Profile of JBIC

JBIC Annual Report 2013

1Profile of JBIC

1 Message from the Governor 2

2 Profile 4

3 JBIC’s Medium-Term Business Plan (FY2012–2014) 6

4 Outline of Operations in FY2012 12

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Aswepublishthe2013AnnualReport,Iwouldliketoexpressmyheartfeltap-preciationforyourcontinuedunderstandingandsupportforouractivities.

Theglobaleconomyremainedsluggishduringtheearly-to-middlepartofFY2012amidthesovereigndebtcrisisinEurope,thefiscalproblemintheUnitedStates,andtheslowdowninemergingeconomies.ItthenbegantoshowsignsofgradualrecoverydueinlargeparttothemildrecoveryoftheU.S.economyandtheendoftheslowdownphaseofemergingeconomiesinthesecondhalfofFY2012.Theinternationaleconomicclimatesurrounding Japan,however,continuestoposemanychallengesforthecountry.Globalcompetitionfornaturalresourcesremainsfierceamidtheever-growingglobalpopulation.ItisvitalforJapantosecurestableaccesstoenergyandmineralresourcesasthisisdirectlylinkedtopeople'slives.Inthemanufacturingsectoraswellastheinfrastructuresector,whichisseeinggrowingdemandworldwide, Japanisfacingincreasingcompetitionaroundtheworldindevelopedanddevelopingcountriesalike.Additionally,achievingeco-nomicdevelopmentinharmonywithglobalenvironmentalsustainabilityhasnowcometobeseenasacommonglobalissue.Thus,thereisanincreasingneednotonlyforenvironmentalandsocialconsiderationsinindividualprojects,butalsoforprojectsconducivetoenvironmentalconservationandimprovement,including,amongothers,thoseseekingtocopewithglobalwarming.Moreover,astheworldeconomyisbecomingincreasinglyintegrated,globalfinancialandeconomiccrisescouldhaveamoresubstantialimpactontheJapaneseeconomythaneverbefore.

Amidthesevariouschangescurrentlyunderwayintheglobaleconomicenviron-ment, JBIC set off on a new start onApril 1, 2012as apolicy-based financialinstitution wholly owned by the Japanese government, pursuant to the JapanBankforInternationalCooperationAct(JBICAct).TheJBICActprovidesthatweatJBICshallconductoperationsinthefollowingfourfields,whilecomplement-ingthefinancialtransactionsofprivate-sectorfinancialinstitutions:(1)promotingtheoverseasdevelopmentandsecurementofresourceswhichareimportantforJapan;(2)maintainingandimprovingtheinternationalcompetitivenessofJapaneseindustries;(3)promotingtheoverseasbusinesshavingthepurposeofpreservingtheglobalenvironment,suchaspreventingglobalwarming;and(4)preventingdisruptionstointernationalfinancialorderortakingappropriatemeasureswithrespecttodamagescausedbysuchdisruption.ContributinginthiswaytothesounddevelopmentofJapanaswellastheinternationaleconomyandsocietyistheultimatemissionofJBICundertheJBICAct.Inthesefourfields,wehavebeenworkingactivelytoconductloan,guaranteeandequityparticipationoperations.

Message from the Governor1·

Profile of JBIC 1. M

essage from

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DuringFY2012,wefocusedon,amongotheractivities,promotingthedevelopmentandsecurementofenergyandnaturalresources.Forexample,wesupportedthedevelopmentofnaturalgasandLNGprojectsinAustralia,theacquisitionofinterestsincopperminesinChile,andtheimportofcrudeoilfromtheUnitedArabEmirateswithourfinancialinstruments.WealsofocusedonfacilitatingtheM&AofforeignfirmsbyJapanesecompaniesandsupportingexportsandstableoverseasopera-tionsbyJapanesemid-tierenterprisesaswellassmallandmediumenterprises.

DuringFY2012,wealsohelpedtomaintainandimprovetheinternationalcompeti-tivenessofJapanesecompanies.Foroverseasinfrastructuredevelopmentprojects,oursupportwasextendedtoprojectssuchasanintercityexpressrailwayprojectintheU.K.andarenewableenergypowergenerationprojectinCanada—eachofwhichinvolvedaJapanesecompanyplayingapivotalroleintheprojectasamajorparticipant.Wealsoassistedinacoal-firedpowerplantprojectinMorocco,aswellastheexportofequipmentandservicesfromJapanforanoilrefinerymod-ernizationprojectinKazakhstan.Furthermore,weassistedMyanmarinreturningtotheinternationalfinancialmarketbyextendingbridgeloanstotheGovernmentofMyanmartohelpclearthearrearsofpastloansfromtheAsianDevelopmentBankandtheWorldBankGroup(InternationalDevelopmentAssociation).Asaresultoftheseandotherfinancingoperations,thetotalamountofcommitmentswemadeduringFY2012inloans,guarantees,andequityparticipationsreachedJPY4,240.9billion.Thiswasanall-timehighsincetheestablishmentoftheJapanExport-ImportBank,thepredecessorofJBIC.

We,themanagementandstaffofJBICwillstrivetoexecuteourworkefficientlyasaunifiedbodyandliveuptotheexpectationsplacedonus,whiletakingcaretodevoteourselvestocomplementingprivate-sectorfinancialinstitutionsandensurefinancialsoundness.

Itismysincerewishthatourendeavorswillearnyourunderstandingandenduringsupport.

August2013HiroshiOkudaGovernorJapanBankforInternationalCooperation(JBIC)

Profile of JBIC 1. M

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Profile2·

As a policy-based financial institution, JBIC has the objective of contributing to the sound development of Japan and the international economy and society, while having the objective of supplementing the financial transactions implemented by private-sector financial institutions.

ProfileName JapanBankforInternationalCooperation(JBIC)Office 4-1,Ohtemachi1-chomeChiyoda-ku,Tokyo100-8144,JapanCapital ¥1,360.0billion(whollyownedbytheJapanesegovernment)Outstanding Loans and Equity Participations* ¥10,685.3billionOutstanding Guarantees* ¥2,400.6billion

Profile of JBIC 2. Pro

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Corporate Slogan

The Purpose of JBICJBICisapolicy-basedfinancialinstitutionwhollyownedbytheJapanesegovernment,whichhastheobjectiveofcontributingtothesounddevelopmentofJapanandtheinternationaleconomyandsociety,byconductingfinancialoperationinthefollowingfourfields:

Promoting the overseas development and securement of resources which are important for Japan Maintaining and improving the international competitiveness of Japanese industries Promoting the overseas business having the purpose of preserving the global environment, such as preventing global warming Preventing disruptions to international financial order or taking appropriate measures with respect to damages caused by such disruption

JBIC Corporate PhilosophyTheobjectiveofJBIC,assetforthinitsstatutorylaw,isto“contributetothesounddevelopmentofJapanandtheinternationaleconomyandsociety”byexecutingavarietyoffinancialfunctions.Topursuethisobjective,wehavesetoutthefollowingcor-poratephilosophy,whichespousesthreecorevalues:“Hands-onPolicy,”“Customer-1stApproach”and“Forward-lookingAction.”

Positioned at the crossroads of global business opportunities, JBIC is opening new venues to the future for the Japanese and global economy.

Hands-on Policy: Pioneeringnewvaluebyparticipatingattheforefrontofoverseasprojectdevelopment, andbyengagingproactivelyinprojectsfromtheearlystagesCustomer-1st Approach: Offeringcustomersone-of-a-kindsolutionsbyadoptingtheirperspectivesandintegratingtheirviewsinto policydevelopmentForward-looking Action: ContributingtothesustainabledevelopmentofJapanandtheworldasawholebydeployinghighlyprofessional skills,withaviewtorealizingasecureandaffluentfuturesociety

*AsofMarch31,2013

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Japan Bank for International Cooperation

(former JBIC)

October1999

Export-Import Bank of Japan (JEXIM)

International Financial Operations

Overseas Economic Cooperation Fund (OECF)

Overseas Economic Cooperation Operations

Japan Finance Corporation ( JFC)

October2008 April2012

JBIC (International Finance Units)

Operations to Facilitate Crisis Responses and Specific

Businesses Promotion, etc.

(Domestic Finance Units)

Micro Business and Individual Unit

Agriculture, Forestry, Fisheries and Food Business Unit

Small and Medium Enterprise (SME) Unit

Japan International Cooperation Agency ( JICA)

Japan Bank for International Cooperation

( JBIC)

HistoryJapanBankforInternationalCooperation(JBIC)wasestablishedonApril1,2012inaccordancewiththeJapanBankforInternationalCooperationAct(JBICAct),whichpromulgatedandcameintoeffectonMay2,2011.

Profile of JBIC 2. Pro

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Operational PrinciplesJBIC,asapolicy-basedfinancialinstitutionandinaccordancewiththefollowingprinciples,conductsspeedyandwell-focusedoperationsbasedonpolicyneedsinresponsetoeconomicandfinancialsituationsinJapanandabroad.

1. Supplementing the financial transactions implemented by private-sector financial institutionsToeffectivelyperformthe functions required forpolicy-basedfinancing, JBICshall takeaccountofsituationswhereprivate-sectorfinancialinstitutionsareplacedintheirinternationalfinanceactivitiesandsupplementtheiroperations.

2. Ensuring financial soundness and certainty of repaymentPursuanttotheJBICAct,JBICshallmakeeffortstomaintainthefinancialsoundnessofitsoperations,andwhenmakingfinancialdecisions,toconductadequatescreeningregardingtheoutlookfortherecoveryoffunds.

3. Maintaining and improving international creditworthiness and confidenceInordertoconductadequateoperationsandeffectiveoverseasfundingoperations,JBICshallmaintainandimprovetheinternationalcreditworthinessandconfidencegainedbyJBICovertheyears.

4. Conducting business operations by drawing on its expertise and initiativesJBICshallconductoperationsbydrawingonitsownexpertiseandinitiativesoninternationalfinance.

Actconsistentlyinthepublicinterest.ContributetoJapanandtheinternationalcommunitybypursuingourMission. Prioritizeclientsatisfaction.Deliberate,decideandactfromtheclient'sperspective. Acceptresponsibilityasaprofessional.Performeverytaskbasedonyourowninitiative. Undertakechallengesdaringly.Createnewvaluewithoutfearoffailure. Workquicklyandcost-effectively.Enhanceyourworkqualitywithaneyetoefficiency. Focusonteamwork.Shareunifiedobjectiveswithyourcolleaguestoachievesignificantsuccesses. Maintainhighethicalstandardsandalaw-abidingspirit.ObserveourmoralcodeasaJBICmemberatalltimes.

JBIC Code of Conduct

December1950

March1961

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Realizingprojectsstrategicallywithoriginalvalueadded,whilebeingdeeplyinvolvedintheprojectformulationstage,therebycontributingtoeconomicgrowthinJapanandtheworld

Realizing sophisticated riskman-agementaswellasmaintainingandstrengtheningJBIC’sfinancialpositioninresponsetoincreasinglyhighrisk,long-termandlarge-scaleprojects

Identifyingpreciseneedsof Japa-nesefirmsandseekingtostrengthen“speedwithflexibility,” “expertise”and“negotiatingpower”toexecuterequisitepolicies

JBIC’s Mission

Positioned at the crossroads of global business opportunities, JBIC is opening new venues to the future for the Japanese and global economy.

Corporate Philosophy

Basic Principles of the Medium-Term Business Plan

Promoting overseas development and acquisition of resources

important for Japan

Maintaining and improving the international competitiveness of

Japanese industries

Promoting overseas business for preserving the global environment

Preventing disruptions to international financial order or to take appropriate measures with respect to damages caused by

such disruption

Contributing to the sound development of Japan and the international economic community

Hands-on PolicyPioneeringnewvaluebyparticipatingattheforefrontofoverseasprojectdevel-opment,andbyengagingproactivelyinprojectsfromtheearlystages

Customer‐1st ApproachOfferingcustomersone‐of‐a‐kindso-lutionsbyadoptingtheirperspectivesand integratingtheirviews intopolicydevelopment

Forward‐looking ActionContributingtothesustainabledevelopmentofJapanandtheworldasawholebydeploy-inghighlyprofessionalskills,withaviewtorealizingasecureandaffluentfuturesociety.

Operations

FinancesOrganization

JBIC’s Medium-Term Business Plan (FY2012-2014)3·

JBIC’s Mission, Corporate Philosophy and the Basic Principles of the Medium-Term Business Plan

Basic Principles, Backdrop and Overview

PlanofOperationalStrategyfor6ThematicAreasandBasicPrinciplesto8BasicStrategies,basedonfollowingJBICmissionandpolicy;1)Realizingprojectsstrategicallywithoriginalvalueadded,whilebeingdeeplyinvolvedintheprojectformulationstage,therebycontributingtoeconomicgrowthinJapanandtheworld,2)IdentifyingpreciseneedsofJapanesefirmsandseekingtostrengthen“speedwithflexibility,”“expertise”and“negotiatingpower”toexecuterequisitepolicies,3)Realizingsophisticated riskmanagementaswellasmaintainingandstrengtheningJBIC’sfinancialpositioninresponsetoincreas-inglyhighrisk,long-termandlarge-scaleprojects.

JBIC’scurrentMedium-TermBusinessPlan(FY2012-2014)aimstopromoteefficientandresults-orientedbusinessoperationsin linewith the Japanesegovernment’spoliciesand toac-complishproperaccountability.Tothisend,itexplicatedhighprioritybusinessandmanagement issues tobeaddressedbyJBICoverthemediumterm,andsetforthstrategiesandactionplanstotackletheseissues.JBICalsosetstheAnnualBusinessPlanforeachfiscalyeartosetspecifictargetsJBICshouldstrivetopursuethisyearwiththeactionplanssetintheMedium-TermBusinessPlan. JBICsetsthebasicprinciplesoftheMedium-TermBusiness

Profile of JBIC 3. JBIC

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Overview of the Medium-Term Business Plan FY2012-2014

Basic Principles (on Operations) and Their Backdrop


Realizing sophisticated riskman-agementaswellasmaintainingandstrengtheningJBIC’sfinancialpositioninresponsetoincreasinglyhighrisk,long-termandlarge-scaleprojects

Identifyingpreciseneedsof Japa-nesefirmsandseekingtostrengthen“speedwithflexibility,” “expertise”and“negotiatingpower”toexecuterequisitepolicies

Operations


Basic Principles

Operational Strategy for Each Thematic Area (6 Issues) Basic Strategies (8 Issues)

1 Supporting development and acquisition of overseas resources based on Japan’s natural resources policies

2 Supporting steadfastly the area of preserving the global environment

3 Supporting overseas development of infrastructure projects

4 Enhancing support for mid-tier enterprises and SMEs

5 Supporting strategic overseas business activities of Japanese firms

6 Preventing disruptions to financial order in the international economy or counteracting their adverse impact

7 Partnership with private financial institutions (Devotion to complementing private business operations)

8 Effective use of a variety of tools such as equity investment

9 Wielding negotiating power with external counterparties by leveraging JBIC’s status as a government-owned institution

10 Conducting speedy, flexible and efficient operations

11 Efforts to strengthen expertise in the organization

12 Self-disciplined corporate management

13 Managing risks commensurate with risk exposure of strategic operations

14 Maintaining appropriate profit levels and a stable fiscal position

Finances

Operations

Organization


OperationsBasic Principles

Areaswhereactiveeffortsshouldbemadegoingforward Areaswhereeffortshavebeenmadetodate

Projectsupervision

Offering financing

Loanstructuring

Awardedconcession;orders

Competitivebidding

Studies for project feasibility

Dialogue with host country government

Consultation with potential Japanese project operations

Proactive involvement from the early stages of project formulation

Provide financing based on the business plan of the project operator

JBIC’sEfforts

Supporting standardization, etc.

Support financings

Policy dialogueBeing involved in

project formulation

Collecting Information Top sales

Supporting the formation of

consortiums

GovernmentEfforts:Examples

What is expected of the government for the overseas business development of infrastructure projects?


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IdentifyingpreciseneedsofJapanesefirmsandseekingtostrengthen“speedwithflex-ibility,”“expertise”and“negotiatingpower”toexecuterequisitepolicies

RealizingsophisticatedriskmanagementaswellasmaintainingandstrengtheningJBIC’sfinancialpositioninresponsetoincreasinglyhighrisk,long-termandlarge-scaleprojects

SetoutprinciplesguidingJBICoperationsoverthemediumtermtoeffectivelyexecutethemissionmandatedonJBIC,givenitsstatusasapolicy-basedfinancinginstitution.

