JBIC

May 2018

Today

May 2018

No part of this magazine may be reproduced without the written permission of JBIC.

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

4-1, Ohtemachi, 1-chome Chiyoda-ku, Tokyo 100-8144, Japan Tel. +81-3-5218-3100 URL: https://www.jbic.go.jp/en/

JBIC publishes this magazine quarterly.

Japan Bank for International Cooperation

Special Feature

Capturing diverse
infrastructure needsof the world
Ongoing Project

Jordan sheds new lighton the Middle East
Our Global Challenges

Forth Inc. (Kouka City, Shiga Prefecture)

Correcting distortion ofjust 0.1 mm with a hammer
Sophisticated craftsmanship supports
Japanese quality in Thailand

31.4

40

Special Feature: Infrastructure30
202000 - 2015

Capturing diverse infrastructureneeds of the world
15年間で約1.5倍に

Global demand for infrastructure continues to grow. However, looking at the global demand, different
2016 - 2030 countries have different priority issues and plans for infrastructure development. While developing coun（十億USドル）
tries continue to grow rapidly, developed countries face a serious problem with their aging infrastructure.
必要額
2000
1,723
What infrastructure
demand is expected to increase in both developing and developed countries?
Where
不足額
1500
can
we find business opportunities? In this report, we focus on the demand for high-quality infrastructurein1000developing
countries, such as medical infrastructure, and the demand for infrastructure renovation in
846
736
developed countries.
500

─ Estimated global infrastructure
50

40

30

(Unit: trillion dollars)

31.4

Increase
about 1.5 times
in thenext 15 years

Developing
Countries
Delhi, India

structure such as energy-saving infrastructure to reduce environmental
burdens, and facilities and equipment aimed at improving the qualityof life (see Figure 1). According to the World Economic Outlook issued by the
IMF, developing countries are expected to grow at an annual rate of about
5% in the future. The high-quality infrastructure needs of those developing countries are likely to increase in line with their economic growth.

Figure 1: Changes in infrastructure needs due to increase in GDP per capita
Needs for establishment ofbasic infrastructure

Needs for infrastructure forindustrialization

Needs for high quality andefficient infrastructure

Needs for infrastructure to
improve the quality of life

GDP per capita:
Below USD 2,000

GDP per capita:
USD 2,000 to 5,000

GDP per capita:
USD 5,000 to 15,000

GDP per capita:
Above USD 15,000

Overall objective• To secure the supply of basic infrastructure required for people’s daily lives
Power sector• Supply of electricity required for people’s daily lives• Construction of large-scale power stations and core electric power cables
Transportation sector• C onstruction of basic road networks
connecting major cities• Construction of major ports
Others• Establishment of urban water supply
systemOverall objective• To increase the volume of infrastructure
for industrialization
Power sector• Response to increasing demand for power
supply due to industrialization, Securing of
stable power supply• E xpansion of power supply capacity
and transmission network
Transportation sector• Expansion of road networks• Construction of inter-city railways
Others• R esponse to water pollution arisingfrom urbanization• Establishment of a sewage system

Overall objective• To increase infrastructure quality,
such as improvement of efficiency
and convenience or use of environment-friendly technology
Power sector• Introduction of energy-saving and lowcarbon technologies
Transportation sector• Improvement of urban road networks• Construction of expressways and highspeed railways• Introduction of energy-saving and lowcarbon technologies
Others• Waste disposal

Overall objective• To increase the quality of lives
Power sector• Establishment of “Smart City”• Improvement and upgrading of existing
facilities
Transportation sector• Establishment of advanced transportation system• C onstruction of international hub
airports• Improvement and upgrading of existing
facilities
Others• Infrastructure for a comfortable urban life

Source: Compiled by JBIC based on “Table 1: Economic Development and Necessary Infrastructure” on page 85 of “MIZUHO Research & Analysis No. 12” published by Mizuho Financial Group, Inc.

2

May 2018

JBIC Today

investment陸上交通
─
10

鉄道

39

空港

0

30 16

126 84

107

21 15

56 46

内陸水路＆
港湾

上下水道

電気

ダム

ゴミ処理
施設

391

271

318

学校

176

その他

China
Eastern Europe
Latin America
Middle East
Other Asian Developing Countries

Developed
Countries

AfricaU.S. and Canada
Western Europe
Developed countries in
Asia and Oceania
Source: Compiled by JBIC based on McKinsey
Global Institute’s “Bridging Global Infrastructure
Gaps, June 2016”

Developed
Countries

Demand for various infrastructure

Infrastructure demand in developing countries is considered to varywith the stage of economic development. In countries whose GDP per
capita is less than 2,000 dollars, it is necessary to establish basic social
infrastructure required for people’s daily lives and business activities,
such as electricity, roads and ports. However, as GDP per capita grows indeveloping countries, they see increasing demand for high-quality infra-

0

11

134

India

49.1
Developing
Countries

20

100

2016 -2030

02000 -2015

10

Special Feature

西ヨーロッパ
他アジア新興国
中国
米国およびカナダ
中東
アフリカ
ラテンアメリカ

新興国分
世界全体の
約60％

Washington State, U.S.

Facing a serious problem withaging infrastructure

There is very large for renovation of aging infrastructure in developed countries such as the U.S. and U.K. In the U.S., infrastructure
established during the Eisenhower administration, which started in
1953, is degrading rapidly. According to a report from the United States
Department of Transportation, 25% of bridges across the country are
inadequate or obsolete and 12% of tunnels are more than 100 years
old. An investment of about USD3.6 trillion is required to repair and reconstruct major infrastructure across the U.S. between 2013 and 2020.
At the same time, it is estimated that there is an investment shortfall of

about USD1.6 trillion (See Figure 2) for infrastructure improvements.
The situation is the same in the U.K. The railway infrastructure constructed in the late 19th century that has supported the U.K.’s industrial
development for about 200 years, now needs to be improved for enhancing
transportation capacity by introducing a high-speed railway system. Furthermore, about half of the water supply networks in London are more than
100 years old and the city is facing the problem of an increasing number ofwater leakage cases due to the obsolete water supply infrastructure.

