JBIC

April 2019Today

Strategic Research Department
Corporate Planning Groupactual inflow of direct investments by Japanesemanufacturers. Looking at these data, we feel that
our Survey generally reflects the direct investment
trends of manufacturers.

Yamazaki Consisting of responses fromover 600 Japanese manInclusion of timely topics, such as theufacturers, the survey
impact of protectionism and theresults enable us to gaina broad view of the curdeployment of environmental business
rent performance and future prospects of their
Yamazaki Independent survey topics differ each
Kasumi Yamazaki
overseas operations. Also,
year, and are selected to reflect major concerns
Deputy Director
partly because we send
felt by the industries at that time. The survey takes
Division 1
the questionnaires to themore than six months from designing the questionStrategic Researchcompanies’ headquarters,
naire to publishing the results, which makes it diffiDepartment
we have been receiving
cult to decide what to ask. Topics that are affected
good feedback that the survey contains valuable
by political relations between major countries, likedata that promptly reflects the impact of the current
this year’s “Impact of protectionism,” may become
business environment on manufacturers. The FY2018
out of date after several months. After discussing
Survey made clear that Japanese manufacturers inwith our management and doing thorough researchtend to maintain or expand their business both inon the international political situation, we considJapan and overseas, leveraging their good businessered that this topic would continue to draw strong
performance in the past year. However, throughout
attention throughout FY2018, and gave a go. It was
the report, you can also see their wariness toward
such a relief when our Survey findings were widelyexternal factors such as trade friction between macovered in the media!
jor countries.
Ikenaga Sometimes the companies’ responses
prove contrary to our expectations in a good way.
Ikenaga Our survey is unique in that it has 30
When we chose “Views on environmental reguyears’ worth of chronological data. Meanwhile, tolations and development of environment-related
maintain continuity, we have certain limitations
business” as one of our independent
on changing the survey questions, so
survey topics this year, we expected
it depends on the researchers’ skills
that the survey result would highlight
to offer new and timely analysis eachthe negative effects of, for example,
year. In the FY2018 survey, we tried totougher regulations in countries likeanalyze the relationship between the
China. On the contrary, an unexpectedly
percentage shares gained by the top
high number of companies answeredcountries in our Promising Country/Rethat environmental regulations havegion Survey and the actual amount of
had positive effects on their overseas
outward FDI from Japan, using long- Azusa Ikenaga
business. It turns out that Japaneseterm data. As a result, we found that
Deputy Director
manufacturers regard the growing moduring the initial stage of investment Division 1
mentum toward environmental stabilifrom Japan, the percentage shares in Strategic Researchty as a business chance, more than we
our Survey tend to rise ahead of the Department

had expected, and these responses showed theirstrength. Also it became clear that the electric vehicle-related business in China is attracting interest
not only from automobile-related companies but
also from other industries.

Research team interviews
companies to hear their opinions
directly
Yamazaki After aggregating data, we also interview the target companies face-to-face or byphone. From these interviews, we gain precious
information that cannot be obtained through data,such as their story behind the numbers or the newest industry trends. We try to present in-depth survey results by incorporating such information into
our reports and presentations.
Shimizu Since joining JBIC,
I have had few opportunities
to meet the managers of othercompanies, but this time I conducted some interviews withthem. Their words and stories made me realize Japanese companies’ philosophy Ayano Shimizu
toward manufacturing.
Division 1
Ikenaga We sometimes
Strategic Researchshare the survey data with our Department
finance groups so that they
can use it for policy dialogue with other countries’
governments. The rankings in our Promising Countries Survey and the issues felt by the companies
in each country are drawing strong attention, andchances to explain the survey results directly toforeign government officials have increased. Our
research team’s mission is to support Japanesecompanies by conveying their opinions to the countries they invest in, and I truly believe that our Survey has the potential to benefit both Japan and thehost countries.

Press and External Affairs Division, Corpor ate Planning Department, Corporate Planning Group, Japan Bank for International Cooperation

Long-running survey backed bymany manufacturers

4-1, Ohtemachi, 1-chome Chiyoda-ku, Tokyo 100-8144, Japan Tel. +81-3-5218-3100 URL: https://www.jbic.go.jp/en/More than 600 Japanese manufacturers responded to the FY2018 JBIC Survey. Reflecting the current status of Japanesemanufacturers’ overseas business operations, the survey has drawn attention from various fields including corporations,researchers and foreign governments. Here, the research team which conducted the survey talks about their views on
the survey and its key findings.