DesignatestrategicissuesnecessarytoconductoperationsinaccordancewiththeBasicPrinciples.TheseconsistoftheBasicStrategies,whichsetoutmattersconcerningoperations,organizationandfinances,andOperationalStrate-giesforThematicAreas,whichsetoutanoperationalstrategyforeachthematicarea.

AssignedoverthemediumtermforeachoftheKeyStrategies.

Evaluatetheextenttowhichtheobjectiveofeachactionplanhasbeenachievedaswellasmonitorandevaluatetheprogressbeingmadeforeachactionplan.

Basic Principles

Key Strategies

Agendas and Action Plans

Performance Indicators

Indicator Definition Initial Assignment End Period Evaluation

QuantitativeIndicators

Setinitiallyquantitativeobjectivesfortheendoftheplannedyearandevaluatetheextenttowhichtheyareachievedattheendoftheplannedperiod.

Setquantitativeobjectives.Tabulatetheactuallyachievedfiguresandeval-uatethemquantitatively.*

MonitoringIndicators

Addupperformancefiguresattheendoftheplannedperiodandmonitortheirchronologicalchanges.

Tabulatetheactuallyachievedfiguresandmonitorthem.

QualitativeIndicators

Setinitiallyexemplifiedqualitativeobjectivesfortheendoftheplannedperiodandevaluatetheresultsactuallyachievedattheendoftheplannedperiod.

Setexemplifiedqualitativeobjectives.

Tabulateactuallyachievedresultsandevaluatethemqualitatively.

MilestoneIndicators

Forissuesthatrequiresteadyprogressinactionovertheme-diumtolongterm(about3years),setinitiallyconcreteactions(milestones**)totakeeachyearandevaluatetheextenttowhichtheyachievethemilestone(ifnecessary,amilestonemaybemodifiedatthebeginningofthenextyear).

Setinitiallyintheplanned3-yearperiodmilestones**(foreachyear).Reviewattheinitialpointinthesubsequentyears.

Evaluatetheresultsbasedonthealreadysetmilestones.*

*QuantitativeMilestoneindicatorsmayalsobeevaluatedfromaqualitativeaspect.**Quantitativefiguresmaybeincorporatedinmilestones.

Basic Principle

Basic Principle

Functions required for organization and finances

Risk-assuming capacity

Expertise

Sustaining credibility

Negotiating power

Speed with flexibility

Speed with flexibility Speedy,accuratecollectionofprojectinformation

Expertise Riskanalysisoflong-termprojectsinvolvingsubstantialcost

Makingpoliciesforbiddingandfinancialsupport

Formulatingprojects,winningorders,constructionandoperationinpublic-privatepartnerships

Negotiating power Dialoguewithhostcountrygovernmentsandagenciesbydrawingonoverseasnetworkandexpertise

FormulatingafinancingstructurecapableforJapantoprovidesupport

Sustaining credibility Solidfinancialpositioncapableofsupportinglargefinancialsupport

InformationdisclosureandIRactivitiesbasedoninternationalrules

Risk-assuming capacity Offeringcompetitivefinancingterms

Basic Principles (on Organization and Finances) and Their Backdrop


OperationsBasic Principle


TheMedium-TermBusinessPlancontainsthefollowingcontent.

TherearefourtypesofperformanceindicatorsusedintheMedium-TermBusinessPlanasshownbelow.ObjectivesaresetintheAnnualBusinessPlanforeachfiscalyear,andtheManagementAdvisoryandEvaluationCommitteewillevaluatetheperformanceattheendofeachfiscalyearbyassessingtheextenttowhichtheinitially-setobjectiveshavebeenachieved.


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PDCA Cycle of Medium-Term Business Plan and Annual Business Plan

Supporting Development and Acquisition of Overseas Resources Based on Japan’s Natural Resources Policies

Supporting Steadfastly the Area of Preserving the Global Environment

Supporting Overseas Development of Infrastructure Projects

Agenda and Action Plan Performance Indicator Type

Supportingdevelopment/acquisitionof re-sourcesintheupstreamsectorandastablesupplyof resourcesbasedonthe JapanesegovernmentpolicyoftakingadvantageofyenappreciationandthechangedenvironmentinthewakeoftheGreatEastJapanEarthquake

Numberofloan,guaranteeandinvestmentcommitmentsfortheprojects/transactionscontributingtoacquisitionofinterestsinresources,takingtheirdeliveryandobtainingtheirsalesconcessions

Quantitative

Amongtheabovecommitments,thenumberofthosecontributingtosecuringastablesupplyofenergyresources

Quantitative

Amongtheimmediatelyabovecommitments,theiramountsofoil,naturalgas,copperandironores,andcoalobtainedbynewacquisitionanddelivery

Monitoring

Efforts(includingsupportforrelatedinfrastructure)toreducetheprocurementcostofnaturalgasforJapan

Qualitative


Realizingsteadfastlysuchenvironmentalproj-ectsasrenewableenergy,energyefficiencyim-provementandhighlyefficientpowergeneration

Numberof loan,guaranteeand investmentcommitments forsuchenvironmentalprojectsas renewableenergy,energyefficiency improvementandhighlyefficientpowergeneration

Quantitative

Projectedreductions ingreenhousegasemissions innewprojects towhich loan,guaranteeandinvestmentcommitmentsweremade

Monitoring

Agenda and Action Plan Performance Indicator TypeActivelysupportingoverseasdevelopmentofinfrastructureprojectsbyJapanesefirms

Numberofloan,guaranteeandinvestmentcommitmentssupportingoverseasdevelop-mentofinfrastructureprojects

Quantitative

Strengtheningeffortstosupporttheformulationofhighlystrategicprojects

Implementingsupportfortheformulationofhighlystrategicprojects Qualitative

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Medium-Term Business Plan

(Plan)

Annual Business Plan

(Plan)

Implementation,Monitoring

(Do)

Evaluation of the Medium-Term

Business Plan(Check)

Evaluation(Check)

Feedback(Action)

Feedback(Action)

PDCA Cycle forAnnual Business

Plan

PDCA Cycle forMedium-Term Business Plan

(3 years)

JBICiscommittedtoperformingitsmissionandrolesappropriatelyasapolicy-basedfinancinginstitutionbyimplementingthePDCAcycleintheMedium-TermBusinessPlanandtheAnnualBusinessPlan.

Strategies, Agendas (Action Plans) and Performance Indicators

Theagendas(actionplans)andperformanceindicatorsfortheOperationalStrategiesforEachThematicAreas(sixstrategies)andBasicStrategies(eightstrategies)areasbelow.

Operational Strategy for Each Thematic Area


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Enhancing Support for Mid-Tier Enterprises and SMEs


PressingforwardeffortsforactivesupportNumberofloan,guaranteeandinvestmentcommitmentsformid-tierenterprisesandSMEs Quantitative

Numberofmid-tierenterprisesandSMEssupportedbytheabovecommitments Monitoring

Increaseopportunitiestodisseminateinforma-tionsuchasseminarsandconsultingsessions

Numberofseminarsandconsultingsessionsorganizedformid-tierenterprisesandSMEs Quantitative

Supporting Strategic Overseas Business Activities of Japanese Firms


SupportingJapanesefirms’strategytocaptureoverseasmarketsharesandthemaintenanceandstrengtheningoftheirsupplychains

Numberof loan,guaranteeand investmentcommitments foroverseas investmentprojectsbyJapanesefirmsorprojectsforsupportingassociatedoperationswithsuchprojects(Showbreakdownbydevelopedcountryformonitoringpurposes)

Quantitative

Numberofloan,guaranteeandinvestmentcommitmentsforexporttransactionsbyJapanesefirms(Showbreakdownbydevelopedcountryformonitoringpurposes)

Quantitative

SupportingM&Aactivitiesbasedonthegov-ernmentpolicyof takingadvantageofyenappreciation

Numberofloan,guaranteeandinvestmentcommitmentsforM&Adeals Quantitative

ThetotalamountofM&Adealsabove Monitoring

Preventing Disruptions to Financial Order in the International Economy or Counteracting Their Adverse Impact


Preventingdisruptions tofinancialorder inthe internationaleconomyorcounteractingtheiradverse impactwithspeed,flexibilityandeffectiveness

Numberofcountriesforwhichmonitoringwasdonewithrespecttomacroeconomicconditions

Quantitative

Numberofloan,guaranteeandinvestmentcommitmentsforpreventingdisruptionstofinancialorderintheinternationaleconomyorcounteractingtheiradverseimpact

Monitoring

Partnership with Private Financial Institutions (Devotion to Complementing Private Business Operations)


Pressing forwardstrategicpartnershipswithprivatefinancialinstitutions,includingappropri-atecofinancing

Theshareofcofinancingcommitmentsinthenumberofloancommitments(excludingmatching*loansandloanstobanks)

Quantitative

Privatesectorfundsmobilizedintheprojects/transactionstowhichJBICmadeloan,guaranteeandinvestmentcommitments

Monitoring

NumberofprivatebankswithwhichJBICenteredintoapartnership Quantitative

*Applicationofthesamecredittermsofferedbytheparticipatingornon-participatingcountriesundertheOECDArrangementonGuidelinesforOfficiallySupportedExportCredits

Effective Use of a Variety of Tools Such as Equity Investment

Agenda and Action Plan Performance Indicator TypeActiveuseofequityinvestment Numberofinvestmentcommitmentsforequityinvestment(participation)projects Quantitative

Effectiveuseofguaranteesandotherfinancialinstruments

Recordofeffectiveuseofguaranteesandotherfinancialinstruments Qualitative

Pressingforwardeffortstofinancewithlocalcurrencies

Numberoflocalcurrencieswithwhichloan,guaranteeandinvestmentcommitmentsweremade(outstanding)

Monitoring

PressingforwardPFandSF*projects NumberofcommitmentstoPFandSFprojects Quantitative

*Projectfinanceandstructuredfinance

Wielding Negotiating Power with External Counterparties by Leveraging JBIC’s Status as a Government-owned Institution

Agenda and Action Plan Performance Indicator TypeStrengtheningrelationswith foreigngovern-mentsandgovernmentagencies, increasingcollaborationwithmultilateralinstitutionsandforeignofficialinstitutions,andwieldingJBIC’snegotiatingpowerwithexternalcounterparties

Effortstostrengthenrelationswithmajorcountries(theirgovernmentsandgovern-mentagencies)

Qualitative

CaseswhereJBICwieldeditsnegotiatingpoweramongthenumberofloan,guaranteeandinvestmentcommitmentswithwhichcross-borderloanswereextended

Quantitative

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Basic Strategies Operations


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Basic Strategies

Basic Strategies

Conducting Speedy, Flexible and Efficient Operations


Enhancingstrategicandflexibleallocationofgivenmanagementresources

Customersatisfactionsurvey(levelofsatisfactionwiththetimetakenforapprovingloansandotherfinancialinstruments)

Quantitative

Employeeconsciousnesssurvey(awarenessofequalizingworkloadamongemployers) Monitoring

Efficientcorporatemanagementwithworkflowimprovementandothermeans

ProgressinkeyBPR*measures Milestone

Averageovertimeworkhoursperemployee Monitoring

UpgradingITinfrastructureProgressinITinvestment,includingimprovementinthecommoninfrastructureandtheestablishmentofabackupcenter

Milestone

*BusinessProcessRe-engineering

Efforts to strengthen expertise in the organization


Recruitingandfosteringhumanresourcesca-pableofprovidinghighvalue-addedservices

Numberoftrainingsessionsforprovidingadvancedfinancingandappraisalmethods(includingthenumberofparticipantsformonitoringpurposes)

Quantitative

Thepercentageofthestaffwhohaveexperienceinanoverseaspostingorwhowereloanedtooverseasinstitutions(duringthepast5years)

Quantitative

Strengtheningthestrategiccollectionanddis-seminationofrequisiteinformation

Domesticandforeignentitieswithwhichanexchangeofviewscontinuestotakeplacethroughoperationalcooperationorassignment,excludingclients(cumulativetotal)

Quantitative

Self-disciplined corporate management


Corporatemanagementthatmeetstheneedsofclients

Customersatisfactionsurvey(overalllevelofsatisfaction) Quantitative

Customersatisfactionsurvey(levelofsatisfactiononthetimetakenforloanapproval) Quantitative

TheaverageappraisalperiodforPFprojects Monitoring

Promotingdisclosureandpublic relationsactivity

NumberoftimestheJBICwebsiteandothermediumsareaccessed Monitoring

Mainstreamingcomplianceefforts Numberofinternaltrainingsessionsoncompliance Quantitative

Managing Risks Commensurate with Risk Exposure of Strategic Operations

Agenda and Action Plan Performance Indicator TypeAmore improvedandadvancedframeworkforappropriatelyassessingandmanagingma-jorrisksassociatedwithconductingstrategicoperations

LoanassetstobedisclosedundertheFinancialRevitalizationAct Monitoring

Theratioofprovisionsmadefortheaboveassets Monitoring

NumberofmeetingsheldbytheRiskAdvisoryCommittee Monitoring

Maintaining appropriate profit levels and a stable fiscal position


SecuringappropriatelevelsofprofitsandlossesOverallprofitmargin* Monitoring

Theratioofadministrativecost Monitoring

Maintainingfinancialstability CapitalAdequacyRatio(BISbasis) Monitoring

PreparationforInternationalAccountingStandard

StateofexaminationwithrespecttointroducingIFRS Milestone

*YieldsonInterest-earningAssets-CostsonInterest-bearingLiabilities

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Organization

Finances

TheperformancewillbeevaluatedattheendofeachtermbytheManagementAdvisoryandEvaluationCommittee,whichconsistsofexternalexpertsandoutsidedirectors,andtheresultwillbepublished.


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Outline of Operations in FY20124·

Operational Highlights

projectsfordevelopingunconventionalenergyresourcesinNorthAmerica,—coal-bedmethane(CBM)1andshalegasinCanada,shaleoilandtightoil2intheU.S.—liquefiednaturalgas(LNG)projectsinAustraliaandPapuaNewGuinea,andcoalmineprojectsinAustraliaandCanada.JBICalsoprovidedloanstosupporttheimportofLNGandoil. Inthemineralresourcessector,JBICprovidedloansforthedevelopmentof,andacquisitionofinterestsin,anironoremineinAustraliaandacoppermineinChile.Regardingraremetals,JBICsupportedanickel/cobaltmixedsulfideproductionprojectinthePhilippines,amolybdenumsmeltingprojectinChile,andaniobiumdevelopmentandproductionprojectinBrazil.

International Infrastructure SectorIn the power sector, JBIC supported a gas-fired combinedcycle power plant project in Thailand—in which Japanesecompaniesparticipatedasanexporterorprojectowner—aswellascoal-firedpowerplantprojectsinMoroccoandChile.JBICalsosupportedtheexportoftransmissionandsubstationequipmenttoIndonesia.JBIC’ssupportinthetransportationsector covered an intercity express railway project in theU.K.—in which Japanese companies participated—and theexportofrailwaycarstoVenezuela.Inthetelecommunica-tionssector,supportwasprovidedfortheexportofaportionofthesubmarineopticalfibercablesystemthatwillconnectSingaporewithJapan.Inthewatersector,JBICsupportedboththeexportofequipment foraseawaterdesalinationplantinSingaporeandaprojectforproducingandsellingwatertreatmentfacilitiesinChina. Inotheractivities,JBICsubscribedtothenewsharesissuedbytheDelhiMumbaiIndustrialCorridorDevelopmentCorpo-rationLimited(DMICDC)inIndia,thecoreprojectexecuting

ThetotalamountofcommitmentsJBICmadeduringFY2012inloans,guarantees,andequityparticipationswas¥4,240.9billion,anall-timehigh. JBIC’s major operations in each sector for FY2012 areshownbelow:

Energy and Natural Resources SectorJBICprovidedloansforthedevelopmentandacquisitionofinterests for a number of projects in the energy sector inwhich Japanese companies were involved. These include

Commitments by Purpose of Financing (FY2012.Unit:billionsofyen)

Export Loans126.6(3%)

Import Loans304.3(7%)

Overseas Investment Loans3,138.5(74%)

Guarantees303.2(7%)

Equity Participations74.3(2%)

Bridge Loans83.2(2%)

Untied Loans210.5(5%)

Commitments by Region (FY2012.Unit:billionsofyen)

¥4,240.9billion

Europe660.6(16%)

The Middle East305.9 (7%)

Africa84.3 (2%)

Asia513.6(12%)

Others154.2(4%) Latin America and

the Caribbean805.5(19%)

¥4,240.9billion

North America

710.8(17%)

Oceania1,005.7 (24%)

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

FY1955

FY1970

FY1985

FY2000

FY2012

61.3 billions of yen



1,204.7 billions of yen

4,240.9 billions of yen

174.0(14%)

356.4(40%)

31.1(6%)

7.4(1%)

14.2(2%)

60.3(98%)

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

304.3(7%)

321.4(27%)

233.5(26%)

402.8(74%)

3,138.5(74%)

523.7(43%)

182.4(21%)

33.3(6%)

303.2(7%)

118.3(10%)

67.4(6%)

101.4(11%)

68.5(13%)

1.0(2%)

74.3 (2%)

Guarantees 0.5 (0%)

210.5 (5%)

83.2 (2%)126.6 (3%)

Profile of JBIC 4. O

utline of O

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ns in FY2012

1

1. Coal-bedmethane(CBM) ismethaneextractedfromandnearcoal-beds. It isdrawingattentionalongwithshalegasas“unconventional”naturalgas.

