese companies, as wellas to expand transactions with overseas companies andJapanese companies.
Going forward, JBIC IG will continue to provide added
value to Japanese industry through the creation of new
funds.

Overview of JBIC IG Partners’ Investment Structure

Strategic partner(s)Limited Partner

Other
Limited Partners

EquityInvestment
as a Limited
PartnerFund management(General Partner)
Overseas investment funds
EquityInvestment

Japanese company(ies)
Equity Investment

Companies/projects
Business allianceand/or acquisition

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Annual Report 2018

Examples of Business3 Outcomes in FY2017
1 Overview of Business Outcomes by Region ·············· 40
2 Examples of Business Outcomes by Region ·············· 42
3 Examples of Business Outcomes Relating toSupport for Mid-tier Enterprises and SMEs ·············· 52

4 Examples of Business Outcomes Relating

to Environment ·············································· 56

5 Examples of Business Outcomes Relating to Studies,

and Collaboration with Overseas Governmental
Organizations and International Organizations ········ 58

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1

3

Overview of Business Outcomes by Region

Geographical Distribution of Loan and Equity Participation Commitments(FY2017; unit: billions of yen)

Examples of Business Outcomes in FY2017

Europe¥60.0
Russia60.0

100%
Myanmar 1.0 1%

1

Mongolia 0.8 0%

Singapore 1.8 1%
China 1.9 1%
The Philippines 2.1 1%

Turkey111.5

Overview of Business Outcomes by Region

29%

Laos 0.4 0%
Cambodia 0.2 0%
Japan 0.2 0%
Malaysia 0.1 0%

Thailand 2.2 1%

The Middle East

Vietnam 4.8 3%¥387.5
United Arab Emirates
276.0

71%

India
38.0

22%

Asia

¥173.5Indonesia
119.4

Egypt
21.4

69%

15%

AfricaMalawi37.9

27%¥138.4

Mozambique
79.0

57%

MarshallIslands
1.4

8%

Oceania¥18.2
Australia
16.7

92%

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Examples of Business Outcomes in FY2017

3

North America¥149.7
Others 3.4 2%

Panama 2.1 1%
United States
149.7

1

Mexico
17.8

100%

Chile
33.5

17%

Overview of Business Outcomes by Region

9%Latin America
Bermudaand the Caribbean Islands
91.5¥201.2

46%

Brazil52.7

26%Transition in Composition of Commitments by Region(Loans, Equity Participations, and Guarantees) over the Last 5 Years
The Middle East 104.8 (5%)
Africa 81.1 (4%)

FY2013Asia
472.7

Oceania
292.9

(21%)

(13%)

Europe350.3

North America
654.0

(16%)

Asia
610.5

¥2,206.1(30%)

Oceania 173.8 (5%)

FY2014(Unit: billions of yen)
Latin America and the Caribbean 209.1 (9%)
Others 40.8 (2%)

Africa 195.6 (6%)

The Middle East
493.6

(19%)

Others 21.2 (1%)
Latin America and the Caribbean 136.1 (4%)
North America
1,389.3

(15%)

(43%)

¥3,249.3

Europe 228.8 (7%)
Oceania 6.9 (0%)

FY2015Asia
332.9

Europe
598.3

(14%)

(25%)

Africa 14.9 (1%)
The Middle East
427.6
(18%)

Oceania 11.1 (1%)

FY2016

Asia
843.2
(38%)

Asia 174.3 (15%)
Oceania 18.2 (2%)

FY2017The Middle East
404.0
(34%)

Europe 60.0 (5%)

Others 15.5 (1%)

North America
493.6
(21%)

Latin America andthe Caribbean
507.3 (21%)

The Middle East 134.2 (6%)

Europe525.7

North America
605.8

(23%)

(27%)

¥2,397.4

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

Others 15.4 (1%)
Africa 138.4 (12%)
Latin America and the Caribbean 201.2 (17%)¥1,193.2
Others 16.1 (1%)
North America 180.6 (15%)

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Annual Report 2018

41

2

3

Examples of Business Outcomes by Region■ AsiaExamples of Business Outcomes in FY2017

Mongolia
Supporting the Export of ATMs by Japanese Companies Using Export Credit Line
Promoting trade and economic partnership between Japan and Mongolia
JBIC concluded an individual loan agreement based on an export credit line1 extended to theGovernment of Mongolia in June 2013. The loan is intended to provide, through the Ministryof Finance of Mongolia, the necessary funds for Khan Bank LLC, a Mongolian financial
institution, to purchase automated teller machines (ATMs) from Hitachi-Omron Terminal
Solutions, Corp.
The enactment of the “Agreement between Japan and Mongolia for an Economic
Partnership (EPA)” by the governments of Japan and Mongolia in June 2016 is expected tofurther enhance reciprocal economic cooperation and vitalize the two countries’ economies
in a wide range of fields, along with the liberalization and facilitation of trade and investment
between the two countries. In March 2017, the “Japan-Mongolia Mid-term Action Plan for a
Strategic Partnership,”2 was agreed on by the two countries, resolving to promote financing
utilizing this credit line effectively. This loan is in line with such measures of the two countries.

2

Cambodia

Examples of Business Outcomes by Region

Loan for the Manufacturing and Wholesales Business of Cosmetic Accessories
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded two loan agreements with Shinohara Co., Ltd. These loans are intended
to provide the necessary funds for the establishment of a plant to manufacture cosmetic
accessories in Phnom Penh, Cambodia by SHINOHARA (PHNOM PENH) CO., LTD (SPP).
Shinohara is an SME engaged in the manufacture and wholesale of cosmetic accessories.
In July 2017, SPP was established as a manufacturing and wholesale base in Cambodia.
Shinohara seeks to expand production capacity and strengthen global sales through SPP
based on the recent growth in demand for cosmetic accessories. These loans contributeto maintaining and strengthening the international competitiveness of Japanese industry
through support for the overseas business deployment of Shinohara.

Indonesia
Guarantee for Loan by Private Financial Institution for the Manufacturing and Sales Businessof Automobile Parts
Supporting overseas business deployment of Indonesian subsidiary of Japanese mid-tier enterprises and SMEs by
guaranteeing
JBIC concluded a guarantee agreement with the Hamamatsu Shinkin Bank for loans the bankhas extended to UNICRAFT NAGURA CORPORATION’s Indonesian subsidiary PT. UNICRAFT
NAGURA INDONESIA (UCNI). JBIC supports UCNI by guaranteeing its cross-border borrowing
from private financial institutions needed for the manufacture and sale of automobile partsin West Java of Indonesia.
UNICRAFT NAGURA is an SME engaged in the manufacture and sale of precision
automotive parts and other products. With the economic growth in Indonesia and neighboring
Southeast Asian countries, UNICRAFT NAGURA established UCNI in 2012 to expand overseas
production through UCNI.
This guarantee supports the overseas business deployment of UNICRAFT NAGURA andcontributes to maintaining and strengthening the international competitiveness of Japaneseindustry.

1. An export credit line is a form of export financing in which JBIC makes a commitment to provide a maximum amount of credit to be extended to theborrower (foreign banks or other entities) to finance exports of machinery, equipment, and services from Japan.
2. The mid-term action plan was agreed on by both governments upon Mr. Enkhbold, Chairman of the State Great Hural (Parliament) of Mongolia, and Foreign
Minister Munkh-Orgil’s visit to Japan in March 2017, as a roadmap for Japan-Mongolia relations for the next five years (2017-2021).

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Examples of Business Outcomes in FY2017

3

Laos
Loans for the Manufacturing and Sales Business of Concrete Products
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded a loan agreement with SANKO LAO Co., Ltd. (SALC), a Laotian subsidiaryof Sanko Construction Co., Ltd. The loan provides SALC with the funds necessary for the
manufacture and sale of concrete products carried out in the special economic zone dedicatedto Japanese mid-tier enterprises and SMEs in Champasak Province in southern Laos.
Sanko Construction is an SME engaged in the civil engineering and construction
business based in Okayama Prefecture. In 2016, Sanko Construction established SALC withthe technical cooperation of business partners to promote concrete products in Laos. In
Laos, the development of infrastructure such as roads is expected to continue, and Sanko
Construction seeks to promote high-quality concrete products through SALC.
This loan will contribute to maintaining and strengthening the international
competitiveness of Japanese industry by supporting the overseas business deployment of
Sanko Construction.

2

India

Examples of Business Outcomes by Region

Export Credit Line for JSW Steel Limited in India
Providing support for export of steel-manufacturing facilities
JBIC concluded an export credit line agreement with JSW Steel Limited (JSW Steel) of India. JSW Steel is a leading Indian steel-manufacturing
company, and Japanese steel manufacturer JFE Steel Corporation has a 15% stake in JSW Steel. This credit line is intended to provide funds
to purchase steel-manufacturing facilities and technical services from Japanese companies.3
In India, demand for steel is expected to expand in the medium to long term, particularly in the infrastructure and automobile sectors
driven by economic growth, and interest in Japanese high-quality steel-manufacturing facilities is growing. This loan is intended to help
further expand exports of machinery and equipment from Japan by meeting the investment needs of JSW Steel in a timely, flexible manner.
This will also contribute to maintaining and strengthening the international competitiveness of Japanese industries.

India
Loan for Japanese Motorcycle and Automobile Parts Manufacturer in India
Providing local currency loan to support Japanese company with overseas operations
JBIC concluded a loan agreement with Mikuni India Private Limited (MID), an Indiansubsidiary of MIKUNI CORPORATION. The loan is intended to provide the funds necessaryfor MID to manufacture and sell fuel injection systems and other parts of both motorcycles
and automobiles in the Neemrana Industrial Park, Rajasthan State, India. India is the largest
motorcycle market and the fourth largest automobile market in the world, and both markets
are expected to see further economic growth. This loan will be used to expand MID’s
production capacity of plants to meet the increasing demand.
MID conducts environmentally friendly manufacturing, as evidenced by its cooperation
with Japan’s New Energy Development Organization (NEDO) on demonstrating a microgrid
system for solar photovoltaic energy power supply in the Neemrana Industrial Park. The loan
is intended to support Japanese companies in making regional investments under the DelhiMumbai Industrial Corridor Project, a joint India-Japan regional development project.

3. This is the second export credit line agreement between JBIC and JSW Steel, following the first one signed in May 2014.

JBIC



Annual Report 201843

3

■ AsiaExamples of Business Outcomes in FY2017

India
Loan for Concrete Products Manufacturing and Sales BusinessSupporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded a loan agreement with Fuji Silvertech Concrete Private Limited1 (FSC), an
Indian company jointly owned by Fuji Concrete Industry Co., Ltd. and Toyota Kohki Co., Ltd.
The loan is intended to finance the concrete products manufacture and sale by FSC in theState of Gujarat, India, and will be used to construct a second plant and expand facilities.
Fuji Concrete Industry is an SME engaged in the manufacture and sale of concrete
products, and Toyota Kohki is an SME engaged in manufacturing and selling concrete forms
for concrete products. In India, with demand for infrastructure investments increasing against
the backdrop of economic growth, the two companies jointly established FSC in India,
where demand for pre-casted concrete products2 such as roadside drains and exterior walls
surrounding industrial parks for various infrastructure development projects is expected toincrease.

2

Malaysia

Examples of Business Outcomes by Region

Loan for the Manufacturing and Sales Business of Mass Flow Controllers
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs
JBIC concluded a loan agreement with JPLINTEC INSTRUMENTS SDN. BHD. (JPLI), a Malaysiansubsidiary of LINTEC CO., LTD. The loan provides the necessary funds for the manufacture andsales of mass flow controllers3 in the State of Penang, Malaysia by JPLI, and for the expansionof production facilities.
LINTEC is an SME engaged primarily in the manufacture and sales of mass flow controllers
used in semiconductor manufacturing. In Southeast Asia, the need for semiconductors has
increased against the backdrop of economic growth, and demand for mass flow controllers, a
key device for semiconductor manufacturing, is expected to grow. Therefore, LINTEC seeks toexpand business through JPLI. The loan will contribute to maintaining and strengthening theinternational competitiveness of Japanese industry by supporting LINTEC’s overseas businessdeployment.

ThailandIndividual Loan Agreements Concluded Based on an Investment Credit Line for Thai Subsidiary
Supporting overseas business deployment for mid-tier enterprises and SMEs utilizing finance leases
JBIC concluded five loan agreements with Bangkok Mitsubishi UFJ Lease Co., Ltd. (BMUL),a Thai subsidiary of Mitsubishi UFJ Lease & Finance Co., Ltd. These individual agreements
were concluded with BMUL based on an investment credit line to support overseas businessdeployment of Japan’s mid-tier enterprises and SMEs. These loans are intended to provide
the necessary funds for procuring equipment needed for the manufacture and sales ofautomobile parts by HAL ALUMINUM (THAILAND) CO., LTD., a Thai subsidiary of HIROSHIMAALUMINUM INDUSTRY CO., LTD., through a finance lease from BMUL.
In recent years, interest and demand for the use of finance leases for the capital
investment of mid-tier enterprises and SMEs in Thailand have increased. The loan will support
the overseas deployment of business by Japanese mid-tier enterprises and SMEs by flexibly
supplying long-term foreign currency funds needed for finance leases based on the credit line
already concluded with BMUL.