April 2019

JBIC supports overseas business operations of Japanesemanufacturers through FY2018 JBIC Survey

Japan Bank for International Cooperation

SpecialFeatureA Review of Overseas Business
Operations by Japanese Manufacturers
in the Past 30 Years

Our Global Challenges

OKAMURA FOODS CO., LTD.
(Aomori City, Aomori Prefecture)

OKAMURA TRADING CO., LTD. (Chuo-ku, Tokyo)

From Trout Salmon Farming to Processing and Sales:

Seamless Supply System Meets
Asian DemandNews in DepthFirst project financing for
Asia’s gas-to-power project:
the Jawa-1 Project inIndonesia

JBIC supports overseas business
operations of Japanese manufacturers
through FY2018 JBIC Survey

Results of
FY2018 JBIC
Survey on JapaneseForeign Direct
Investment

Survey overview■ Objective and targets of survey
Objective: Analyzing the current status and future prospects of overseas business development of Japanese manufacturing companies.
Targets: Japanese manufacturing companies that have three or more overseas affiliates (including at least one production base).
■ Number of companies questionnaires were mailed to:
1,012 companies

SpecialFeatureA Review of Overseas
Business Operations by
Japanese Manufacturers
in the Past 30 Years
Results of FY2018 JBIC Survey on Japanese Foreign
Direct Investment■ Response status(1) Number of valid responses: 605 companies (330 companies responded bypost and 275 online)(2) Valid response rate: 59.8%■ Period of survey
June–September 2018

■ Survey topics(1) Basic Data
(2) Business Performance Evaluation(3) Overseas Business Prospects(4) Promising Countries/Regions over the Medium Term
(5) Impact of Protectionism*(6) V iews on Environmental Regulations and Development of Environment-related Business*(7) Time Series Analysis*(*Independent topics of this year)■ Definition of "Overseas business"“Overseas business operations” is defined as production, sales and R&D
activities at overseas affiliates, as well as outsourcing of manufacturing andprocurement overseas.

Polarizing promising countries
Ranking of promising countries/regions over the medium term in FY2018
rest significantly widened. There are high expectations for the market’s growth potential and current
size of both countries.
There seem to be two factors behind China’s
increase in the percentage share. First, the boost
in capital investment in China under the “Made in
China 2025” plan, the Chinese version of Industry
4.0, has generated strong and growing demand forthe products and technologies of foreign companies, and sales of Japanese semiconductors andmachine tools have been good for the past year.
Second, income levels have risen in China, and consumer goods, including hygiene products through

China and India gain far larger
percentage shares
China maintained the lead for two consecutive
years in the ranking of promising countries/regions
over the medium term (next three years). Its percentage share increased by 6.5 points from the previous year to 52.2%, which was the largest among
the major countries. India dropped from first place
to second in FY2017, but this year its percentage
share rose to 46.2%. Thus, the gap in the percentage shares between these two countries and the

e-commerce, and durable goods, including passenger vehicles, have sold well. From these factors, we
can see that Japanese manufacturing companies
view China not only as a production base but also
as a large and promising market.
Commentatorof the survey

Takeshi Kasuga
Director
Division 1
Strategic Research
Department
Corporate Planning Group■ Figure 1: Promising Countries/Regions for Overseas Business over the Medium Term(next 3 years. or so) (Multiple answers allowed)
In November 2018, the Japan Bank for International Cooperation (JBIC) released the results of the

Ranking

No. of companies"FY2018 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies".
This year marks the 30th year of this survey since it was first conducted in 1989. In addition to
the usual survey topics such as “Business Performance Evaluation,” “Overseas Business Prospects” and “Promising Countries/Regions over the Medium Term,” the survey for FY2018 includes
the following special topics: "Impact of Protectionism," "Views on Environmental Regulations and
Deployment of Environment-related Business" and "Time Series Analysis."

China

225

2

India

4

Thailand

—

1

2

—

turers in the past 30 years.

4

JBIC Today

444

1

3

April 2019

431

2017

2018

2017

203

52.2

45.7

199

195

46.2

43.9

160

153

37.1

34.5

3

V ietnam

146

169

33.9

38.1

5

—

5

Indonesia

131

147

30.4

33.1

6

—

6

US

124

116

28.8

26.1

7

—

7

Mexico

59

81

13.7

18.2

8

—

8

Philippines

43

47

10.0

10.6

9

—

9

Myanmar

37

40

8.6

9.0

12

Malaysia

36

26

8.4

5.9

April 2019

JBIC Today

10

2

2017

←

This issue looks back on the development of overseas business operations by Japanese manufac-

Countr y/ Region ( Total)

2018

2018

Percentage share(%)

3

30Special Feature|

20– A Review of Overseas Business Operations by Japanese Manufacturers in the Past 30 Years

100

Changing balance between domestic
and overseas businessChanges in the percentage shares of promising countries/regions over the medium term

Global economic and political trends
reflected in the shares of promisingcountries/regions in the medium termThis year marks the 30th year of this survey since it started in 1989, so this issue looks
back on the changes in the percentage shares ofpromising countries/regions in the medium term
during the period between 1992 and 2018 (Figure2). Major economic and political events are listed
below the figure. Time series analysis will help
understand the effects of global economic andpolitical trends on Japanese manufacturing companies, as well as which countries are promisingin the future.