2. Unlikeconventionaloilthatisextractedfromwellsnaturallystoredinthestratum,tightoilexistswidelythroughtightstratasuchassandstone,limestoneandshaleformations,andthemethodsusedforitsextractionaresimilartothoseusedinshaleoilandgasextraction(horizontaldrilling,hydraulicfracturing,etc.).

12



utline of O

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ns in FY2012

1

agency responsible for advancementof theDelhiMumbaiIndustrialCorridor(DMIC)Project3.JBICalsodecidedtoinvestinthreeinfrastructurefunds,whichtargetNorthAmericaandEurope,SoutheastAsia,andIndia,respectively.

Supporting Japanese Companies in Exportation of Their Products, and Manufacturing and Sales Business Abroad

JBICsupportedtheexportofmachineryandequipment in-cluding:oilrefinery-relatedequipmenttoKazakhstan;textilemanufacturingmachinerytoAngola;apickingline-tandemcoldmillandpetrochemicalplant-relatedequipmenttoIndia;andequipmentforanethyleneproductionplantinTurkey,aswellasequipmentneededfortheinfrastructurementionedabove.JBICalsosupportedtheexportofshipsincluding:bulkcarrierstoTurkey,theBahamas,andHongKong;aswellasRamformvesselstotheBahamas.Inaddition,JBICextendedcreditlines,designedtosupportJapaneseexports,tolocalfinancialinstitu-tionsinMalaysia,India,Turkey,Russia,andSouthAfrica. Inadditiontosuchexportassistance,JBICalsosupportedJapanese companies in manufacturing and sales of theirproducts overseas in a wide range of industries, includingautomobiles,electricalequipment,electronics,machinery,andmetals.JBICalsoassistedJapanesecompaniesinmergingandacquiringforeignfirmsinvariousareas,includingcommercialmotors,air-conditioners,food,medicalequipment,insurance,andaircraftleasing.

Supporting Overseas Business Operations of Japanese SMEs

JBICprovided loans for JapaneseSMEstoassist themwiththeirbusinessoperationsoverseas,particularly inAsia. JBICalsoextendedinvestmentcreditlines,whicharedesignedtosupportJapaneseSMEsinexpandingtheirbusinessoperationsoverseas,tothreeJapanesebanks:TheSenshuIkedaBank,Ltd;ResonaBank,Limited;andSumitomoMitsuiBankingCorpora-tion.Furthermore,JBICacquiredanequitystakeinaprivate

equityfundthatisaimedatsupportingJapanesecompaniesinexpandingtheirbusinessoperationsintotheASEANregion,managedbyaSingaporesubsidiaryofMizuhoBank,Ltd.

Promoting Renewable Energy and Conserving the Global Environment

JBICsupportedarenewableenergypowergenerationprojectinCanadainwhichaJapanesecompanyparticipatedbywayofprojectfinancing4denominatedinCanadiandollars.InBrazil,JBICsupportedaco-generationprojectatarefineryandaflaringgasreductionprojectatmultipleoffshoreoilconcessionstoreducegreenhousegas(GHG)emissions.Moreover,JBICex-tendedexportcreditlines5toseverallocalfinancialinstitutionsinIndiaandTurkeytofinancetheexportfromJapanofrenew-ableenergy-relatedequipmentandenergy-savingequipment.

Preventing Disruptions to International Financial Order or Taking Appropriate Measures with Respect to Damages Caused by Such Disruptions

Inordertoaddressthepotentialadverseimpactsofcontin-uedinternationalfinancialmarketvolatilityontheIndonesianeconomy,JBICofferedaContingentFacilitytotheGovernmentofIndonesiaasaprecautionarymeasuretoenhanceitscrisispreparedness,inparallelfinancingwiththeWorldBank,theAsianDevelopmentBank(ADB),andtheGovernmentofAus-tralia.JBICalsoextendedbridgeloanstotheGovernmentofMyanmartoclearthearrearsofpastloansfromtheADBandtheInternationalDevelopmentAssociation(IDA).Theobjectivewastohelpthecountryreturntotheinternationalfinancialmarket.

3. TheDelhiMumbaiIndustrialCorridor(DMIC)ProjectisaJapan-Indiajointdevelop-mentprojectwhichaimstobuildafreightraillinetoconnectDelhiandMumbaianddevelopinfrastructurealongthelinesuchasindustrialestates,logisticsparks,powerplants,roads,ports,residentialareasandcommercialfacilitiesmainlybymobilizingprivateinvestments.

4. Projectfinanceisafinancingstructurethatreliesprimarilyonthecashflowgener-atedbytheprojectforrepayment.Itisusedforfinancinglargeprojectsinsuchsectorsaspowergenerationandoil,gasorothernaturalresourcedevelopment.

5. AnexportcreditlineisaformofexportcreditinwhichJBICcommitstothemaximumamountofcredittobeextendedtoforeignbanksorotherentitiestofinanceexportsofmachinery,equipmentandservicesfromJapan.

Planned and Actual Lending and Investments (Unit:billionsofyen)

FY2009 FY2010 FY2011 FY2012Plan Actual Plan Actual Plan Actual Plan Actual

ExportLoans 108.0 43.8 113.0 73.6 120.0 73.9 200.0 143.1

ImportLoansandOverseasInvestmentLoans

1,010.0 2,382.8 1,080.0 1,113.9 1,113.5 913.0 1,879.0 2,307.4

UntiedLoans 82.0 186.7 207.0 85.4 100.0 103.2 100.0 132.0

EquityParticipations 20.0 13.6 45.5 26.8 200.0 7.3 100.0 17.2

Securitization 30.0 ─ 30.0 19.0 19.0 ─ 19.0 ─

Total 1,250.0 2,627.0 1,475.5 1,318.8 1,552.5 1,097.6 2,298.0 2,599.8

Operational Results

TotaldisbursementsmadebyJBICinFY2012stoodat¥2,599.8billion.

13


Statement of Operations(April1,2012–March31,2013;millionsofyen)

Amount

Ordinary Income 217,291

InterestIncome 167,947

FeesandCommissions 23,288

OtherOrdinaryIncome 9,171

ReceiptsfromtheNationalBudget 256

OtherIncome 16,627

Ordinary Expenses 153,708

InterestExpenses 119,510

FeesandCommissionsPayments 1,427

OtherOrdinaryExpenses 597

GeneralandAdministrativeExpenses 17,551

OtherExpenses 14,620

Ordinary Profit 63,583

Extraordinary Income 1

Net Income 63,585

Balance Sheet(AsofMarch31,2013;millionsofyen)

Amount Amount

Assets Liabilities and Net Assets

CashandDuefromBanks 837,986 BorrowedMoney 7,234,598

ReceivablesunderResaleAgreementsNote5

284,902 BondsPayableNote7 2,215,962

SecuritiesNote4 122,181 OtherLiabilities 216,171

LoansandBillsDiscountedNote6 10,555,128 ProvisionforBonuses 445

OtherAssets 338,679 ProvisionforDirectors’Bonuses 5

Property,PlantandEquipmentNote8

28,206 ProvisionforRetirementBenefits 15,595

IntangibleAssets 1,352 ProvisionforDirectors’RetirementBenefits

29

Customers’LiabilitiesforAcceptancesandGuarantees

2,400,699 AcceptancesandGuarantees 2,400,699

AllowanceforLoanLosses (138,891) Total Liabilities 12,083,506

CapitalStock 1,360,000

RetainedEarnings 851,685

TotalShareholders'Equity 2,211,685

ValuationDifferenceonAvailable-for-saleSecurities

2,221

DeferredGainsorLossesonHedges

132,831

ValuationandTranslationAdjustments

135,053

Total Net Assets 2,346,738

Total Assets 14,430,245 Total Liabilities and Net Assets 14,430,245

*Seepages102–104fordetailsofNotes4to8

The First Term for the New JBIC (FY2012)


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1

Financial Results

attributabletoJBIC’sfinancialsupportinrelationtooverseasM&AactivitiesbyJapanesecompaniesandtooverseasdevel-opmentandacquisitionofstrategicallyimportantresources.Interestexpensesamountedto¥119.5billion,withordinaryexpensesregistering¥153.7billion.Asaresult,ordinaryprofitstoodat¥63.5billion.Aftertakingaccountofextraordinaryincome,netearningsforFY2012amountedto¥63.5billion.

(2) Balance SheetTotalassetsincreasedto¥14,430.2billionfromFY2011.Thiswas largely attributable to an increase in loans in foreigncurrencies. Total liabilities decreased to ¥12,083.5 billionfromFY2011. Thiswasattributable to two factors.One isanincreaseof¥1,979.1billioninborrowedmoneyfromthebeginningof the year to¥7,234.5billiondue in largeparttonewborrowingsfromtheForeignExchangeFundSpecialAccount.Theotherfactorisadecreaseof¥162.7billioninbondspayableduring thesameperiod to¥2,215.9billion,mainlybecauseredemptionsexceeded issuance.Totalnetassetsreached¥2,346.7billion,whichincluded¥63.3billioninnetearningsand¥69.0billionincapitalcontributions,bothintheAccountforJBICOperations.

Principles of Accounting(1) Separation of AccountJBICconductedJBICoperationsandFinancialOperationsforFacilitatingRealignmentofUnitedStatesForcesinJapan(USFJ)on separateaccountspursuant toArticle18.2of theUSFJRealignmentSpecialMeasuresAct.Thispracticewasdiscon-tinuedduringFY2012.( See “Discontinuation of the Financial

Operations for Facilitating Realignment of USFJ” on page 16.)

(2) Preparation of Financial StatementsPursuanttotheCompaniesActandArticle26oftheJapanBankforInternationalCooperationAct(JBICAct), JBICpre-paresfinancialstatementsandsubmitsthemtotheMinisterofFinance.The reporton thefinal settlementofaccountsissubmittedtotheGovernmentofJapan,togetherwiththefinancialstatements,and,afterexaminationbytheBoardofAuditors,totheDiet.

Statement of Operations and Balance Sheet(1) Statement of OperationsInFY2012,interestincomeamountedto¥167.9billion,withor-dinaryincomereaching¥217.2billion.Thesefiguresarelargely

14


Funding Sources: Actual and Planned(Unit:billionsofyen)

FY2009 Actual FY2010 Actual FY2011 Actual FY2012 Actual FY2013 Planned

CapitalContributionfromtheGeneralAccount ─ ─ ─ ─ ─

CapitalContributionfromFILPIndustrialInvestment 20.0 35.5 200.0 69.0 ─

BorrowingfromFILPFiscalLoan 906.6 690.9 201.0 400.0 600.0

BorrowingfromForeignExchangeFundSpecialAccount 987.4 323.5 230.4 1,744.9 1,223.1

Government-guaranteedForeignBonds* 626.3 463.3 423.2 205.3 660.0

FILPAgencyBonds* 70.0 50.0 50.0 ─ 20.0

OtherSourcesofFunds,IncludingRepayments 16.7 (244.4) (6.9) 180.6 (192.1)

Total 2,627.0 1,318.8 1,097.6 2,599.8 2,311.0

*Figuresforbondsareindicatedinfacevalue.

Funding Sources

anteedForeignBondissuance,capitalcontributionsfromthegovernment,andborrowingsfromtheForeignExchangeFundSpecialAccountconstitutepartofthenationalbudget(eitherasanitemintheGeneralAccountbudgetortheSpecialAc-countbudget).Therefore,theyaresubmitted,togetherwiththeoperatingbudgetofJBIC,totheDietforapproval.RecentfundingresultsandplansforFY2013areshowninthetablebelow.

JBICfinancesitsoperationsthroughvarioussources,includingborrowingsfromtheFILPFiscalLoan,Government-guaranteedForeignBondissuance,FILPAgencyBondissuance,capitalcontributionsfromthegovernment,andborrowingsfromtheForeignExchangeFundSpecialAccount. As JBICprovides long-termfinancing, itsoperationsarefinanced by long-term funds to match maturities betweenfundingandlendinginstruments. BorrowingsfromtheFILPFiscalLoan,Government-guar-


utline of O

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1

Funding Sources

Financial Market

Japanese and foreign firms, foreign financial institutions, foreign governments and government agencies, multilateral financial institutions

Special Account for Fiscal Investment and Loan Program Fund

Foreign Exchange Fund Special

Account

Loans / Investments

Internal Funds**Repayments, etc.

FILP Agency Bonds

Government-guaranteed

Foreign Bonds

Fiscal Loan Fund Account

Loans

Investment Fund Account

Capital Contribution

Loans

FILP Bonds

15


Government-guaranteed BondsJBICraisespartofitsfundsthroughgovernment-guaranteedbondissuanceininternationalcapitalmarkets.Outstandinggovernment-guaranteedbondsattheendofFY2012amountto¥1,528.0billionatfacevalue,whichaccountsfor16.2%ofthetotaloutstandingborrowingsandbonds. JBICprovidesforeigncurrency loanswhennecessary foreffectivefinanc-ingoperations.Financial resources fundedbygovernment-guaranteedbond issuance in international capitalmarketsareappliedtosuchfinancialoperations. AsJapanesecompanieshavebeenrecentlysteppingupoverseasbusinessoperations,therearerisingexpectationsforJBICtoprovidelocalcurrency-denominatedfinancialsup-port.Tomeetsuchfinancialneedsappropriately,JBICissuedgovernment-guaranteedforeignbondsinCanadiandollarsinMarch2013. In the FY2013budget, JBICplans to issue government-guaranteedbondsinthetotalamountofupto¥660.0billion. JBIC’s government-guaranteed bonds receive the sameratingsastheGovernmentofJapanfromtheratingagencies(Aa3fromMoody’sandAA-fromStandard&Poor’sasoftheendofJuly2013).SincetheyaretreatedasassetsforwhichtheBankforInternationalSettlements(BIS)assignszeroriskweightincalculatingthecapitaladequacyratiofordepositoryinstitutions,thesebondsprovideaqualityinvestmentoppor-tunityforinvestorsininternationalcapitalmarkets.

FILP Agency BondsIncompliancewiththegovernmentpolicytoreformtheFILP,JBIChasissuedbondswithoutgovernmentguarantee(FILPagencybonds)inthedomesticcapitalmarketsinceFY2001,therebyraisingfundsbasedonitsowncreditworthiness.IntheFY2013budget, JBICplans to issueFILPagencybondstotalingupto¥20.0billion. JBIC’sFILPagencybondsreceivethesameratingsastheGovernmentofJapan(asoftheendofJuly2013)asshownbelow.TheyaretreatedasassetsforwhichBISassigns10%riskweightincalculatingthecapitaladequacyratiofordeposi-toryfinancialinstitutions.

Rating&InvestmentInformation,Inc(R&I):..........AA+ JapanCreditRatingAgency,Ltd.(JCR):...................AAA Moody’s:.............................................................................Aa3 Standard&Poor’s:..........................................................AA–


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1

Discontinuation of the Financial Operations for Facili-tating Realignment of USFJ

JBICcontinuedtoconductfinancialoperationsforfacilitat-ingrealignmentofUnitedStatesForcesinJapan(USFJ)in thespecialaccount for thispurposeunder theUSFJRealignmentSpecialMeasuresAct.TheseoperationsweredesignedtofinanceprojectsnecessarytofacilitatetherelocationofUSFJ to theU.S.withequity investments,loans,andotherfacilities. However, JBICdecidedtodiscontinuetheseopera-tionsfollowingtheannouncementoftheJointStatementof the Japan-U.S. Security Consultative Committee onApril27,2012. In thisstatement, thetwogovernmentsaffirmedthatJapan’sfinancialcommitmentistobethedirectcashcontributionasstipulatedinArticle1oftheAgreementbetweentheGovernmentof JapanandtheGovernmentoftheUnitedStatesofAmericaConcerningtheImplementationoftheRelocationofIIIMarineExpe-ditionary Force Personnel and Their Dependents fromOkinawatoGuam.TheyalsoaffirmedthatotherformsofJapanesefinancialsupporttoGuamrelocationwouldnotbeutilized.WhiletakingintoaccountthewishesoftheGovernmentofJapan,JBICdiscontinueditsfinancialoperationsforfacilitatingrealignmentofUSFJbytheendofSeptember2012.BytheendofNovember2012,JBICeliminatedthespecialaccountfortheseoperationsafterturningtheresidualassetsovertothenationaltreasury. DuringFY2012,nolendingwasmadeinthisaccount.