1. Fuji Concrete and Toyota Kohki holds FSC through Fuji-Toyota Precast Technology Japan Co., Ltd. (Headquarters: Tokyo), a Japanese company which is jointly
invested by the two companies.
2. The concrete products are produced with highly and in large quantities at a factory, not at a construction site.
3. A device that accurately measures and controls masses of various air and liquids and is used in semiconductor manufacturing and the LCD panel
manufacturing process

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Annual Report 2018

Examples of Business Outcomes in FY2017

3

ThailandIndividual Loan Agreement Concluded Based on an Investment Credit Line for Hachijuni Bank
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs by collaborating with regional
banks
JBIC concluded an individual loan agreement with the Hachijuni Bank, Ltd. This individual
agreement is based on an investment credit line to support the overseas business deployment
of Japanese mid-tier enterprises and SMEs concluded with the Hachijuni Bank in November
2016. The individual loan agreement concluded under the credit line provides the funds
necessary for the manufacture and sales of die casting mold parts by Kikuchi Kanagata(Thailand) Co., Ltd., a Thai subsidiary of KIKUCHI KANAGATA.
This loan, under the credit line, will support the overseas business deployment ofJapanese mid-tier enterprises and SMEs and contribute to maintaining and strengthening
the international competitiveness of Japanese industry by flexibly supplying long-term
foreign currency funds needed for businesses operated by mid-tier enterprises and SMEs indeveloping regions via Japanese financial institutions.

2

Vietnam

Examples of Business Outcomes by Region

Individual Loan Agreement Concluded Based on an Investment Credit Line for Shizuoka Bank
Supporting overseas business deployment of Japanese mid-tier enterprises and SMEs by collaborating with regional
banks
JBIC concluded a loan agreement with the Shizuoka Bank., Ltd. This individual loan agreement
is based on an investment credit line concluded with the Shizuoka Bank in December 2016
to support the overseas business deployment of Japanese mid-tier enterprises and SMEs.
The individual loan concluded under the credit line provides the necessary funds for the
manufacture and sales of plastic molded products by SAHARA INDUSTRY VIETNAM CO.,LTD., a Vietnamese subsidiary of SAHARA INDUSTRY CO., LTD.
This loan, under the credit line, will support the overseas business deployment ofJapanese mid-tier enterprises and SMEs and contribute to maintaining and strengthening
the international competitiveness of Japanese industry by flexibly supplying long-term
foreign currency funds needed for businesses operated by mid-tier enterprises and SMEs indeveloping regions via Japanese financial institutions.

Vietnam
Loan for Wharf Development and Operation
Supporting the overseas expansion of Japanese steel industry
JBIC concluded a loan agreement with Thi Vai International Port Co., Ltd. (TVP), a Vietnamese
subsidiary of KYOEI STEEL LTD. KYOEI STEEL is a major electric-furnace steelmaker whose
mainstay business is the manufacture and sale of steel products, particularly steel materials
for civil engineering and construction. This loan provides the funds needed by TVP to develop
and operate the wharf facilities in Cai Mep-Thi Vai Port in Vietnam’s Ba Ria-Vung Tau Province.
The fund will be applied to the capital investment required to develop these wharf facilities toprovide logistics services mainly for Vina Kyoei Steel Limited (VKS), a Vietnamese subsidiary of
KYOEI STEEL, and other steel industries located neighborhood.

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Annual Report 201845

3

■ Europe

Examples of Business Outcomes in FY2017

RussiaConclusion of Formation and Corporate Agreement to Establish Japanese Project Promotion
Vehicle in the Russian Far Eastern Region
Facilitating and enhancing investment by Japanese companies in the Russian Far Eastern Region
JBIC concluded a Formation and Corporate Agreement with The Far East Investment and Export Agency1 (FEIA) and JSC The Far East andBaikal Region Development Fund2 (FEDF) to establish a joint venture company named the Japanese Project Promotion Vehicle in the Far East
Limited Liability Company (“Far East JPPV”) that will promote Advanced Special Economic Zones3 (“ASEZs”) and Free Ports.4
The purpose of Far East JPPV is to enhance Japanese companies’ investment in Advanced Special Economic Zones and Free Ports in
the Russian Far East Region, by mitigating the concerns of Japanese companies involved in project formation through its coordination with
Russian governmental authorities and providing tailored advisory services. The establishment of Far East JPPV is in line with the policy of theRussian government, which seeks to develop and expand the Far East region and will contribute to further deepening of economic relations
between Russia and Japan.

2

RussiaExamples of Business Outcomes by Region

MOU Concluded with Public Joint Stock Company Gazprom
Strengthening cooperation with the Russian Federation’s largest natural gas producer
JBIC concluded a memorandum of understanding (MOU) with Public Joint Stock Company Gazprom (Gazprom) at the Eastern Economic
Forum in Vladivostok. Gazprom is a global energy company focused on geological exploration, production, transportation, storage,
processing, and marketing of gas (including as a vehicle fuel), gas condensate, and oil, as well as electricity and heat production anddistribution. This MOU aims to strengthen mutual cooperation based on the earlier MOU signed in December 2016 in order to enhancebusiness relations between Russia and Japan.
JBIC continues to build relationships with important partners in the areas of oil and gas development and LNG procurement andprovide financial support to secure stable sources of energy for Japan through efforts to create business opportunities for Japanesecompanies.

1. FEIA, established in 2016 under the Ministry for the Development of the Russian Far East, conducts public relations and other activities to attract investment
into the Russian Far Eastern Region.
2. FEDF, established in 2011 by Bank for Development and Foreign Economic Affairs (Vnesheconombank), aims at promoting development in the Russian Far
Eastern Region.
3. ASEZ is a region where preferential tax treatment and deregulation have been introduced with a purpose of promoting private-sector investment. Currently,
13 areas in the Russian Far Eastern region are designated as ASEZs, including Khabarovsk.
4. Free Port is also a region where preferential tax treatment and deregulation have been introduced with a purpose of promoting private-sector investment
as is the case with ASEZ. Currently, five areas in the Russian Far Eastern region are designated as Free Ports, including Vladivostok.

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3

■ The Middle East

Examples of Business Outcomes in FY2017

TurkeyProject Finance and Political Risk Guarantee for Hospital PPP Project
Supporting the first case of Japanese company’s participation in a hospital PPP project
JBIC concluded a loan agreement for project finance5 with Istanbul PPP Saglik Yatirim A.S.
(IPSY), a Turkish corporation in which Sojitz Corporation, a Japanese company, and Ronesans
Holding A.S., a Turkish company, jointly hold stakes. The loan will be used for the Istanbul
Ikitelli Integrated Health Campus (Ikitelli IHC) public-private partnership (PPP) project. In
this project, IPSY will build Ikitelli IHC in Istanbul, which will be one of the largest hospitalcomplexes in Turkey. The Ministry of Health of Turkey will provide medical services, while IPSY
will operate and administer the facilities under a PPP scheme.
In Turkey, demand for medical services is increasing due to a rising population andeconomic growth, and the Turkish government is promoting hospital development projects
through PPP. This loan agreement will support large hospital PPP projects in Turkey, whichplans to introduce the operational and administrative know-how of Japanese hospitals. Thisis the first case of supporting a hospital PPP project for Japanese company as well as for JBIC.

2

TurkeyExamples of Business Outcomes by Region

MOU with Türk Eximbank
Supporting joint business between Japan and Turkey in third countries
JBIC concluded an MOU with Export Credit Bank of Turkey (Türk Eximbank) in Turkey withthe aim of supporting businesses in third countries undertaken by Japanese and Turkish
companies.
Türk Eximbank is a fully state-owned export credit agency which provides loans,insurance, and guarantees for exports of goods and services from Turkey. The aim of this
MOU is to support Japanese and Turkish companies’ collaboration, through cofinancing by
JBIC and Türk Eximbank, which is anticipated to develop businesses in the infrastructure
and manufacturing sectors in third countries surrounding Turkey such as Africa, the Middle
East, and Central Asia. Based on this MOU, Japanese companies, which develop quality
infrastructure, are expected to further expand into third countries in collaboration with
Turkish companies, which have a strong presence, especially in the fields of construction andcivil engineering, in third countries.

United Arab Emirates
Loan for Acquisition of Interest in Onshore Oilfields in Abu Dhabi
Contributing to stable supply of energy resources for JapanJBIC concluded a loan agreement with INPEX CORORATION (INPEX) to provide the funds
necessary for INPEX to acquire, through its subsidiary, interests in ADCO oilfields6, which
are onshore oilfields in the Emirate of Abu Dhabi (Abu Dhabi). The ADCO oilfields, in which
INPEX acquired a 40-year concession (5% participating interest) from the Supreme Petroleum
Council in April 2015, is one of the world’s largest oilfields.
In the “Basic Energy Plan,” the Japanese government set forth the target of increasing
Japan’s self-development ratio7 of oil and natural gas to 40% or more by 2030. Abu Dhabi
is vital to Japan’s resource strategy as the Emirate allows the entry of foreign companies on
the basis of concession agreements. JBIC has also indirectly supported Japanese companies’
interest acquisitions such as by the signing of MOUs with Abu Dhabi National Oil Company(ADNOC). This loan is also in line with these efforts and is expected to contribute to theenhancement of Japan’s self-development ratio of oil and gas.

Provided by INPEX CORPORATION

5. Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
6. The ADCO oilfields produce about 1.6 million barrels of crude oil a day.
7. The proportion of oil and natural gas purchased from those granted to Japanese entities to the total sum of imported and domestically produced oil andnatural gas

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■ Africa

Examples of Business Outcomes in FY2017

Mozambique/Malawi
Project Finance for Construction of Nacala Railway and Port Infrastructure
Supporting the securing a stable supply of mineral resources for JapanJBIC concluded a loan agreement in project financing with two corporations in Mozambique1
and two corporations in Malawi2, in which Mitsui & Co., Ltd. and Vale S.A., a Brazil corporation,
jointly hold equity stakes. The aim of this project is to construct the railway (a part of which
passes through Malawi) and port infrastructure which is needed to transport and export coalproduced from the Moatize coal mine in Mozambique. The project is expected to boost thequantity of coal exported to Japan from the Moatize coal mine.
Japan is totally dependent on the import of coking coal from abroad. It is important forJapan to secure a stable supply of high-quality coking coal from new sources over the longterm and diversify its supply sources. The coking coal obtained from the Moatize coal mine isof high-quality and suitable for using in producing iron and steel. This project will contributeto securing a stable and long-term supply of mineral resources to Japan.
This project is the first natural resources-related infrastructure project financed by JBIC
under FAITH23 and JBIC’s largest financial commitment in Africa.

2
Examples of Business Outcomes by Region

Tanzania
Approval of Individual Loan Based on Export Credit Line for Eastern and Southern African
Trade and Development Bank
Supporting exports of construction machinery by Japanese company to Tanzania
JBIC approved an individual loan based on an export credit line extended to the Eastern and Southern African Trade and Development
Bank (TDB) in August 2016.
The loan is intended to provide, through TDB, the necessary funds for Vehicle and Equipment Leasing (Tanzania) Limited, a Tanzaniancompany, to purchase construction machinery from Komatsu Ltd. This is the first loan approved under the credit line extended to TDB
which was set on the occasion of the 6th Tokyo International Conference on African Development (TICAD VI) held in Nairobi, Kenya.
This loan will financially support the export of machinery and equipment and the overseas business deployment of Japanese companies
in the Sub-Saharan African countries, which are covered by TDB’s financing.

1. The two Mozambique corporations are Corredor Logístico Integrado De Nacala SA and Corredor De Desenvolvimento Do Norte SA.
2. The two Malawi corporations are Vale Logistics Limited and The Central East African Railways Company PLC.
3. The promotion of economic structural reform in Africa through economic diversification and industrialization was raised as an important topic of discussion
at the 6th Tokyo International Conference on African Development (TICAD VI). In response, JBIC launched the JBIC’s Facility for African Investment and Trade
Enhancement (FAITH2), expanding the previous FAITH launched in June 2013.

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■ North America

Examples of Business Outcomes in FY2017

United States
MOC with Washington State Government in the U.S.
Supporting development of Japanese companies’ businesses in Washington StateJBIC concluded a memorandum of cooperation (MOC) with the Washington State
Government in the U.S. with the aim of contributing to the sustainable economic developmentof Washington State through supporting projects related to Washington State in sectors
such as infrastructure. The conclusion of the MOC aims to establish a business cooperation
relationship between JBIC and the Washington State Government for the purpose of further
promoting business development through investments by Japanese companies in projects,
including infrastructure projects, associated with Washington State.
Washington State has a high economic and population growth rate and numerous
infrastructure projects are being planned in the State. Furthermore, being located on the
Pacific coast, Washington is very important in terms of logistics connecting the inland areasof the U.S. with the Asia-Pacific region, including Japan, and many Japanese companies areoperating businesses in the State. Under these circumstances, it is expected that this MOC
between JBIC and the Washington State Government will create further opportunities forpromoting the business activities of Japanese companies in Washington State.