Polarization of percentage sharesagain: China and India in the lead
The percentage shares tended to converge
for several years, but polarization of the percentage shares of the top six countries and the restin the list became pronounced in 2018. In particular, the gap between the top two (China andIndia) and the other countries widened.
China’s percentage share sharply rose after
it joined the WTO in 2001, but then dropped until 2013. The reasons for the recovery in recent
years are considered to be the expansion of
e-commerce, and increase in attractiveness as
an R&D base in some sense. India is also likely
to maintain a substantial share, as the consolidation of industries is underway.

Rivalry among Thailand, Vietnam andIndonesia

The three countries have so far had different
features: Thailand is attractive as an export base,Vietnam as the supplier of a cheaper, well-trained
workforce, and Indonesia as a large market volume. For these reasons, companies from diverse
industries have expanded to these countries.
However, such characteristics will become lessdistinctive along with industry consolidation,
geographical supply chain expansion, further investment in labor-saving, and the entry of Chinese
firms. As a result, competition among the three
countries is expected to become more intense.
The percentage shares of Russia and Brazil had increased for some time since 2000,
but have been falling in recent years. The
percentage share in 2018 was 3.7% in Russia
and 5.6% in Brazil. This is probably because■ Figure 2: Changes in the Percentage Shares ofPromising Countries/Regions over the Medium
Term (FY1992-2018)

Indonesia
USA

MexicoPhilippines

80

Myanmar
MalaysiaBrazilRussia60

40

20

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 14 16 17 18(FY)

Start of Trump administration

Trouble with neighboring
countries“The 2008 financial crisis”

Anti-Japanese protests
in China

BRICs Report

SARS outbreak

9/11 attacks

China’s entry into the WTO

Bursting of the IT bubble

JBIC Today

India

Vietnam100

Asian Currency Crisis

April 2019

China
Thailand（%）

Southern Tour Lectures

4

The US joined the top-six group, but Mexico
did not. The US remained in sixth with the percentage share of 28.8%, up 2.7 points from theprevious year. However, this increase is modest
compared to that in the previous survey (6.8
points). Mexico stayed seventh, but its percentage share dropped by 4.5 points from the previous
year to 13.7%.
The gap between the two countries is expected to narrow if the uncertainty in trade negotiations
between them is dispelled. However, many Japanese companies are taking a wait-and-see attitude
toward the Trump administration’s protectionist
policy. Therefore, it will take time for Mexico’s percentage share to regain momentum.

Japanese manufacturers are cautious about
geographical expansion.

0

Thailand, Vietnam and Indonesia are listed
in the top six countries from the ASEAN region.
Thailand rose to third place, overtaking Vietnam,with the percentage share of 37.1%. This risingtendency is largely due to the strong performanceof the automobile industry.

Widening gap between US and
Mexico00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 (FY)

Overseas business prospects

Ratio of companies intending to“strengthen/expand” both domestic andoverseas business hits a record high■ Figure 4: Percentage of MTEs/SMEs among the Respondents
(%)

35
30
25
20
15
10
5
0

The response rate of “strengthen/expand
overseas business” had slowly been droppingfrom 87.2% in 2011 due to the integration of production bases and the focus on existing bases, but
in 2018 it increased to 75.6%.
On the other hand, the response rate of “strength89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 (FY)
en/expand domestic business” rose from 37.7%
in 2017 to 45.9% in 2018, recovering to the level
prior to the 2008 global financial crisis. This indimore of their resources to domestic business.
increased. The difference between them became
cates that companies put more focus on domes230 companies (53.4%) said that they would
the largest in FY2011 when the Great East Japantic operations by investing in equipment renew“strengthen/expand” both overseas and domestic
Earthquake happened. The changes over the pastal, promoting R&D, developing new business andbusiness over the medium term. This ratio is the18 years are largely correlated with the dollar-yen
winning customers. This also suggests that theyhighest since the relevant survey started in 2010.
exchange rates. The attitude toward strengthening
are taking a pause from expanding their overseas
overseas business, though it weakened tempoproduction and are flexibly changing their way ofrarily after the global financial crisis in 2008, has
Response ratio of MTEs/SMEs
business to maximize earnings.
remained high, supported by the strong yen and theincreases threefold
The bar graph in Figure 3 shows the differhigh growth in Asia. However, in recent years Japence between the overseas “strengthen/expand”
anese companies have begun to focus on domestic
ratio and the domestic “strengthen/expand” rabusiness, which may be the result of Abenomics
The ratio of mid-tier enterprises (MTEs)/smalltio. Both ratios were around 50% in 2000 whenand medium-sized enterprises (SMEs) (with capital ofand the inbound effect. According to the 2018 surDomestic “strengthen/expand” ratio(Difference) Overseas “strengthen/expand” ratio
the questionnairebegan,
but the former graduallyless than 1 billion yen) among the total respondents
vey, JapaneseOverseas
companies
are tending to allocate– Domestic“strengthen/expand”
ratio“strengthen/expand”
ratiorose from 9.7% to 33.2% over the past 30 years. They
tend to be less keen to expand overseas compared■ Figure 3: Shift in intentions to Strengthen/Expand Businesses
with larger companies, but for FY2018, their overseas(FY2000-2018)“strengthen/expand” ratio increased to 69.2%, up 8.6
points from the previous year. Given that the survey(Difference) Overseas “strengthen/expand” ratio – Domestic “strengthen/expand” ratio
targets are companies with three or more overseas
Domestic “strengthen/expand” ratio
Overseas “strengthen/expand” ratio
affiliates, this development implies that overseas(%)
100
business operations in the manufacturing sector have90
expanded even among the MTEs/SMEs.
For MTEs/SMEs that are strengthening their80
75.6%
overseasbusiness, their main business partners
70
are Japanese affiliates in foreign countries. As the60
integration of industries is underway mainly among50
45.9%
large corporations, the number of local human re40
sources who understand Japanese manufacturing
technology and practices is growing. Moreover, the30
expansion of IoT has made it possible to control
20
quality remotely from Japan. These factors have
10
helped increase the percentage of responses from
0MTEs/SMEs among the respondents.
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 (FY)