16


2The Environment Surrounding JBIC and

Its Challenges

1 Energy, Natural Resources and Environment Finance Group 18

2 Infrastructure Finance Group 22

3 Industry Finance Group 26

17


◉ Oil ● Natural Gas■ Coal◆ Iron Ore▲ Copper✚ Other

Mineral Resources, etc

◉

◉

◉

◉

◉

◉

◉

◉◉

◉

◉◉

●

●

●

●

●

●●●

■●

●

●●

●

●●

●●●

◆◆◆✚

✚✚

✚

✚

✚

◆✚✚✚

✚

✚

✚✚

✚

✚▲

✚

✚

✚✚ ◆

◆◆

▲▲

▲

▲▲

▲

■

■■

■

■

■

■

●

●

✚

●●●

▲

✚✚

●

Frade Oil Field, Brazil

Purchasing oil product from PDVSA, Venezuela

Sakhalin I, Russia

Sakhalin II, Russia

Pagardewa Oil Field, Indonesia

En�eld Oil Field

Advance Payment Loan to ADNOC

Kashagan Field, Kazakhstan

BTC PipelineACG Field,Azerbaijan

Norwegian North Sea Oil Field

British North Sea Oil Field

LNG, Qatar

METOR Methanol, Venezuela

Oil & Gas Field, US

Marcellus Shale Gas, US

Cordova Shale Gas, CanadaMontney Shale Gas, Canada

IGBC Shale Gas, Canada

Coal-Bed Methane, Canada

Curtis LNG

Bayu Undan LNG

PNG LNGTangguh LNG, Indonesia

Kangean Oil & Gas Field, Indonesia

Gas Fields, Malaysia

Tiga LNG, Malaysia

Gorgon LNG

Pluto LNGWheatstone LNG

Cape Lambert Iron Ore Shipping Port

Shark Bay Salt Field

Worsley Bauxite Mine &Alumina Renery

Rasp Zinc &

Lead Mine

Rolleston Mine

Moolarben Mine

Forestation, New Zealand

Tayan Alumina Project, Indonesia Taganito Nickel Project, Philippine

Advance Payment Loan to VINACOMIN, Viet Nam

Assmang Iron, Zinc,Chrome Ore Mine,

South Africa

MOZALAluminum Smelter,

Mozambique

Ambatovy Nickel, Madagascar

Woodchip, Mozambique

Tungsten Mine, Portugal

Kharassan Uranium Mine, Kazakhstan

West Mynkuduk Uranium Mine, Kazakhstan

Neryungri Mine, Russia

Pogo Gold Mine, US

Alouette Aluminium Smelter, Canada

Grande Cache Coal Mine, Canada

Similco Mine, Canada

Drummond Project, Columbia

Bayovar Phosphate Mine, Peru

Cerro Verde Mine, PeruSan Cristobal Zinc Mine, Bolivia

Sierra GordaCopper Mine,

Chile

Promoly Project, ChileEscondida Mine, Chile

Caserones Copper Mine, ChileLos Pelambres Mine, Chile

Esperanza Mine, Chile

AMAZON Alumina Renery / Aluminum Smelter, BrazilForestation, Brazil

CENIBRA Pulp, Brazil

NAMISA Mine, Brazil

MUSA Mine, Brazil

Logistical Support for Iron Ore Transportation, Brazil

Eagle Ford Shale Oil, US

Oil Field, UAE

Woodchip, Indonesia

Prelude FLNG

Ichthys LNG

Roy Hill MineJimblebar Mine

■ Caval Ridge Mine■ Isaac Plains Mine■ Byerwen Mine■ Kestrel Mine■ Minerva Mine■ Oaky Creek / NCA Mine

Boggabri Mine

Stock Acquisition ofAnglo American Sur, Chile

Permian Basin Tight Oil, US

Suska Sukunka Mine, Canada

Energy, Natural Resources and Environment Finance Group1·

Increasingly Intense Scramble for Acquiring ResourcesForJapan,acountryscarcelyendowedwithnaturalresources,itisimperativetosecurestablesuppliesofoverseasenergyandmineralresourcesinordertomaintainandmakeprogressineconomicactivity.JBIChasbeenprovidingfinancialsupporttoJapanesecompaniesindeveloping,acquiringinterestsinandimportingoverseasnaturalresources,therebycontribut-ingtosecuringitsstablesupplytoJapan. Globalcompetitionforacquiringenergyandmineralre-sourcesremainstough,posingachallengetoJapaninobtain-ingstableandaffordableenergyandmineralresources.

Rising Risk on the Demand and Supply SidesGrowingdemand forenergy inemergingmarket countrieshasexertedsignificantimpactsontheglobaldemand-supplybalanceofenergy.Inparticular,energyconsumptionintheAsiaandOceaniaregions,which includesChina, IndiaandSoutheastAsia,showsmuchhighergrowthratesthanotherregions. Crudeoilposesasignificantgeopoliticalriskfactorinviewofthefactthatroughly50%ofitsreservesareconcentratedintheMiddleEast.Japan'sdependenceonthisregionforcrudeoildeclinedatonetime,buthasnowincreasedtomorethan80%ofitsimports.ThisisattributabletorisingdemandforoilinAsiancountries.Asthesecountrieshavechanneledthepreviouslyexportedoiltomeetoildemandintheirdomestic

markets,theiroilexportstoJapanhavedecreased. ThesituationinwhichJapanprocuresliquefiednaturalgas(LNG)hasbeenchangingatafastpaceinrecentyears.Untilabouttheyear2000,JapanhadapredominantshareofglobalLNGtransactions,butitssharehasdiminishedtoroughly30%today.AsChinaandIndiahavebeenrapidlyincreasingimportsofLNG,itisexpectedthatthedemandwouldsharplyclimbinthefuture.InJapan,whichhasfounditverydifficulttosupplyelectricityfromnuclearpowerstationsaftertheGreatEastJapanEarthquake,LNGisincreasingitspresenceasamajorsourceofenergy,asnaturalgasproduceslessgreenhousegas(GHG)emissionsrelativetooil.Inaccordancewiththesitua-tionabove,suppliercountriesarechangingaswell.IndonesiaandMalaysia,bothofwhicharetraditionalsuppliersofLNGtoJapan,havecontinuedtopostremarkablegrowth.ThesetwocountrieshavehadtocutbackLNGexportstoJapanastheyhaveseenadeclineinproductionandasustainedincreaseindomesticdemandfortheresource. Inthemineralresourcesector,demandhasbeengrowinginemergingmarketcountries.Inaddition,oligopolyhassig-nificantlydisturbedthedemand-supplybalance.Forexample,intheironoreindustrythetopthreecompaniesaccountformorethanhalfofworldseabornetradeinironore,andthetopfourcoalcompanieshavecreatedanoligopolyintheworldmarket.There isagrowingneedtocopewith theunevendistributionof individual typesof oreminerals andquality

AsofJuly31,2013

Major Projects Over the Last 10 Years (Amountofloanfornaturalresourceprojects(signed):ApproxUS$74Billion)

2

The Environment Surrounding JBIC

and Its Challenges

1. Energy, N

atural Resources and

Enviro

nment Finance G

roup

18


deteriorationsofthemineralsofresource-richcountries. Inthisway,variousrisksareincreasingbothonthedemandandsupplysides.ThismeansthatJapanesecompanieshaveaneedtodiversifytheiroverseasinvestments.JBICwillconductoperationsbyfocusingmorethaneveronstrengtheningrela-tionswithresource-endowedcountriesandsuppliers.

Efforts for Stable Procurement of Natural GasJBIC,especially,isstrivingtoobtainnaturalgasbydesignatingitasoneofJBIC’stoppriorities.AfterwhathappenedattheFukushimaDai-ichiNuclearPlant,thestablesupplyofelectricpowerhasbecomeanurgentissueforJapanesepeople'slivesandeconomicactivities.Therearerisingexpectationsforthesupportofastableandaffordablesupplyofnaturalgasasamajorsourceofenergyinthepresent. Responding to these expectations, JBIC is actively sup-portingtheacquisitionofinterestsanddevelopmentofLNG-relatedprojectsaswellastheimportofLNG.InFY2012,JBICsupportedtheWheatstoneLNGProjectinAustraliathroughequityparticipationandaloan.JBICalsoofferedprojectfi-nancing1totheIchthysLNGProjectinAustralia,thefirstmajorLNGoperatorshipprojectforaJapanesecompany. Amidthesedevelopments,JBICisalsosupportinganacqui-sitionofinterestsin“unconventional”naturalgas,suchasshalegasandcoal-bedmethane(CBM)2.InFY2012,JBICsupportedthefundingofJapanesecompaniesforacquiringinterestsinshalegasandCBMfieldsinCanadaforthedevelopmentandproductionofnaturalgas.JBICalsofinancedaprojectaimedtoprocureLNGtankersaspartofJBIC’scomprehensivesup-portforthevaluechainofnaturalgas. Furthermore,JBICismakingeffortstostrengthencoopera-tivetieswithnaturalgas-producingcountriesandmajornatu-ralgasdevelopersinordertoencourageJapanesebusinessestodevelopnaturalgasoverseas. In June2011, JBICsignedamemorandumofunderstanding (MOU)withBPMIGAS,agovernmentagencyinIndonesia,overseeingandcontrolingupstreamoilandgasbusinessactivities,forthepurposeofbuildingabusinessmodeltoencouragefurtherexpansionofIndonesia’stotalnaturalgassupplycapacityandtopromotegas-relatedbusinessopportunitiesforJapanesecompanies.DuringFY2012,JBICsignedacooperationagreementsepa-ratelywiththeBGGroup,aBritishgasmajor,andWoodside,Australia'slargestindependentoilandgascompany.

Spreading Risk with DiversificationTo secure a stable supply of resources, it is important todisperseriskswithdiversification. Firstly,geographicaldiversificationneedstobeconsidered.Asdescribedabove,JapanisheavilydependentontheMiddleEast for oil. Thus, it should consider urgently exploringoilsupply sources fromoutside theMiddleEastanddiversifythemwithintheMiddleEastregion.RegardingLNG,JBIChasmade loans to theSakhalin II Project and LNGprojects in

PapuaNewGuineaandelsewhere,therebycontributingtothediversificationof Japan’s LNG supply sources. JBICwillalsoproactivelyengageintheformulationofLNGprojectsinNorthAmerica,Africaandotheruntappedregions. JBIChastakenstepsinthecoalsectoraswell.InMarch2012,JBICprovidedaloanforthethermalcoaldevelopmentprojectinColombiafromwhichJapanhasimportedhardlyanycoal.Furthermore,JBIChasalsodiversifiedthetargetingcountriesbyapproachingMozambiqueandMongolia,whichare expected to potentially become new major suppliers.Inthesecountries,animportantgoalistomeettheirneedswithproposalsthatdrawonJapanesetechnologyandtrackrecords. Secondly, we should make use of “unconventional” re-sourcesthathaveremaineduntappedtodate.Inthisarea,developmentisunderwayforCBMinsuchcountriesasAus-tralia,aswellasshalegasandshaleoilintheUnitedStatesandothercountries.Forshalegas,JBIChasalreadyprovidedloans to projects in the U.S. and Canada. In FY2012, JBICofferedaloantoashaleoilprojectintheU.S. Thirdly, the diversification of production technologyneedstobeconsidered.Inrecentyears,projectsarebeingplannedthattakeadvantageoffloatingLNG(FLNG)technol-ogy3wherebyproducednaturalgasisprocessedintoliquid

AprojectinCanadainwhichaJapanesecompanyparticipatesinacquiringinterestsanddevelopmentofshalegas

1. Project finance is a financing structure that relies primarily on the cash flow,whichisgeneratedbytheproject,forrepayment.Itisusedforfinancinglargeprojectsinsuchsectorsaspowergenerationandoil,gasorothernaturalresourcedevelopment.

2. Coal-bedmethane(CBM) ismethaneextractedfromandnearcoal-beds. It isdrawingattention,alongwithshalegas,as“unconventional”naturalgas.

3. FLNGisanewgasdevelopmenttechnologywherebynaturalgasfromanoffshoregasfieldisprocessedintoliquidandstoredonalargevessel,whichisequippedwithanLNGplant,thendirectlyoffloadedtoanLNGcarrierforshipment.Amongitsadvantagesoverbuildingonshoreliquefactionplantsisalowerenvironmentalimpactasthereisnoneedtolaygaspipelinesfromthegasfieldtoanonshorefacility,nortodevelopthecoastalarea.Moreover,asthefloatingLNGfacilitywiththeliquefactionplantcanbemoved,itisalsoseenashavingtremendouspotential for thedevelopmentof small andmedium scaleoffshore gas fieldswhosedevelopmenttodatehasnotbeeneconomicallyfeasible.

2


and Its Challenges

1. Energy, N


Enviro

nment Finance G

roup

19


ofFY2012.Atthesametime, Japan is the largest importerof LNG from Qatar. This is a good example of securing astable,long-termsupplyofLNGtoJapan,whilecontributingtostrengtheningtherelationshipbetweenthetwocountriesthrough continuous cooperation in the world LNG supplychain. Australia also accounts for about a 20% shareof LNG,60%ofcoaland70%ofironoreprocuredbyJapan.Givenitsgeographicalproximity,politicalstabilityandabundanceofvariousresources,AustraliaisoneofthecountriesincreasinglyimportanttoJapanasaresourcesupplysource.JBIChasbuiltfavorablerelationshipswithitsresourcedevelopersthroughcontinuedfinancingovertheyears.Asdescribedabove,JBIChassupportedunconventionalLNGprojectswhereCBMisusedasa rawmaterial, and in theacquisitionof interestsin coal mines by Japanese companies. Furthermore, JBICcultivated relations with state governments in FY2011 bysigningMOUsoncomprehensivestrategicpartnershipswiththeWesternAustralianGovernmentandQueenslandGov-ernment.TheseMOUsprovidefor,amongotherthings,anexchangeofinformationoninvestmentsJapanesebusinessescould make, with periodic consultations being held. Thus,theyareexpectedtoleadthelayingofthegroundworkforJapanesebusinessdevelopment. Inotheractivities,JBICsignedanMOUwiththeMinistryofFinanceofMongoliainMarch2012toenhancefinancialcooperation,includingprovisionofexportcreditlines5,withMongoliawheremineral resources, suchas coal andcop-per, are abundant. In accordance with the MOU, the twopartiesarenowexpeditingtheconsultationprocesstoward

offshore.DuringFY2012,JBICofferedaloantosupportaJapa-nesebusinessparticipatinginanFLNGprojectinAustralia.

Strengthening Multilayered Relations with Resource-Endowed CountriesItisalsoimportanttostrengthenthemultilayeredandstrate-gicrelationsoftheresource-endowedcountriesandresourcesupplierswithwhichJapanhasbuiltgood,stablerelations. Inrecentyears,oil-producingcountriesintheMiddleEasthavepushedforwardadiversificationofindustriesandinfra-structuredevelopmentintheircountriesbasedonabundantrevenuesgeneratedbyhighoilprices.Theyhavelookedtooverseasgovernmentsandcompaniesforsupportintrans-planting technologies for these purposes. In this context,economicrelationsbetweentheMiddleEastandJapanhaveshifted from a traditional, simple relationship between oilconsumersandsuppliersto“multilayered”tiesthroughthesupportofindustrialdiversificationfromenergy-relatedandinfrastructure-developmentproject cooperation, aswell asjointinvestmentsinthirdcountries. Forexample,inSaudiArabiainMarch2006,JBICprovidedaprojectfinancingloantooneoftheworld'slargestpetro-chemicalplantsbeingplannedbyastate-ownedenterprise,SaudiArabianOilCompany(SaudiAramco),tosupportjobcreationandindustrialpromotionfromtheproductionofhighvalue-addedproducts.FortheLNGprojectinQatar,JBIChassupportedanumberofkeylinksinformingtheLNGsupplychainsincetheearlystagesofitsdevelopmentinthe1980s,suchasnaturalgasfielddevelopment,LNGplantconstructionandloadingportdevelopment.InFY2012,JBICofferedaguar-anteeforthefirstyen-denominatedforeignbonds(Samuraibonds4)issuedbyQatarPetroleum(QP),therebystrengthen-ingrelationswithQPevenfurther.QatarisamajorsupplierofLNGto Japan,accounting for18%of Japan’s importsas

AcoppermineprojectinChileinvolvingparticipationofaJapanesecompany

4. Samuraibondsareyen-denominatedbonds issuedby foreign issuers suchasforeigngovernmentsandforeigncompaniesintheJapanesebondmarket.