Figure 2: Investment demand for infrastructure renovation in the U.S. (2013–2020)

Investment
shortfall againstrenovation
demandElectricity
USD107 billion
Total
required amountfor renovation

USD3,635
billion

Shortfall of
USD1,611
billionLand transportation
USD846 billion

Schools USD271 billion

Others USD218 billion

Water and sewage
USD84 billion
Garbage disposal facility
USD46 billion
Airports
USD39 billion• Investment shortfall = Amount required for investment − Estimated investment amountThe estimated investment amount is calculated based on the assumption that the current investment trend will continue. The proportion of public and private-sector investment varies according to type of infrastructure.
• Source: Compiled by JBIC based on “Report Card for America’s Infrastructure” published by the American Society of Civil Engineers in March 2013.

May 2018

JBIC Today

3Special Feature: Infrastructure

Current instances of infrastructure needs
Developing Countries

Developed Countries

Demand for medical infrastructure required for a comfortable urban life

Demand for infrastructure renovation

In developing countries that already have a certain level of social infrastructure and face remarkable increases in population and average life
expectancy, there is a growing demand for infrastructure which is indispensable for a comfortable urban life, for example, demand for medical
facilities. In the medical sector of developing countries in the Middle East
and Asia, there is a movement in recent years to expand their healthcare
systems, including launching a medical reform program and introducing auniversal healthcare system.
The Japanese medical sector could provide attractive solutions tothose developing countries in demand for medical infrastructure as Japan
has efficient and advanced medical technologies and services. In fact, theJapanese government expressed its intention in the “Growth Strategy”
and “Healthcare and Medical Strategy” to encourage Japanese companies to find business opportunities in overseas medical markets and rollout their technologies and services to the world. Japanese companies
have already made the move to expand their business overseas, such asexport of medical equipment, acquisitions of foreign companies and participation in hospital projects overseas. Since FY2014, JBIC has financed
26 projects to support Japanese companies in expanding their businessin relation to healthcare to overseas countries.
On pages 6 and 7 of this brochure, we introduce an example of a hospital project in Turkey that a Japanese company participated in.

The U.S. has the greatest demand for investment in infrastructure
among developed countries, more than three quarters of which is forinfrastructure renovation. The Trump administration has reiterated theneed to invest in infrastructure since it took office. In the 2019 Budget
Message, the administration announced its plan to spend USD200 billion
in federal funding for infrastructure investment, while mobilizing privatesector funds for the remaining portion of investment.
According to the 2017 JETRO Survey on Business Conditions ofJapanese Companies in the U.S., Japanese companies that have already entered the buoyant U.S. market are planning to further expand
their business. The survey also shows that their focus is now drawn
to the direction of U.S. policy to promote infrastructure investment.
On pages 8 and 9 of this brochure, we present the capability of our“state by state” approach aimed at meeting the infrastructure needsof the U.S. and an example of a Japanese company that has recently
participated in an infrastructure project in the country.

Delhi, India: Buildings under construction

U.S.: Town with aging streets─ 2017 Infrastructure Evaluation in the U.S. ─
Various infrastructure with grade “D: Poor”

─ Medical equipment market in developing countries ─
Growing demand for medical equipment

AVIATION

D

WASTE
WATER

D+

ROADS

D

INLAND
WATERWAYS

D

(%)

High

19.0

VietnamBrazilMalaysia
Indonesia
Thailand
China

Average annual growth rate of the medical
equipment market between 2014 and 2019

17.0

Low

15.0
13.0

India

Istanbul, Turkey: A rapidly urbanizing city

MexicoD

BRIDGES

C+

PORTS

C+

TRANSIT

D-

RAIL

B

ENERGYD+

D

America’s
Cumulative
Infrastructure
Grade

Saudi Arabia

9.0South Africa
TurkeyRussia

7.0

South
Korea

5.0

Rapidly growing
emerging countries

3.0
1.0
0

Small

40.0

90.0

140.0

190.0

Expenditure on medical
equipment per person(USD, 2014)

Large

(USD)

Note: The size of the circle of each country in the above figure shows the size of the market.
Source: Compiled by JBIC based on “Latest Trend in Global Medical Device Market”
published by Japan External Trade Organization (JETRO)May 2018

DRINKING
WATER

11.0

10.0

4

U.S.: Rapidly aging electric power cables

JBIC TodayDAMS

A : Exceptional

Project involving JBIC’s financing

Hospital business in India

B : Good

C : Mediocre

D : PoorD+
F : Failing

Source: Compiled by JBIC based on data from the American Society of Civil Engineers

Project involving JBIC’s financing

Intercity Express Programme in the U.K.

May 2018

JBIC Today

5

Special Feature: Infrastructure

Hospital Business in Turkey- Introducing safe, reliable andefficient medical infrastructure technology from Japan -ing that of hospital building management, maintenance of medical equipment, cleaning, car park management, information system management,
hospital meal services, diagnostic imaging systems and support services
for rehabilitation.

Providing solutions to issues in the medical
sector in Turkey; Aiming for further
medical infrastructure development

logistics for medical equipment and supplies, and other related services as
they can utilize their strengths for such businesses. Recognizing those areas
as future business opportunities, we will continue to structure projects in an
accelerated manner.
Note 1: Public Private Partnership is a contractual scheme under which the public and private sectors cooperate to develop infrastructure projects or provide public services by mobilizing privatesector funds and knowledge.
Note 2: Project finance is a financing scheme in which repayments for a loan are made solely fromthe cash flows generated by the project.
Note 3: A concession business is a business in which a private-sector company established asa special-purpose company is contracted to operate facilities owned by a public agency for acertain period of time.