April 2019

JBIC Today

5

Special Feature|– A Review of Overseas Business Operations by Japanese Manufacturers in the Past 30 Years

Independent survey topics reflecting
the situations of the times

30 years of the JBIC survey

The survey results are used fordeveloping mid- and long-termbusiness plan by examining thechanges in the survey datacollected every year.

Changes in the independent survey topics in the past 30 years
When the survey started in 1989, Japanese companies were seeking opportunities to expand overseas as the yen’s value appreciated rapidly after the Plaza
Accord in 1985. Since the start of the survey in 1989, JBIC has conducted the survey on the same topics every year regarding the overseas business operations in the
manufacturing sector.
Such survey topics are “Business Performance Evaluation,” “Overseas Business Prospects,” and “Promising Countries/Regions over the Medium Term.” In addition
to those annually surveyed items, the survey has also examined independent topics reflecting the situations of the times. The following table shows the independent
topics that were surveyed from 1989 to 2018. The changing trends in overseas business operations during this period are outlined below.

■ Specific survey items by fiscal year
1989 ● T rend in localization
1990 ● J apanese companies’ strategy in Europe
1991 ● R egional integration in EC and NAFTA, and foreign direct investment
urrent status and future of the production/sales network of overseas affiliates, and their con1992 ● Ctribution
to exports

1993
1994

● Issues faced by Japanese companies operating overseas business and their solutions, points tonote over the long term, and long-term business strategy● Strong yen and corporate strategy for overseas business (Japanese companies undertaking

structural adjustments in Japan and abroad amid the appreciation of the yen)

1995 ● E ffects of the rapid appreciation of the yen on manufacturing, and how to deal with them
1996 ● T he effect of foreign direct investment (FDI) on domestic production
1997 ● D egree of interest in regional integration
1998 ● E ffects of the Asian crisis and the future investment strategy
1999 ● E ffects of European and US companies’ expansion to Asia
● E
 fforts to restructure overseas business operations
2000 ●
Introduction of IT for overseas business operations

2001 ● A ttractiveness of China and ASEAN4 as a production base over the medium term (next 3 years)A ttitude toward expanding business operations in China and ASEAN
2002 ●● A pproach to restructuring business overseas and concrete restructuring plan

2003 ● (Free trade agreements, the impact of China’s WTO entry)
2004 ● (Chinese operations and risks, free trade agreements (FTAs))
China and ASEAN, economic partnership agreement and free trade agreement in East Asia,
2005 ● (EUenlargement) aintaining/securing international competitiveness, and localization of management,
2006 ● M
procurement, and R&D

2007 ● C ompetition and international competitiveness2008 ● International competitiveness and competition
2009 ● T he markets of emerging nations and efforts involving eco-businesses● B usiness development & competition in emerging marketsH uman resources for overseas expansion & approaches to R&D
2010 ●● R esults of urgent additional questionnaire survey – Views on business in China after the Sen-kaku Islands problem arose –● S upply chains since the Great East Japan EarthquakeO verseas infrastructure development – From the perspective of the manufacturing industry –2011 ●● R esults of additional questionnaire survey – The impact of flooding in Thailand
on production –● C urrent status and issues of business operations control of overseas local subsidiariesC ompetition in the global market and action plan for improving competitiveness2012 ●● R esults of additional questionnaire survey – Influence on business operations in China, Taiwan,
and Korea –● B usiness prospects in China
2013 ● Infrastructure needs & issues in business operation countries● G lobal management issues and future strategies● C ompetitiveness of Japanese manufacturing companies and trends in global production sys2014 tems
● Involvement of Japanese manufacturing companies in overseas infrastructure-related business ajor topics related to overseas business operations
2015 ● M● S
 tatus of cross-border M&A and issues

2016 ● C urrent state of supply chain and roles of production/R&D bases● C ompetition in the global market

2017

● S
 ervices provided by manufacturing companies● S ervices received by overseas affiliates of manufacturing companies● B usiness management of overseas affiliates● Impact of protectionism

2018 ● V iews on environmental regulations and development of environment-related business● L ong-term time series analysis

6

April 2019

JBIC Today1989 - 1998

Concern over the hollowing out of the domestic industry,
and the Asian currency crisis

Motoshige Itoh, Ph.D.