5. Anexportcredit line isa formofexportcredit inwhich JBICcommits to themaximumamountofcredittobeextendedtoforeignbanksorotherentitiestofinanceexportsofmachinery,equipmentandservicesfromJapan.

2


and Its Challenges

1. Energy, N


Enviro

nment Finance G

roup

20


Denizbank A.S., Turkiye Kalkinma Bankasi A.S., RHB BankBerhad, Petróleo Brasileiro S.A. (PETROBRAS), and Bancode Bogotá S.A. to support renewable energy and energy-efficiency improvementprojects in India, Turkey,Malaysia,andtheLatinAmericanandCaribbeanregionsinaneffortforGREEN(GlobalactionforReconcilingEconomicgrowthandENvironmentalpreservation)operations( see p. 59 for details

of this initiative).Theseloansareexpectedtocontributetothereductioningreenhousegas(GHG)emissions,andhelpthediffusionofJapan'sadvancedenvironmentaltechnologiesinthesecountriesandregions.( For selected cases of environment-related operations by JBIC,

see pp. 49–50.)

JBIC's Efforts for Renewable EnergyAseffortsarebeingmadeinothercountriesaswelltopro-mote theuseof renewableenergy,businessopportunitiesareexpandingforJapanesecompanies.JBICistakingstepstosupporttheseopportunities,includingprojectfinancingforrenewable-energypowergenerationprojects inCanada inwhichJapanesecompaniesparticipate( see p. 49). JBIChasofferedexportcreditlinesforICICIBankLimitedofIndiaandfourlocalbanksinTurkey(TurkiyeIsBankasiA.S.,YapiveKrediBankasiA.S.,T.GarantiBankasiA.S.andDen-izbankA.S.)forthepurchaseofJapaneserenewableenergymachineryandequipment,notablythoseforgeothermal,windandsolarpowergeneration,therebysupportingexportsfromJapan.

theofferingofsuchexportcreditlines.DuringFY2012,JBICsignedanMOU fora comprehensive strategicpartnershipwithKazatomprom,ajointstockcompanywhollyownedbytheKazakhstangovernment.ThisMOUisaimedatidentifyingfuturecandidateprojectseligibleforJBICfinance,andjointlydevelopingrareearthandmetals. ForTurkey,whichhasbecomeincreasinglyimportantinrecentyearswithitsgeopoliticallocationthatborderswithMiddleEastern,NIS(NewIndependentStates)andEasternEuropeancountries, JBICinMarch2012guaranteeditspri-vatelyplacedSamuraibond issuetosupport thecountry’sefforttodiversifyfundingsources. In addition, although Japan and China tend to be in acompetitiverelationshipintheareaofnaturalresources,JBIChasbeenbuildinguprelationswiththeExport-ImportBankofChinaandotherChinesepolicy-basedfinancialinstitutions,asitconsiderssecuringachannelforanexchangeofinformationwithrespecttoindividualprojectsandpolicytrendswhilealsoexploringthepossibilityofcofinancingprojects.

Toward Comprehensive Development of Natural Resources

Japan has longbeenoneof the leadingbuyers of variousnaturalresourcesintheworld.Japan’srelativepositionasademandsidehasrecentlydeclined,however,asChinaandotheremergingmarketcountriesareproceedingtoengageinglobalcompetitiontoacquireresourcesagainstthebackdropofvigorouslyincreasingdemand. Underthesecircumstances,inordertohavesecureandstableaccesstovariousresources,JBICshouldnotonlysup-portacquisitionofinterestsandlong-termdeliverycontractsbyJapanesecompaniesbutalsolikeanapproachtoMiddleEasternoilcountries,proposecomprehensiveresourcedevel-opment,whichencompassesthedevelopmentofinfrastruc-tureincludingrailways,roads,ports,electricpowersystemsandrapidlyadvancingindustries,inaccordancewiththeneedsofindividualcountries.Althoughthisisonlyindirectlylinkedtoresourcedevelopment,ifJapanesecompaniesprovidetech-nologiesforhighlyefficientcoal-firedpowergenerationandreductioninenvironmentalimpact,thiscouldcontributetopowerdevelopmentandenvironmentalmeasuresinresource-endowedcountries,andcouldfurthermorehelptocreateafavorable position for acquiring interests in resources andpricenegotiationforJapan. JBICwillcontinuetoprovidefinancialsupportinvarioussectorsandthematicareas,includingsupportforinfrastruc-turedevelopmentinresource-endowedcountries,helpingtosecureastablesupplyofresourcesthatareindispensableforthesounddevelopmentoftheJapaneseeconomy.

Efforts toward GREEN OperationsDuring FY2012, JBIC provided loans to ICICI Bank Limited,

2


and Its Challenges

1. Energy, N


Enviro

nment Finance G

roup

ArenewableenergyprojectinIndia

21


goalofincreasingGNIfrombothphysicalandnon-physicalaspects(exportsononehandandprojectmanagementandinvestmentontheother). ExportinganinfrastructuresystemproducesnotonlydirectbenefitsresultingfromreceiptoftheorderbutalsoindirectbenefitsintheformofanewfootholdforJapanesecompaniesandastrengthenedsupplychain.Onthedownside,however,itentailsmanychallenges.Foronething,itisoneofthesec-torsexposedtothefiercestglobalcompetition.Foranother,itinvolvesmanydifficultiesthatmaynotbeaddressedbytheprivatesectoralone.Theseincludehugebusinessriskssuchaslongpaybacktime,aswellastheneedtonegotiatewithhostcountrygovernments.Inviewofthesechallenges,theJapanesegovernment is pushing aheadwithpublic-privatepartnerships.Forexample,theInfrastructureSystemsExportStrategy,adoptedattheMinisterialMeetingonStrategyrelat-ingInfrastructureExportandEconomicCooperationinMay2013,aswellastheJapanRevitalizationStrategymentionedearlier,setoutacleargoaloftriplingthetotalvalueofordersforinfrastructuresystemsreceivedbyJapanesecompaniestosome¥30trillionby2020.ThesetwostrategiescallforsalespitchesbythePrimeMinisterandotherministers. TheInfrastructureSystemsExportStrategydividesemerg-ing market countries targeted for overseas infrastructuredevelopment into three groups: (i) China and ASEAN; (ii)SouthwestAsia,MiddleEast,RussiaandCIS,andLatinAmerica

Theglobalinfrastructuremarketcontinuestoexpandnotablyinemergingmarketcountries,driv-enbyrapidurbanization,amongotherfactors.Tappingintothishuge infrastructuredemand todrivegrowth in Japan iscalledforintworecently-releasedpol-icydocuments,bothendorsedbytheCabinetinJune2013:(i)theJapanRevitalizationStrategy(“JAPANisBACK”),and(ii)BasicPolicies for Economic and Fis-cal Management and Reform,formerly known as “HonebutonoHoshin.”Thefirstdocument,representing the growth strat-egybasedonthe“three-arrows”strategy or “Abenomics,” setsout a clear goal of increasingrealgrossnationalincome(GNI).Workingforinfrastructureproj-ectsoverseasisoneofthekeypolicies in thegrowthstrategyasitwouldhelpJapantoincreaseGNIthroughthreemajorfactors:(i)increasedexports,(ii)moreprofitsfrombusinessinvestmentoverseas,and(iii) improvedprocurementtermsforenergyandnaturalresourcesthroughthedevelopmentofinfrastructurerelatedtonaturalresources. JBICwillcontinuetoproactivelysupport Japanesecom-panies participating in infrastructure projects overseas bytaking advantage of the experience in the engagement ofsuchprojectsinarangeofsectors,includingelectricpowersystems,railways,seaports,roads,andwatersupplysystems,aswellasthetrustingrelationshipsJBIChasbuiltwithhostcountriesovertheyears.Inthisway,JBICwillconductopera-tionsinaccordancewithJapanesegovernment’spoliciesandcontributetothestabilizationoftheglobaleconomyandthedevelopmentoftheJapaneseeconomy.

Growing Infrastructure Demand Overseas and Japan’s “Infrastructure Systems Export”

It isexpected thatdemand for infrastructureoverseaswillcontinue to grow. Overseas infrastructure demand is pro-jectedto increaseatanannualrateofaround2.2%,morethan 5%, and about 4% for the power, seaports, and ICTsectors,respectively.1Suchdemandcanbemetbyprovid-ingintegrated“infrastructuresystems”thatinvolvenotonlyexportingequipmentfromJapanesecompanieswithadvancedtechnological capabilitiesbutalsoprovidingexpertise thatvariouscompaniesandlocalgovernmentshaveinthedesign-ing,construction,operation,andmaintenanceofinfrastruc-ture.Receivingorders for suchsystemswillhelpmeet the

Infrastructure Finance Group2·

1. TheInfrastructureSystemsExportStrategy,adoptedattheMinisterialMeetingonStrategyrelatingInfrastructureExportandEconomicCooperationonMay17,2013.

2


and Its Challenges

2. Infrastructure Finance Gro

up

ABritishhigh-speedrailwayprojectinwhichaJapanesecompanyparticipated

22


2


and Its Challenges


up

◉ Power● Water■ Transport Infrastructure　 (ports, railways, roads, etc.)◆ Broadcasting, Telecommunication▼ Renewable Energy✚ Others

◉

◉

◉

◉◉

◉◉

◉

◉

◉

●

●

▼

▼

■

■

■

■

■

■◉ ▼

●◉◉

◉■●◉◉

●◉

▼

◉◉◉◆▼

◉◉◆▼

▼

◉ ■▼◉

■◆▼◆■

■

✚ Infrastructure Fund


▼ TSL for Renewable Energy-Related Project

The Latin Americanand Caribbean Region

■ Belt Highway Project■ Railway Project■ Cargo Railway Network

Development Project◆ Equipment Export for

Digital Broadcasting◆ Telecommunications Project▼ TSL for Renewable

Energy-Related Project

Brazil

◉ Export of High Energy Ef�cient Coal-�red Power Plant

◉ Portfolio Acquisition of Existing IPP Projects

◆ Telecommunications Network Expansion Project


▼ Funding for Renewable Energy-Related Project

Mexico

■ Panama Canal Expansion Project

Panama

◉ Hydroelectric Power Plant Project◉ Export of Water▼ TSL for Renewable Energy-Related Project

Colombia

■ Intercity Express Programme

United Kingdom

◉ Export of Gas-�red Power Generation

Morocco

■ The Port of Durban Expansion Project◉ Power Transmission and Distribution Project▼ TSL for Renewable Energy-Related Project

South Africa

■ Export for Metro Construction Project

Egypt

▼ TSL for Renewable Energy-Related Project and Equipment Export

Turkey

◉ Export of Gas-�red Power Generation Plant

Kazakhstan

◉● IWPP Project◉ IPP Project

UAE

◉● IWPP Project◉ IPP Project

Qatar

■ Port Expansion Project◉ IPP Project◉● IWPP Project

Oman

● Water Supply and Sewerage System Operation Project

Maldives

◉ Export of Hydro Power Generation Facilities

Sri Lanka

◉ Equity Participation in Acquiring Shares of Senoko Power Limited

● Export of Seawater Desalination Plant

Singapore

◆ Export of Telecommunication Machinery and Equipment◉ IPP Project◉ Submarine Cables Replacement Project◉ Export of Transmission and Substation Equipment


Emerging Market Countries in Southeast Asia

Indonesia

North America and European Region

Emerging Market Countries in Asia

◉ Natural Gas-Fired Combined Cycle Power Plant Project

Thailand


Viet Nam

◉ Portfolio Acquisition of Existing IPP Projects

The Philippines

■ Delhi-Mumbai Industrial Corridor (DMIC) Project

◉ High Energy Ef�cient Coal-�red Power PlantManufacturing and Sales Project and Equipment Export

▼ TSL for Renewable Energy-Related Projectand Equipment Export

India

■ Monorail Project

▼ Renewable Energy-Related Project

Canada

China


Korea

◉ Power Transformer Manufacturing and Sales Project

Russia


Malaysia

■ Exports of Railway Cars

Venezuela

AsofJuly31,2013

(Note)AnIndependentPowerProducer(IPP)buildsandoperatesapowerplantonitsownandsellstheelectricityproducedtopowerutilities. AnIndependentWaterandPowerProducer(IWPP)buildsandoperatespowergenerationandwaterdesalinizationplantsonitsown

andsellstheelectricityandwaterproducedfromthem.

JBIC’s Financing for Infrastructure Projects

BankandtheWorldBank.

Three Challenges Japanese Companies Face in Infrastructure Projects Overseas

In implementing infrastructure projects overseas, Japanesecompaniesfacethreemajorchallenges:(i)weakpricecom-petitiveness,(ii)ashortageofversatileoperators,and(iii)thelackofschemesdesignedtoensureprojectfeasibilityonthepartofemerginganddevelopingcountries. Thefirstchallengeisreflectedininternationalcomparisonsinthetotalvalueofplantordersreceivedfromoverseas.ThefigureforJapanfellabout9%inFY2012fromayearearlier.ThoseforChinaandKorea,ontheotherhand,roseslightlyorremainedflatoverthesameperiod.Roughlyspeaking,China’svalueissixtimesasmuchasJapan’s,whileKorea’sfigureis

andtheCaribbean;and(iii)Africa.GivingtopprioritytoChinaandASEAN,thestrategystatesthatJapanwillfocusonbroad-baseddevelopmentassistance(developmentassistancethattranscendsnationalborders) forstrengtheningconnectivitywithintheASEANregionandbetweentheregionontheonehandandIndiaandBangladeshontheother.ThishighlightstheneedforinfrastructuredevelopmentinMyanmar,acoun-try that faces the Indian Ocean and serves as a strategicnodethatconnectsASEANwithIndia.Inthiscontext,JBICiscommittedtosupportingtheMyanmargovernmentinclear-ingthearrearsofpastloans,aproblem,whichstandsinthewayofextendingnewloanstothecountry.JBICtookthefirststepinJanuary2013whenitofferedbridgeloans(short-termbridgingloans)totheMyanmargovernmentinordertoassistitinclearingthearrearsofloansfromtheAsianDevelopment

23


internationalalliancesorbuyoutsofforeignbusinessesthatwillhelpthemaccumulateexpertise. Thethirdchallengeisbestrepresentedbyinfrastructureprojectsinemerginganddevelopingcountriesthatarede-signedsothatprojectownershavetobearexcessiverisks.Theserisksincludeweakprovisionsinpowerpurchaseagree-mentsregardingthedutiesonthepartofthehostcountrygovernmentsand/or their agencies, aswell as inadequateminimum income guarantees in transport projects. It hap-penssometimethat,inprojectsthatinvolvesupervisionand/orinvolvementbymorethanonecompetentauthorityandthosethatcovermorethanonelocalgovernment,itwouldbedifficultforthecentralgovernmenttoensurecoordinationamongdifferentpartiesandsuperviseprojects. Intheeyesofprospectiveprivatecontractors,thisstateofaffairsbearswitness to less feasibleproject schemes,hinderingprivateinvestment. An effective approach to ensuring adequatelyfeasibleprojectschemesinemergingmarketcountriesisforthepublicandprivatesectorsinJapantoworktogethertofullycommunicateandcooperatewithactualandpotential

three timesasmuch.2 Toboost theprice competitivenessof Japanesecompanies, itmaybeoneof solutionsnot tosticktothe“AllJapan”principleofmobilizingonlyJapaneseentitiesbuttoadoptthe“JapanInitiative”strategy.Underthisstrategy,thecorepartofaplantwillbemanagedbyJapanesecompanieswithatechnologicalcompetitiveedgewhiletheotherpartswillbemanagedincooperationwithpartnersfromothercountries,inordertoachievethebestmixofJapaneseandforeignproducts. Thesecondchallengeismostevidentinwaterandrailroadsectors,inwhichtheknowledgeandexpertiseaccumulatedfromexperience inoperationswithin Japanaredistributedamong different enterprises, including public corporations,dueinlargeparttotheexistinginstitutionalarrangements.FewJapanesecompanieshaveatrackrecordofintegratedbusinessoperationsrangingfrom“upstream”operations,suchasthedevelopmentofmasterplans,to“downstream”opera-tions,suchastheoperationandmaintenanceoffacilitiesandthecollectionofchargesandfares.Forthesereasons,Japa-nesecompaniesarenotalwaysabletoadequatelymeettheneedsofhostcountriesthatcallforintegratedinfrastructuresystems.InsectorswhereJapanesecompanieslackexpertiseinintegratedbusinessoperations,itmaybeviabletopromote

2


and Its Challenges


up

TheexportofequipmentbyaJapanesecompanyforapowergenerationprojectinMorocco

2. JapanMachineryCenterforTradeandInvestment,2012NendoKaigaiPurantoEnjiniaringu(PE)SeiyakuJissekiChosaHokoku(reportonconcludedcontractsforplantengineeringoverseasforFY2012),July2012.