-What are the issues in the medical sector in Turkey?

Construction of Ikitelli Hospital in Istanbul in Turkey is scheduled to be completed in 2020. To meet growing
healthcare needs in the country, Japanese trading firm Sojitz Corporation (“Sojitz”) has launched a project in
the form of a public-private partnership (Note 1) to build a hospital. The aim of this PPP project is to design, constructand manage a hospital facility, and provide related medical services. JBIC will provide project finance (Note 2) for
this joint project undertaken by Sojitz and Ronesans Holding A.S.(“Ronesans Holding”), a leading Turkish construction
company. The loan is co-financed by private-sector financial institutions, bringing the total financing amount to
JPY163 billion. This report highlights the background of the launch of this project in Turkey, which is the first hospital
PPP project in which a Japanese company has participated, and Sojitz’s challenges and enthusiasm for entering
the medical infrastructure business which is a new area for the company.

Paving the way for Japanese companies toenter medical infrastructure business in a developing country-Why were you interested in starting the
medical infrastructure business in a developing country, such as hospital facility operation?

Ikuo Koinuma
General Manager
Medical Infrastructure Office
Infrastructure & Environment
Business Division
Sojitz Corporation

6

May 2018

JBIC Today

Koinuma Amid expected increases in theworld’s population and average life expectancy, we recognized that Japan’s technology andknowledge of developing high-quality medical infrastructure is indispensable for improving the quality of people’s lives. People in developing countries are becoming increasingly
health-conscious as their economies grow.
Against this backdrop, we came to believethat Japan’s highly-efficient medical care system will help to provide solutions to the issues
faced by the healthcare sector in developing
countries because Japan has advanced medical technology and services. The Japanese
government announced its “Healthcare andMedical Strategy” in July 2014, with the aimof promoting the roll-out of Japanese healthcare services in the world. In response to thisannouncement, we thought that Sojitz, as a
trading firm, could become the first successful
example of exporting Japanese medical technology and services, which would help to pave
the way for other Japanese companies to expand into the medical infrastructure business.
-Why did Sojitz establish Medical Infrastructure Office in April 2017?
Koinuma To focus on the Ikitelli Hospital PPP
Project, we decided that we need to enhanceand deepen our new efforts to develop medical infrastructure. To this end,
we established Medical Infrastructure Office, which integrates multiple divisions working in the field of healthcare and infrastructure development.
-Why did you choose Turkey as an investment destination for yourfirst medical infrastructure business?
Koinuma We have two major reasons. The first reason is that Turkey has
improved its own health insurance system, including launching a medical reform program in 2002, introducing a universal healthcare system in2008 and enacting the new hospital PPP law in 2013. The current Erdogan
administration is also striving to enhance the Turkish health care system
in addition to upgrading transportation infrastructure and improving education. Against this backdrop, medical needs in Turkey are expected tocontinue growing. The second reason is that we were already seeking an
opportunity to work with Ronesans Holding on forming a joint venture in
the concession business (Note 3) which is positioned as the core business ofRonesans Holding. We have already established a close business relationship with Ronesans Holding, which is why they are our partner company
for this project. As JBIC promptly considered our request for financing thisproject, we decided to participate in the project which is expected to help
establish our core business in the medical field and increase healthcare
services in Turkey, in addition to further strengthening our relationshipwith Ronesans Holding.
-Please explain how the roles of Sojitz, Ronesans Holding and theTurkish government are split in this project.
Koinuma The Turkish government is responsible for providing overall
medical services, ranging from hiring doctors and nurses to offering medical treatments to patients. We and Ronesans Holding will work together todesign and construct the hospital, raise funds as well as maintain hospital
facilities. We are in charge of providing non-medical services in the hospitalby utilizing our knowledge of operating Japanese hospital facilities, includ-

Koinuma Medical issues facing Turkey include constraints in the provisionof both medical facilities and services. Although the introduction of auniversal health insurance system allowed all Turkish people to receive
medical treatment, many national hospital buildings and facilities are aging
because they were built in the 1930s and 1940s. Under such circumstances,medical infrastructure supply in Turkey lags behind demand. Moreover,healthcare professionals in Turkey currently work under an inefficient systemthat requires them to perform hospital administrative duties in addition totheir medical work. This makes it hard to improve the quality of medical
services in the country.
-What are the innovative points of this project?
Koinuma The host country can attract investment and financing fromabroad as well as gain knowledge on medical infrastructure development, through the use of private-sector techniques that cover every taskof a hospital project from building construction to facility management.
This can also help construct a new hospital in an efficient way. We also
believe that using private-sector companies for the provision of non-medical services enables medical professionals to focus more on their medical work, which will lead to improved medical services in Turkey. This
project meets the medical needs of Turkey through the introduction ofefficient Japanese methods of hospital facility management. This projectwill also help the country to provide state-of-the-art medical treatment
while providing solutions to the issues and challenges that the medical
sector is facing.
- Please explain “efficient Japanese methods of hospital facility management.”
Koinuma The strength of the Japanese methods of hospital facility management can be characterized by “total optimization” of hospital facility
management. This management technique refers to increasing the overall
efficiency of a hospital, for example by centralizing the management ofdrugs and medical supplies inside the hospital, rather than managing themat each medical department. This type of hospital is not common outside
Japan. We plan to employ local people for the hospital facility managementcompany. This will not only create new employment opportunities for the local community, but also contribute to the development of the medical sector
in Turkey through the transfer of techniques and knowledge on Japanesehospital facility management to local staff members during personnel training programs.