2
Examples of Business Outcomes by Region

United States
MOU with OPIC of the U.S.
Promoting projects in third countries in cooperation between Japan and the U.S.
JBIC concluded an MOU with Overseas Private Investment Corporation (OPIC) of the U.S.
OPIC is an agency of the U.S. government established to mobilize and facilitate theinvestment of U.S. private capital in the economic and social development of emerging
market countries, by offering financing and political risk insurance for certain projects. Under
the MOU, it is intended that JBIC and OPIC, as public financial institutions promoting thepolicies of their respective governments, support potential projects in the sectors, such as
infrastructure, energy, and natural resources in the regions of Asia, the Indo Pacific, the Middle
East, and Africa. In this way, the MOU will also contribute to strengthening the economic ties
between Japan and the U.S. It is expected that the implementation of cooperative projects
in which Japanese and U.S. companies participate will be promoted through cooperation
between JBIC and OPIC under the MOU.

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■ Latin America and the Caribbean

Examples of Business Outcomes in FY2017

PanamaProject Finance for Ship Exports
Supporting export of ore carriers built by Japanese shipbuilders
JBIC concluded a buyer’s credit agreement on a project finance basis with MacLin Sunny
Maritime S.A., a subsidiary in Panama owned by the Ta Tong Marine Co., Ltd. (TTM) Group, aTaiwanese corporation, for financing the purchase of an ore carrier.
The TTM Group is based in Taiwan and is a ship owner and operator of bulk carriers.
This loan is provided to finance the TTM Group to purchase a 241,000 DWT1 ore carrier
manufactured by Japanese shipbuilder IMABARI SHIPBUILDING CO., LTD.
The aim of this loan is to support the export of ships built by Japanese shipbuilders
which play a major role in the regional economy and associated industries, including mid-tierenterprises and SMEs. The loan is also intended to contribute to maintaining and increasing
the international competitiveness of the Japanese shipbuilding industry.
(Reference photo) A ship of approximately thesame size as the ship to be financed

2

BrazilExamples of Business Outcomes by Region

Project Financing for FPSO Operation Project
Supporting offshore resource development and strengthening international competitiveness of Japanese companies
JBIC concluded a loan agreement with Dutch company Sepia MV30 B.V. (SEPMV30)
incorporated by MODEC, Inc. (MODEC), Mitsui & Co., Ltd., Mitsui O.S.K. Lines, Ltd., Marubeni
Corporation, and Mitsui E&S Holdings Co., Ltd. The loan, provided as project finance, is tofinance long-term FPSO2 vessel chartering services to be provided to Petróleo Brasileiro S.A.
(Petrobras), a state-owned oil company in Brazil, for developing the Sepia oilfield3 located off
the coast of Brazil in which Petrobras holds an interest.
MODEC views Brazil as a promising market for the FPSO business. This project is the 10th
FPSO vessel chartering service to be provided to Petrobras by MODEC.
This loan is expected to maintain and increase the international competitiveness of theJapanese companies in offshore resource development and contribute to the securing ofaccess to resources and their stable supply of natural resources to Japan.
The same model as the FPSO that is to receive
financing (Provided by MODEC, Inc.)

MexicoLoan for Los Gatos Zinc and Silver Mine Project
Supporting Japanese companies’ long-term and stable procurement of zinc concentrates
JBIC concluded a loan agreement with DOWA METALS & MINING CO., LTD. The loan isintended to finance a zinc and silver mine development project called Los Gatos, located in
Mexico, which is undertaken by Minera Plata Real, S. de R.L. de C.V, a Mexican joint venturecompany owned by DOWA METALS & MINING and the U.S. based company Sunshine Silver
Mining & Refining Corporation.
Zinc is used for corrosion-resistant galvanization and for corrosion-resistant parts.
Japan is totally dependent on imports of zinc concentrates which are used to produce zincbullion. In response to expanding global demand for zinc concentrates in the infrastructure
and automobile sectors due to the economic development of developing countries, it isincreasingly important to ensure supplies of those zinc concentrates. This loan is intended toprovide financial support for securing a long-term stable supply of zinc, which is an important
metallic resource for Japan.

1. DWT stands for Dead Weight Tonnage and refers to the total carrying capacity of a vessel, including freight, fuel, food, drinking water, the crew, and theirpersonal effects.
2. A floating production, storage and offloading (FPSO) system is a 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.
3. This oilfield is located in the pre-salt layer of the Santos Basin, which is about 250 kilometers off the southeast coast of the state of Rio de Janeiro.

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Examples of Business Outcomes in FY2017

3

MexicoLoan for Japanese Automobile Parts Manufacturer
Providing local currency loan to support Japanese company with overseas operations
JBIC concluded a loan agreement with Ashimori Industria de Mexico, S.A. de C.V. (AIM), a
Mexican subsidiary of Ashimori Industry Co., Ltd. The purpose of the loan is to provide thefunds necessary for AIM to manufacture and sell automobile parts in the State of Guanajuato,
Mexico. The loan funds will be used to build a second factory within the existing factory siteof AIM for enhancing the production facility.
Ashimori Industry specializes in manufacturing not only automobile safety systemproducts such as seat belts and air bags, but also materials used for trenchless rehabilitation ofburied pipelines, industrial materials, as well as disaster prevention materials and equipment,
etc. In recent years, Ashimori Industry has been proactively expanding its business to overseas
markets. Ashimori Industry established AIM in 2012 and has supplied automobile seat belts,
air bags, as well as other automobile interior parts, but it now plans to expand sales in North
America and Europe by building a second factory. This local currency loan is to support thecompany in expanding its overseas business.

2
Examples of Business Outcomes by Region

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3

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

JBIC supports mid-tier enterprises and SMEs in a wide range of industries with their overseas business deployment.

Examples of Business Outcomes in FY2017

3

China

Indonesia

Fujix Co., Ltd.

Ondo Metal Co., Ltd.

Electric Parts Manufacturing and Sales Business

Construction Machinery and Parts Manufacturing
and Sales BusinessFujix is engaged in the manufacture and sale of wire
harnesses, aluminum die-casted products, and otherproducts used in servomotors, inverters, and industrial
robots. With demand for electric parts required forindustrial robots and other products growing due torising demand for factory automation, Fujix establishedFuhai Precision Electronic Industry (Nantong) Co., Ltd., aChinese subsidiary, in August 2017. Fujix seeks to secure
new production bases and further expand business. JBIC
provided Fujix with the funds necessary to establish an
electric parts manufacturing and sales base operated by its
Chinese subsidiary.

Since its establishment in 1968, Ondo Metal has
been engaged in the manufacture and sale ofcounterweights1 for construction machinery. With
demand for construction machinery parts expected
to grow on the back of economic growth in ASEAN
countries, Ondo Metal established PT. ONDO METALINDONESIA (OMI), an Indonesian subsidiary, in 2011
with the aim of expanding overseas production. JBIC
provided the funds necessary for the manufactureand sales of construction machinery parts by OMI andassisted by guaranteeing the borrowings with a crossborder loan through the Chiba Bank, Ltd.
1. A large weight attached to the rear of the machine to ensure thebalance and safety of construction machinery (hydraulic excavator,
cranes, forklifts, etc.)

Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs
52

Malaysia

MyanmarOkumura Engineering Corporation

EBISU SHOJI Co., Ltd.

Valves Manufacturing and Sales BusinessBroiler Meat Processing and Sales BusinessOkumura Engineering is a century-year old company founded
in 1902 that is primarily engaged in the manufacture andsale of valves. In light of the expected growth in demandfor valves on the back of increasing demand for the waterbusiness and infrastructure development in Southeast
Asia, Okumura Engineering established OKM VALVE (M)
SDN. BHD (OKM Malaysia), a Malaysian subsidiary, withthe aim of expanding its business. JBIC provided the funds
necessary for the expansion of the production facilities ofthe valve manufacturing and sales business operated by
OKM Malaysia in the State of Selangor, Malaysia.

Established in 1969, Ebisu Shoji is engaged in theprocessing and sale of broiler meat by leveraging its
strength of being able to supply a high-quality producton a stable basis thanks to its integrated system, fromegg production to processing and distribution, all within
the Group. Ebisu Shoji seeks to enter the Southeast
Asian market and gain market share by establishing thesubsidiary TTSN Ebisu Co., Ltd. as a production basein Myanmar, where stable economic growth continues.
JBIC provided the funds necessary for Ebisu Shoji toestablish the local subsidiary.

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Myanmar

The Philippines

OKAMURA TRADING CO., LTD.

BANDAI CO., LTD.

Processed Seafood Products Manufacturing and Sales
Business

Wire Harness Manufacturing and Sales Business

OKAMURA TRADING is engaged in the import and saleof processed seafood products. OKAMURA TRADING
established the subsidiary OKAMURA TRADING MYANMAR
CO., LTD (OTM) as a manufacturing base in Myanmar in
September 2017 in anticipation of growth in demand,
especially in Asia, for processed seafood products such as
sushi ingredients. JBIC, through its first cofinancing with
the Aomori Bank, Ltd., provided OKAMURA TRADING
with the funds necessary for establishing a new production
factory for the manufacture and sale of processed seafood
products performed locally by OTM.

BANDAI is engaged in the manufacture and sale of wire
harnesses for automobiles. With steady overseas demand
for wire harnesses anticipated, in March 2017, BANDAI
established the local subsidiary BANDAI WIREHARNESSPHILIPPINES, INC. (BWP) as a manufacturing and sales basein the Philippines. BANDAI seeks to expand production in
the Philippines. JBIC provided the funds necessary for the
manufacture and sale of wire harnesses by BWP.

Examples of Business Outcomes in FY2017

3

3

Thailand

FORTH Inc.

IME (HD) Co., Ltd.

Automotive Parts Sheet-Metal Processing Business

In-Vehicle Electronic Parts Manufacturing and Sales
Business

FORTH is primarily engaged in the business of sheetmetal processing of auto parts. With the growth of theautomobile market in ASEAN countries, FORTH establishedthe subsidiary THAI FORTH CO., LTD. (TFC) in Thailand
where demand for automotive parts is expected to grow.
FORTH seeks to expand sales channels, especially among
Japanese companies that are entering the market, with its
advantage of being able to handle prototype sheet-metal
processing of precision auto parts locally. JBIC provided
the Thai baht-denominated funds necessary to expand
the production facilities for the business of sheet-metal
processing of auto parts.

IME (HD) is the holding company of a corporate groupbuilt around IM ELECTRONICS Co., Ltd., which is primarily
engaged, as a group, in the manufacture and sale of various
in-vehicle electronic parts. In 2011, IME (HD) established thesubsidiary IM Electronics (Thailand) Co., Ltd. in Thailand,
where automobile industry demand is expected to grow. It
seeks to increase sales to automotive parts manufacturers
who are expanding globally by boosting its production
capacity. JBIC provided IME (HD) with the funds necessary
to expand the production facilities of its local subsidiary.

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

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Examples of Business Outcomes in FY2017

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3
Examples of Business Outcomes Relating to Support for Mid-tier Enterprises and SMEs
54

Thailand

Vietnam

NIHON SHINKAN Co., Ltd.

Koden Co., Ltd.

Aluminum Products Manufacturing and Sales
Business

Manufacturing and Sales of Household Electric
Heating Appliances

NIHON SHINKAN is engaged in the manufactureand sale of aluminum products for a wide range ofapplications including office automation (OA) equipment
and automotive parts. It seeks to expand business ineconomically growing ASEAN countries by enhancing the
production capacity of NIHON SHINKAN (THAILAND) CO.,LTD., its subsidiary in Thailand, where OA equipment andautomobile industry demand is growing. JBIC provided Thaibaht-denominated funds necessary for plant expansion to
support the aluminum product manufacturing and sales
business conducted by the subsidiary in Ayutthaya Province
in central Thailand.

Koden is engaged in the manufacture and sale of household
electric heating appliances (electric carpets, electricblankets, etc.). Koden seeks to expand its sales activities forhousehold electric heating appliances throughout Japanand abroad and to further expand business by increasing
the production capacity of its subsidiary KODEN VIETNAM
CO., LTD. in Vietnam. JBIC provided Koden with the funds
necessary for the manufacture and sale of household
electric heating appliances by its subsidiary in Vietnam.

VietnamVietnam

Toyota Corolla Nankai Co., Ltd.

Tombow Pencil Co., Ltd.