24


the framework of regular dialogue with the host countrygovernment—arebestrepresentedbytwoschemes.OneisequityparticipationintheDelhiMumbaiIndustrialCorridorDevelopmentCorporationLimited(DMICDC),whosedutiesinclude,amongothertasks,preparingdevelopmentmasterplansfortheareassituatedbetweenDelhiandMumbaiandconductingfeasibilitystudiesforindividualprojectsthere.TheotheristheFinancialPolicyDialoguebetweenJBICandthegovernmentofIndonesiaandothercountries. JBICisconsideringapplyingthesetwoschemestoothercountries.(Forthesecondscheme, JBIChasalreadyput inplaceasimilarframeworkfordialoguewiththegovernmentsofMexicoandVietNam.)Aspartofefforts toensure thefeasibilityofinfrastructureprojectswithalongpayouttimeandwhoserevenuesarereceivedinlocalcurrency,JBICoffersloansinlocalcurrencies inordertoreduceexchangerisksforJapaneseprojectownersassociatedwithforeigncurrencyborrowingandthussupportlong-termoperations( see p.

65). As an entity that coordinates the needs of public andprivatesectors,JBICwillcontinuetosupportJapanesecom-panies inavarietyofaspectssothatthegrowingdemandforinfrastructureoverseaswillcreateandincreasebusinessopportunitiesforthem.

partnersinthesecountries.Suchpublic-privatepartnershipscanmakeitpossibleforinvolvementinactivitiesofthehostcountrygovernmentand/or localbusinesscorporationsasearlyastheprojectformulationphasethroughtheestablish-mentofabusinessaimedatpromotingprojectformulationorwithin the frameworkof regulardialoguewith thehostcountrygovernment.ThiswillallowtheJapanesesidetoof-ferappropriatesupporttothehostcountrygovernment insuchaspectsasthecontentofmajorprojectcontractsandtheframeworkforimplementingandsupervisingprojects.Itwillalsoallowfortheadoptionoflifecyclecostsandotherbidding criteria that are favorable to Japanese companies.TheseactionswillinturnimprovetheprospectsforprojectsthatbuildonthestrengthsofJapanesecompaniesinmeetinglocalneeds.

Supporting “Infrastructure Systems Export” to Overcome Challenges Facing Japanese Companies

ExpectationsarerisingforJBICtoplayanimportantroleaspartofgovernmenteffortstoboosttheexportsofinfrastruc-ture systems. JBIC is striving to help Japanese companiesovercomechallengestheyface. JBIC’seffortstoensureprojectfeasibilitythroughpublic-privatepartnerships—notably throughtheestablishmentofabusinessaimedatpromotingprojectformulationorwithin

2


and Its Challenges


up

AThaiprojectforanaturalgas-firedcombinedcyclepowerplantinwhichaJapanesecompanyparticipated(aboveandright)

25


Industry Finance Group3·

Overview of the Japanese EconomyWhiletheimpactoftheGreatEastJapanEarthquakeinMarch2011lingered,theJapaneseeconomyshowedamildrecoveryinthefirsthalfofFY2012.InthemiddleofFY2012,itbegantoweakenduetotheslowingglobaleconomyandtheap-preciationoftheyen.However,alongwiththeinfluenceoftheglobaleconomyrecovery,theleveling-offofexportsandindustrialproduction,andimprovedconsumerandcorporatesentimentssuggestthattheJapaneseeconomywasgradu-allyheadingtowardapick-upinthesecondhalfofFY2012.TheJapanesegovernmenthasrecentlyannouncedtheJapanRevitalizationStrategy.Thisstrategy,decidedbytheCabinetinJune2013,callsfor,amongotherthings,measuresdesignedtosupportJapanesecompaniestoexporttheirproductsandevenexpandtheiroperationsoverseas.ByrevitalizingJapa-nesecompanies,throughthestrategy,theJapanesegovern-mentaimstoputtheJapaneseeconomyonagrowthtrack.

Overview of Overseas Business Operations by Japanese Companies

Overview of FDI by Japanese CompaniesForeignDirectInvestment(FDI)byJapanesecompaniesfellinbothFY2009andFY2010afterpeakinginFY2008beforetheLehmanShock.InFY2011,itrosetoaround¥10.1trillion,a108.2%increasefromFY2010.ThefigurelargelyremainedflatinFY2012,ormoreprecisely,itdipped0.8%year-on-year,standingatabout¥10.0trillion(seeFigure1). 1. MinistryofFinance,“Outward/InwardDirectInvestment.”

AJapanesemanufacturerandmarketerofmotorcyclepartsandconstructionmachineryinIndonesia(BanshuElectricCo.,Ltd.)

2

Figure 1 Foreign Direct Investment by Japanese Companies

0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

(FY)

(Trillions of yen)

05 06 07 08 09 10 11 12[Source]MinistryofFinanceJapan


and Its Challenges

3. Industry Finance G

roup

A closer look at the trends in FY2012 shows that FDIjumped54.9%inthefirstquarterfromthesameperiodayearearlier.Itdropped33.9%and8.5%year-on-yearinthesecondandthirdquarters,respectively,amidgrowinguncertaintysur-roundingtheU.S.economyandtheslowdownofemergingeconomies,includingChina.Inthefourthquarter,however,FDIrose15.0%onayear-on-yearbasisastheJapaneseandglobaleconomyshowedagradualrecoverytrend.ThisisasignthatFDIispickingup1. Japanesecompanieshaveremainedcommittedtoexpand-

26


theyenfromFall2012andariseinthetotalbuyoutvolume,resultingfromtherecoveryofstockpricesintheU.S.market(Figure3).ItisexpectedthattheneedforoverseasM&AbyJapanesecompanieswill remainstrongas theyaimto tapintooverseasmarket.

ExportsTotalexportsbyJapanesecompanies,whichslowedinthefirsthalfofFY2012,arenowbeginningtoshowsignsofre-covery.AcloserlookatthetrendsinFY2012showsthat,thefigureamountedto¥16,443.6billioninthefirstquarter,up4.8%fromthesameperiodayearearlier,partlybecausetheimpactof theflooddisaster inThailandsubsided tosomeextent. Despite this sign of recovery, the figure fell in thetwoconsecutivequartersthatfollowedduetothefalteringJapaneseandglobaleconomyandtheappreciationof theyen.Itstoodat¥15,714.5billionordown8.2%year-on-yearinthesecondquarter,and¥15,429.7billionordown5.5%year-on-year in the thirdquarter.Thedecreasewasattrib-

ing theiroverseasoperationsover themid-term.ThisviewissubstantiatedbytheFY2012Survey(the24th)ReportonOverseas Business Operations by Japanese ManufacturingCompanies,which JBICconductedbetweenJulyandOcto-ber2012.Inthissurvey,towhich613companiesresponded,84.4%oftherespondentssaidtheywouldstrengthenand/orexpandtheiroverseasbusinessesinresponsetothequestionregardingtheirmedium-termbusinessprospects.Thefigurewas 72.5% as far as mid-tier enterprises, as well as smallandmediumenterprises(collectively“SMEs”),areconcerned(Figure2).

Overseas M&A by Japanese CompaniesDuringFY2012,Japanesecompaniesremainedactiveinmerg-ingandacquiringforeignfirmsfromFY2011.ThenumberofM&AcasesofforeignfirmsbyJapanesecompaniesinFY2012amountedto501,anincreaseof27fromayearearlier,al-thoughthefigureforthefourthquarterstoodat104,ade-creaseof14year-on-year,dueinparttothedepreciationof

(Note)1.“Overseasoperations”isdefinedasproduction,sales,andR&Dactivitiesatoverseasbases,aswellastheoutsourcingofmanufacturingandprocure-mentoverseas.

2.Thenumbersintheparenthesesabovethebargraphsindicatethenumbersofrespondingcompaniestothequestion.

3.Mid-tierfirms/SMEsarecompanieswhosepaid-upcapitalislessthan¥1billion.

[Source]ResultsoftheJBICFY2012SurveyReportonOverseasBusinessOperationsbyJapaneseManufacturingCompanies

2

Figure 2 Medium-term Prospects (next 3 yrs. or so) for Overseas Operations

Total responding companies Mid-tier firms/SMEs

FY2012FY2008 FY2009 FY2010 FY2011

(588) (153)0.9% 1.3%

14.8% 26.1%

72.5%

84.4%

(611) (149)0.7% 0.7%

20.1% 30.2%

69.1%

79.2%

(611) (161)2.0% 2.5%

32.2% 44.7%

52.8%

65.8%

(594) (156)0.7% 0.6%

16.5% 28.2%

71.2%

82.8%

(586) (163)0.2% 0.0%

12.6% 21.5%

78.5%

87.2%

■ Scale back/w

ithdraw

■ Maintain p

resent level

■ Strengthen/expand

Figure 3 Number of Overseas M&As by Japanese Companies

FY2012FY2008 FY2009 FY2010 FY2011

(Number of cases)

0

40

80

120

160

1Q 4Q3Q2Q

145 102 150 104

FY2012

129 111 116 118

FY2011


and Its Challenges


roup

[Source]RECOFDATACorporation

27


extendedaThaibaht-denominatedloanforthemanufacturingandsalesofautoparts,aswellasaloaninIndonesiarupiah—thefirstofitskindbyJBIC—forthemanufacturingandsalesofautomobileandmotorcycleparts.

Supporting Ship and Plant ExportsJBIC is also committed to supporting exports by Japanesecompanies.DuringFY2012,suchsupportwasprovidedfortheexportofshipssuchasbulkcarriers,tankers,andseabedexploringships,aswellasforplantexportsinvolvingmachinetools,compressors,andotherequipment.

Supporting Overseas Business Operations by SMEs ThesuperiortechnologicalcapabilitiesofJapaneseSMEsaregiven high marks both at home and abroad. At the sametime,developingcountriesthemselvesarefocusingeffortsonattractinginvestmentfromcompaniesthathavesophisticatedtechnologies.However,JapaneseSMEsoftenhaveonlylim-itedaccesstofinancingandinformationnecessaryfortheirbusinessoperationsoverseas.Toboosttraditionalsupportforsuchoperations,JBICinFY2012setupatitsHeadOfficeandWestJapanOfficeaunitspecializinginthesupportofoverseasbusinessdevelopmentofSMEs.DuringFY2012,JBICcommittedatotalof34cases.Inadditiontofinancialsupport,suchasloans,JBICalsooffersinformationonarangeoftopics,includingtheforeigninvestmentclimate.DuringFY2012,JBICsignedamemorandumofunderstanding(MOU),separatelywiththreelocalbanksinthedevelopingworld,tosupportoverseas business operations of SMEs through Japaneseregional financial institutions under the “three governmentoffices’jointpolicy2.”Atotalof46JapaneseregionalfinancialinstitutionssignedpartnershipagreementsduringFY2012withlocalbanks indevelopingcountriesbasedonsuchMOUs.

utedparticularlytoafallinexportsbothtoAsiancountries,experiencinganeconomicslowdown,andtotheEuropeanregion, where countries struggled with fiscal problems. Inthe fourth quarter, however, the figure reached ¥16,352.6billion,up1.2%onayear-on-yearbasis,duetorecoveryinthe Japaneseandglobaleconomyandthedepreciationoftheyen.ItsuggeststhattotalexportsbyJapanesecompaniesbottomedout(Figure4).

Overall Commitments in Loan, Equity Participation, and Guarantee by the Industry Finance Group in FY2012

Inviewofthesituationandindustrytrendsalreadydescribed,JBIChassupportedJapanesecompaniesintheirbusinessop-erationsoverseasthroughvariousaspectstomaintainandim-provetheinternationalcompetitivenessofJapaneseindustries.JBIC’sIndustryFinanceGrouphadatotalof151commitmentsconcerningloan,equityparticipation,orguaranteeinFY2012.

Supporting Foreign Investment by Japanese Companies

JBICfocusesonsupportforoverseasinvestmentbyJapanesecompanies.JBICprovidesthesecompanieswithequipmentfundingfortheiroverseasbusinessesandfundsforsalesfi-nancingbytakingadvantageofschemesasnecessary,includ-ingprojectfinancingandlocalcurrency-denominatedfinanc-ing.DuringFY2012,suchloanswenttoprojectsconductedbymanufacturersinchemical,automobile,electricalmachinery,andotherindustriesaswellasengineeringfirms.AloanwasalsoprovidedtosupportanFPSO(floatingproduction,storageandoffloadingsystem)charteringproject. The“RebirthofJapan:AComprehensiveStrategy”andtheJapanRevitalizationStrategy,bothdecidedby theCabinetin2012and2013,respectively,callforthestrengtheningoflocalcurrency-denominatedfinancialsupporttofacilitatelo-calcurrencyfundingforJapanesecompaniesexpandingtheirbusinessoperationsoverseas.Inlightofthesepolicydevelop-mentsandtheneedsofJapanesecompanies,inFY2012,JBIC

2


and Its Challenges


roup

AJapanesemanufacturerandmarketeroffilmsfordisposablediapersinIndonesia(YAMATOGAWASHIKOCo.,Ltd.)

Figure 4 Value of Exports by Japanese Companies (FY2012)

(Trillions of yen) （%）

15.0

15.5

16.0

16.5

-10

-8

-6

-4

-2

0

2

4

6

1Q 4Q3Q2Q

4.8%

-8.2%

-5.5%

1.2%

16.4 15.7 15.4 16.3

Export value in 2012

Year-on-year percent change

[Source]MinistryofFinanceJapan

2. The“threegovernmentoffices’jointpolicy”referstothepolicythatwassetforthin2010jointlybytheFinancialServicesAgency,theMinistryofFinance,andtheMinistryofEconomy,TradeandIndustry.ThispolicyisaimedatsupportingSMEsintheexpansionoftheirbusinessoperationstoAsiaandelsewherebydevelopingandstrengtheninga frameworkforsuchsupportthroughcoordinationamongJapanesefinancial institutions, the JapanExternalTradeOrganization (JETRO),andJBIC.

28


agriculture,aerospace,disastercontrol,marineinfrastructure,Ecocity, etc.). In line with the Japan Revitalization Strategyandothergovernmentstrategies,JBICwilladdresstheneedsof Japanesecompaniesbydrawingona rangeoffinancialinstruments.

TheselocalbanksincludethosewithwhichJBIChadsignedMOUsearlier.( See pp. 66–67)

Taking Appropriate Actions in Response to the Government’s Growth Strategy and the Needs of Japanese Companies

JBICwillcontinuetoworktomaintainand improvethe in-ternationalcompetitivenessofJapaneseindustriesbytakingactionsthataddresschallengesJapanesecompaniesfaceinexpandingtheiroperationsoverseasandtoconductopera-tionsinaccordancewiththegovernment’sgrowthstrategyknownastheJapanRevitalizationStrategy.Thisstrategycallsfor,amongotherthings,encouragingJapanesecompaniestoinitiateandexpandtheirbusinessoperationsoverseaswiththeaimtobecomegloballeadingcompanies,aswellastopromotetheexportofinfrastructuresystemsforthepurposeoftappingintoforeigndemand.SpecificmeasuresidentifiedinthestrategyincludeassistingJapanesecompanies,includingSMEs,inmergingandacquiringforeigncompanies,develop-ingemergingmarkets selectively, and supportingoverseasbusinessdevelopment innewfrontiersectors(healthcare,

2


and Its Challenges


roup

TheexportofatankbuiltbyaJapaneseshipbuilder

29


3Examples of Business Outcomes

in FY2012

1 Examples of Business Outcomes by Region 32

2 Examples of Business Outcomes Relating to

Support for SMEs 47

3 Examples of Business Outcomes Relating to

the Environment 49

4 Examples of Business Outcomes Relating to Studies, and Collaboration with

Overseas Government Organizations and

International Organizations 51

31


Examples of Business Outcomes by Region1·

JBICsignedasetofagreementstoprovideaguaranteeforyen-denominatedforeignbonds(Samuraibonds1) issuedinJapanbytheGovernmentofIndonesia(GOI).ThisisthethirdSamuraibondissuancebyGOI,andthecontinuedsupportforthisbyJBICwillhelpGOIdiversifyitsfundingsourcesandcontributetothestableeconomicmanagementofIndonesia.ItwillalsofurtherenhancetheclosebilateraltiesbetweenJapanandIndonesia.