Voices of JBIC’s staff members
Providing financial support for Japanesecompanies planning to expand into
overseas medical and healthcare markets
There were three key factors for the successful development of the
project finance scheme for this project. The first factor is that Turkey’s PPP
system for hospital projects looks stable in the eyes of the lender. The
second factor is that the project is jointly undertaken by Sojitz, a large
Japanese trading firm, and Ronesans Holding, an experienced Turkish constructor. The third factor is that, through Sojitz, the project is expected help
expand the Japanese medical business in Turkey, including the introductionof Japanese techniques and knowledge of hospital facility operation andmanagement into the country.
After holding numerous dialogue with Turkish government high officials, we confirmed their commitment to maintaining a PPP system for hospital projects in Turkey as well as the significance of this project. We
also had discussions with international organizations such as International
Finance Corporation (IFC) and the European Bank for Reconstruction andDevelopment (EBRD), which had financed a number of hospital PPP projects.
We considered the information gained through those discussions when examining the financing for this project. Based on these efforts, we took thelead in developing a bankable financial scheme for this project. As a result,project risks were shared among the parties involved in the project, including the Turkish government, in an appropriate manner, which finally enabled
us to make a loan to this project.
Amid the increasing population in emerging countries and growing
expectations for advanced medical services, the global demand for medical
and healthcare products and services is becoming stronger and morediverse. Under such circumstances, Japanese companies are expected tofind huge business opportunities not only in the hospital business, but also
in the area of medical equipment and pharmaceutical products. As a
Japanese policy-based financial institution, JBIC, in collaboration withprivate-sector financial institutions, will continue to provide financial
support for Japanese companies which plan to expand into overseas medical and healthcare markets, by drawing on its various financial instruments
for structuring projects and by expanding its risk-taking ability.

-What competitive advantages have you built in this medical infrastructure project? What business do you think you could start infuture based on your competitive advantages?
Koinuma In this project, we have made a great achievement in the operation and management of large-scale hospital facilities. The collaborative
framework we built with partner companies in our business network, aswell as support from JBIC and NEXI, will continue to be sources of our competitiveness in the future. At present, there are business opportunities forJapanese companies in medical infrastructure development. I believe thatJapanese companies can also see business opportunities in areas such as

Taro KatoAoi Suzuki

Director
Division 1
Corporate Finance Department
Industry Finance Group

Division 1
Corporate Finance Department
Industry Finance GroupMay 2018

JBIC Today

7

Special Feature: InfrastructureEntering the infrastructurebusiness in developed countries- Leveraging the growing demand forinfrastructure renovation in the U.S. --What does Washington State expect from Japanese companies?
Suzuki They expect Japanese companies to provide advanced technologies and high product quality. Although Japanese products costmore than those of other countries at the time of installation, they areless prone to failure and offer lower repair costs. That is, the lifecycle
cost of Japanese products is low. Developing countries might focus
most on the initial price, but developed countries emphasize a balance
between price and quality as an important element of evaluation. Business achievements in developed countries lead to further business indeveloping countries.
-What is needed to meet those expectations?

The Trump administration in the U.S. aims to mobilize a total of USD1.5 trillion of public and private investments ininfrastructure projects over the next 10 years. In the 2019 Budget Message released in February 2018, the federal
government announced plans to use USD 200 billion in federal funding for infrastructure investment. The purposeof the investment plan is to make large-scale renovations to the country’s infrastructure which has been left untouched for more than half a century. The Trump administration strives to attract investment from the private sector and local governments into the massive infrastructure plan, while using the federal budget. How can Japanese companies benefit from the growing demand for infrastructure improvements in the U.S.?

Business
ExampleState needs
1 Washington
improved “connectivity”

JBIC’s Action

Conclusion of a memorandum of cooperation with
Washington State Government
JBIC signed in August 2017 a Memorandum of Cooperation (MOC) with the Washington State Government to support
infrastructure business in Washington State. The aim of the
MOC is to establish a business cooperation relationship between JBIC and the Washington State Government to promotebusiness expansion in the state through investments by Japanese companies.
-What is the current situation of infrastructure in the U.S.?
Suzuki When I worked in JBIC’s New York representative office several years ago, I often noticed aging roads and bridges while driving
along the streets. Utility poles were sometimes brought down by
heavy snow, knocking out the power. It was quite obvious that there
was an urgent need to renovate infrastructure. No large-scale infrastructure improvements have been made throughout the U.S. since theEisenhower administration took office in 1953. An investment of
USD1.5 trillion in infrastructure projects in the next 10 years seems
ambitious but it is essential.
-JBIC applies a “state by state” approach, by which JBIC tries todevelop collaborative relationships with state governments, to help
Japanese companies find opportunities to join infrastructure projects in the U.S. Please elaborate on this approach.
Suzuki Although the federal government has announced its massive

8

May 2018

JBIC Today

infrastructure investment plan, local governments in each state actuallyattract investments because they have strong authority over infrastructure improvements in the state. Therefore, it’s extremely important toestablish connections not only with the federal government but alsowith state governments when structuring projects in each state.
Washington State has a faster growing economy and population compared to other states in the U.S. In response, a number of infrastructure
projects are being planned in the state. Located along the Pacific Coast, thestate is also geographically important for logistics between inland areas of
the U.S. and Asian countries. Due to this, various industries have been attracted into the state and many Japanese companies have also started
doing business in the state. Capitalizing on its geographical convenience,
Washington State strives to become a gateway to Asia, while improving thetraffic networks of the state and increasing the “connectivity” between
Asian countries and other states in the U.S.
Against this backdrop, JBIC signed an MOC with the Washington
State Government to support Japanese companies which plan to expand
their business to Washington State. The scope of this MOC includes
exchange of information about the competitive advantages of Japanesecompanies and the infrastructure needs of Washington State.

Becoming a “solution provider” ineach state in the U.S. by meetingthe needs of local communities-Specifically, what renovation needs do you foresee?
Suzuki There are several infrastructure plans in Washington State, including railway improvements in the center and suburbs of Seattle anda high-speed railway line connecting Vancouver, Seattle and Portland. I
believe that Japanese companies will have opportunities to negotiate
on supplying trains and signaling equipment for those projects, as they
have a great competitive advantage in these areas.

