JBIC Today

February 2020

Special Feature

Global Changes to LNG Value Chain▶ History of Japan’s LNG Development and JBIC's Support▶ What Role Should JBIC Play in this Turning Point for the LNG Market?
▶ JBIC Interview■ Securing Stable Energy Supply and Creating International LNG Market!

■ Building LNG Value Chains in Emerging Countries to Cover the Whole Process from Procurement to Fund Collection

The Focus / Our Global Challenges

英文組合せシステム“Omotenashi” (Japanese hospitality and service) to strengthen bonds withcustomers is the key to our overseas expansion

Latest Report From Young Staff

Project Frontline▶ Loan to the freight railway business for achieving stable logistics in Brazil▶ Project finance for long-term, stable procurement of copper concentrates▶ New credit line for environmental preservation in Vietnam

FeatureFeatureSpecial Feature Global Changes to LNG Value Chain

Malaysia LNG Project● A project in Sarawak State, Malaysia, consisting of four projects

History of Japan’s LNG development and JBIC’s Support(annual production capacity: 27.8 million tons/9 trains in total)● Japanese companies are involved in these projects in various

capacities from upstream to downstream. JBIC provided a wide
range of financial support to these projects. (since April 1980).

Through their participation in upstream gas field developments and LNG plant construction projects over the last 50 years, Japanese companies have, with JBIC as a supporting
partner, achieved a stable long-term supply of LNG for Japan.

Brunei LNG Project● A project in Brunei (annual production capacity: 7 million tons/5

trains). The first LNG investment made by Japanese companies.
● JBIC’s first loan to an LNG project (August 1970).

Yamal LNG Project

Sakhalin Ⅱ LNG ProjectIndonesia LNG Project● A project in the Yamal Peninsula, Russia (annual pro-

● A project in Sakhalin, Russia (annual production capacity: 9.6 million● Project in East Kalimantan State, Indonesia, consisting of two proj-

tons/2 trains)duction capacity: 16.5 million tons/3 trains).

ects (annual production capacity: 28.7 million tons/14 trains)● The purpose of the project is to sell LNG to Asia and● The first LNG project in Russia. This project contributes to diversifying the● The first LNG project in Indonesia. The Indonesian national oil

Europe through the Northern Sea Route. JBIC provid-sources of LNG supply for Japan, which had previously relied heavily oncompany led this project alongside Japanese companies who par-ed export credit project financing for the construction

suppliers from South East Asia.

of the LNG Plant developed by Japanese engineering

ticipated through a joint venture company.

● JBIC provided project financing loans to support this project (June 2008).

companies (December 2016).

● JBIC provided a wide range of financial support to these projects.

(since June 1974).

Yamal LNG
Arctic LNG Ⅱ

Qatargas LNG Project● A project in Ras Laffan Industrial City, Qatar, consisting of four proj-

ects (annual production capacity: 41.1 million tons/7 trains in total)● Including other projects, Qatar has a total LNG production capacity

Sakhalin Ⅱof 77 million tons, which makes it among the largest LNG producers
in the world.
● JBIC fully supported the construction of the LNG value chain, andrelated infrastructure, in Qatar (since March 1994).

Freeport LNG
Qatargas LNG

Brunei LNG

Das Island LNG

Cameron LNG

Indonesia LNG
Donggi-Senoro LNG
Malaysia LNG

Tangguh LNG
PNG LNG

Equatorial Guinea LNG
Ichthys LNG

PNG LNG Project● An LNG project located in Papua New Guinea (annual production

Pluto LNG
Bayu-Undan LNG

Gorgon LNG

Wheatstone LNG Project● A project in the State of Western Australia, Australia

North West Shelf LNG

Prelude FLNG

Wheatstone LNG

capacity: 6.6 million tons/2 trains)● This project is Papua New Guinea’s first LNG Project and contrib-

utes to diversifying the sources of LNG supply for Japan.
● JBIC provided project financing loans to support this project (De-(annual production capacity: 8.9 million tons/2 trains)

cember 2009).

● Following the Great East Japan Earthquake, JBIC sup-ported this project by providing both loans and equity
investments with the aim of establishing a stable LNG

Queensland Curtis LNG

procurement arrangement for Japan (July 2012).