JBICsignedabuyer’scredit2agreementwithGOI.GOIwillal-locatetheloanfundstothestate-ownedpowercompanyPT.PLN(Persero)forpurchasingpowerequipmentfromMarubeniCorporationforuseinestablishingpowersubstationsandlay-ingundergroundcablesintheIndonesiancapitalofJakarta.ByfacilitatingtheintroductionofhighlyreliableJapanesepowersupply infrastructure technologies, this buyer’s credit willcontributetoamorestablepowersupplyinJakarta.

JBICsignedaloanagreementwithPT.KorintigaHutani(KTH),anIndonesiansubsidiaryofOjiHoldingsCorporation.Thisloanwill financeawoodchipmanufacturingand salesprojectbyKTHusingtimberfromplantationforestsinCentralKalimantan,Indonesia.Worldwoodchipsupplyanddemandisexpectedtotightenoverthemediumtolongtermasdemandforpaperexpandswitheconomicgrowthinemergingmarketcountries.ThisloanwillhelpJapanesecompaniestosecurealong-termandstablesupplyofwoodchipsfromplantationforests.

Guarantee for Privately Placed Samurai Bonds Issued by the Government of Indonesia:Supporting Diversification of the Indonesian Government’s Funding Sources and Invigoration of the Samurai Bond Market

Buyer’s Credit for Exporting Transmission and Substation Equipment:Supporting the Export of Power Infrastructure Equipment by Japanese Companies

Loan for Woodchip Manufacturing and Sales Project:Supporting Japanese Companies to Secure Long-term Stable Woodchip Supply

1. Samuraibondsareyen-denominatedbondsissuedbyforeignissuerssuchasforeigngovernmentsandforeigncompaniesintheJapanesebondmarket.2. Abuyer’screditisaloanJBICdirectlyextendstoaforeignimporter(buyer)tofinanceitsimportofmachinery,equipmentorservicesfromaJapanesecompany.

3

Examples of Business O

utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

Indonesia

Asia

IndonesiaIndonesia

32


JBICsignedaloanagreementwithGOIestablishingacontin-gentfacility.ThiscontingentfacilityisdesignedtostrengthenGOI’scapacitytodealwithvolatilityinglobalfinancialmarketsandsupportGOImeasures forenhancing thestabilityanddurabilityoftheIndonesianeconomyincooperationwiththeWorldBank,theAsianDevelopmentBank,andtheAustraliangovernment.EnhancingIndonesia’screditstandinginglobalfinancialmarketsandimprovingthestabilityoftheIndonesianeconomywillcontributetothefinancialstabilityinJapanandtheentireAsianregion.

JBICprovidedbridgeloanstotheGovernmentofMyanmarso that it could clear its debt arrears owed to the AsianDevelopment Bank (ADB), and International DevelopmentAssociation(IDA),oneoftheWorldBankGroup.Afterclearingthedebtarrears,theGovernmentofMyanmarreceivednewloansfromADBandIDAforsocialandeconomicdevelop-ment.ThenormalizationofMyanmar’srelationswithinterna-tionalorganizationsthroughthesebridge loans isessentialforMyanmar’sreturntotheglobalfinancialmarket,andwillcontributetothestabilityandgrowthofMyanmarandtheneighboringarea.

JBICsignedaprojectfinance3loanagreementwithGulfJPUTCo.,Ltd.(GUT),aThaisubsidiaryofElectricPowerDevelopmentCo.,Ltd.fortheUtaiNaturalGas-FiredCombinedCyclePowerPlantProject.Underthisproject,GUTwillbuildandoperateanaturalgas-firedcombinedcyclepowerplant,andsellthegeneratedelectricitytotheElectricityGeneratingAuthorityof Thailand. This is a significant project for local Japanesesubsidiariesasitwillprovidethemwithastablepowersupply,andinadditiontoadvancing infrastructuredevelopment inThailand,itwillalsomakeabroad-rangingcontributiontotheoverseasbusinessoperationsofJapanesecompanies.

Establishment of a Contingent Facility for the Government of Indonesia:Preparation against Volatility in Global Financial Markets

Bridge Loans to the Government of Myanmar:Contributing to the Medium to Long Term Development of Myanmar through Support for Its Return to the Global Financial Market

Project Finance for a Natural Gas-Fired Combined Cycle Power Plant Project:Supporting Japanese Participation in a Power Infrastructure Project

3. Projectfinanceisafinancingstructurethatreliesprimarilyonthecashflowgeneratedbytheprojectforrepayment.Itisusedforfinancinglargeprojectsinsuchsectorsaspowergenerationandoil,gasorothernaturalresourcedevelopment.

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

Indonesia

Asia

ThailandM

yanmar

33


India

Asia

ThailandA

SEAN

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsignedaloanagreementwithJuthawanMolitec(Thailand)Co.,Ltd.(JWM),aThaisubsidiaryofMOLITECSTEELCO.,LTD.MOLITECSTEELmanufacturespartsforcontinuouslyvariabletransmissionsattheJWMplantinChonburiProvinceforsaleinthedomesticThaimarketandinthirdcountries,andthisloan,inThaibaht,willenablethecompanytoexpandandupgradeitsmanufacturingfacilitiesandequipmenttomeetthegrowingdemandforautomobilesinemergingmarketcountries.TheloanwillalsohelptheJapaneseautomobilepartsindustrytomaintainandimproveitsinternationalcompetitiveness.

JBICagreedtoequityparticipationintheprivateequityfundMizuhoASEANPEFund,managedbyMizuhoAsiaPartnersPte.Ltd.(FundManager),awhollyownedSingaporeansub-sidiaryofMizuhoBank,Ltd.TheFundisstructuredtoprovidefinancetolocalcompaniesintheASEANregionasameansofsupportingtheexpansionofmid-tierenterprisesandsmallandmediumJapaneseenterprises(collectively,“SMEs”)intotheASEANregion.Tothisend,theFundManagerwilluseitsnetworks inASEANto identifypotential investments,whileMizuhoBank,Ltd.andJBICwillprovidecooperationandsup-porttoJapanesecompaniesincludingSMEs.

JBICestablishedacredit line for ICICIBankLimited, India’slargestprivatebankintotalassets.Thecreditlineisextendedunder theGREEN (Global action for Reconciling EconomicgrowthandENvironmentalpreservation)operationstopro-videnecessaryfundingforenvironment-relatedprojectsthatcancontributetoareductioningreenhousegasemissionsin India,and isexpectedtogive furthermomentumtotheenvironmentalpoliciesadoptedbytheIndiangovernment.

Loan for Automobile Parts Manufacturing and Sales Project:Providing Local Currency Loans to Support Japanese Company’s Operations in Thailand

Equity Participation in a Fund to Support Expansion of Japanese Companies into the ASEAN Region:Supporting the Overseas Business Deployments of Japanese Companies Including Mid-tier Enterprises and Small and Medium Enterprises

Credit Line for India’s Largest Private Bank under the GREEN Operations:Supporting Renewable Energy and Energy Efficiency Projects

34


India

Asia

Kazakhstan

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBIC signed a buyer’s credit agreement with GAIL (India)Limited(GAIL).ThisloanwillenableGAILtoprocureplant-relatedequipmentfromJapanesecompaniessothatitcanincreaseproductioncapacityat itspetrochemicalplants inIndia.Itwillalsocontributetocreatingbusinessopportuni-tiesforJapanesecompaniesinthepetrochemicalsectorinIndia,andhelpthesecompaniestomaintainandimprovetheirinternationalcompetitiveness.

JBICsignedabuyer’screditagreementwithLLPAtyraurefinery(AR),asubsidiaryoftheKazakhstanstate-ownedoilandgascompanyJSCNCKazMunayGas.ARismodernizingtheAtyrauOilRefinerytominimizeitsenvironmentalload,andthisloanwillbeusedbythecompanytopurchaseplantequipmentthroughMarubeniCorporationasapartofthismoderniza-tionproject.The loanwill leadtothecreationofbusinessopportunitiesforJapanesecompaniesintheoilrefineryandpetrochemicalsectorsinKazakhstan,andthroughthis,helpJapaneseindustriesmaintainandimprovetheirinternationalcompetitiveness.

Buyer’s Credit for Indian Company:Supporting the Export of Petrochemical Plant-related Equipment by Japanese Companies

Buyer's Credit for Oil Refinery Modernization Project:Supporting the Export of Environment-friendly Plant Equipment by Japanese Companies

35


4. FloatingLNG(FLNG)isanewgasdevelopmenttechnologywherebynaturalgasfromanoffshoregasfieldisprocessedintoliquidandstoredonalargevessel,whichisequippedwithanLNGplant,thendirectlyoffloadedtoanLNGcarrierforshipment.Amongitsadvantagesoverbuildingonshoreliquefactionplantsisalowerenvironmentalimpactasthereisnoneedtolaygaspipelinesfromthegasfieldtoanonshorefacility,nortodevelopthecoastalarea.Moreover,asthefloatingLNGfacilitywiththeliquefactionplantcanbemoved,itisalsoseenasapotentialtoolforthedevelopmentofsmallandmediumscaleoffshoregasfieldswhosedevelopmenttodatehasnotbeeneconomicallyfeasible.

Australia

Oceania

Australia

Australia

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBIC signed a loan agreement with Marubeni Iron OreAustraliaPty.Ltd.(MIOA),anAustraliansubsidiaryofMarubeniCorporation.The loanwillprovide thenecessary funds forMIOAtoacquireinterestsintheRoyHillIronOreMineProject,operatedby theAustralian companyRoyHill Holdings PtyLtd(RHH)withcapitalfromMarubeniCorporationandotherforeign companies, and undertake mine and mine-relatedinfrastructuredevelopment.RoyHillMineproduceshigh-gradeironore,sotherearehighexpectationsamongJapanesesteelmillsinparticularthatthisprojectwilleventuallyprovidethemwithastablesupplyofthishigh-gradeironore.

JBIC signed a loan agreement with INPEX CORPORATION(INPEX).This loanwillprovide thenecessary funds for theAustraliansubsidiaryof INPEXtoacquireapart interest intheblock containingAustralia’s Prelude gas field from theAustraliansubsidiaryofRoyalDutchShell,andtoextractnatu-ralgasandprocessitintoLNGusingfloatingLNGtechnology4.ByfinancingparticipationbyINPEXintheworld’sleadingfloat-ingLNGproject,theloanwillcontributetoINPEX’sacquisitionoffloatingLNG-relatedknow-howandexpertise.

JBIC has signed a memorandum of understanding (MOU)on a comprehensive strategic partnership with WoodsidePetroleumLtd. (Woodside),Australia’s largest independentoilandgascompany.HavinglongcontributedtoLNGsupplyto Japan,Woodside isastrategically importantpartner forJapan’senergyresourcestrategy.Closeexchangesofinforma-tionandviewsbetweenthetwopartiesunderthisMOUareexpectedtocreateopportunitiesforJapanesecompaniestoparticipateinenergyprojects,thuscontributingtoastableLNGsupplytoJapan.

Loan for Acquisition of Interests in and Development of an Iron Ore Mine Project:Supporting Japanese Companies to Secure Mineral Resources and Participate in Large Scale Overseas Iron Ore Mine Development

Loan for Acquisition of Interests in and Development of a Floating LNG Project:Supporting Japanese Company’s Participation in a Floating LNG Project

JBIC Signs an MOU on a Comprehensive Strategic Partnership with Woodside Petroleum Ltd. in Australia:Supporting the Creation of Business Opportunities for Japanese Companies to Participate in Energy Projects by Establishing a Partnership with Australia’s Largest Independent Oil and Gas Company

36


Australia

Oceania

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBIC signeda loanagreementwithSumishoCoalAustraliaPty Limited (SCAP), an Australian subsidiary of SumitomoCorporation.This loanwillprovidethenecessary fundsforSumitomoCorporation toacquirean interest inAustralia’sIsaacPlainsCoalMinethroughitsAustraliansubsidiary.Thecoalextracted fromtheminehasmainlybeensupplied toJapanesesteelmillsonanongoingbasis,andtheacquisitionoftheinterestinthemineisexpectedtoresultinanincreasein thevolumeofcokingcoalandthermalcoalsuppliedtoJapanesecompaniesfromthemine.

Loan for Acquisition of Coal Mine Interests:Contributing to Japan’s Securing Energy Resources and a Stable Energy Supply

37


5. 3Dmarineseismicdataacquisitionvesselsareequippedfor3Dgeologicalstratumanalysis.Thevesselsreceivepressurewavereflectionsfromtheoceanfloororsub-surfaceregionthroughsensorsintowedcablesfor3Danalysisofthegeologicalstructureoftheoceanfloor.

IrelandN

orway

Europe

United K

ingdom

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsignedaprojectfinanceloanagreementwiththeU.K.companyAgility TrainsWest Limited, a consortium ledbyHitachi,Ltd.,tofundtheIntercityExpressProgramme(GreatWesternMainLine).ThisisoneofthemajorprojectsoftheBritish government, and is expected to make a significantcontributiontothelong-termandstableprovisionofrailwayservicesintheU.K.

JBICsignedaloanagreementwiththeIrishcompanySMBCAviationCapitalLimited,SumitomoMitsuiFinanceandLeasingCompany, Limited (SMFL), and Sumitomo Corporation toprovidefundsforthejointacquisitionbythethreeJapanesecompaniesofSMFL,SumitomoMitsuiBankingCorporationandSumitomoCorporationofanaircraftleasingbusinessoper-atedundertheRoyalBankofScotland(RBS),aBritishbank.Throughthisacquisition,thethreeJapanesecompaniesplantotackletheexpandingdemandforcommercialaircraftwiththeincreasingvolumeofairtravelersfollowingthegrowthinemergingmarketsandtheriseoflow-costcarriers.

JBICsignedtwobuyer’screditagreementsforshipexportwithPGSTitansAS (PGSTITANS),awhollyownedship-holdingsubsidiaryoftheleadingNorwegianseismicserviceprovider,PetroleumGeo-ServicesASA.Theloansareprovidedforthepurchaseoftwo3Dmarineseismicdataacquisitionvessels5to be built at the Nagasaki Shipyard of Mitsubishi HeavyIndustries,Ltd.Withthecontinuingconstraintsonshipfinanc-ingthroughouttheworld,theseloanswillhelptheJapaneseshipbuildingindustrytomaintainandimproveitsinternationalcompetitiveness.

Project Finance for an Intercity Express Programme:First Project Finance Loan by JBIC in the Railway Sector

Loan for Acquisition of an Overseas Aircraft Leasing Business:Supporting Overseas M&A by Japanese Companies

Buyer's Credit for Ship Export to Norwegian Company:Supporting the Export of 3D Marine Seismic Data Acquisition Vessels Built at a Japanese Shipyard

38


United A

rab Emirates

The Middle East

Qatar

Turkey

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBIC has signed a set of agreements to provide a guaran-teefortheyen-denominatedforeignbondsissuedbyQatarPetroleum(QP)intheJapanesebondmarket(Samuraibonds).ThisarrangementispartofJBIC’seffortstosupporttheissu-anceofSamuraibondsbyforeignissuersintheTokyobondmarketandtherebyrevitalizetheSamuraibondmarket.Thisis the first issue of Samurai bonds by the state-owned oilcompanyofQatar.TheguaranteeprovidedbyJBICwillsup-portQP’sabilitytodiversify its fundingsources. ItwillalsofurtherstrengthenbilateralrelationswithQatar,animportantenergyresourcesupplierforJapan.

JBICestablisheda credit line forTurkiyeKalkinmaBankasiA.S.(TKB),apolicy-basedfinancialinstitutioninTurkey.ThecreditlineisextendedundertheGREEN(GlobalactionforReconcilingEconomicgrowthandENvironmentalpreserva-tion)operations toprovidenecessary fundingthroughTKBfor environment-related projects in Turkey. The expandedcooperativerelationshipbetweenthetwobanksreinforcedby this credit line is expected to provide broader rangingsupportforinfrastructureprojectsinTurkeyinwhichJapanesecompaniesparticipate.

JBIChassignedaloanagreementwithAbuDhabiNationalOilCompany(ADNOC),astate-runoilcompanywhollyownedbytheEmirateofAbuDhabi,UnitedArabEmirates(UAE).ADNOCconductsoilandgasbusinessinAbuDhabi,whichproducesmostoftheoilandgasintheUAE.ThisagreementisdesignedtofinanceADNOCtoexpandtheiroilandgasdevelopment.TheloanwillhelptosecureastablesupplyofenergyresourcestoJapanaswellastostrengthenbilateraltieswiththeUAE,astrategicallyimportantcountryforJapan’sresourcestrategy.