Suzuki It is necessary to know local needs precisely and offer the rightsolutions. We need to explore local needs by involving JBIC’s local staff
members. It is also important to explain quantitatively why Japanesetechnology is prominent in terms of lifecycle cost, in addition to the highlevel of technology. We have to become a “solution provider” for the
problems and challenges that the state government is facing.

Business
Example2

Meeting environmental
infrastructure needs ofCalifornia State with Japanesetechnology for improving qualityof life (“QOL”)

Project involving JBIC’s financeWaste treatment and power generation project by
a U.S. subsidiary of Hitachi Zosen Corporation
In this project, Kompogas SLO LLC (Kompogas SLO), a U.S.
subsidiary of the Hitachi Zosen Cooperation Group, is to construct a waste treatment and power generation plant with awaste treatment capacity of 30,000 ton/year and a power output
capacity of 730 kW. Kompogas SLO will conduct waste treatment
and biogas power generation and sell compost (Note) for 20 years.
JBIC signed a loan agreement with Kompogas SLO amounting up
to USD6.1 million (JBIC portion). The loan is co-financed by a private financial institution, bringing the total co-financing amountto USD12.4 million.
Note: Compost is fertilizer made by fermenting organic matter, such as food waste.

- Where do you think Japanese companies can find otherbusiness opportunities in the U.S.?
Suzuki Let me describe a project in which a Japanese company responded to the environmental needs of the State of California. Even
after President Trump declared that the U.S. was withdrawing from theParis Agreement, California has remained committed to achieving thetargets set by the Paris Agreement, and is considered as an environmentally advanced state. Recognizing California’s need for environmental technology, Kompogas SLO, the U.S. subsidiary of Hitachi Zosen,
participated in the project to construct a biogas power generation plantthat generates power by collecting and fermenting food waste. This
technology integrates the fermentation technology of a Swiss company
that Hitachi Zosen acquired with the advanced thermal power combustion technology of Hitachi Zosen. It generates power by fermenting
household food waste and burning the generated gas. This is a suc-

The same plant as the waste treatment and power generation plant of the California project

cessful example in which a Japanese company found a business opportunity by recognizing that their business met the objective of theenvironmental policy of the state.
-What is the key point in taking an approach to meet the environmental technology needs of states?
Suzuki It is important to understand the environmental policy precisely,
which varies by state. Japanese companies have not yet accumulated astrong track record of providing environmental technology. However, if
Japanese companies understand the environmental technology needsof state governments and take different approaches for different
states when negotiating with them, I strongly believe that they willconsider the advanced Japanese technologies to be in line with theirenvironmental policies. It could successfully join the project by bringing in the technology of the Swiss company that it had acquired. M&A
is another important way of meeting the infrastructure needs of developed countries.
- What advice can you give to Japanese companies planning to enter the infrastructure business in developed countries including the U.S.?
Suzuki In general, Japanese companies have a competitive advantage inproviding technologies that help to improve quality of life. As shown by
the above two business examples, when Japanese companies try to enter
the infrastructure business in developed countries, it is extremely important to make business proposals to national governments or state governments of developed countries in a way that demonstrates that Japanesecompanies’ technologies can provide solutions to the problems and challenges that those governments are facing. JBIC
will continue to support
Japanese companies instructuring projects thatsatisfy various infrastructure needs of developed
countries by capitalizing
on Japanese technologies
that help to improve quality of life, such as projects
which are expected to increase the connectivity
between developed counHiroyuki Suzuki
tries and other countries
Directorin the world.
Division 1 and Division 4
Social Infrastructure Finance Department
Infrastructure and Environment Finance GroupMay 2018

JBIC Today

9IrbidAjlun

JerashMafraq

Balqa

Zarqa

Examining the projectfrom viewpoints ofAmman

MadabaKarakthe three parties

Ongoing Project

Diagram ofproject participants

concerned

TafilahMa'an

Jordan sheds new lighton the Middle East

13P

Mitsubishi Corporation

Aqaba(Investor on the Japan side)

Jordan corporation

Qatari corporation
Investment, etc.

10 P

Shams Ma’an
Power Generation PSC(Project organizer)

Endless rows of solar panels exposed to direct sunlight can be seen in an area of Ma’an Governorate ofHashemite Kingdom of Jordan (hereafter Jordan), which is located about 220 km south of the capital cityof Amman. In this province, the Shams Ma’an photovoltaic power generation project was carried out withthe participation of a Japanese company. The goal of this project is to generate and sell electricity converted from sunlight, and contribute to the local area through active corporate social responsibility (CSR)
activities. Since its start in September 2016, the project has been operating successfully. This report takes
a close look at the project and the views of the people involved.

Summary of the project

12P

Power
supplyNational ElectricPower Company(Purchase, transmission, and distribution of power)

Co-financing

Banks
Private financial
institutions

Power

Supply to inside Jordan

This is the largest photovoltaic generation project in the Middle East, (Note) inwhich the Jordanian company Shams
Ma’an Power Generation PSC (hereafter“Shams Ma’an) sponsored by Mitsubishi
Corporation constructed a photovoltaic
power plant with a generation capacityof 52.5 MWac in Ma’an Governorate tosell electricity to National Electric Power Company (hereafter “NEPCO”) for a
20-year period to 2036. In support ofthis project, JBIC signed a financing
agreement for up to 77 million USD for
Shams Ma’an in January 2015, its firstproject financing for photovoltaic generation business in the Middle East.
Note: As of January 2015 when the financing agreement was signed.