Cameron LNG Project/Freeport LNG Project● Projects in Louisiana, United States (annual production capacity:

12 million tons/3 trains) and in Texas (annual production capacity:

Ichthys LNG ProjectNorth Western Shelf LNG Project● A project in the State of Western Australia, Australia

pacity: 8.9 million tons/2 trains)(annual production capacity: 16.3 million tons/5 trains)● The first large-scale LNG project led by a Japanese company acting as● JBIC’s first project finance transaction (since March

the project operator. JBIC supported this project by provision of its larg-1986).

2● A project in Darwin, Northern Territory, Australia (annual production ca-

February 2020 │ JBIC Today

est ever project financing loans (December 2012).

4.64 million tons/1 train)● These are the first projects to provide for committed long term LNG

offtake to Japan from the continental United States. These projects
contribute to diversifying the sources of LNG supply for Japan.
● JBIC provided project financing loans to support these projects(August & October 2014).

Contributing toJapan’s Energy Security
Japan first imported LNG in 1969, 50 years ago.
LNG stands for “liquefied natural gas”, which is natural
gas cooled down to its liquid form at -162 ºC. LNG is aclean energy source that contains almost no harmful substances or pollutants, such as sulfur oxide, and produces
lower CO2 emissions during combustion than oil or coal.
LNG has now established itself as one of Japanʼs primaryenergy sources.
However, back in the ʻoil heydayʼ of 1969, there
were few countries that used LNG as an energy source.
Furthermore, to introduce LNG into a country, it was
first necessary to spend several tens of billions of yen on
the construction of specialized LNG vessels and receiving
terminals and, in addition, the construction of an LNG
plant in a country that produces natural gas would cost
approximately 1 trillion yen at the time.
Nevertheless, from the perspective of energy security, securing an alternate energy source to oil and coal wasa very important mission for Japan, which was facing increasing energy requirements following a period of higheconomic growth but lacked domestic energy resources
to meet such demand.
JBIC (formerly, the Export-Import Bank of Japan)
has been supporting LNG projects since its involvementin the Brunei LNG project in 1970. That was a project
to develop LNG infrastructure in Brunei, including construction of the LNG plant and the piers for docking the
LNG vessels.
Following the Brunei LNG project, JBIC broadened the scope of its support not only to cover upstream
projects in the LNG value chain, such as gas field development and construction of LNG plants, but also to thedevelopment of downstream infrastructure for marinetransportation, such as by providing loans for the procurement of LNG vessels.
Meanwhile, in 1986, in response to the increasing
financing requirements for large-scale LNG projects,
JBIC provided its first project finance loan to the North
Western Shelf LNG project located in Western Australia.
Since then, JBIC has continued to provide financing to support projects that contribute to the stable longterm supply of LNG to Japan. Such projects include theIchthys LNG Project in Australia ̶ the first large-scale
LNG project involving a Japanese operator ̶ and the
Cameron LNG and Freeport LNG Projects, which produce LNG from U.S. shale gas-for export back to Japan.
Marking the 50th anniversary of the commencementof LNG imports to Japan, the LNG business has entereda time of change. This can be seen in the shift in focus to
the development of integrated gas value chains including
power plants and related facilities, and the flexibility now
being included in recent LNG sale and purchase agreements. In line with such changes, the role that JBIC is
expected to play in the LNG market is also changing.
February 2020 │ JBIC Today3FeatureFeatureed assurance that they would be able to recover

more than ever and Asian companies, par-LNG market if it focuses only on its domestic

their large capital investment, and LNG con-ticularly Chinese companies, have been pur-supply. Accordingly, JBIC proactively supports

sumers, who needed to secure a stable supply

chasing more LNG than ever. If this situation

the establishment of gas value chain infra-

continues, Japan could lose the LNG market

structure by taking a flexible approach to new

Recently, however, LNG sale and pur-position that it has built up over the last 50

financing structures. The “Jawa- 1 Project” ischase agreements are much more diversified,years, which may raise concerns about the sta-

one example of these initiatives.

as demonstrated by the increase in spot andbility of the supply of LNG to Japan.

of natural resources.

Special Feature Global Changes to LNG Value Chain

What Role Should JBIC Play in this Turning Point for the
LNG Market?
Since Japan began importing LNG in 1969, it has driven the LNG market as a major consumer.
However, 50 years have now passed and the LNG market is facing dramatic changes.
This article considers what actions should be taken by Japanese companies, and how JBIC’s missions should respond, in relation to thischanging LNG market.
Japan has a significant presence in thesignificant changes.