The specific topic for the first survey was the “trend in localization.” Theyen-dollar exchange rate moved into the 100 yen per USD range in 1994, andappreciated further to 80 yen in 1995. Therefore, the 1994 survey examined
concerns over the hollowing out of the domestic industry due to the strong yen,and the differences in companies’ strategies for overseas business operations.
In 1998 after the Asian Currency Crisis occurred, the specific survey topic
was the “effects of the Asian crisis and the future investment strategy.”

From 2000

Increasing need for analysis of the investment climate
In this period, more emphasis was placed on Asia and its recovery fromthe recession following the Asian Currency Crisis. Against this backdrop, thefollowing independent topics were surveyed: “Efforts to restructure overseas
business operations” (2000), “Attractiveness of China and ASEAN4 as a production base over the medium term (next 3 years)” (2001), and “Maintaining/
securing international competitiveness, and localization of management, procurement, and R&D” (2006).

From 2011

Changes in overseas business operations after the earthquake
The Great East Japan Earthquake which happened on March 11, 2011highlighted the vulnerability of supply chains and the need for restructuring.
The 2011 survey addressed the two additional topics: “Supply chains since
the Great East Japan Earthquake” and “The impact of flooding in Thailand
on production.”

From 2018

Earnings and trade expected to decline by 30% due to protectionism
In FY2018, “impact of protectionism” and “views on environmental regulations and development of environment-related business” were examinedthrough the survey. Much attention has been paid to the survey results, particularly on the impact of protectionist policies that are creating increased
concern under the Trump administration.
As mentioned above, the survey has included high-interest topics forJapanese manufacturing companies for 30 years. Since the start of the survey, independent survey topics have been selected each year from policy
perspectives. More survey data is collected and accumulated year after year,
increasing the accuracy of the analysis of the survey.

Professor Emeritus
The University of Tokyo

Professor
Faculty of International Social Sciences
Gakushuin University

Overseas business strategy needs to quickly respond tointernational policies and policy changes

Utilize 30 years of valuable survey data

Analyzing global economic trends is essential for planning a businessI think the JBIC survey, which has been conducted for 30 years, contains a

strategy. Particularly when developing an overseas business strategy, it is

lot of valuable information that may help Japanese enterprises to understandnecessary to quickly know the changes in international trade policies andbusiness trends. While conducting the survey on the same topics for many

economic policies of countries. Companies need to conduct their businesses

years, JBIC has added to the independent survey items specific to each year

in a cautious or dynamic manner based on various information, whereas in

to analyze the trends of the times. As described by the old Japanese proverb,

some cases they need to decide to withdraw from business.

“Continuance is power/strength”, I believe the JBIC survey can provide Jap-

One of the topics of the 2018 survey is protectionism. When these survey

anese companies more accurate information used for predicting the changes

results are reviewed again in several years later, they may show a turningin the times, through the analysis of the survey data accumulated for many

point in the international trade system which has been built since the end

years. In this respect, this survey is unique in the world.

of World War II. The survey findings on another topic, “environment-related

Although there is growing uncertainty in the current business environ-business,” indicate the possibility of growth in environmental business in Chi-ment, I hope this survey will be used to know how Japanese companies havena. This may suggest a worldwide shift from the 20th-century growth model

viewed the circumstances of the times.

to a 21st-century recycling-oriented growth model, as described by such key
words as Quality of Life and Sustainable Development Goals. Analyzing the
major trends of the times is very important for Japanese companies to further
expand overseas business.

The survey draws more attention from host countries
A characteristic of this survey is that the same survey topics on foreign direct investment by Japanese manufacturers have been examined for 30 years. There are many countries and regions seeking
to attract direct investment from abroad. Under such circumstances, the number of inquiries from hostcountries, for example, through their embassies in Japan, is increasing every year. This indicates that thesurvey continues to draw high attention from countries around the world.

April 2019

JBIC Today

7

Our Global
Challenges

A Various fish and eggs are processed at Okamura Foods in Aomori

OKAMURA FOODS CO., LTD. (Aomori City, Aomori Prefecture)

B Opening ceremony of OKAMURA TRADING MYANMAR CO., LTD. held in Myanmar in January 2019.
C Trout salmon processing factory established in the Thilawa Special Economic Zone (SEZ) on the outskirts of Yangon, the biggest

OKAMURA TRADING CO., LTD. (Chuo-ku, Tokyo)

city in Myanmar.