Shams Ma'an photovoltaic power station in Ma’an Governorate of Jordan

Implementing a
power generation project
Viewpoint of Shams Ma’an

Establishing a milestone for photovoltaic projects in the Middle East

Q u e st ion
Can you tell us about the history of thisproject from its start to completion andabout the development of business rooted
in the local community from thestandpoint of a project operator?
- Tell us about the history of this project up to its completion.

Samer Al-Ma’anyCEOShams Ma’an Power Generation PSC
Located in Ma’an Governorate, Jordan, Shams Ma’an is thecompany engaged in the construction and operation of thisproject. Mitsubishi Corporation participated in this project as asponsor from Japan. The success of Jordan’s first large-scale
photovoltaic generation project is expected to be a milestoneof photovoltaic generation projects in the Middle East.

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JBIC Today

This project was initiated according to the plan drawn up by
His Majesty King Abdullah II Ibn Al Hussein in 2011. The projectsite Ma’an Governorate is inconveniently located because it is 220
km from the capital Amman, and faced a high unemployment rate
because small-scale industry was not developed. In Jordan’s pursuit of a renewable energy strategy, Ma’an Governorate is considered to be an ideal place for using solar power for the generationof electricity because of its flat land and abundant solar radiationneeded for high generation efficiency. King Abdullah’s goal wasto promote photovoltaic generation business using facilities inside
the province without relying on procuring fuel from distant areas. In
the construction phase, the project faced several problems, including the treatment of waste flowed from other photovoltaic power
plants located in the surrounding areas and measures against
floods in the rainy season. While struggling with these problems,
people involved in the project worked very hard to complete theconstruction of the photovoltaic power plant. As a result of their

hard work without a holiday for 45 days before the completion,
the opening ceremony was successfully held on October 10, 2016.
-What are the operating conditions of the photovoltaic power plant?
The current availability factor operating ratio (Note 1) of the installed solar panels is 99.6%, which exceeds the target of 98%. At
the same time, the power output performance ratio (Note 2) is 79.3%,
exceeding the target of 78.2%. As fugitive dust that accumulates
on the solar panels greatly affects power generation efficiency, thesolar panels need to be cleaned in an effective way. In this respect,
our employees, including 50 local residents, do excellent work incleaning and monitoring of the solar panels, as well as device management. The photovoltaic power generation business has spreadto other countries such as Saudi Arabia and Dubai. We hope thatthe experience gained by the employees of Shams Ma’an will be of
benefit for them when they work on renewable energy projects inother countries in future.

generation plant to local residents with a view to developing humanresources who can play an active role in renewable energy projects inother provinces and countries. By conducting these project-related activities in surrounding areas, our aim is to realize a project that benefits
not only the buyers of electricity but also the project stakeholders including local residents.

Note 1: The availability factor refers to the proportion of time when a photovoltaic facility is in operation.
Note 2: It shows how much electricity was generated as compared with the nominal maximum output
of a photovoltaic cell.

Active corporate social
responsibility (CSR) activities

Panels, which change the angle in accordance with the sunshine angle, are always kept clean.

-What influence has this project had on the surrounding area?
We are conducting various activities as the first company implementing CSR efforts in Ma’an Governorate. We built a park in the province and a roofed bus stop for children waiting for their school bus. In
addition, we installed small solar panels for in-house power generationin schools. We offer technical training on the operation of photovoltaic

Medals awarded in the Karate tournament organized by Shams Ma’an

May 2018

JBIC Today

11

Purchasing, transmitting, and distributing
power inside the country
NEPCO’s viewpoint

Growing expectations for future
public-private partnership (PPP)
projects accelerated by the successof this project

Ongoing Project

power company in the Middle East, and the first large-scale photovoltaic generation project under a PPP scheme in Jordan. We
believe that the excellent relationship we established with Shams
Ma’an, the sponsor companies, and the government of the hostcountry helped to share risks effectively among project participants, which has also led the project to success. The success of
this project greatly increased trust in the government of Jordan
and the PPP scheme NEPCO built, making a good impression on investors who are considering investing in business in Jordan. There
are high expectations for structuring PPP projects in Jordan. At thesame time, we believe that Jordan has taken a big step towardachieving its target for the amount of total power generation by
renewable energy by 2020.

Investing in the power project
Viewpoint of Mitsubishi Corporation

Focusing on Jordan to establish afoothold for renewable energy business in the Middle East

Jordan’s continued expectations for
quality of Japanese companies- Please tell us your evaluation and expectations for Japanesecompanies.

H.E. Eng. A. DaradkahManaging Director

NEPCO
It will buy electricity generated in the Shams Ma’an Photovoltaic
Power Plant for 20 years and supply it to users in Jordan. This projectmarks an important first step in Jordan’s departure from dependence
on imported energy and a successful energy strategy toward 2020.

Q ue stion
What does Jordan expect from thisproject and how does the kingdom
evaluate the participation ofa Japanese company?
-Tell us about the background to Jordan’s renewable energy efforts.
Jordan is not an oil-producing country and depends on imports
for 95% of its energy needs. Gas shipments from Egypt have been
unstable since the Arab Spring in 2011, and generation cost hassoared because Jordan was forced to import expensive diesel oil
and heavy oil. Under such situation, the government announced anenergy strategy to reduce its dependence on imported energy andincrease the ratio of renewable energy to the total power generation inside the kingdom. The government plans to boost the ratio ofrenewable energy generation capacity to 2,440MW by 2020, which
stands at 25% of the total power generating capacity in the kingdom, of which 1,600MW will be generated from solar power and
840MW from wind power except the net metering and wheeling in
distribution side.