This project is being developed in the

short-term arrangements, removal of destina-

Accordingly, it is extremely important forWest Java Province of Indonesia, as an inte-tion clauses and the acceptance of a range ofJapanese companies to proactively participate

grated ʻGas to Powerʼ project combining both

LNG pricing indices. There are several reasonsin new LNG businesses, mainly in Asia wherea gas-fired power plant and its connected gas

driving these changes. With the liberalization

the demand is surging, in order to maintainfacilities within a single project structure. Inof the electricity and gas industries in Japan

Japanʼs presence in the LNG market.

other words, the project will construct, own

and Europe (which are large LNG custom-

In emerging countries in Asia, LNG

and operate both a FSRU (Floating Storageers), it is no longer sufficient to focus only on

demand is expanding but they do not have aand Regasification Unit)* and a combined

ensuring a stable supply of natural gas, but

well-developed infrastructure to support thecycle gas fired power plant. An FSRU can be

flexibility with respect to pricing and trans-

full gas value chain, such as LNG receiving

constructed at lower cost and in a shorter peri-

action volume has also become an importantterminals for receiving and regasifying theod than an onshore LNG receiving terminal.

consideration. In addition, the expanded size

imported LNG, power generation facilities to

JBIC has a wealth of experience inof the LNG market as a result of the increased

utilise the gas stored in those terminals and in-supporting the development of stand-alone

demand for LNG in emerging countries has

frastructure networks to deliver gas and power

projects, such as power plants, but it is un-enabled more forms of trading arrangements

to the end-users. Utilizing technology andprecedented for a Japanese company to op-

to become viable. Producers, mainly oil ma-

know-how across the gas value chain that has

erate both a power plant and the gas-related

jors, are seeking to diversify their portfolio

been cultivated over the last 50 years, Japanesefacilities together as a single project. In thisincreased its output of LNG at a pace that willof trading contracts in anticipation of ancompanies can actively participate in the de-regard, it is a groundbreaking project. JBIC

LNG (liquefied natural gas) market as theFirst of all, there is the issue of global

overtake Qatar, the largest LNG exporter inincreased demand for natural gas in future. Fi-velopment of the entire gas value chain, from

intends to proactively support projects whereworldʼs largest buyer, with imports of over 80

warming. Amid increasing global focus on

the world. In addition, the shale-gas produc-nally, as the United States expands its exports

gas exploitation, LNG liquefaction facilities

Japanese companies are able to play a major

million tons of LNG annually. However, 50

CO2 reduction, natural gas is gaining moretion that was developed in the United Statesof the shale gas-derived LNG, the number of(production), transportation, receiving termi-role in building gas value chains overseas andyears have passed since Japan first began toattention as a clean energy resource because

in the late 2000s has now started to come on-

LNG contracts linked to Henry Hub, which

nals, all the way to end-user gas supply. This

to expand their presence in the LNG market.

import LNG and the LNG market is facing

it produces less greenhouse gases than oil andstream and exports of such shale-gas derived

is the leading index for U.S. natural gas, is in-

not only helps Japan to maintain its presence

JBIC also supports the development ofcoal. In particular, China has been promoting

LNG are increasing. Finally, LNG plants increasing.

in the LNG market to secure supply of natural

LNG projects in the United States to helpa shift from coal to natural gas in response to

the Arctic Ocean, which were technically dif-

The LNG market is changing signifi-

resources, but also creates more business op-

Japanese companies establish gas value chains.

its serious air pollution issues and, as early as

ficult to develop, have now commenced theircantly from a traditional market led by a small

portunities for Japanese companies to utilize

Specifically, we are financing the Cameron

the beginning of the 2020ʼs, is expected tooperations and we are seeing increased en-

selection of large buyers such as Japan, South

their competitive advantages.

LNG project in Louisiana and the Freeport

overtake Japan as the worldʼs largest LNG im-

deavors to develop LNG in regions that have

Korea and Taiwan.

porter.

not previously had LNG production facilities,

Even countries that produce their own

such as Mozambique in Africa.

natural gas such as the Philippines, Bangladesh
and Vietnam have started to increase theirdemand for imported LNG due to declines
in their domestic LNG output. As an energy
source that is seen to support rapid economic

HAMAMATSU
Masayuki

Director General
Oil and Gas Finance Department
Energy and Natural Resources Finance Group