Automobile Maintenance and Sales Business

Stationery Supplies Manufacturing and Sales Business

Since its founding in 1961, Toyota Corolla Nankai has
engaged in the automobile maintenance and sales
business. In 2017, Toyota Corolla Nankai established
TOYOTA NANKAI HAIPHONG WEST CO., LTD., a subsidiaryin Vietnam, where demand for automobiles is expected
to grow. Toyota Corolla Nankai seeks to further expand
business through automobile sales and an associatedmaintenance and service business in Vietnam. JBIC
provided Toyota Corolla Nankai with the funds necessary
to establish a maintenance and service shop and installa maintenance line to be operated by its local subsidiary.

Tombow Pencil is engaged in the manufacture and saleof stationery supplies including pencils, erasers, and glue.
In June 2017, it established the subsidiary TOMBOWMANUFACTURING ASIA CO., LTD. in Vietnam as amanufacturing and sales base in anticipation of steadyworldwide demand for stationery supplies. Tombow
Pencil seeks to further expand business by securing a new
production base. JBIC provided Tombow Pencil with thefunds necessary for the manufacture and sale of stationery
supplies by its local subsidiary. The funds covered theestablishment of a new production factory in Vietnam.

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Turkey

MexicoSango Co., Ltd.

SAMTECH Corporation

Automotive Parts Manufacturing and Sales Business

Automotive Parts Manufacturing and Sales Business

Since its founding in 1928, Sango has engaged in the
manufacture and sale of automotive exhaust systemparts for major automakers by leveraging its strength
in metal processing technologies for various metal
stamping and pipe products. In 2002, Sango establishedthe subsidiary SANGO OTOMOTIV URUNLERI SANAYI VE
TICARET ANONIM SIRKETI (STI) in Turkey as a base serving
automobile exports to the EU. Sango seeks to strengthen
STI’s production system in Turkey with the aim of further
expanding its market share. JBIC provided the funds
necessary for the manufacture and sale of automotive
parts carried out by STI in Kocaeli Province, Turkey. The
funds covered the expansion of production facilities.

SAMTECH, founded in 1913, is engaged primarily inthe manufacture and sale of automotive parts. With thegrowth of North American and European automotive
markets, SAMTECH seeks to further expand businessby boosting the production capacity of its subsidiary in
Mexico, SAMTECH AUTOMOTIVE MEXICO, S.A. de C.V(STAM), which continues to grow as a production base for
automotive parts. JBIC provided the funds necessary forthe manufacture and sales of automotive parts by STAM in
the Mexican State of Guanajuato. The funds covered theestablishment of a new production site.

Examples of Business Outcomes in FY2017

3

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

MexicoOkawa Screw Manufacturing Co., Ltd.
Automobile Parts Manufacturing and Sales BusinessOkawa Screw is engaged in the manufacture and sale ofautomobile parts with a focus on precision cold forging
technology1. In 2012, Okawa Screw established OKAWAMEXICANA, S.A. DE C.V. in Mexico to strengthen its global
production system. Against a backdrop of expanding
economic growth in North America and a growing
automobile market, Okawa Screw seeks to expand businessin Mexico, which continues to grow as a production
base for automotive parts. JBIC provided Mexican pesodenominated funds necessary for the manufacture andsale of automobile parts by Okawa Screw’s local subsidiaryin the Mexican State of Guanajuato.
1. A metal shaping technology that enables forging of a malleable metal bycompressing it into a die at or near room temperature with a precisionequivalent to that of cutting

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3

Examples of Business Outcomes Relating
to Environment

Supporting Environmental Conservation and Improvement Projects

Examples of Business Outcomes in FY2017

Achieving both environmental preservation and economic
development is at present universally recognized as acommon challenge for developed and developing countries
alike. Given this awareness, there are growing expectations
across the world on implementing projects which lead toenvironmental conservation and improvement.
Various efforts in this field are underway throughout
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;
and eco-city projects that aim to realize environmentally
sustainable cities.
Amid such developments, JBIC not only takes into
consideration the environmental and social aspects ofindividual projects, but is also committed to support
environmental conservation and improvement projects,
such as measures against global warming.

Supporting Onshore Wind Power Generation Project in Egypt
JBIC concluded a loan agreement for project finance with Ras Ghareb Wind Energy SAE (Ras Ghareb), a corporation in Egypt inwhich Toyota Tsusho Corporation and Eurus Energy Holdings Corporation hold equity stakes. Under this project, Ras Ghareb willbuild, own, and operate an onshore wind power generation plant with a total generation capacity of approximately 262.5 MWon the Gulf of Suez. Ras Ghareb will sell the generated electricity to the Egyptian Electricity Transmission Company for 20 years.
This is the first project finance that JBIC has provided for a project in Egypt since the Arab Spring and also the first for a wind
power generation project in Africa. JBIC supports renewable energy projects in Africa, in which Japanese companies have lessexperience, and this is the first renewable energy project that JBIC has approved under FAITH21.
In addition, this financial support is in line with Japanese
government’s policy initiatives such as “export strategy for infrastructure
systems” and “Actions for Cool Earth: ACE2.0”2.

4
Examples of Business Outcomes Relating to Environment

Supporting Geothermal Power Project in Indonesia
JBIC concluded a loan agreement for project finance with PT Supreme Energy Rantau Dedap (SERD), an Indonesian company
invested by Marubeni Corporation, Tohoku Electric Power Co., Ltd., and other sponsors for the Rantau Dedap Geothermal Power
Project. In this project, SERD will construct, own, and operate a geothermal power plant with a gross capacity of 98.4 MW in
South Sumatra, Indonesia. The electricity generated from this plant will be sold to PT PLN (Persero), a state-owned power utility inIndonesia, for a period of 30 years.
In Indonesia, demand for electricity is surging due to economic growth.
The Indonesian government has committed to promoting its 35 GW power
plant development plans, and this project is positioned as a part of those plans.
The Government has been actively promoting geothermal power generation,
which taps into the country’s rich geothermal resources, including the issuingof a new law for geothermal power production in 2014. By generating a
steady power supply, which contributes to climate change mitigation, thisloan is also expected to support Indonesia’s economic development as well.
Moreover, this project is in line with the Japanese government’s “export
strategy for infrastructure systems” and “Actions for Cool Earth: ACE2.0”
initiatives.

1. Reinforced version of the JBIC Facility for African Investment and Trade Enhancement (FAITH), launched in June 2013. FAITH2 started in August 2016.
2. An initiative announced by the Japanese government in November 2015, aimed at supporting action in developing countries to address climate change

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Supporting Solar Power Generation Project in India

Examples of Business Outcomes in FY2017

JBIC concluded a loan agreement for project finance with an Indian subsidiary (the company) of SoftBank Group Corp. (SBG), fora solar power generation project in India. Under this project, the company has constructed, owns, and is operating a solar power
generation plant with a total generation capacity of 350 MW at the solar park built in Kurnool district, the state of Andhra Pradesh
in the south of India. The company also sells the generated electricity to NTPC
Limited, India’s state-owned power generation company, for the contracted
period of 25 years.
The government of India launched the Jawaharlal Nehru National Solar
Mission, a major initiative to promote solar power generation, for developing
100 GW solar power capacity by 2022, and this power plant is a part of thisinitiative. This is SBG’s first overseas solar power generation project in India.
This project, which is also in line with the Japan-India Investment
Promotion Partnership that was announced by the Prime Ministers of Japanand India in 2014, is the first project that has been realized through discussions
aimed at promoting investment in India’s power generation project between
the government of India and JBIC.

Partnerships and Knowledge Sharing in the Environmental Sector

4through activities such as holding seminars andparticipating in relevant events. JBIC also simultaneously
forms close partnerships with foreign governments andgovernment agencies, domestic prefectural and municipal
governments, and other stakeholders both in Japan andabroad.

Examples of Business Outcomes Relating to Environment

Amid growing expectations for the implementation ofenvironment-related projects toward global environmental
conservation and a low-carbon society in various partsof the world, JBIC supports Japanese overseas businessdeployment as well as efforts being made by foreign
governments in this field, not only through financing but
also by sharing information and providing knowledge

GREEN Operations
Since April 1, 2010, JBIC has conducted environmental
operations under the name Global action for Reconciling
Economic growth and ENvironmental preservation (“GREEN”).
Under GREEN operations, JBIC has provided support for projects
that have a high global environmental conservation effect in
the form of loans, guarantees and equity participations, whilemobilizing private-sector funds. GREEN’s main focus has been
providing support for preserving the global environment, mainlyfor projects that are expected to sharply reduce greenhousegases (GHG), while paying attention to potential disseminationof Japanese advanced technologies that are highly regarded

around the world.
In light of the launch of the Global Facility to Promote Quality
Infrastructure Investment for Environmental Preservation andSustainable Growth (see page 72) on July 1, 2018, “Overseas
Investment Loans” were added to the available GREEN support
tools in order to more actively assist projects that preserve theglobal environment.
JBIC will promote overseas infrastructure developmentthat contributes to preserving the global environment while
widely utilizing the know-how and technologies of Japanesecompanies.

Promoting the overseas business having the purpose of preserving
the global environment, such as preventing global warming

Guarantees
Loans/Equity participations

PrivateFlows

Eligible Projects:
Favorable impact on preservation of the global environment, such as
significantly reducing GHG emissions

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

Examples of Business Outcomes in FY2017

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

Operations by Japanese Manufacturing
Companies

JBIC conducted the 29th Survey Report on Overseas Business
Operations by Japanese Manufacturing Companies.
Conducted since 1989, this survey attempts to identify
the strategies and challenges of Japanese manufacturing
companies expanding overseas, and appeals to a broad
audience for its originality and continuity.

Overseas Investment (JOI) co-sponsored a seminar titled“Sustainability & Economics of Public-Private Partnerships”
and invited as a speaker Professor Alexander Galetovic, who
conducts studies and research on PPP at the Universidad deLos Andes in Santiago, Chile. Professor Galetovic explained
from an economic viewpoint based on various empiricalresearch conducted abroad the conditions under which PPP
properly functions, the relationship between government
budget constraints and PPP, the best way for the public
and private sectors to share risk, issues related to demandrisk, and contract design issues concerning projects which
include that risk, renegotiation of concession contracts,
and other issues. In a panel discussion featuring Professor
Galetovic, several JBIC officials pointed out the practicaland political aspects of PPP projects, contributing to an
animated discussion.

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

The FY2017 survey reported on the regularly
covered topics such as “evaluations of overseas businessperformance,” “overseas business prospects,” and“promising countries or regions for overseas business
operations.” In addition, it examined themes such as“services provided and received by Japanese manufacturing
companies outside Japan,” and “business management ofoverseas affiliates.” JBIC publishes its survey results andwidely disseminates related information, such as by holding
seminars in cooperation with local chambers of commerceand regional banks. JBIC also hosts explanatory meetings
for Japanese chambers of commerce located overseas, aswell as for foreign governments, and the survey’s results
have been effectively utilized in policy recommendations
to foreign governments.
■ Public-Private Partnership (PPP) Initiatives

In May 2017, the 50th Asian Development Bank (ADB)
Annual Meeting was held in Yokohama, Japan. Taking
advantage of the opportunity presented by ADB’s annual
meeting, held in Japan for the first time in 10 years, JBIC
and ADB co-sponsored a seminar titled “Future Prospectsof Quality Infrastructure Projects in Asia through PublicPrivate Partnership.” The seminar aimed to develop
shared awareness of challenges and future courses among
stakeholders, and featured keynote speeches and panel
discussions on the best ways that the private and public
sectors can cooperate and on what roles each shouldtake in addressing the growth in infrastructure demand in
Asia. More than 200 people participated in the seminar,
showing a keen interest in infrastructure development
projects under PPP among stakeholders from many
countries, institutions, and corporations.
In June 2017, JBIC and the Japan Institute for

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Seminar on the “Future Prospects of Quality Infrastructure Projects in Asia
through Public-Private Partnership”■ Collaboration with Overseas Governmental

Organizations and International
Organizations

In December 2017, JBIC and the Export-Import Bank ofIndia (EXIM Bank) jointly held a conference titled “JBIC
and EXIM Bank Support for Japan-India International
Collaboration Projects.” In September 2014, JBIC signed
an MOU for business cooperation with EXIM Bank. The
purpose of this MOU is to explore the possibilities of JapanIndia cooperation in financing businesses and projects in
India and its neighboring countries, such as infrastructuredevelopment projects aimed at strengthening connectivity
between India and its neighboring countries or businessin third countries where Japanese companies collaborate
with Indian companies. Both banks have cooperated on
various occasions based on this MOU. As a part of thiscooperation, this conference focused on the roles andfunctions of the two banks for business partners in India,
as well as on cooperation between the Export Credit
Agencies (ECAs) of Japan and India for exports to andinvestments in third countries.
JBIC held the Seventh Annual Meeting for Financial
Policy Dialogue with the Government of Indonesia in
October 2017. Since it was first held in August 2010,
this annual meeting has aimed to have comprehensive,high-level discussions on issues related to infrastructure
projects supported by JBIC, as well as on macroeconomic
policies, in order to deepen the cooperative relationshipbetween Indonesia and Japan. During the meeting, theparticipants from Indonesia expressed their expectations