The Jordanian power sector highly evaluates the participationof Japanese companies as business operators in several successful projects including this project and the world’s largest diesel engine thermal power generation project. The strengths of Japanesecompanies are characterized by high-quality products and highly
reliable management teams, which have gained great trust fromboth the Jordanian government and our company. In this project,
the top management of Mitsubishi Corporation paid a private courtesy visit to King Abdullah to develop a favorable relationship withthe kingdom, leading the way to launching this project.
- What are Jordan’s future efforts for increasing renewableenergy use and attracting foreign investment?
Jordan is promoting the “Green Corridor” project to increase
the power transmission capacity between the southern part of the
kingdom where renewable energy business aggregates and thenorthern and middle part of the kingdom that consumes a majorityof the electricity generated in the southern part. In conjunction
with this project, Jordan plans to increase renewable energy projects and expects Japanese companies to participate in these projects. Jordan can be a gateway to neighboring countries including
Syria, Iraq, and Lebanon, as well as Gulf countries in terms of technological and personnel exchanges. If those neighboring countries
make progress in national stability and reconstruction efforts, we
assume that the success in Jordan will become a role model and a
supply source of technology and human resources. NEPCO strives
to attract further foreign investment by improving its international
creditworthiness through an effort to restore fiscal soundness.

- How do you position the photovoltaic generation project by
Shams Ma’an in the process of achieving the goal?
This is the first renewable energy project by an independent

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May 2018

JBIC TodayHead office of NEPCO in Amman of Jordan

Yuji Okafuji
General Manager
International IPP Department
New Energy & Power Generation Division

Mitsubishi Corporation
Mitsubishi Corporation is the project sponsor on the Japaneseside. As the company aims to increase the ratio of renewable energy to the total power-generating capacity it owns worldwide, it
positions this project as providing a foothold to increase its competitive advantages in the Middle East. Investing in this project totake a stake as a sponsor, the company has been involved in theoperation and financial management of the project.

Q u e st i on
What were the reasons for selecting
Jordan and the knowledge you acquired
through this project? How do you planto put the experience from this project touse for future projects?
- What is the position of renewable energy in the power business and the significance of the photovoltaic generation projectin Jordan?
Positioning renewable energy business as one of our growth pillars, we
strives to increase the ratio of renewable energy to the total power generation capacity we own worldwide to more than 20% by 2030. We focusedon Jordan in the Middle East, because the kingdom historically pursues anomnidirectional foreign policy and maintains a neutral foreign policy withcountries in the Middle East. With a hereditary ruling system, the Hashemite family is greatly respected by Middle Eastern countries, maintaining
its influence and status within the region. We have conducted fertilizer
businesses for more than 30 years and also participated in power generation businesses, which provided us with opportunities to gain a lot of expe-

Jordan sheds new light on the Middle Eastrience and knowledge of working in the kingdom. As we view this projectas giving us a foothold to develop renewable energy business in the Middle
East, we decided to participate in the project.
- We heard that the photovoltaic power plant that started
operation in September 2016 is operating successfully because
the operating ratio of the installed solar pannels exceeds thetarget amount.
Photovoltaic generation is largely affected by solar radiation. The current amount of solar radiation is larger than originally planned, which has
greatly contributed to the current excellent operating conditions. Anotherfactor behind such favorable operating conditions is that those installed solar panels are cleaned and monitored in an effective manner by the local
staff members who are working with our dispatched employees. We expect
this project to help improve the livelihood of local residents in various ways
including employment creation and establishment of a better community.

Transfer of our knowledge fromthis project to future projects-What benefits did this project bring to your businesses?
We plan to increase the ratio of renewable energy worldwide. There
are large-scale off-shore wind generation projects in Europe and the regions
surrounding the North Sea. We have recently participated in several projects. Large-scale photovoltaic generation projects were launched in the
Middle East, Africa, and the Sun Belt of the United States. We accumulated
valuable knowledge on such questions as: Is investment in renewable energy being promoted based on a properly organized national system? For
example, does the project ask users to bear the burden widely and shallowly
without too much dependence on the country in terms of system planning?
On what point do we need to focus when deciding whether to participate in
the project, in light of the legal system of the host country? In addition, we
had an opportunity to work with the local partners in Qatar with whom weestablished a relationship through this project when we participated in thethermal-power generation and desalination project in Qatar. I feel we largely
benefited from this project in terms of expanding human networks.
- What is the overall evaluation of this project?
This is Jordan’s first project to utilize a PPP scheme for a domestic largescale photovoltaic generation project in Jordan. We heard that this successful PPP project is highly evaluated not only by the government of Jordan
but also by the investors who plan to invest in business in Jordan in the
future. We believe that earning trust and a high evaluation from the hostcountry based on the strengths of Japanese companies, such as high quality
technology and management team, will help to increase the presence ofJapanese companies in the Middle East and in the renewable energy sector,
which will also lead to further business development and expansion.

Holding a PF/PPP Workshop in Jordan
We held a PF/PPP Workshop in Jordan in October 2017, where
we explained the importance of utilizing a PPP scheme and the theoryof cash flow in project financing. We also explained to Jordanian
government officials the importance of the roles played by the project
host country and JBIC’s intention to contribute to the growth of the
kingdom. JBIC works hard to establish good relations with project hostcountries around the world by organizing such seminars.

May 2018

JBIC Today

13

Our Global
Challenges

Forth Inc. (Kouka City, Shiga Prefecture)

Correcting distortion ofjust 0.1 mm with a hammer
Sophisticated craftsmanship supports
Japanese quality in Thailand

Forth Inc. (hereafter “Forth”) is an SME that specializes in sheet-metal processing of auto parts. Staffed by seven workers, its head office and factory are located in Kouka city in Shiga Prefecture. Its sophisticated technology is highly appreciated by major auto parts manufacturers, and its competitive advantage is rare “craftsmen engineers” who process
sheet metal manually to perfection. Their extremely high skill enables them to correct distortion of 0.1 mm just byusing a hammer, and this skill by far exceeds the accuracy of the latest machine tools. This skill is highly evaluated, andenabled the company to expand its business to Thailand in 2015. Its sophisticated technology is the crucial final stepthat automakers need to build delicate prototypes, and Forth is accumulating results steadily.