Requiring more flexibility in
LNG contracts
The entry of new LNG importing coun-

Finding a way forward with
the new LNG business

LNG project in Texas. These projects are each

Providing flexible support for
new LNG contracts

based on the new approach to LNG contracts,
under which a U.S. natural gas index is used asa pricing benchmark instead of oil linked pric-Due to concerns around factors such as

es and the destination clauses have been re-

Looking at Japan, annual LNG imports

country risk, it is difficult for private compa-

moved. We accommodated this new approachpeaked at 89 million tons in 2014, but thenies to develop projects in emerging countries

to LNG contracts to respond to the changing

volume has remained flat at just-over 80 mil-without some governmental, or multilateral,

LNG market, as explained earlier.

growth, there is an increasing demand fortries and new LNG suppliers into the LNG

lion tons, or has been slightly decreasing, since

support. Accordingly, one of JBICʼs major

The LNG market will continue tonatural gas, particularly in Asia. This has led tomarket has also brought changes to the ap-

then. As Japanʼs population is expected tochallenges is to structure the financing forchange, and Japanese companies will also need

rapid increases in the number of LNG import-

proach to LNG sale and purchase agreements.

decrease in the future, it does not seem likely

such projects in such a manner as to develop

to adjust their business model and adapt ac-

In the past, LNG sale and purchasethat Japanʼs LNG demand would grow in theinfrastructure for building the gas value chain

cordingly. JBIC intends to flexibly respond toing countries over the last few years.
It is also noteworthy that LNG supply

agreements were based on long-term contracts

sources are becoming more diversified. By

with destination clauses and oil-linked pricing.

Conversely, in anticipation of an in-

reinforcing its LNG production facilities, Aus-

Traditionally, stable long-term contracts werecreased global demand for LNG, oil majors

tralia (Japanʼs largest LNG export partner) has

desirable for both LNG producers, who need-have been expanding their LNG businesses

same manner as it did in the past.

in emerging countries, particularly in Asia andsuch changes in the LNG market and to seek

to respond to the diverse range of LNG trans-

new opportunities to contribute to the stableactions types.

procurement of LNG and the involvement ofJapan cannot maintain its presence in theJapanese companies in the LNG market.

* FSRU: Floating Storage and Regasification Unit. FSRU is an offshore vessel that includes all systems to enable LNG to be received, stored and regasified offshore.

4

February 2020 │ JBIC Today

February 2020 │ JBIC Today

5FeatureFeaturedeveloping Gas-to-Power projects. Even large

sion-making and enhance our organizational

in implementing the LNG transportationcompanies such as major resource companies

diversity such as through gender, age andbusiness under project financing, JBIC helped

have difficulty in implementing these projects

nationality.

us develop a financing scheme in line with oursingle-handedly. Therefore, joint developmentwith other companies from both within and― What are your expectations for JBIC?

support the LNG value chain business by uti-

outside of Japan is important.

Mr. Kani: In the past, I have worked with JBIC

lizing its accumulated networks with emerging

In order to collaborate with major over-in launching an LNG transportation busi-

countries, while taking into account the needs

seas companies, we plan to speed up deci-ness. At that time, as we had no experienceof Japanese companies.

Building LNG Value Chains in Emerging Countries to Coverthe Whole Process from Procurement to Fund Collection

Special Feature Global Changes to LNG Value Chain

JBIC Interview

Creating a stable supply mechanism in South Asia with a view of 20-40 years of growthin the LNG market

Securing Stable Energy Supply and Creating International
LNG Market!
JERA's efforts towards expanding the LNG Market― 50 years have passed since Japan started

fluctuate greatly, it is important to procure

invested in a local power producer in Bangla-

importing LNG. What is the current situation of

LNG more flexibly. In other words, we needdesh. Moreover, we have decided to participate― What do you think of the current LNG mar-fuels, but still emits about 3 tons of CO2 per 1

ket and its future development?

ton of LNG in the whole value chain from gas

Mr. Nishizawa: LNG transaction volume hasdevelopment to liquefaction, transportation,

increased during the past 50 years, reachingand power generation. I think corporations

close to 350 million tons per annum. We

involved in the LNG business should take on

expect the volume will double to about 700

responsibility for reducing such negative im-

million tons in the next 20 years.

pact on environment by utilizing CCS (Carbon

Some people see LNG just as a bridge

Capture and Storage) and CCU (Carbon

the LNG market surrounding Japan, the largest

to create an LNG market where buyers canin separate new gas-fired power generationfuel towards renewable energy and cast doubt

Capture and Utilization) for capturing CO2

LNG importer in the world?

purchase LNG at the appropriate price when

projects in Bangladesh. We would like toon the drastic growth of the LNG demand.

emissions.