In May 2017, JBIC held the Sixth Annual Meetingfor Policy Dialogue with the Government of Mexico. The
annual meeting was based on the framework agreed uponin the MOU signed in February 2011 with the Secretariat
of Finance and Public Credit of Mexico and ProMéxico.
In the meeting, the Government of Mexico explained
the impact of U.S. trade and immigration policies and the
Mexican government’s policy and strategy to deal with suchcircumstances. They stated that both Japan and Japanesecompanies are essential partners for Mexico and expressed
their hope that Japan will continue to invest in Mexico.
They also voiced their expectations for the cooperation ofJapanese companies in the energy reform that is currently
being carried forward by the Mexican government. JBIC
responded by raising a discussion on the possibility of
Mexico functioning as the gateway for production andexport to the Inter-American region. Furthermore, JBIC
presented concerns held by Japanese companies operatingin Mexico and the issues which must be addressed in orderfor Mexico to become an export hub, and expressed that
JBIC will provide support in the resolution.
In May 2017, Dr. Etsuaki Yoshida, Director and Senior
Economist, Country Credit Department, JBIC, delivered aspeech at the 2nd CIBAFI Global Forum in Jordan. CIBAFI, theGeneral Council for Islamic Banks and Financial Institutions,
was established in 2001 by the Islamic Development Bankand other private financial institutions, which amount to
120 organizations from 31 countries. It aims to enhancecross-border communication and coordination among
institutions within the Islamic financial industry on a global
scale. The forum was intended to contribute to soundand comprehensive development of the industry. In the
opening panel discussion titled “Macroeconomic Outlook■ Cooperation with Regional Financial

Institutions

In April 2017, JBIC held the “High-level Workshop on
International Finance for Regional Financial Institutions”
with the cooperation of Kinzai Institute for Financial
Affairs, Inc., inviting executive managers of regional
financial institutions. The workshop was held with the aimof serving as a venue for an exchange of views to further
enhance cooperative relationships between regional
financial institutions and JBIC in term of supporting
overseas business development by mid-tier enterprises andSMEs. A total of approximately 100 audience members
including presidents and executive officers from over 60
regional financial institutions and Japanese branches ofoverseas banks participated.
At the workshop, JBIC explained its efforts forsupporting mid-tier enterprises and SMEs in general as wellas the securitization of loans. Furthermore, Mr. Toshihide
Endo, then Director-General of Supervisory Bureau,
Financial Services Agency, made a speech on the “Rolesof Regional Financial Institutions in Terms of Supporting
Mid-tier Enterprises and SMEs in Overseas Business
Development,” followed by a speech made by Mr. Kazuo
Kubota, Executive Officer, The Bank of Yokohama, Ltd.,
titled “Measures of The Bank of Yokohama for Supporting
Overseas Business Development,” and another speech by
Dr. Shinobu Nakagawa, then Deputy Director-General,
Financial System and Bank Examination Department, Bankof Japan, titled “Trend of Management in European Banks
under the Negative Interest Rates.”
The Singapore representative office of JBIC held aworkshop in August 2017 for Japanese regional banksin Singapore. This workshop was intended to share JBIC’s
knowledge and information about the macro-economic
trends and recent topics of interest in the Asia and Pacificregion, with Japanese regional banks in Singapore who
manage their overall operations in the region.

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

Seventh Annual Meeting for Financial Policy Dialogue between JBIC and theGovernment of Indonesia

3

and Global Regulatory Developments,” Dr. Yoshidagave his insights by mentioning business strategy on
Islamic finance under oil price fluctuations, and potential
influence of regulatory trends in the U.K. and U.S. which
limit banks’ business domain upon institutions that offer
Islamic financial services.

Examples of Business Outcomes in FY2017

for infrastructure development support outside of Java,
which is a current focus for the Government of Indonesia
including for the isolated islands, and the sharing of JBIC’s
knowledge on structuring PPP projects in the infrastructure
field. JBIC described infrastructure development projects
which had led to economic growth in Indonesia. JBIC also
explained its plan to further strengthen its efforts in social
infrastructure sectors other than the power sector. JBIC willcontinue to hold discussions with the ministries and stateowned companies of Indonesia under the frameworkof policy dialogue, for providing support not only to
Japanese companies that plan to expand their businesses
in Indonesia, but also to a wide range of sectors for thecountry’s economic growth.

High-level Workshop on International Finance for Regional Financial
Institutions

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4 Financial Instruments
1 Financial Instruments········································ 62
2 Prominent Initiatives in Recent Years····················· 72
3 Framework for Supporting Globalization Efforts of

Mid-tier Enterprises and SMEs ····························· 74

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1

4

Financial Instruments

Export Loans

Financial Instruments

Export loans are provided to overseas importers andfinancial institutions to support finance exports ofJapanese machinery, equipment, and technology mainly
to developing countries. In particular, products such as
marine vessels, power generation facilities, and other typesof plant equipment incorporate a significant amount ofadvanced technology, and their export will be instrumental
in enhancing the technological base of Japanese industries.
Furthermore, Japanese shipbuilding and plant facilities
industries have a broad range of supporting industries,
including mid-tier enterprises and SMEs producing partsand components, and thus the loans are expected topositively contribute to the business of these Japanesecompanies. Export loans in specific sectors are also available
to developed countries (see note).
Terms and conditions of export loans are determinedbased on the Arrangement on Officially Supported Export
Privatefinancial
institutions

1

Credits (OECD Arrangement). In principle, the loan amountshould not exceed the value of an export contract ortechnical service contract, and excludes the down payment.
Local costs may be covered provided that the amount iswithin the scope prescribed by the OECD Arrangement.

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

Loan (B/L)1

Financial institution, etc.,
in foreign country

Financial Instruments

Loans
Loan (B/C)2

Japanese exporter(s)Exports of plants, etc.

Importer(s) in foreigncountry(ies)

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

Supporting Exports of Construction Machinery by Japanese Companies to Mongolia

Provided by SUMITOMO CORPORATIONJBIC concluded an individual loan
agreement based on an export credit
line1 extended to the Government ofMongolia in June 2013. The loan isintended to provide, through the Ministryof Finance of Mongolia and Trade andDevelopment Bank of Mongolia LLC,
the necessary funds for Khishig Arvin
Industrial LLC, a Mongolian company,
to purchase construction machinery
made by Komatsu Ltd. from SUMITOMOCORPORATION.

The enactment of the Agreement
between Japan and Mongolia for an
Economic Partnership (EPA) in June 2016is expected to liberalize and facilitate
trade and investment between thetwo countries and enhance reciprocal
economic cooperation. This loan willcontribute to the development of
the Mongolian economy through thepromotion of Japanese exports while
maintaining and strengthening theinternational competitiveness of Japaneseindustries.

1. An export credit line is a form of export financing in which JBIC makes a commitment to provide a maximum amount of credit to be extended to the borrower(foreign banks or other entities) to finance exports of machinery, equipment, and services from Japan.

Supporting Export of Bulk Carriers Built by Japanese Shipbuilders
JBIC concluded two buyer’s credit
agreements with a Singapore-based
ship-holding subsidiary of the Ultrabulk
A/S Group, a Denmark-based bulk
carrier operator under Chile-based shipowner Naviera Ultranav Limitada Group.
These loans are intended to financethe Ultrabulk A/S Group to purchasethrough the exporter MITSUI & CO., LTD.
two bulk carriers to be built by IMABARI

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SHIPBUILDING CO., LTD.
These loans are intended to support
the export of ships built by Japanese
shipbuilders which perform a significant
role in the regional economy andassociated industries. These loans will
therefore contribute to maintaining
and strengthening the international
competitiveness of the Japanese
shipbuilding industry.

4

Import Loans■ 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

Loan

Financial Instruments

Privatefinancial
institutions

guarantee facility for goods and services essential to thesound development of the Japanese economy, such as
for the import of aircraft. (See page 67 for the scheme ofguarantees for imports 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 is poorly
endowed with natural resources, stable imports of natural
resources over the long term are one of the key factors
underpinning domestic economic activity. Import loans
finance the development and import of energy resources,
including oil and LNG, and mineral resources, including
iron ore, copper, and other rare materials.
In addition to natural resources, JBIC provides a

Loan

Japanese importer(s)Imports of natural resources

Foreign exporter(s)Securing Long-term Supply of Crude Oil and Strengthening Strategic Partnership with UAE
JBIC concluded a facility agreementwith Abu Dhabi National Oil Company(ADNOC), a state-run oil company
wholly owned by the government in the
Emirate of Abu Dhabi (Abu Dhabi) in
the UAE. This is the fifth loan that JBIC
has provided for ADNOC with an aim tosecuring a long-term oil supply for Japan.
Abu Dhabi is vital to Japan’s energy
resource strategy as it has been a stablesource of crude oil for more than 30 years.

Additionally, Abu Dhabi allows foreign oil
companies to conduct business based on
oil concession agreements. This facility
aims to support Japanese companies inrenewing their existing concessions in theoffshore oilfields in Abu Dhabi as well as
acquiring new concessions. This facility
will also help the strengthening of Japan’s
relationships with ADNOC as well as theUAE, which is an important country interms of Japan’s energy resource strategy.

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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 or financial
institutions that have equity participations in or provide
loans to such overseas affiliates.
Direct loans to Japanese companies are intended for
mid-tier enterprises and SMEs, as well as to projects aimed
at developing or securing interests in overseas resourcesthat are strategically important to Japan, and projects that
support merger and acquisition (M&A) activities (theseprojects include those of large companies). Moreover,
JBIC provides two-step loans (TSL) to support the overseas
business deployment of Japanese companies, including midtier enterprises and SMEs, as well as TSL intended to support
M&A activities by Japanese companies. JBIC is also able toprovide short-term loans for overseas business operations

when bridge loans are required to fill the financing gaps
before that offers long-term loans. Moreover, JBIC isempowered to provide investment loans for projects indeveloped countries for specific sectors (see note).

Privatefinancial
institutions

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

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

1
Financial Instruments

Loan

Loan

Loan
Loan

Japanese company

Loans and/or equity participations

Equityparticipations

Loan

Project(s) in foreigncountry(ies)Japanese affiliate(s)LoanJoint venture partner(s)Supporting Japanese Companies’ Long-term and Stable Procurement of Copper Concentrate
JBIC concluded a loan agreement with
Chilean company Minera Escondida
Limitada (MEL), in which Mitsubishi
Corporation, JX Nippon Mining &Metals Corporation, Mitsubishi Materials
Corporation, and others have stakes.
This loan is provided to the expansion
project of the Escondida Copper Mine in
Región de Antofagasta, Chile, the world’s
largest copper mine. The loan is expected
to maintain the production capacity of

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copper concentrate impacted by thelower head grade.
MEL is supplying a significant
proportion of copper concentrate
production to Japanese smelters. The
loan contributes to the continuity ofsupply over the long term for a grade of
product that is strategically important in
the Japanese market because of its low
level impurities and high copper content.

4

Untied Loansstable 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 procurement ofequipment and materials from Japan.
Capital procured from untied loans is used to: secure

Privatefinancial
institutions
Loan

Government,
financial institution, etc.,
in foreign country
Imports ofequipment andtechnology

1
Financial Instruments

Foreign importer(s)Project(s) in the recipient
country(ies)

Exporter(s)Supporting Diversification of Turkey’s Funding Sources and Vitalization of Samurai Bond Market
JBIC made a partial acquisition of a yen-denominated bondissued in the Japanese bond market (Samurai bonds)1 by
the Government of Turkey (GOT) under JBIC’s facility of the
Guarantee and Acquisition toward Tokyo market Enhancement(GATE)2. This acquisition follows three previous Samurai bonds
issued by GOT that JBIC has provided support to. At this time,the issuance of Samurai bonds without JBIC’s guarantee was
successful. JBIC’s support in encouraging foreign issuers to
issue Samurai bonds in the Tokyo market is expected to provide
broader investment opportunities for Japanese investors andstimulate the Samurai bond market.

1. Samurai bonds are yen-denominated bonds issued by a foreign government or company in the Tokyo bond market.
2. GATE facility supports the issuance of Samurai bonds through partial guarantees or partial acquisition by JBIC.

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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■ Japanese companies make equity
participations in an overseas projectcompanies perform significant roles. In principle, equity
participations take the following forms.

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

Japanesecompany(ies)

Equityparticipations

Overseas
project

Japanesecompany(ies)

Equityparticipations

Equityparticipations

Fund

Equityparticipations

Other
investor(s)Equityparticipations

1
Financial Instruments■ Japanese companies acquire equity
interests in a foreign company toform business alliance■ Japanese companies form a consortium and participate in aninternational fundBusiness allianceJapanesecompany(ies)

Equityparticipations

Foreigncompany

Japanesecompany(ies)

Equityparticipations

Consortium

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Fund

Equityparticipations

Equityparticipations

Other
investor(s)4Guarantees
overseas Japanese companies, as well as for currency swap
transactions. JBIC also issues reassurance for guarantees
from export credit agencies in other countries.