B

A

C

Asian Seafood Culture Backed by Customer-Oriented Value Chain

From Trout Salmon Farming to Processing and Sales:
Seamless Supply System Meets Asian Demand
Raw trout salmon is a popular food as a sushi topping and sashimi (sliced raw fish). OKAMURA FOODS CO., LTD.
(Okamura Foods) is a vibrant small and medium-sized enterprise engaged in the farming, processing and sales of trout
salmon for which demand is growing worldwide. OKAMURA TRADING CO., LTD. (Okamura Trading), an affiliatedcompany specialized in the trading of processed seafood products, established its own trout salmon processing factoryin Myanmar in 2019. With this factory and a processing subcontractor in Vietnam, Okamura Foods is ready to respondto accelerating demand for trout salmon in Asia. The company seeks to expand its business in Asia through its value
chain which has been carefully built from the customer’s perspective.

Customer-oriented
value chain
Okamura Foods’ business ranges fromtrout salmon farming and fish processing, torunning Japanese restaurants in Vietnam andretailing in Japan. Established in 1971 as afish processing company in Aomori, the company has expanded to cover broad businessareas from upstream to downstream as Okamura Foods Group. “We’ve succeeded because we have created a value chain from thecustomer’s viewpoint,” said the company’sCEO, Mr. Koichi Okamura.
“Demand for trout salmon is growing by
10% a year. In order to ensure a stable supply
to our customers, we have no choice but to secure resources ourselves. We began trout
salmon farming in Denmark in 2004, then in2014 we started the marine farming of domestic trout salmon in Aomori. We expect to ship

8

April 2019

JBIC Today

this product to market in 2019,” he added.
If domestic farming works well, it is possible to build a more flexible supply system,
which will also lead to local revitalization.
The same is true with the fish processing industry. Okamura Foods Group has improved
its processing technologies to satisfy customers’ needs, including customized processing
for meeting the specific needs of conveyor-belt sushi restaurants.
“We process raw fish according to customers’ needs so that they can do the conveyor-belt sushi business without a skilled sushi
chef. With the global boom of Japanese food,
we provide “Japanese quality” products forfood service companies operating in Asia, as
well as trading firms,” said Mr. Okamura,whose vision has always been a step ahead.

Responding to vigorous
Asian demand through a newfactory in Myanmar
At present, Okamura Foods Group processes trout salmon in Vietnam that have been
farmed in Denmark, for the purpose of export
to Japan and other Asian countries. But as demand for processed seafood grows due to theglobal boom of Japanese food, some of ourcustomers are becoming concerned about thedependence on one country for customized
processing, which plays a crucial role in the
distribution of processed seafood. Under suchcircumstances, the company established a
new trout salmon processing factory in Myanmar, which is run by OKAMURA TRADING MYANMAR CO., LTD. (OTM). To set up the factory,
Okamura Trading used a co-financing scheme
offered by The Aomori Bank, Ltd. (Aomori Bank)and JBIC. “We were impressed with JBIC’s

broad network of contacts in Southeast Asia.
We also received support in areas other thanfinance, such as obtaining the latest information about the legal system and social situation
in Southeast Asia,” said Mr. Okamura.
Established in January 2019, the new OTM’s
factory has an annual production capacity of
1,882 tons, which has enabled us to be ready formeeting brisk demand in Asia.
Mr. Okamura said, “The reason for thegrowing demand for trout salmon in Asia is
not only the Japanese food boom, but also
religious reasons for those who are not permitted to eat beef and pork. We now process
mainly raw fish for sushi toppings, but I expect that as more women enter the workforce, ready-to-serve seafood products suchas grilled or boiled fish without bones, will
become popular.” It is thought that many people do not like fish because of the difficulty ofremoving fish scales, innards and bones andkeeping the fish fresh, as well as the smell. If
these problems can be solved by processing
technology, seafood dishes other than sushi
will also be accepted more widely. “We canhelp the seafood culture take root in Asia,”
said Mr. Okamura confidently.
To achieve this goal, he also expressed his
wishes for JBIC, saying “I would like JBIC tosupport us in the following three areas: i) providing detailed, accurate information about thebusiness environment, ii) negotiating with thelocal government in case of trouble and iii) accessing funding to further expand overseas.”

Another mission of Japanesecompanies operating overseas
Okamura Foods Group is currently focusing
on developing human resources in Myanmar.
Local employees are earnest and willing towork. They quickly understand the processing
techniques and acquired enough skills. However, industrial development in Myanmar has justbegun. It is important to foster a sound corporate and industrial culture from now on.
“We have found it more difficult than expected to make them recognize the importanceof a disciplined working environment and hygiene control, but Myanmar people have something pure and positive that enables them to do
so. I hope to focus on training middle managers
too in the future,” said Mr. Okamura. “Employees need to keep the same goal in mind andthink for themselves what needs to be done.
We should not only create local employment,
but also develop business leaders who willcontribute to the economic development of
Myanmar. These are important roles thatshould be played by Japanese companies,” heemphasized. CEO Okamura is continuing towork on industrial education in Myanmar.