Mr. Kani: In the past 10 years, LNG demand

they need it. We must also improve industryʼs

expand these activities into other Asian coun-

However, both solar power generation andIn light of these aspects, our major strat-

has increased by 20% in Japan, but the de-practices that restrict the destination of ship-tries.

wind power generation have the problem of

egy is to achieve a stable supply of LNG to themand in the overall Asian market has climbed

ments of LNG.

intermittency. This problem cannot be solved

Japanese market and then cultivate overseas― What is important when promoting Gas-to-without a drastic technological innovation

demand. To be specific, we are focusing onsuch as storage batteries. Still, it is current-

not only China but also South Asia where theby over 100%. Japanʼs presence has relatively

It is also important to boost the demand

declined in the global LNG market, but LNG

of LNG itself. To this end, we are working on

Power projects?

is still a vital energy source in Japanʼs energy

Gas-to-Power projects.

Mr. Kani: Large investment is necessary forpolicy.

NISHIZAWA Jun
CEO, Natural Gas Group
Executive Vice President
Mitsubishi Corporation

ly difficult to foresee that such remarkabledemand is expected to surge. Bangladesh andprogress will occur immediately. In addition,

Pakistan have been natural gas producing andconsuming countries, and have developed

ceiving LNG to regasification, transportation,
gas sales, up to recovery of invested capital.

I would also like to emphasize that LNG― Could you share JERA’s initiatives to ex-

according to one provisional calculation, as

is compatible with renewable energy. For ex-pand the LNG market including participation inmuch as $5 trillion of investment is required

infrastructure including pipeline networks.

ample, solar power generation rapidly loses its

Gas-to-Power projects?

for covering the entire US electricity demand

Therefore, this makes it easier to reduce busi-

output after sunset. On the other hand, ther-Mr. Kani: “Gas-to-Power” refers to a project forsolely by renewable energy. Taking these sit-

ness risks and necessary investment in those――What are your expectations for JBIC?

mal power generation using LNG can adjustan integrated development ranging from LNG

uations into account, We foresee that LNG

countries. Meanwhile, a mechanism where

Mr. Nishizawa: First of all, in developing proj-

its output as if you were turning the switch of

procurement to the construction of LNG re-demand will grow for over 20 years from now.

investors can recover their investment is neces-

ects in emerging countries, we expect JBIC tosary to invest. For example, in the most down-

play a major role in creating a mechanism tostream part of an LNG value chain, we needcollect sales proceeds.

a gas stove, so we can complement the output

ceiving terminals and gas-fired power plants.

shortage of renewable energy. Obviously, ther-

As large-scale development entails technicalmal power generation using LNG is important

hurdles, this project is not so simple. Howev-

drawing amid the robust increase of LNG de-to securely establish a mechanism to collect

Additionally, amid the trend toward

considering the energy mix target by fiscal year

er, we believe we can support this integrated

mand?

gas charges or electricity charges for gas power

decarbonization, more advanced measures to2030 set by the Japanese government.

LNG development project based on our solid

Mr. Nishizawa : We are focusing on three

generation in foreign currencies. If this mecha-

reduce CO2 emissions are required for LNG

experience in Japan, and would like to embark

points: (1) mitigating environmental impacts;

nism is not properly established, investors will

projects. We would highly appreciate it if― What should Japan do now to expand theon Gas-to-Power projects in foreign countries.

(2) securing competitive LNG; (3) achieving

not be assured of a return on investment. We

JBIC could support not only LNG projects

LNG market?

6needs. We expect JBIC to continue to further

In addition to Gas-to-Power projects, we

Mr. Kani: Given the possibility that short-term

are also committed to investing in overseas

and medium/long-term LNG demand may

infrastructure business. For example, we have

February 2020 │ JBIC Today― What strategies is Mitsubishi Corporation

KANI Yukio

Corporate Vice President, Director
Chief Operating Officer, Business Development
Department
JERA Co., Inc.

stable supply of LNG. Particularly, in terms ofare aiming to establish a mechanism for stable

but also a wide range of businesses including

mitigating environmental impacts, LNG is rel-and long-term supply of LNG to South Asia

the CCUS (Carbon Capture, Utilization andatively environmentally-friendly among fossil

by creating a series of systems ranging from re-Storage) business.
February 2020 │ JBIC Today

7

The Focus

Our Global Challenges"Omotenashi" (Japanese hospitality and service) to strengthen
bonds with customers is the key to our overseas expansion― NAKAZAWA CO., LTD.
Having started as a small watch repair shop in a town, NAKAZAWA CO., LTD opened 95 shops inJapan and now expands its operation to China, Vietnam and Cambodia. What is the secret of its
growth?