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

Financial Instruments

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

Foreignexporter(s)LoanImport of products

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

Investor(s)Guarantee
Counterguarantee

Sub-guarantee

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

Issue
of bonds
Guarantee

Japaneseaffiliate (issuer)

Guarantee for Loan by Private Financial Institutions for Aircraft Import
JBIC concluded a guarantee agreementwith two private financial institutions
for the principal and interest of private
financial institution loans related to theimport of aircraft by ANA HOLDINGS
INC. (ANAHD). This guarantee willassist TLC Citron Co., Ltd. and FK
Utopia Leasing Ltd. in borrowing fromprivate financial institutions the funds
necessary to import aircraft from theBoeing Company in the U.S. that will
be operated by the ANA Group. The
imported aircraft will then be leased to
ANAHD.

JBIC also concluded a guarantee
agreement with private financial
institutions (16 banks) for the principal
and interest of a loan to Japan Airlines
Co., Ltd. (JAL). This guarantee is intended
to support JAL in obtain financing fromprivate financial institutions to importaircraft from the Boeing Company.
JBIC will contribute to maintaining
and strengthening the international
competitiveness of the Japaneseaviation industry and continue toprovide financial support for the importof aircraft that are indispensable for the
lives of Japanese citizens.

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4
Financial Instruments■ Guarantees for Cofinancing, Overseas
Syndicated Loans, and Public Sector Bonds
Loans to developing countries involve, among
others, currency conversion and transfer risks, aswell as country risks. Guarantees that JBIC issues
to cover such risks will enable Japanese private
financial institutions to provide medium- andlong-term financing for developing countries,
and contribute to developing countries tobringing in private capital and facilitating privatecompanies to expand international businessactivities.

Investor(s)Guarantee
Loan

Guarantee

Private financial
institution, etc.

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

1

Government,
etc., in foreigncountry

LoanJapanesecompany(ies)

Financial Instruments

Guarantee

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

Issue ofpublicbonds, etc.

Operation

Private financial
institution
Currency
swap
contractLocal
currency
loan

Counterguarantee

Overseas
infrastructure
projects, etc.

Japanese Foreigncompany company
(ies)
(ies)

Foreign ECAGuarantee

Private financial
institution(s)Investment

Loan

ExportForeignimporter(s)Supporting Japanese Companies’ Funding of Local Currency through Collaboration withJapanese and Indonesian Private Financial Institutions
JBIC concluded contracts with the MUFG
Bank, Ltd. (MUFG) and PT Bank CIMB
Niaga Tbk (CIMB Niaga) of Indonesia
concerning a currency swap guarantee
arrangement under which JBIC will
guarantee currency swap transactions
executed for providing funds inIndonesian rupiah (Rupiah) to Japanesecompanies in Indonesia.
In Indonesia, which is undergoing
continued economic growth, Japanesecompanies’ needs for long-term Rupiah
funds are rising due to the obligation to

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use Rupiah in fund settlements in the
country. These contracts enable MUFG’ssmooth procurement of long-term
Rupiah funds. JBIC will provide MUFG
with a guarantee for the payment ofearly termination amount by CIMB
Niaga, the counterparty of MUFG’s
currency swap transactions in case ofcancellation of swap transactions. This
currency swap guarantee arrangement
will facilitate long-term funding in
Rupiah by Japanese companies.

4

Bridge Loans

Loan

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

Government, financial
institution, etc.,
in foreign country(Conditionality)

Financial Instruments

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

Loans from theIMF, World Bank, etc.

Import orother externaltransaction(s)1Acquisition of Loan Assets and Public and Corporate Bonds

Financial Instruments

When JBIC provides export loans, import loans, overseas
investment loans, and untied loans, JBIC can also provide
credits, in addition to providing loans and guarantees, bypurchasing loan assets and acquiring public and corporate
bonds* issued by borrowers for funding. The objective ofsuch operations is to promote private financial institutions’loans in international finance and Japanese companies’
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 means of identifying
potentially quality projects, and is expected to lead toincreasing exports of materials and services from Japan, as
well as expand opportunities to participate in projects by
Japanese companies. Research and studies are conductedat each stage necessary for realization of the project,including preparation of a master plan for an individual
project, conducting of prefeasibility and feasibility studies(Pre-F/S, F/S), front-end engineering design (FEED), andstudies of regions and industry sectors conductive to

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

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4

Securitization and Other Financial Instruments

Financial Instruments

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

1. Securitization (Guarantees)

2. Securitization (Acquisition of Securities)

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

JBIC supports bond issues by acquiring a portion of the
ABS issued by SPC or trust companies with loans or otherassets as collateral. JBIC’s acquisition will support the
securitization needs of the originators* and is expected tohelp invigorate the bond market by circulating the acquiredbonds back into the market when market conditions allow.

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

Originator
Private financial
institutions, etc.

1

Transfer of loans

SPC
Guarantee

Loans

Financial Instruments

ObligorOverseas Japaneseaffiliates

Issue of ABS

Purchase of ABS

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

3. Securitization and Liquidation of Receivables
JBIC provides guarantees for the receivables and othermonetary claims held by overseas subsidiaries of Japanesecompanies in order to facilitate the purchase of suchreceivables by banks (an increase in their liquidity). JBIC

Overseas Japaneseaffiliates

Accounts receivable, etc.
Guarantee

Proceeds

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Annual Report 2018

Overseas local
companies
Guarantee

Assignment of accounts
receivable

Private financial
institutions

70

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

ABS

SPC or Trust

Investors
Proceeds

4Japan Bank for International Cooperation Guidelines for Confirmation ofEnvironmental and Social Considerations

Financial Instruments

Growing interest in environmental conservation has led toa worldwide trend toward more rigorous environmental
regulations. There are more than a few cases, especially inoverseas projects, in which insufficient risk managementof possible environmental and social impacts has seriously
affected project implementation or undermined its social
reputation.
In conducting these operations, JBIC confirms whether
the borrower has made appropriate consideration for
local communities and the natural environment in all
the JBIC-financed projects based on the “Japan Bank forInternational Cooperation Guidelines for Confirmation ofEnvironmental and Social Considerations” (Environmental
Guidelines).
The Environmental Guidelines set out the procedures,
criteria, and requirements that JBIC-financed projects mustmeet in confirming environmental and social considerations.
When JBIC judges that the project proponents have notmade appropriate environmental and social considerations,
it will encourage them to take remedial measures. If
appropriate environmental and social considerations havenot been taken, JBIC may decide not to extend funding.
In addition, JBIC established and made public the“Japan Bank for International Cooperation Guidelines for
Confirmation of Information Disclosure Considerations
for Nuclear Sector Projects” (Information Disclosure
Guidelines) in December 2017. Based on the Information
Disclosure Guidelines, JBIC confirms that appropriate
measures are carried out by project proponents and otherrelevant parties to ensure information disclosure and public
participation for issues specific to each project.

1

Procedure for Confirmation of Environmental and Social Considerations

Financial Instruments

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

Project
Proponent

Screening Form is submitted at
the time of funding request.

Information necessary for
the Environmental Review
is submitted.

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

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

Category A
Category B
Categorization
Category FI

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

Funding
Commitment

Category C

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

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

Confirmation of
Monitoring(site inspections
conducted asnecessary)

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

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

Projects are classified into one of the following four categories in relation to the degree of environmental impact, based on
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, the financial
intermediary selects and conducts screenings for specific subprojects, in cases where subprojects cannot be determinedprior to acceptance of JBIC funding, and where such subprojects are anticipated to have an impact on the environment

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2

4

Prominent Initiatives in Recent Years

Global Facility to Promote Quality Infrastructure Investment forEnvironmental Preservation and Sustainable Growth

Financial Instruments

JBIC launched the new Global Facility to Promote Quality
Infrastructure Investment for Environmental Preservationand Sustainable Growth (QI-ESG), and started it on July 1,
2018.
Japanese Deputy Prime Minister and Minister ofFinance Taro Aso announced the launch of QI-ESG at theAnnual Meeting of the Asian Development Bank heldin May 2018 in Manila, Philippines. Amid the increasing
global trend for environmental, social and governance(ESG) investment across the world, JBIC’s new facility, QIESG, aims to provide a wide range of financing support for
infrastructure development which is expected to help topreserve the global environment.

■ Financing Conditions of QI-ESG

2

Eligible projects

Projects that are expected to reduce greenhouse gas (GHG) or contribute to protecting the global environment,
including those related to renewable energy, energy savings, green mobility solutions (such as a modal shift
in transportation and electric vehicles), air pollution prevention, water supply, water pollution prevention andwaste disposal, etc.

Available currencies

Japanese yen, U.S. dollar, and the Euro (other currencies to be decided separately)

Financing amount available from JBIC

Up to 60% of the total cofinancing amount

Deadline for signing a financing
agreement

Until the end of June 2021

Prominent Initiatives in Recent Years■ Major Features of QI-ESG
Expanded scope of eligible projects: The new facility will provide various financial assistance to infrastructure development
projects that are expected to contribute to global environmental protection, including those connected with air pollution
prevention, water supply, water pollution prevention and waste disposal, in addition to the sectors that JBIC has supported
under its GREEN Operations.
Energy supply(Power generation/
Heat supply)

Energy demand

Green innovation

Renewable energy• Solar energy, wind energy, geothermal energy, biomass energy, hydro energy, etc.
• Essential equipment/machinery, etc.

Other energy saving• High-efficiency coal-fired power generation, gas-fired thermal power generation, cogeneration,
power generation from waste, fuel cells, etc.
• Essential equipment/machinery, etc.

Energy-saving equipment/ • High-efficiency equipment/technology, etc.
machinery in each
• Use of waste heat and exhaust gas
industrial field
Smart energy• Smart grid, etc.
• Storage batteries, etc.

Green mobility• Modal shift (including intercity traffic)• Next-generation mobility (electric vehicles, electric ships, etc.)

Smart cities• Regional energy management system, energy-saving consumer electronics

Other global environmental preservation
activities• Recovery of methane, fluorocarbon, etc. • Carbon dioxide absorption• Air pollution prevention (Desulfurization/Denitrification equipment)• Water supply/Water pollution prevention • Waste treatment (including recycling)

More diversified financial support tools: Previously, JBIC provided financing support only in the form of untied loans andequity participation under its GREEN Operations. Under QI-ESG, to enhance the support for environmental projects throughvarious financial tools, JBIC will offer overseas investment loans under its GREEN Operations, in addition to the abovementioned financial instruments, for infrastructure projects that are expected to help protect the global environment. The
new facility will enable JBIC to consider providing overseas investment loans to projects involving Japanese companies fromthe perspective of not only maintaining and increasing the international competitiveness of Japanese industries, but also ofcontributing to global environmental protection.
JBIC will promote QI-ESG in collaboration with multilateral development banks and other financial institutions.
More streamlined and efficient operation procedures: Projects approved under the GREEN Operations have beenrequired to quantify GHG emission reductions under the Guidelines for Measurement, Reporting and Verification of GHG
Emission Reductions in JBIC’s GREEN. Under QI-ESG, to further promote the implementation of projects, the quantitative
measurement process of GHG emission reductions applied to GREEN projects will be simplified by only evaluating an
estimate of emission reductions made through projects when JBIC determines commitment of a loan, equity participation,or guarantee. Furthermore, if it is obvious that a project will help to protect the global environment based on a qualitativeevaluation, the evaluation process of calculated emission reductions can be omitted for the purpose of implementing more
simplified and efficient operation procedures. This will ease the burden of clients applying for JBIC’s financing supports.

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Annual Report 20184

Launch of Special Operations for Overseas Infrastructure Projects
with the aim of providing more support toward Japanesecompanies’ overseas infrastructure businesses.
In fiscal 2017, JBIC supported the export of an
automatic train stop system to Argentina as the second
project of the Special Operations.

Financial Instruments

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

Finance for governments, governmental agencies, or local governments in foreign countries with relatively high risk proﬁle[Example: Exports of plants for infrastructure project]

Government,
Governmental agencies,
Local governments,
in foreign country

Loan
Private ﬁnancial
institutions

Exports of plants
and equipment

Japanese company

2

Public-private partnerships (PPP)

Prominent Initiatives in Recent Years

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

Loan

Payment
Power producer
Equity participations

Private ﬁnancial
institutions

Sell electricity

Government,
Governmental
agencies,
Local governments,
in foreign country

Japanese company

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

Loan
Train operating company

Private ﬁnancial
institutions

Passenger

Fare

Equity participations
Japanese company

Supporting Export of Automatic Train Stop System by Japanese Companies to Argentina
JBIC concluded a loan agreement onbuyer’s credit (export loan) with theGovernment of Argentina. The loan isintended to finance the purchase of a setof a railway signal system (manufactured
by NIPPON SIGNAL CO., LTD.) fromMarubeni Corporation in order for State
Company of Administration of Railway
Infrastructure to carry out installationof an automatic railway stop system for
Buenos Aires’ suburban rail lines.
The
Argentine
government
announced that an infrastructuredevelopment plan, which includes
foreign investment and renewal of
facilities, in infrastructure sectors,
such as railway, is being considered.
Japanese companies aim to capture theopportunities to export their products
to the Argentine infrastructure industry.
This loan will contribute to improving thesafety of the Argentine railway sector by
introducing high-quality infrastructure,
as well as contribute to maintaining
and strengthening the international
competitiveness of Japanese industries.