JBIC’s financing and its
abundant know-how are agreat asset for us

Relationshipwith JBICCEOOKAMURA FOODS CO., LTD.
Management Director
OKAMURA TRADING CO., LTD.

Company Profile

Aomori Bank, a co-financing partner

We proposed to CEO Koichi Okamura a co-financing
scheme using JBIC because we thought the company needed to gain information about the local country
through JBIC’s network. The experience and expertise
gained through coordination of this financing have becomea great asset for us. As enterprises in Aomori are showing
greater interest in overseas markets, we would like to support them in expanding into the markets.

Koichi Okamura

Name

OKAMURA FOODS CO., LTD.

Established1971

Capital90 million yen

CEOKoichi Okamura

Number of
employees

120(include part-time employees)

Purchase of marine raw materials from global vendors, includBusiness lines ing Musholm A/S, and sales ofprocessed seafood products.

Tomoya Harako
Assistant Manager
Regional Development Division
The Aomori Bank, Ltd.

Headquarters

1-6-11 Yaeda, Aomori 030-0912

Overseas
Group
Companies

Musholm A/S: Farming trout salmon and producing trout salmon
roe in Denmark
TVN JV (Tokyo deli): Operating
Japanese restaurants in Vietnam
TRUNG SON CORP: Processing
and selling products in Vietnam

In January 2018, JBIC and Aomori Bank provided co-financing for Okamura Trading, an affiliate of Okamura Foods,
which planned to construct a trout salmon processing factory in Myanmar. JBIC’s portion of the loan amount was 224
million yen. This is the first co-financing with Aomori Bank and the first partnership with a local bank in the threeprefectures of the northern Tohoku region: Aomori, Akita and Iwate.

April 2019

JBIC Today

9Behind the scenes of media coverageNews in DepthFirst project financing for Asia’s gasto-power project: the Jawa-1 Projectin Indonesia

Project Financing for Jawa 1 Gas-to-Power
Project in Indonesia
First Project Financing to Support Japanese Companies Participating in Gas-to-Power Projectin Asia: Flagship Project of the newly launched QI-ESG
The Japan Bank for International Cooperation (JBIC) signed on OctoberThis loan will contribute to Japanese industry maintaining and enhancing

18, 2018 a loan agreement for project finance amounting up to approximately

its international competitiveness by financially supporting those Japanese

USD604 million (JBIC portion) with PT Jawa Satu Power (JSP) and PT Jawa

companies that invest in overseas infrastructure projects as well as operate

Satu Regas (JSR) for the Jawa 1 Gas-to-Power Project in Indonesia. The proj-

and manage these facilities on a long-term basis.

ect financing is provided as part of JBIC’s newly launched Global Facility to

In particular, its significance lies in the fact that this is the first project fi-

Promote Quality Infrastructure Investment for Environmental Preservation

nancing provided for gas-to-power projects to be implemented in Asia as welland Sustainable Growth (QI-ESG). Both JSP and JSR are Indonesian compa-

as the first time for JBIC to finance such a project. In addition, this will be thenies: the former invested in by Marubeni Corporation, Sojitz Corporation andflagship project of QI-ESG as well as the first project in Asia under QI-ESG

PT. Pertamina (Persero), the state energy company of Indonesia; the latterfor the purpose of preserving the global environment.

by Marubeni Corporation, Sojitz Corporation, Mitsui O.S.K. Lines, Ltd., PT.

* Source: JBIC’s press release issued on October 22, 2018

Pertamina (Persero), and other firms.
The loan is co-financed by Mizuho Bank, Ltd., MUFG Bank, Ltd., and other banks. The total co-financing amount is approximately USD1,312 million,

Electricity demand in Indonesia is rapidly increasing due to high economic growth and the government plans to develop additional powersources totaling 56 gigawatts over the next 10 years. In particular, LNG-fueled thermal power generation, which has low impact on the environment, is regarded as a key intermediate power source. JBIC is supporting the Jawa-1 Gas-to-Power Project in Indonesia through project
financing. Our staff in charge of this project reveal behind-the-scenes stories that do not appear in the news, including the significance of thisproject finance and how the loan agreement for such a complex project could be concluded so quickly, within six months of negotiations.

the portion co-financed by private-sector banks is covered by Nippon Export

An article related to this project was published in the morning edition of The Nikkei on October 21, 2018.

supply fuel to the power plant. The electricity produced by these facilities will

South China Sea
Pacific Ocean

and Investment Insurance (NEXI).
In this Gas-to-Power Project, JSP will construct, own and operate a 1,760
MW gas-fired combined cycle power plant while JSR will construct, own andoperate an offshore floating LNG storage and regasification unit (FSRU) tobe sold to PT PLN (Persero), a state-owned power utility in Indonesia, for a

Kalimantan

SumatraIndian Ocean

Cilamaya inWest Java

JakartaJava

Sulawesi
New Guinea

SurabayaDenpasar
Yogyakarta

Timor Sea

period of 25 years.

