### Box 5. Working to Raise “Visibility of Japanese Aid” through ODA Loans

In order for developing countries to achieve self-sufficient and sustainable growth, it is essential to develop infrastructure, such as electricity, gas, water and sewerage systems, roads, railways, ports, airports, and communications, necessary for creating a trade and investment environment that will attract private-sector investment, while promoting activities by the private sector. Moreover, the importance of “Visibility of Japanese Aid” and financial aid utilizing Japan’s advanced technology and know-how are stipulated in Japan’s Official Development Assistance Charter, the February 2006 report of the Review Meeting on Overseas Economic Cooperation, and recommendations of private-sector groups such as Nippon Keidanren (the Japan Business Federation). By making use of its knowledge and expertise in infrastructure, Japan has been working towards realizing technical transfers to developing countries through ODA loans (Japanese ODA Loans).

In July 2002, Japan introduced STEP $ ^{*} $ , an ODA Loan system that enables Japan to make use of its advanced technology and know-how. Through this system, Japan aims to transfer various types of advanced technology to ODA yen loan recipient countries, whose prime contractors are limited exclusively to Japanese companies in accordance with the Organisation for Economic Co-operation and Development (OECD) regulations. For projects financed with ODA loans through the STEP system, more than 30% of equipment, work and services must be procured from Japan, and developing countries can expect transfers of state-of-the-art Japanese technological capabilities. Furthermore, interest rates and loan repayment periods under the STEP system are more advantageous to developing countries than conventional ODA loans.

Japan has implemented a total of 20 projects in nine countries (as of the end of FY2007) using ODA loans under this system. In FY2007, exchanges of notes were concluded for three projects: the Mombasa Port Development Project, Kenya (loan amount: approximately ¥26.71 billion), the New Ulaanbaatar International Airport Construction Project, Mongolia (loan amount: approximately ¥28.81 billion) and the Hanoi City Urban Railway Construction Project (Line 1), Viet Nam (loan amount: approximately ¥4.68 billion) (total loan amount for all three projects: approximately ¥60.2 billion).

Disbursements of STEP (Special Terms for Economic Partnership)

As of the end of FY2007

Fiscal Year	E/N Date	Country	Item	Amount (Unit: ¥ million)	Interest Rate	Repayment Period (grace period)
2003	Mar. 31	China	Public Broadcasting Infrastructure Improvement Project	Gross Amount	20,202	0.75	40 (12)
Mar. 31	Viet Nam	Hanoi-Ho Chi Minh City Railway Line Bridges Safety Improvement Project	Gross Amount	8,222	0.75	40 (12)
Mar. 31	Indonesia	Lahendong Geothermal Power Plant Project	Gross Amount	5,866	0.75	40 (12)
2004	Aug. 26	Uzbekistan	Tashguzar-Kumkurgan New Railway Line Construction Project	Gross Amount	16,359	0.40	40 (10)
Mar. 29	Indonesia	North Java Corridor Flyover Project	Gross Amount	4,287	0.40	40 (10)
Tanjung Priok Access Road Construction Project (Phase I)	Gross Amount	26,306	0.40	40 (10)
Mar. 31	Viet Nam	Cai Mep-Thi Vai International Port Construction Project	Gross Amount	36,364	0.40	40 (10)
2005	Jun. 22	Tunisia	Photovoltaic Rural Electrification and Water Supply Project	Gross Amount	1,731	0.40	40 (10)
Mar. 24	Sri Lanka	The Galle Port Development Project (Phase I)	Gross Amount	14,495	0.30	30 (10)
Mar. 28	Indonesia	Tanjung Priok Access Road Construction Project (Phase II)	Gross Amount	26,620	0.40	40 (10)
Mar. 29	Viet Nam	Nhat Tan Bridge (Vietnam-Japan Friendship Bridge) Construction Project (Phase I)	Gross Amount	13,698	0.40	40 (10)
2006	Nov. 28	Indonesia	Engineering Services For Jakarta Mass Rapid Transit System Project	Gross Amount	1,869	0.40	40 (10)
Dec. 9	Philippines	Pasig-Marikina River Channel Improvement Project (Phase II)	Gross Amount	8,529	0.75	40 (12)
Mar. 12	Tunisia	National Television Broadcasting Center Project	Gross Amount	4,075	0.40	40 (10)
Mar. 28	Indonesia	National Geo-Spatial Data Infrastructure Development Project	Gross Amount	6,373	0.40	40 (10)
Mar. 30	Viet Nam	Ho Chi Minh City Urban Railway Construction Project (Ben Thanh-Suoi Tien Section (Line 1)) (Phase I)	Gross Amount	20,887	0.40	40 (10)
Mar. 30	Viet Nam	Hanoi-Ho Chi Minh City Railway Line Bridges Safety Improvement Project (Phase II)	Gross Amount	11,737	0.40	40 (10)
2007	Nov. 20	Kenya	Mombasa Port Development Project	Gross Amount	26,711	0.20	40 (10)
Mar. 3	Mongolia	New Ulaanbaatar International Airport Construction Project	Gross Amount	28,807	0.20	40 (10)
Mar. 26	Viet Nam	Hanoi City Urban Railway Construction Project (Line 1) (Engineering Services)	Gross Amount	4,683	0.01	40 (10)
Total	Amount	287,821	Projects	20

*STEP: Special Terms for Economic Partnership