Findinga newopportunity
in selling
gift watchesamid harshbusiness
environment”Omotenashi”, the Japanese spirit of hospitality and service highly appreciated around theworld, is the key to the global expansion of Nakazawaʼs retail business. The company, a retailerof watches, eyeglasses and jewelry, was establishedby NAKAZAWA Kohei in 1952 as a small watch
repair shop in a tiny space of a four-and-a-halftatami (straw) mat room. Today, it has grown toa successful group of companies that operate in
China (2 stores), Vietnam (5 stores) and Cambodia (2 stores), as well as in Japan where it has 95
stores.
What served as the catalyst of this growthis the power of imagination that turned a crisis
situation into an opportunity.
In the 1990 ʼ s, mobile phones rapidly
became popular, which decreased the sales ofwatches. Under these increasingly difficult circumstances, NAKAZAWA Michimori, who wasto succeed his father as the companyʼs President& CEO in 2000, found a new business opportunity in selling “gift watches”, which is a newconcept that encourages customers to purchasea watch for someone else other than just themselves.

Casual watches targeted at a broad
range of customers“Everyone in the company was involved inones. But, of course, high-end watches would
limit the potential customer base. We wanted
to help a wider range of customers deepen theirpersonal ties by giving a watch as a gift. For thisreason, we chose to focus on retailing casual
watches at between JPY10,000 and 30,0000.”
Nakazawa also invited NISHIWAKI Ichiro,
an interior designer, to completely redesign its
retail space into a more stylish space that would
appeal to the sophisticated younger generation
by removing its existing unrefined image of a“watchmakerʼs workshop”. In addition, theycarefully chose the design of wrapping paper andshopping bags, in order to provide added value
to the gift merchandise.
At the same time, they made their efforts
to pass on and further enhance the technicalknow-how and skills necessary to repair watches,
which has been a legacy of their company since
its establishment. They employed certified watch
repair technicians in all shops to ensure precisionin maintenance service.
With these two strategies, they pioneered
the new market of casual gift watches, while
holding to their spirit of “Omotenashi”.
Moreover, they created a completely newstyle of retail store called “Time Station NEO”.
This led them to start business with Aeon Co.,
Ltd., which also paved the way for their overseas
expansion.

exchanging their ideas to find a way to restore
the custom of wearing watches on the wrist after
they had been replaced by mobile phones. As aresult, we reached a hypothesis that there mustbe customers who will think of giving a watch asa gift when they see the bare wrists of their loved

NAKAZAWA Michimori
NAKAZAWA GROUP
President & CEO

8

February 2020 │ JBIC Today

Local staff members welcome customers with the Japanese spirit of
hospitality, “Omotenashi”.

Store at Sen Sok City in Cambodia.

“It all started when an Aeon employee saw
one of our stores in Tokyo and asked us to open
one in one of their shopping malls. From then on,
we opened our stores in Aeonʼs shopping malls
across the country, which helped push up oursales. When Aeon decided to expand abroad withthe desire to serve customers in the spirit of theJapanese “Omotenashi”, they again asked us toopen our stores in their shopping malls overseas.

Nakazawa remains resolute inoverseas expansion amid despair
among retailers
Aeon had apparently approached some 20
to 30 prospective retailers in addition to Nakazawa, when deciding to expand abroad. However,when the Aeon Mall Tan Phu Celadon opened in
Ho Chi Minh, Vietnam in 2014, there were only
a handful of stores from Japan.
“The hurdle for overseas expansion wasmuch higher than expected. To start with, we
needed to establish a local subsidiary. A majorbank told us we would need about JPY20 million
for initial investment and working capital, which
is a huge overhead for a small and medium-sizedcompany. However, we wanted to try our best
to work with Aeon which had made a make-orbreak decision in expanding their business toabroad. We consulted with our local bank, theShiga Bank, Ltd. (Shiga Bank). They explained
to us about how to set up a local subsidiary at
minimum cost and provided us a loan to expand
to overseas markets.”
The next challenge was the training of local staff. It was extremely difficult to teach theart of Japanese customer service to local staff
members who do not know even the simplest
greeting words said by Japanese shop assistants,
such as “irassyaimase (welcome)” or “arigatougozaimashita (thank you)”.
“We made a tenacious effort to teach local
staff members the Japanese style of service. We
tried many ways through a trial-and-error approach, such as inviting them to Japan so thatthey could experience “Omotenashi” up close.
Although we also have stores in China and Cambodia, each country has different business mindset and practices and therefore, we needed great