-Please explain an outline and the features of the Project
Financing for Jawa-1 Gas-to-Power Project in Indonesia.
Oishi This project undertakes integrated development of power generation facilities and gas-related facilities in West Jawa Province, Indonesia. PT Jawa Satu Power (JSP), an Indonesian corporation funded byMarubeni Corporation, Sojitz Corporation and PT Pertamina (Persero),an Indonesian national oil company, will construct, own and operate a
gas-fired combined cycle power plant. Meanwhile, PT Jawa Satu Regas (JSR), an Indonesian corporation funded by Marubeni, Sojitz, Mitsui
O.S.K. Lines and other firms, will construct, own and operate an offshore
floating LNG storage and regasification unit (FSRU) to supply fuel to thepower plant. In addition, the electricity produced by these facilities will
be sold to PT PLN (Persero), a state-owned power company in Indonesia,
for a period of 25 years after completion. This large-scale project willvertically integrate upstream and downstream functions ranging fromprocurement of fuel to sale of electricity.
In addition to being the world’s first large-scale gas-to-power project with a power generation capacity of 1,760 megawatts, this projectis also the first project financing for a gas-to-power project in Asia.
One of the advantages of FSRU is that it can be constructed fasterand cheaper than onshore regasification facilities. Amid the loosening
supply and demand balance of natural gas on the back of the shalegas revolution as well as rising environmental awareness, this gasto-power project has become a promising option for Asian countries
in formulating their power source development plans. Highly regarded
as an outstanding project finance deal against this background, this10

April 2019

JBIC Today

financing was selected for the “Asia-Pacific Power Deal of the Year2018” award by Project Finance International, the major project financemarket journal.
Matsumoto The difficult part was that it was project financing for a
joint project between two companies, a power generation company andan FSRU operating company. It took a lot of effort to bring the companies and lenders together and develop a structure that would ensure theunity of the two businesses. I heard that the project also attracted muchattention from industry officials.
-The agreement for this complex project was concluded inabout half a year. How were you able to accomplish it so quickly?
Oishi In the case of project financing, it often takes an enormous amountof time to reach agreement if the terms and conditions are not agreed
among participating companies. However, I believe that project financing can be arranged in a constructive and speedy way if the major points
associated with financing are agreed among the participants during theinitial stage of the loan agreement negotiations.
In this project, JBIC consulted and agreed with project sponsors on the
major points that are critical to structuring a loan scheme during the initial
phase of the negotiations. This led to the signing of the loan agreement in
only half a year, with neither side raising any major issue in the final stage.
Another major factor was that as we were fortunate in having such good
partners, we could expedite loan negotiations to implement the project
without wasting time discussing trivial issues. Since it is not easy to identify important issues associated with project financing far in advance before

the negotiations make headway, I think I was able to utilize my experiencefrom previous project financing deals I was involved in.
JBIC has a track record of financing many Independent Power Producer(IPP) projects in Indonesia, including three geothermal power generation
projects. It was also very helpful that the Indonesian government and sponsors trusted and treated JBIC as a key partner, valuing our experience andknowledge on project financing.
Matsumoto The signing ceremony for the financing was held in Indonesia the other day, and many officials from participating organizations
marveled in their speeches at how fast the project reached agreement
despite its complex structure. I think their comments aptly reflect thecharacteristics of this project.

electric power supply and demand situation such as Indonesia.
In line with the “Strategy on Infrastructure System Export” promotedby the Japanese government, this project is a good example of an overseas infrastructure project where Japanese companies participate as
investors and the project’s operators. JBIC will continue to support Japanese companies’ participation in infrastructure projects, by utilizing its
capability to structure a financing scheme based on its knowledge andexperience accumulated so far and performing its risk assuming functions.

-What effects might this project have on the overseas infrastructure business development of Japanese companies in the future?
Matsumoto In July 2018, JBIC established the “Global Facility to Promote Quality Infrastructure Investment for Environmental Preservationand Sustainable Growth” (QI-ESG), and has since been widely supporting infrastructure development for the purpose of preserving the global
environment, in keeping with the global trend of ESG (environmental,social and governance) investment. This gas-to-power project became
the first flagship project in Asia financed under QI-ESG.
Oishi The power plant, which began construction at the end of 2018, isscheduled to start operations in 2021. Gas-to-power projects such as thisone, which provide integrated development from fuel procurement to power
generation, can spread outwards to other countries and regions with a tight

Yohei Oishi

Osamu Matsumoto

Deputy Director (then)Division 3
New Energy and Power Finance
Department I
Infrastructure and Environment
Finance Group

Deputy Director (then)Division 1 and 3
New Energy and Power Finance
Department I
Infrastructure and Environment
Finance Group

April 2019

JBIC Today

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