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Annual Report 2018

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3

4

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

Financial Instruments

With the economic growth of emerging market
countries, especially in Asia, an increasing number of
mid-tier enterprises and SMEs seek not only to meet the
procurement needs of major Japanese companies withoverseas production operations, but also to expand theirown business in emerging markets. With such change inthe purpose of overseas expansion of mid-tier enterprises
and SMEs, the need for funds among mid-tier enterprises
and SMEs has grown more diverse.
To respond to the diversification of financial needs of
mid-tier enterprises and SMEs for their overseas expansion,
JBIC has further enhanced cooperation with Japanese
private financial institutions. JBIC expanded its support
from individual loan schemes based on cofinancing withprivate financial institutions to two-step loans throughprivate financial institutions, foreign currency-denominatedloans, and two-step loans for finance leases (see diagramon right for individual loan and two-step loan schemes).
JBIC is also collaborating with local financial institutions
overseas by signing memorandums to develop a support
system for mid-tier enterprises and SMEs overseas businessexpansion that involves regional financial institutionsin Japan.

3

Example of mid-tier enterprises and SMEs support
schemes
1) Individual loan scheme
Overseas project1

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

Overseas subsidiary

Parent company(Japan)Domestic loans(back ﬁnance)

Direct loans(Dollar/Yen/Euro/other local currencies)

Japanese ﬁnancial
institutions
JBIC
2) Two-step loan scheme (via Japanese financial institution)
Overseas projectOverseas subsidiary
A. Direct loans

Japanese ﬁnancial
institution

Parentcompany(Japan)Domestic loans

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

JBIC

Five Measures to Support Overseas Business
Deployment of Mid-tier Enterprises and SMEs
(1) Response to small loans (several tens of millions of yen): Loans for
replacement of machinery, in addition to new capital investment(2) U.S. dollar, Euro, and local currency-denominated loans: Financing
of long-term with U.S. dollar, Euro, and local currency(3) Support for M&A overseas: Loans for acquisition funds required
when entering overseas markets through M&A(4) Coordination and cooperation with private financial institutions(regional banks, Shinkin banks, mega banks): Support for theoverseas business deployment needs of mid-tier enterprises and
SMEs all through the country(5) Utilization of networks of JBIC overseas offices: Information
service on overseas investment environment; support for solving
issues with foreign governments

B. Domestic loans
1. In principle, intended to developing countries* Definition of mid-tier enterprises and SMEs: Companies capitalized at less than ¥1billion or with not more than 300 employees. Consolidated subsidiaries of large
companies are excluded.

■ Support for the Overseas Deployment of
Mid-tier Enterprises and SMEs
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 mid-tier enterprises and SMEs, foroverseas investment, export of products, and other activities
through cofinancing with private financial institutions in

Number of Local Financial Institutions That Cofinanced Projects for Mid-tier Enterprises and SMEs
By head office location
Yamagata 1
Kanagawa 1
Toyama 2
Ishikawa 1
Fukui
1

74

JBIC



By head office location

Gifu
2
Shizuoka 1
Shiga
1
Kyoto
1
Hiroshima 2

Annual Report 2018

Osaka
3
Nara
1
Wakayama 1
Okayama 1

Hiroshima 1 Ehime
Yamaguchi 2 Saga
Tokushima 1
Kagawa 1

13

50

Institutions withoutstanding
cofinanced
projects as of
2011

Institutions withoutstanding
cofinanced
projects asof end of
FY20171
1

Aomori1
Yamagata 1
Fukushima 1
Ibaraki
1
Gunma
2
Saitama 2
Chiba
1
Tokyo
2
Kanagawa 1
Toyama 2

Ishikawa
Fukui
NaganoGifu
Shizuoka
Aichi
Mie
Shiga
Kyoto

1
1
2
2
5
6
3
1
2

the form of overseas investment loans, export loans, andother loans.

Meeting to exchange views with the State Bank of India

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

Regional financial institutions that mid-tier enterprises
and SMEs work with play an important role when mid-tierenterprises and SMEs seek to expand overseas.
JBIC has cooperated with regional financial institutions
on cofinancing and financing of two-step loans. In FY2017,
JBIC has cofinanced with the Bank of Saga Ltd., the Aomori
Bank, Ltd., and the Musashino Bank, Ltd., in addition
to regional financial institutions with which it has pasttransactions. Moreover, a general agreement to establish
a credit line for the funds necessary to enable Japanese
mid-tier enterprises and SMEs to promote their business indeveloping countries was concluded between the Nanto
Bank, Ltd., the Chugoku Bank, Ltd., the Hokkoku Bank,
Ltd., and the Nishi-Nippon City Bank, Ltd.
JBIC is strengthening cooperation beyond financing
including cooperation in cofinancing and the financing of
two-step loans. In April 2017, JBIC also invited executive
officers including the presidents of more than 60 regional
financial institutions to hold the High-level Workshop
aimed at further enhancing cooperative relationships.

4

Securing the support of local financial institutions indeveloping countries well acquainted with the local area isalso vital for mid-tier enterprises and SMEs.
JBIC has forged stronger relationships with local
financial institutions in developing countries while it
identifies the needs of mid-tier enterprises and SMEs
to expand business overseas through Japan’s regional
financial institutions. As a part of those efforts, JBIC has
concluded MOUs with local financial institutions to develop
a support system for mid-tier enterprises and SMEs’
overseas business expansion that involves regional financial
institutions in Japan. Under these MOUs, JBIC encourages
local financial institutions to set up and expand single
contact points “Japan desks” for Japanese companies, andbuilds frameworks which enable consultations on specificcooperation and coordination together with the regional
financial institutions that have business relationships withthe mid-tier enterprises and SMEs.
JBIC has concluded an MOU to establish Japandesks with seven local banks in five Asian countries(KASIKORNBANK Public Company Limited in Thailand,
PT. Bank Negara Indonesia (Persero) Tbk in Indonesia, theState Bank of India, BDO Unibank, Inc., the Metropolitan
Bank and Trust Company (Metrobank) in the Philippines,
the Joint Stock Commercial Bank for Investment andDevelopment of Vietnam (BIDV) and the Joint Stock
Commercial Bank for Foreign Trade of Vietnam), as well asfour local governments (the State of Aguascalientes, theState of Jalisco, the State of Guanajuato, and the Stateof Nuevo León) and one local bank, (BANCO NACIONAL
DE MÉXICO, S.A., INTEGRANTE DEL GRUPO FINANCIERO
BANAMEX (Banamex)) in Mexico.
JBIC invited Japan desk staff of participating Japaneseregional financial institutions and foreign local financial
institutions to regular follow-up seminars to deepen
mutual understanding through discussions on Japandesk management issues and methods of collaboration.
In FY2017, JBIC held a meeting to exchange views with
the State Bank of India and the State of Aguascalientes,
Mexico.

Financial Instruments■ Cooperation with Japanese Regional Financial
Institutions, etc.

■ Cooperation with Local Financial Institutionsin Developing Countries

Diagram Outlining Collaboration with Foreign Local Financial Institutions
MOU

Foreign local ﬁnancial
institutions, etc.
Information provision, etc.

Japan desk

Participation

Regional banks, etc.
Transactions

Mid-tier enterprises and SMEs

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

Overseas

Information
provision
Loans, etc.*

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

JBIC



Annual Report 201875

Financial Instruments

4■ Providing Local Currency-denominated Loans■ Information Services and Seminars

JBIC provides loans in various local currencies, including theThai baht and Mexican peso. Mid-tier enterprises and SMEs,
when trying to procure local currency funds in developing
countries, face the problems of short repayment periods(basically up to one year) and high interest rates.
In order to solve these problems, JBIC prepareslong-term fixed-rate local currency loans and provides
cofinancing with private financial institutions directly to the
local subsidiaries of Japanese companies who are the clientsof those financial institutions. The cofinancing sometimes
involves JBIC providing local currency-denominatedloans and the private financial institutions providing yendenominated loans through the parent company in Japan.

In addition to individual consulting services for mid-tierenterprises and SMEs’ overseas expansion, JBIC provides
advisory services through experts concerning the legal,
accounting, and currency regulations related to tax
affairs, employment and labor issues, contracts, company
establishment, and other issues for China, India, the 10
member states of ASEAN, North America, Latin America,
and the Middle East.
JBIC also organizes seminars and consultations
on overseas business deployment in cooperation with
regional financial institutions, prefectural and municipal
governments, and local chambers of commerce andindustry. In addition, it conducts field studies to assess
investment climates in countries where Japanese companies
are actively expanding their business. The findings of thesestudies are compiled into guidebooks, which are available
in book form and on JBIC’s website.
In FY2017, JBIC created guidebooks on the investment
environments in India, Indonesia, Thailand, and Vietnam.
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 isavailable on a regular and or as-needed 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.

■ Business Matching with Overseas Companies
JBIC assists Japanese mid-tier enterprises and SMEs toexpand sales channels and co-production and helps themto enter foreign-affiliated global supply chains. Further, asa part of reinforcing collaboration with regional financial
institutions that goes beyond financing, since FY2017 JBIC
has been creating opportunities for business matching
between overseas companies and Japanese mid-tierenterprises and SMEs. JBIC performed business matchingwith a French automotive parts manufacturer in June 2017,
and with a Canadian automotive parts manufacturer withthe cooperation of the Hiroshima Bank in March 2018.

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

Business matching with Canadian automotive parts manufacturer

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Annual Report 2018

Operational and5 Administrative Policies
1 Corporate Governance ······································ 78
2 Risk Management············································ 82
3 Public Information and Disclosure ························ 85

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Annual Report 2018

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1

5

Corporate Governance■ Fundamental
GovernanceApproachtoCorporate

Operational and Administrative Policies

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

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

Shareholder Meeting
Supervisory and Evaluative Function

Board of Corporate Auditors

Board of Directors

Accounting Auditor

Outside Corporate
Auditors

Outside Director

Management Advisory and
Evaluation Committee

Office of Corporate
Auditor1

Risk Advisory Committee

Executive Function

Corporate Governance

Executive Committee

Credit Committee

ALM Committee

Corporate Risk
Management Committee

Global Head Committee

ICT Promotion Committee

Personnel
Committee

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

■ Supervisory and Evaluation Function and theConduct of JBIC Operations
To strengthen the supervisory and evaluative functionof 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, theManagement Advisory and Evaluation Committee, theRisk Advisory Committee, the Internal Audit Committee,

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JBIC



Annual Report 2018

Internal Audit
Department

BCP Committee

Compliance andCustomer Protection
Management Committee■ Involvement of Japanese Government

Internal Audit
Committee(As of August 31, 2018)

and the Executive Committee. Furthermore, a variety ofcommittees were set up by the Executive Committee thatdelegates specific tasks to them.
(1) Board of Directors
The Board of Directors consists of eight members, ofwhich two members are outside directors as set forth in
the Companies Act. The outside directors supervise theconduct of JBIC operations from the point of view of acorporate outsider, apart from representative directors
of JBIC. In addition, the outside directors contribute toimproving the governance of JBIC as a member of theManagement Advisory and Evaluation Committee as wellas the Risk Advisory Committee.
(2) Board of Corporate Auditors
The Board of Corporate Auditors consists of three auditors,of which two are outside corporate auditors, as set forth in(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.

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

(iii) ComplianceandCustomerProtection
Management Committee
The Compliance and Customer Protection Management
Committee makes decisions and deliberations concerning
important matters pertaining to the compliance andcustomer protection management of JBIC, as delegated by
the Executive Committee.

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

(6) Executive Committee
The Executive Committee consists of representative
directors, executive directors, and all the managing
executive officers. They make decisions and deliberations
concerning important managerial matters, thereby taking
responsibility for conducting flexible JBIC operations, asdelegated by the Board of Directors. Certain decisions
such as financing to a specific project are delegated to thefollowing committees.
(i) Credit Committee
The Credit Committee makes decisions and deliberations
concerning important matters on loans, equity
participations, and guarantees by JBIC, as delegated by the
Executive Committee.
■ List of Members of the Management Advisory and
Evaluation Committee(As of July 31, 2018)
Name
Shujiro Urata

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

Noriko Endo

Project Professor, Graduate School of Media andGovernance, Keio University

Yoshinori
Kawamura

JBIC Managing Director (Outside Director)

Shinichi Koizumi

JBIC Managing Director (Outside Director)

Yoshikatsu Suzuki

Journalist (formerly editor-in-chief Diplomacy)

Yuzo Takagi

Chairman & Representative of Audit Corporation
GODAI, Certified Public Accountant

Takeshi Niinami

President & Chief Executive Officer, Member of theBoard, Representative Director, Suntory Holdings
Limited(Listed in the order of 50 character kana syllabary, name listed withouthonorifics)(iv) Personnel Committee
The Personnel Committee makes decisions and deliberations
concerning important matters pertaining to the personnel
of JBIC, as delegated by the Executive Committee.
(v) 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.