effort to find the right training method for eachcountry.”
However, what Nakazawa learned from thisexperience is now being fed back into their efforts to capture demand from foreign visitors toJapan. As Nakazawa continues:“At present we have 45 Chinese staff members who practice the Japanese “Omotenashi”
service. I suppose that if Chinese visitors to Japan
receive Japanese service in their mother tongue,
they would feel more comfortable. Sales to visitors from foreign countries have reached 7% of
our total domestic sales.”Nakazawa plans to further expand theiroverseas store base. For the new stores they
opened in Vietnam and Cambodia, they utilized
JBICʼs co-financing scheme proposed by the Shiga Bank.
“By making use of JBICʼ s cross -borderloans, our subsidiaries can borrow funds locallyand directly. We believe that this not only reduces costs compared to borrowing from local
banks, but also encourages the independence ofthe local subsidiaries. I hope we may be able toutilize JBICʼs facilities for future expansion.”

Utilizingknow-howgained fromour overseas
experiencefor domestic
retailoperation!

Carefully chosen wrapping paperand shopping bag.

Corporate Data
NAKAZAWA CO., LTD
Founded 1986
Total capital JPY50 million
Business R etail of watches, eyeglasses and jewelry
Headquarters 2-92 Chuo, Konan, Shiga Prefecture
Relation with JBIC
Received cross-border loans to be directly provided to their local subsidiaries in Vietnam and Cambodia which
require funds for wristwatch sales and repair operations.

February 2020 │ JBIC Today

9Project Frontline

Latest Report From Young Staff

Loan to the freight railway business for achieving stable logistics in
BrazilBoverseas expansion of Japanese companies and enhancing relation-

the largest stakeholder in VLI, has built favorable relationships withships with Vale.

Japanese companies over a long period of time.
We initiated a full-scale consideration for providing a loan toof the loan agreement and the negotiation process. However, thisricultural products, having a significant presence in the global

negotiation was far from easy. As this was our first time to do busi-

agricultural market. Moreover, Brazil is the world’s leading producer

ness with VLI, we made a tenacious effort to propose and explainand exporter of mineral resources including iron ore, copper ore,

JBIC-specific contractual terms and conditions to be included in aand bauxite.

loan agreement until they understood its necessity. During negotia-

However, Brazil’s transportation infrastructure has not been

tions, I strived to understand the true needs hidden behind the mes-

established sufficiently and the country depends heavily on truck

sage from VLI, while bringing my legal experience and knowledgetransportation. In 2018, truck drivers launched a large-scale strike

gained from when I was in the legal department to promote theirdemanding a reduction in fuel prices. As this strike demonstrates, un-understanding towards JBIC’s financing terms and conditions withinstable logistics network and rising costs become problems. To address

their organization.

Under these circumstances, we received a request of a loan to
the freight railway business operated by a Brazilian corporation VLI

profileWith the support of JBIC’s representative office in Rio de Janeione year later and held a signing ceremony with the attendance ofthe executives of both companies.
We believe this project contributes not only to stable logistics

corporation Vale S.A., VLI provides combined and integrated trans-

network and cost reductions through the establishment of logisticsUOZAKI Mizuki
Division 1 & 4Social Infrastructure Finance Department
Infrastructure and Environment Finance Group(then)

ro, my boss and colleagues, we finally concluded this negotiation

S.A., which is jointly invested in by Mitsui & Co., Ltd. and a Brazilian

Project finance for long-term, stable procurement of copper
concentrates“I would like to work in JBIC’s overseas representative office
to promote projects while building deep relationships withlocal governments and companies.”