Even the latest processing
machines can achieve only 90%
accuracy; manual work
delivers the last 10%“We named our company “Forth” because it was established by four people andbecause it sounds like going ‘forth’ or moving ahead in English.”
While manufacturing is rapidly mechanizing, Forth has been going “forward and ahead”
since it was established in 2003 as a team ofunique specialists in sheet-metal processing
using manual labor to build prototypes. Whenbuilding a prototype, sheet-metal processing is
an important process for correcting minute distortions in the prototype before starting mass
production, and craftsmanship is needed tocorrect small differences between the designon the drawing and the actual prototype, withjust a hammer. In addition to sheet-metal processing to build prototypes, Forth has installeda three-dimensional laser processing machine,

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May 2018

JBIC Today

so it can now machine dies,
which is an upstream process
in sheet-metal processing.
The company now receives
orders not only from parts
manufacturers affiliated withleading Japanese automakers but also from companies
that supply auto parts to foreign automakers.
The factory at the headquarters where three-dimensional laser processing machines are“Even the very latest proalso installedcessing machine cannot build
a part that perfectly matches the drawing. It
creasingly using strengthened high-tensile
may achieve a precision of about 90%, but thesteel plate for the skeletal structure to reduceremaining 10% must be done by hand. The huthe weight of auto bodies to increase fuel effiman hand is needed to correct distortions of justciency and improve safety in collisions. This is
0.1 mm width or 0.5 degree angular misalignbecause high-tensile steel plate offers highment. Although mechanization is making rapid
strength even though it is just half as thick as
progress in parts processing, lately we havetraditional steel sheet.
been receiving orders that other companies had
According to President Hirao’s view of theto abandon, leading to an increase in orders. We
future of the auto industry, “Processing a highare like lifeguards in sheet metal processing.”
tensile steel sheet requires an even higher level
For example, the auto industry is now inof processing technology. Because it is sostrong, it is not easy to process by machinery.
But with a hammer, an engineer can achieve
such a high level without leaving a scratch on
the surface, because the hammer hits the sheet
surface perpendicularly. Automobiles keep advancing, as evidenced by autonomous cars andelectric vehicles, and automakers design the
body shape for differentiation. The more unique
the shape becomes, the more delicate processing is required. Consequently, the demand for
handwork will increase.”

Expanding to Thailand,committed to maintaining
Japanese quality andtechnology
Around 2012 President Hirao started tothink about expanding overseas. He always
thought there was demand for handwork inother countries, but he could not proceed forfinancial reasons and because of the conditions offered by other countries. In 2014 theidea surfaced again. An executive of an auto
body components manufacturer became president of a subsidiary in Thailand, and hestrongly asked President Hirao to set up in
Thailand and help him, because his company
in Thailand could not make components asprecisely as those available in Japan. In response, President Hirao flew to Thailand andworked on just correcting distortion for twomonths. This convinced him of strong local
demand for precision components and so hedecided to establish a joint venture, THAIFORTH CO., LTD. (TFC), in 2015.
TFC has a total staff of five. Forth dispatched an experienced handwork engineer
from Japan, who taught local staff how to usea three-dimensional laser processing machine. At the same time, he has been teaching them handwork technology as needed.
“The Thai subsidiary has established a system to let a Japanese engineer always checkthe final products to make sure that they havethe precision and quality of Japanese products. Until we started doing business in Thai-

Relationshipwith JBIC

land we didn’t realize that it is very hard forJapanese parts manufacturers to maintainhigh quality in the country. In our business inThailand, we are determined to maintainJapanese quality and technological competence. Local staff watch our experienced engineer correct delicate distortions to perfection with a hammer as if watching a magician.
They are very interested in handwork, and wewill continue to teach them.”

Leading the way throughsophisticated technology
According to President Hirao, “Seven oreight years have passed since the abolition of
the tax break on new car purchases under theformer Yingluck regime, and so people are expected to trade up for a new car soon. The auto
industry in Thailand expects this peak to occur
after 2020, and so automakers are likely to introduce new models in time for this replacement period. We will be busy from mid 2019.”
TFC plans to strengthen its production
system and has decided to introduce a threedimensional laser processing machine and anitrogen gas separation device to blow off
cutting chips. The company used financing
from JBIC to purchase the devices. “Our local
bank, Shiga Bank, introduced JBIC’s financing system to us. We are very grateful to
JBIC for agreeing to provide long-term financing denominated in Thai baht free fromexchange rate risks for us, and we were also
very impressed that JBIC has a representative office in Bangkok.”
President Hirao intends to make his company even greater with its technological competence: “I am looking forward to seeing what
we can achieve when we increase our technological competence beyond the level of ourcompetitors. I wish to make my company indispensable to all companies concerned so thatthey will need us to stay in business.”
In the rapidly-changing Thai auto market,
TFC supports Japanese quality with hammers
and state-of-the-art processing machines.

Takashi Hirao
President
Forth Inc.

Company Profile
Name

Forth Inc.

Incorporated

2003

Capital

3.3 million yen

President

Takashi Hirao

Employees

7

Business lines

Sheet-metal processing andadjustment processing
for manufacturing auto part
prototypes, various kinds of
welding processing,
three-dimensional laser
processing, various kinds ofmachine processing

In March 2017 JBIC signed a loan agreement with TFC, the Thai subsidiary of Forth, as co-financing with Shiga
Bank, Ltd. for the amount of 11.9 million Thai baht (JBIC portion) and in January 2018 signed another loan agreement for 7 million Thai baht (JBIC portion). Each of these two loan agreements is to finance the necessary long-term
funds denominated in Thai baht for the sheet-metal processing business for auto parts to be conducted by TFC in
Chonburi Province of Thailand.

May 2018

JBIC Today

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