1
Corporate Governance(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.

5
Operational and Administrative Policies

the Companies Act. Outside corporate auditors contributeto improving the governance structure of JBIC, as they
cooperate with the full-time auditor in auditing the conductof its operations. As a section helping them execute their
responsibilities, there is the Office of Corporate Auditor.

(vi) 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.
(vii) BCP Committee
The BCP Committee makes deliberations concerningenhancement of JBIC’s business continuity plan (BCP) to
be carried out, for example, upon the occurrence of largescale disasters, as delegated by the Executive Committee.
(viii) ICT Promotion Committee
The ICT Promotion Committee makes deliberations
concerning matters for achieving effective, efficient, andsteady ICT (information and communication technology)■ List of Members of the Risk Advisory Committee(As of July 31, 2018)

Name

Occupation

Shuhei Abe

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

Eiji Ogawa

Professor, Graduate School of Commerce andManagement, Hitotsubashi University

Akihiko Kagawa

Partner, Deloitte Touche Tohmatsu LLC

Yoshinori
Kawamura

JBIC Managing Director (Outside Director)

Shinichi Koizumi JBIC Managing Director (Outside Director)
Toshiki Tomita

Guest Scholar, Nomura Institute of CapitalMarkets Research

Mikiko Fujiwara

CEO of Alpha Associates Co., Ltd.

Chieko Matsuda

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

Keisuke Yokoo

Vice Chairman & President, Japan Association of
Corporate Executives(Listed in the order of 50 character kana syllabary, name listed withouthonorifics)

JBIC



Annual Report 201879

5
Operational and Administrative Policies

when carrying out various measures required for the ICT
plans and policies which had been determined by the
Board of Directors and Executive Committee, as delegatedby the Executive Committee.
(ix) Information Security Committee
The Information Security Committee makes deliberations
concerning important matters pertaining to the use
and management of JBIC’s information assets, as wellas information security, as delegated by the Executive
Committee.

■ 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 by bringing together

knowhow and expertise in each sector and area, thereby
facilitating JBIC to perform the functions in its mission
more flexibly and strategically.
Specifically, the Corporate Planning Group; Credit,
Assessment and Risk Management Group; Treasury and
Systems Group; Energy and Natural Resources FinanceGroup; Infrastructure and Environment Finance Group;
Industry Finance Group; and Equity Finance Group were
set up, with each Group having departments with special
expertise.
For each Group, the responsible board member isappointed, and the managing director or a managing
executive officer serves as the Global Head of each Group.
Each Group is managed in an integral manner under the
Global Head of the Group in an effort to conduct speedy,
flexible and efficient operations.

Members of Board of Directors

1
Corporate Governance

Governor

Tadashi Maeda

Deputy Governor

Nobumitsu Hayashi

Executive Managing Director

Kazuhiko Amakawa

Senior Managing Director

Yasushi Hasegawa

Senior Managing Director

Kuninori Kuroishi

Senior Managing Director

Tatsuhiko Takesada

Managing Director (Outside Director)

Shinichi Koizumi

Managing Director (Outside Director)

Yoshinori Kawamura

Managing Executive Officers
Global Head of Corporate Planning Group

Shigeto Hashiyama

Corporate Planning Group

Global Head of Credit, Assessment and Risk
Management Group

Yutaka Funada

Credit, Assessment and Risk
Management Group

Global Head of Treasury and Systems Group

Tsuyoshi Nishitani

Treasury and Systems Group

Global Head of Energy and Natural Resources
Finance Group

Masaaki Yamada

Energy and Natural Resources
Finance Group

Global Head of Infrastructure andEnvironment Finance Group

Kazuhisa Yumikura

Infrastructure andEnvironment Finance Group

Global Head of Industry Finance Group

Kazuhiko Tanaka

Industry Finance Group

Global Head of Equity Finance Group

Shinji Fujino

Equity Finance Group

Member of Board of Directors

80

JBIC



Annual Report 2018

Member of Internal Audit Committee

Member of Executive Committee

■ Internal Audit

Pursuant to the Companies Act, JBIC has put in place aninstitutional structure, including internal regulations, toensure the proper conduct of its operations and activities,
based on the Basic Policy for the Internal Control System
decided by the Board of Directors.

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

■ Compliance■ Maintenance and Control of Information
AssetsJBIC sets forth its fundamental “Security Policy” concerning
the use and management of information assets (see page189) 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.

1
Corporate Governance

JBIC has set forth in its Code of Conduct to “Maintain highethical standards and a law-abiding spirit. Observe ourmoral code as a JBIC member at all times.” Its management
and staff members are keenly aware of the public missions
and social responsibilities called for in the international
community and in civil society. It is also well recognizedthat any act in violation of laws, regulations, or rules by its
management and staff will lead to denigrating confidence
in JBIC as a whole and have a materially adverse effect on
its operations. Attentive to these needs, JBIC is constantly
striving toward compliance and operational integrity.
JBIC makes efforts to improve compliance, primarily
through the Compliance and Customer Protection
Management Committee and has established the Legal
Affairs and Compliance Office as an integrated compliancemanagement unit.
Each Group and Overseas Representative 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 such awarenessamong JBIC employees.
To foster an 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, and follows
up on the progress and completion.
In addition to the reporting procedures in its ordinaryline 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 earlystage and taking appropriate remedial action.

5
Operational and Administrative Policies■ Fundamental Policy on Internal Control■ Protection of Private Information
JBIC has drawn up and disclosed its Privacy Policy (see page
191) which stipulates appropriate management of private
information held by JBIC pursuant to the provisions of
the Act on the Protection of Personal Information Held by
Independent Administrative Agencies, etc.

■ Conflict of Interest Management Policy
In accordance with the Financial Instruments andExchange Act, JBIC has formulated the Conflict of Interest
Management Policy and disclosed the outline of its content(see page 190).

JBIC



Annual Report 2018

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2

5

Risk Management

Operational and Administrative Policies

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

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

Credit Risk

2
Risk Management

Credit risk refers to the potential loss from a decline orloss of the value of credit assets due to deterioration in thefinancial conditions of a debtor. This risk is inherent in JBIC’soperations as it primarily engages in lending activities. Credit
risk exposure to JBIC may be classified into: sovereign risk,
which involves financing foreign governments; corporate
risk, which involves financing business firms; projectrisk, which occurs when a project financed in project
financing—a financing structure in which a loan is primarily
secured on the cash flow generated from the project—fails
to generate the planned cash flow; and country risk, which
involves financing foreign firms as well as projects locatedin foreign countries (collateral risk arising from political andeconomic situations of countries where debtor companies
are located or projects are under way). Given the very
nature of financial support JBIC provides for promotionof overseas development and securement of strategicallyimportant resources to Japan, for maintaining andimproving the international competitiveness of Japaneseindustries, and for promoting the overseas business forpreserving 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’soperations.

■ Managing Credit Risk
The cornerstone of credit risk management at JBIC is theevaluation of an individual borrower’s creditworthinessin the process leading to credit approval. When a newloan application is being processed, the relevant financedepartment and the Credit Department collect and analyze
information on the borrower. The overseas representative
offices also play a part in collecting information on
foreign governments and companies. It is based on thisinformation and its analysis that credit appraisal takes
place, with checks and balances at work between thesedifferent departments throughout this process, leading to
the final decision by management.

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Annual Report 2018

In providing credit for foreign governments andcompanies, JBIC makes the most of its unique position as
an official financier, as it exchanges views and information
with the governments and relevant authorities in therecipient countries, multilateral institutions such as theInternational Monetary Fund (IMF) and the World Bank,other official export credit agencies and, furthermore, withprivate financial institutions in developed countries. Using
all these channels, JBIC evaluates sovereign and country
risks based on a broad range of information collectedon borrowing governments, government agencies, andpolitical and economic conditions in their countries.
In providing credit for domestic and foreign companies,
there is a need to evaluate their creditworthiness and theappropriateness of the collateral they offer. In particular,
for credit provision related to overseas projects, credit
evaluation involves checking and examining the certainty of
conducting transactions to be financed, feasibility studiesof 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.

■ Internal Assessment of Asset Portfolio
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 the internal
assessment of its loan portfolio referring to the Financial
Inspection Manual so that the characteristics of its loan
assets will be accurately reflected on its assessment. In thisprocess, the first-stage assessment is conducted by therelevant financing departments, while the second-stage
assessment is conducted by the Credit Department and■ Quantifying Credit Risk
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
a significant proportion of long-term loans and loans

5involving sovereign and country risks. Also to be taken into
account are mechanisms for securing assets, such as theParis Club1, 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

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 forthe continuous reviews of the loan portfolio but are also
reflected in the disclosure of asset quality to enhance thetransparency of JBIC’s financial position.

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

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

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

(As of March 31, 2018; unit: 100 million yen)Contract Amounts /Notional Amounts
Interest Rate Swaps

50,074586

Currency Swaps

32,744

3,349

Forward Exchange
Contracts

948

8

Other Derivatives——

Credit Risk Reductions
through Netting(2,359)■ Interest Rate Risk

Total

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 raterisk for portions of loans that are thought to have highexposures to interest rate fluctuation risk. Interest raterisks associated with foreign currency-denominated loan
operations and relevant fundings are generally hedged bymanaging the funds with floating interest rates with theuse of interest rate swap transactions. In addition, JBIC
carefully calculates and analyzes projections of its future
asset/liability structure and profits and losses.

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

■ Derivatives Transactions◆ 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.

(1) Basic Policy for Derivatives Transactions
JBIC engages in derivatives transactions exclusively for the
purpose of hedging exchange rate and interest rate risks.
(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, 2018.

2

Credit Risk
Amounts

Risk Management■ Exchange Rate Risk

Credit Risk of Derivatives, etc.

83,7671,585(3) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.
◆ 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.

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

JBIC



Annual Report 201883

5Liquidity Risk

Operational and Administrative Policies

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
from inadequate or failed internal processes, people, andsystems or from external events. Apart from administrative,
computer system, and information security risks, JBIC
recognizes that its operations involve various direct andindirect risks. JBIC will proactively identify, assess, andmanage such risks.

2
Risk Management■ Administrative Risk
Administrative risk refers to the potential loss resulting
from the neglect by officers and employees to conduct
administrative work properly, accidents caused by them,and violation of laws and regulations caused by them,etc., conducted in the course of the administrative work
process.
JBIC has been minimizing this risk by ensuring soundoperations through scrupulous checks on work processes,
creating operational manuals, improving training programs,
and streamlining and adopting systematic procedures.

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

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

3

Public Information and Disclosure

5

In January 2018, JBIC renewed its website to make iteasier to read and use. Not only was the design wholly
revamped but the website is now easily accessible frommultiple devices such as smartphones.
JBIC aims to enhance the content to keep it up todate.

Operational and Administrative Policies

JBIC is providing and disseminating information to a broad
range of the domestic and overseas public in an effort
to promote further understanding of its operations andactivities.
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 (https://www.jbic.
go.jp/en/).

■ Publications
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, which is 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’slatest activities and topics on its operations and otherrelevant issues; JBIC Profile: Role and Function, a brochuredescribing JBIC operations; and pamphlets for project
finance and other publications.

JBIC website PC site

3
Public Information and Disclosure

Smartphone site

■ 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 throughpress conferences, meetings, etc.
JBIC Today■ Website
The website provides access to JBIC information, including
its financial instruments, introduction of each business area,press releases, invitations to seminars, reports on various
studies, annual reports, various brochures, IR information
for investors, and various other types of information.

■ Disseminating 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.

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Annual Report 201885

5

■ Promoting International Exchange

3

Participants at a JBIC Seminar

Operational and Administrative Policies

Since 1976, JBIC has held annual JBIC Seminars in Japan topromote mutual understanding with its overseas business
partners and relevant organizations by inviting officials
from foreign governments, government agencies, privatecompanies, financial institutions, etc. The cumulative
number of seminar participants is approximately 690 todate.

Public Information and Disclosure■ Participating in Various Events

Eco-Products 2017

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.
JBIC set up a JBIC Booth at the Asian Development
Bank (ADB) Annual Meeting held in Yokohama in May
2017. In December 2017, JBIC exhibited at Eco-Products
2017, which was held at Tokyo Big Sight. Overseas, in

Source of Information

86

February 2018 JBIC participated in Mining Indaba in South
Africa, one of the world’s largest mining conferences.

■ 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: https://www.jbic. go.jp/en/

JBIC



Annual Report 2018