New credit line for environmental preservation in Vietnam

V

ietnam is in the middle of developing its power sources to

VCB showed an interest from the outset of a proposal, but withrespond to increasing power demand due to the nation’s

little experience in doing business with foreign financial institutions,ing Co., Ltd. and Sumitomo Corporation decided to acquire a partial

economic growth. On the other hand, there is a steady increase inas well as a lack of familiarity with international financial practices,

stake in Quebrada Blanca Copper Mine in Chile from Tech Resources

awareness of the environment. Faced with the need to mitigate thetheir approach was often greatly at odds with ours. Meanwhile, we

Limited (Canada) and invest in the development of this copper mine.

impact of climate change, the Vietnamese government announced

had to show them that there were contractual terms and conditions

In response to their request of a loan, JBIC started a full-scale con-the expanded use of renewable energy in its revised Power Develop-

we could not concede on in order to provide finance within thesideration of funding the project in the form of project financing.

ment Plan VII adopted in 2016.

framework of JBIC’s facility for QI-ESG.

resources projects.)
Against this backdrop, in December 2018, Sumitomo Metal Min-The sponsor gave us only a six-month lead time to finalize loan

Under such circumstances, JBIC proposed a credit line to be set

The only way for us to overcome these crucial differences andnegotiations, which was indeed challenging for us. However, thanks

up for Vietcombank (VCB) under the framework of its newly estab-reach an agreement was through continuous dialogues and building

to our vast experience in supporting copper mine development proj-

lished “Global Facility to Promote Quality Infrastructure Investmentof trust. We visited Vietnam five times for face-to-face discussions

ects, as well as the sponsor’s excellent leadership, enthusiasm andfor Environmental Preservation and Sustainable Growth” (QI-ESG).

and held meetings with them at least 15 times, including over thesincerity in their approach to their work, we managed to sign a loan

QI-ESG is a financing facility that aims to support infrastructure proj-

phone, to exchange views. It was not uncommon for a single sessionagreement for project finance amounting to USD900 million (JBIC

ects contributing to global environmental preservation.

to last half a day or more.

portion) on May 30, 2019.

After one year of such tough negotiations, we were finally able

I feel delighted that I was involved in support for the projectto agree upon a credit line totaling USD200 million. My sense ofopper is essential resource used by various industries for pro-that contributes to securing important resources for Japan, whileachievement at that time was enormous and I was delighted to haveduction of electric cables, electronic equipment, automobiles

meeting the needs of our clients through the use of JBIC’s financial

been able to contribute to environmental preservation in Vietnam,

and construction materials, etc. As demand for copper is expected to

instruments and know-how that has been accumulated so far.

as well as greater business expansion by Japanese enterprises.

rise globally, competition for acquiring interests in high-quality cop-profileprofileC

per mines continues to intensify. Japan relies solely on imports forcopper concentrates. As highlighted by the Japanese government’s
Strategic Energy Plan which has set a goal of achieving at least 80%
self-sufficiency* for base metals, including copper, by 2030, longterm stable procurement of copper is an important challenge forthe country. (*”self-sufficiency” is the ratio of Japan’s ownership ofinterest in resources or that of Japanese companies’ participation in10

infrastructure that underpins the Brazilian economy, but also to theVale, which is the world’s leading mineral resource supplier and alsorazil is one of the world’s largest trade surplus countries for ag-

tation, in other words, a modal shift is a critical issue for Brazil.

Quebrada Blanca copper mine in the Tarapacá Region, Chile.

portation services through Brazil’s railway networks and harbors.

VLI from around summer of 2018 and proceeded with a draftingthese problems, a departure from heavy reliance on truck transpor-

Locomotive owned by VLI.

JBIC is working on a variety of projects around the world.
Young staff members report on the significance of the latest projects and the role of JBIC.

February 2020 │ JBIC TodayYONEMURA Takashi

YAGURA Kohei

Division 1
Mining and Metals Finance Department
Energy and Natural Resources Finance Group(then)

Division 1
New Energy and Power Finance Department II
Infrastructure and Environment Finance Group(then)“This project made me realize that JBIC actively helps Japanese companies expand overseas and contributes to thenatural resource policy of Japan.”“I wish to utilize my experience being involved with the projectfrom the proposal phase throughout to the signing of a credit
line agreement, when working for other projects in future.”

Signing ceremony in Hanoi on June 25, 2019.

February 2020 │ JBIC Today

11

JBIC Today February 2020
【Published by】
Press and External Affairs Division, Corporate Planning Department,
Corporate Planning Group,Japan Bank for International Cooperation
4-1,Otemachi,1-chome Chiyoda-ku,Tokyo 100-8144,Japan
Tel.+81-3-5218-3100 URL: https://www.jbic.go.jp/en/
Cover photo : ©Product/VGL/Geoscience/Planetobserver Agency/Artbank
Some of the photos shown here are used under license from Shutterstock.
*No part of this magazine may be reproduced without the written permission of JBIC.