JBIC Guarantees Privately Placed Samurai Bonds Issued by Qatar Petroleum:Stimulating the Samurai Bond Market and Strengthening Multilayered Ties with a Resource-Supplying Country

Credit Line for Turkiye Kalkinma Bankasi A.S. under GREEN Operations:Supporting Renewable Energy and Energy Efficiency Projects

JBIC Signs a Loan Agreement with Abu Dhabi National Oil Company (ADNOC):Securing Long-Term Supply of Crude Oil and Strengthening a Strategic Partnership with the UAE

Qatar

39


6. TheDeauvillePartnershipisaframeworkforsupportinghistoricalchangeinMiddleEastandNorthAfricannationsagreeduponattheG8DeauvilleSummitinMay2011.

United A

rab Emirates

The Middle East

Africa

TunisiaM

orocco

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsigneda loanagreementwithAbuDhabiOilCo.,Ltd.toprovidethenecessaryfundsforAbuDhabiOilCo.,Ltd.torenewitsinterestintheMubarrazandotheroilfieldsintheEmirateofAbuDhabi.AllofthecrudeoilAbuDhabiOilCo.,Ltd.producesinAbuDhabiisshippedtoJapan.Providingthisloantosupporttherenewaloftheoilfield interestheldbyAbuDhabiOilCo.,Ltd.isexpectedtocontributetosecuringalong-termstablesupplyofindependentlydevelopedcrudeoil,which,inturn,willcontributetoJapan’senergysecurity.

JBICsignedaprojectfinancebasedbuyer’screditagreementwiththeMoroccancompanyJorfLasfarEnergyCompany5&6S.A.Undertheproject,aconsortiuminwhichMITSUI&CO.,LTD.isparticipatingprovidestheprincipalequipmentforthecoal-firedpowerplantexpansionintheJorfLasfardistrict,andthisloanwillbeusedasapartoftheconstructioncostforthispowerplant(thesteamturbinesaremanufacturedbyMitsubishiHeavyIndustries,Ltd.,andtheboilersaremanufac-turedbyIHICorporation).Thisloanwillhelptocreatebusi-nessopportunitiesforJapanesecompaniesinMorocco,whereelectricitydemandisexpectedtoincreaseintheyearsahead.

JBICprovidedaguaranteeforyen-denominatedforeignbonds(Samuraibonds)issuedinJapanbytheCentralBankofTunisia.ThisguaranteeisapartofthesupportprovidedtocountriesintheMiddleEastandNorthAfricaundertheDeauvillePart-nership6,andisalsoJBIC’sfirstguaranteeforSamuraibondsissuedbyagovernmentofanAfricancountry.ThisguaranteewillhelptheTunisiangovernmentdiversifyitsfundingsources,andbystimulatingtheSamuraibondmarketanddeepeningbilateral relations with Tunisia. It is also expected to giveaddedmomentum to thebusinessoperationsof Japanesecompanies.

Loan for Renewal of an Oil Field Interest in Abu Dhabi:Supporting a Japanese Company in the Stable Holding of an Oilfield Interest

Buyer’s Credit for a Coal-Fired Power Generation Project:JBIC’s First Project Finance Support in Morocco

Guarantee for Privately Placed Samurai Bonds Issued by the Central Bank of Tunisia:JBIC’s First Guarantee for Samurai Bonds Issued by an African Country

United Arab Emirates

Tunisia

40


7. AnexportcreditlineisaformofexportcreditinwhichJBICcommitstothemaximumamountofcredittobeextendedtoforeignbanksorotherentitiestofinanceexportsofmachinery,equipmentandservicesfromJapan.

Africa

Angola

African Region

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsignedabuyer’screditagreementwiththeGovernmentoftheRepublicofAngola.Theloanwillprovidethenecessaryfundsforthepurchaseofnecessarytextilemanufacturingmachinery(madebyToyotaIndustriesCorporation,MurataMachinery,Ltd.,etc.)fromMarubeniCorporationundertheprojectimplementedbytheAngolanMinistryofIndustryforrebuildingstate-runtextilemanu-facturingplantsinAngola.TheAngolangovernmentiscurrentlypushingaheadwithpost-warreconstructionfollowingtheendoftheprolongedcivilwar,andrebuildingthetextileindustry,whichreliesonimportsforthemajorityofitstextileproducts,asakeygovernmentplatform.TheloanwillalsohelptheJapanesetextileindustrytomaintainandimproveitsinternationalcompetitiveness.

JBICestablishedanexportcreditline7forTheDevelopmentBankofSouthernAfricatoprovidefundsforlocalcompaniesinSouthernAfricaandother regionsofAfrica topurchasemachineryandequipmentfromJapanesecompanies.ManySouthernAfricancountrieshaveanabundanceofresources,andtheireconomicgrowthfueledbyresourcesdevelopmentcontinuestoreinforcetheneedtodevelopthelocalinfrastruc-ture.Againstthisbackdrop,Japanesecompaniesarelookingtowardthesecountriesforopportunitiestoexportmachineryandequipment,andthereforehaverisingexpectationsontherolethatJBICcanplayinthisregion.

Buyer’s Credit for Exporting Textile Manufacturing Machinery:Supporting Japanese Exports of Textile Manufacturing Machinery

Export Credit Line for The Development Bank of Southern Africa:Supporting Japanese Exports to the African Region

41


8. Coal-bedmethane(CBM)ismethaneextractedfromandnearcoal-beds.Itisdrawingattentionalongwithshalegasas“unconventional”naturalgas.

Canada

North A

merica

United States

Canada

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsignedaloanagreementwithToyotaTsushoCorporation.ThisloanwillprovidethenecessaryfundstoToyotaTsushoCorporation to enable its wholly owned Canadian subsid-iary—ToyotaTsushoWheatlandInc.—toacquireapartinter-est in thecoal-bedmethane (CBM)8fields inCanada fromEncanaCorporation,Canada’slargestnaturalgasproducer,forCBMdevelopment.ThisloanwillhelptoimproveJapaneseknow-howonCBMdevelopmentandraisetheratioofJapan’sindependentlydevelopedenergyresources,which,inturn,isexpectedcontributetoJapan’senergysecurity.

JBIC signed a loan agreement with INPEX CORPORATION(INPEX).ThisloanwillprovidethenecessaryfundstoINPEXtoenabletheCanadiancompanyjointlyestablishedbyINPEXandJGCCORPORATIONtoacquireapartinterestinCanadianshale gas fields held by the Canadian oil and natural gasdevelopmentcompanyNEXENInc.,anddevelopandproduceshalegas.ThisloanwillhelptoimproveJapaneseknow-howonshalegasdevelopmentandraisetheratioofJapan’sinde-pendentlydevelopedenergyresources.

JBIC signed a loan agreement with JD Rockies ResourcesLimited (JDR), a wholly owned U.S. subsidiary of ITOCHUCorporation. The loan provides the necessary funds forITOCHU Corporation to acquire equity in the U.S. oil andgas development company Samson Investment Company(Samson)throughJDR.Samsonproducesthelargestvolumeofoilandgasamongunlistedoilandgasdevelopmentcom-paniesintheU.S.,andoverthepastseveralyears,ithasalsobeendevelopingunconventionalnaturalresources.ThisloanwillalsohelptoexpandopportunitiesforJapanesecompaniestoparticipateinunconventionalnaturalresourcesdevelop-mentprojects.

Loan for Acquisition of Interests in and Development of Coal-Bed Methane:Supporting Japanese Participation in a Coal-bed Methane Project

Loan for Acquisition of Interests in and Development of Shale Gas:Supporting Japanese Acquisition of Interests in and Development of Shale Gas

Loan for Acquiring Equity in an Oil and Gas Development Company:Supporting Overseas Resources Development by Japanese Companies

42


3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

North A

merica

United States

United States

9. Unlikeconventionaloilthatisextractedfromwellsnaturallystoredinthestratum,tightoilexistswidelythroughtightstratasuchassandstone,limestoneandshaleformations,andthemethodsusedforitsextractionaresimilartothoseusedinshaleoilandgasextraction(horizontaldrilling,hydraulicfracturing,etc.).

JBICsignedaloanagreementwithSumitomoCorporationanditsU.S.subsidiarySummitDiscoveryResources IIILLC(SDRIII).ThisloanwillprovidethenecessaryfundsforSumitomoCorporationtoacquirethroughSDRIIIapartinterestinU.S.tightoil9reservesheldbytheU.S.oilandgasdevelopmentcompany Devon Energy Corporation, and to develop andproduce tightoil. Theknow-howon tightoildevelopmentgainedbyJapanesecompaniesthroughthisprojectwillleadtogreateropportunitiesforJapaneseparticipationinshaleoilandgasdevelopmentprojects,andhelptoraisetheratioofJapan’s independentlydevelopedoilresourcesthroughtheholdingoftightoilinterests.

JBICsignedaloanagreementwithJGCExplorationEagleFordLLC(JEEF),awhollyownedU.S.subsidiaryofJGCCorporation.ThisloanwillprovidethenecessaryfundsforJGCCorporationtodevelopandproduceshaleoilintheU.S.EagleFordshaleoilfields,ofwhichJGCCorporationholdsapartinterestthroughJEEF.Inviewoftheprojectedriseinshaleoilproductionintheyearsahead,theknow-howonshaleoildevelopmentgainedbyJapanesecompaniesthroughthisloanwillleadtogreateropportunitiesforJapaneseparticipationinoverseasshaleoildevelopmentprojects.

Loan for Acquisition of Interests in and Development of Tight Oil Reserves:Supporting Japanese Participation in a Tight Oil Development Project

Loan for Shale Oil Development:Supporting Japanese Participation in a Shale Oil Development Project

43


Chile

Latin Am

erica and the Caribbean

BrazilC

hile

Cochrane Site

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICsignedaloanagreementwithAmapáFlorestaleCeluloseS.A. (AMCEL),aBraziliancompanycapitalizedby Japanesecompanies.ThisloanprovidesthenecessaryfundsforAMCELtoplanteucalyptustreesandmanufactureandsellwoodchipssourced fromplantation forests inBrazil.Worldwoodchipsupplyanddemandisexpectedtotightenoverthemediumtolongtermasdemandforpaperexpandswitheconomicgrowthinemergingmarketcountries,andthisloanwillhelpJapanesecompaniestosecurealong-termandstablesupplyofwoodchipsfromplantationforests.

JBICsignedaprojectfinanceloanagreementwithEmpresaElectricaCochrane SpA, aChilean subsidiary ofMitsubishiCorporation,fortheCochraneCoal-FiredPowerProject.Underthispowerinfrastructureproject,MitsubishiCorporation,asanequityinvestor,willundertakealldevelopmentprocesses,fromconstructiontooperation,jointlywiththeChileancom-panyAESGernerS.A.Thisisthefirstpowerinfrastructureproj-ectinChilewithcapitalparticipationbyaJapanesecompany,andisexpectedtobecomeamodelforfutureinfrastructureprojectsinChilebyJapanesecompanies.

JBIC signed a loan agreement with Minera EscondidaLimitada(MEL),aChileancompanycapitalizedbyMitsubishiCorporation, JX Nippon Mining & Metals Corporation,MitsubishiMaterialsCorporation,BHPBillitonGroupandRioTintoGroup.Theloanwillprovidethenecessary fundsforMELtoexpanditsEscondidaCopperMine,theworld’slarg-estcoppermine,inChile,andincreaseproductionofcopperconcentrate. The copper concentrate producedbyMEL iscrucialtoJapanesecompaniesduetoitshighquality,andthisloanwillcontributetothelong-term,stablesupplyofcopperconcentratetoJapan.

Loan for Forestation, Woodchip Manufacturing and Sales Project:Supporting Japanese Companies to Secure Long-term Stable Woodchip Supply

Project Finance for a Coal-Fired Power Generation Project:Supporting the First Power Infrastructure Project by a Japanese Company in Chile

Loan for a Project to Expand the World’s Largest Copper Mine:Supporting the Long-term, Stable Procurement of Copper Concentrate by Japanese Companies

44


3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

Chile

Latin Am


Mexico

Mexico

JBIC signed separate loan agreements with MitsubishiCorporation,MITSUI&CO.,LTD.,andawhollyownedsubsid-iaryofMITSUI&CO.,LTD.TheloanswillprovidethenecessaryfundsforMitsubishiCorporationandMITSUI&CO.,LTD.toacquireequityinAngloAmericanSurS.A.,awhollyownedChileansubsidiaryofthemajorBritishminingcompanyAngloAmericanplc.withasubstantialportfolioofcopperassetsinChile,andalsotoacquireofftakerightsforcopperconcen-tratesetc.ThestrongercooperativerelationshipandstrategictieswithmajorminingcompaniesresultingfromthisarealsohighlysignificantforJapan’ssecuringamediumtolongtermsupplyofcopperconcentrates.

JBICsignedaloanagreementwithMazdaMotorManufacturingdeMexicoS.A.deC.V.(MMMdM),aMexicansubsidiaryofMazdaMotorCorporation.ThisloanwillprovidethenecessaryfundstoMMMdMforthemanufactureandsaleofautomobilesinMexico.MazdaMotorCorporationestablishedMMMdMinMexicoasaproductionsitetomanufactureandassemblecarsfortheimpor-tantNorthAmericanandCentralandSouthAmericanmarketswithaviewtostrengtheningitsglobalproductionnetworkandexpandingitsoverseasoperationstoincreasethelocalproductionratio,andinprovidingsupporttoMazdaMotorCorporationinitsoverseasbusinessoperations.ThisloanwillhelpJapaneseindus-triesmaintainandimprovetheirinternationalcompetitiveness.

JBICsignedaloanagreementwithNipponSteelPipeMexico,S.AdeC.V. (NPM),aMexicancompany jointlyestablishedbyNipponSteel&SumitomoMetalCorporation,SPTandSCInvestmentCo.,Ltd. (a jointventureofSumitomoPipeandTubeCo.,Ltd.andSumitomoCorporation),andMetalOneCorporation.TheloanprovidesthenecessaryfundstoNPMfor themanufactureandsaleofhighgradesteelpipes forautomobilesinMexico.InprovidingsupportfortheoverseasbusinessdeploymentofthesecompaniesinvestinginNPM,thisloanwillhelptheJapanesesteelindustrymaintainandimproveitsinternationalcompetitiveness.

Loan for Acquiring Equity in a Major Resources Subsidiary:Contributing to Securing the Medium to Long Term Stable Supply of Copper Resources to Japan

Loan for Automobile Manufacturing and Sales Project in Mexico:Supporting the Overseas Business Operations of the Japanese Automobile Industry

Loan for Automobile Steel Pipe Manufacturing and Sales Project:Supporting the Overseas Business Deployment of the Japanese Steel Industry

Mexico

45


10.GlobalStrategicInvestmentAllianceisanallianceofmultipleinvestorsledbyOMERS,apublic-sectorpensionfundestablishedinOntario,Canada.

North A

merica and Europe

Latin Am


Mexico

Venezuela

Other

3


utcomes in FY

2012 1. Exam

ples o

f Business Outco

mes b

y Region

JBICpartiallyacquiredthepubliclyplacedyen-denominatedforeignbonds(Samuraibonds)issuedinJapanbytheMexicangovernment.ThisacquisitionwillhelptomaintainandincreasethepresenceofMexicangovernmentbondsintheTokyomar-ket,andprovideabroadrangeofinvestmentopportunitiestoJapaneseinvestors.JBICholdsanannualmeetingforpolicydialoguewiththeMexicangovernmentaimedatpromotingmutualcooperationanddeepeningbilateraleconomicrela-tions,andatthesecondannualmeetingheldinfiscal2012,theMexicangovernmentexpresseditsappreciationtoJBICforthispartialacquisition.

JBICsignedabuyer’screditagreementwiththeVenezuelangovernment.The loanwillprovide thenecessary funds fortheVenezuelanstate-runInstitutodeFerrocarrilesdelEstado(StateRailwaysInstitution)topurchaseJapaneserailwaycars(builtbyNIPPONSHARYO,LTD.andTOSHIBACORPORATION)fromMarubeniCorporationtorunfromthecapitalCaracastotheneighboringcityofTuyMedio.Thismass-transitpublictransportinfrastructureprojectisexpectedtohelpalleviateur-bantrafficcongestionandeasepopulationpressuresthroughthedevelopmentofneighboringcities.

JBIC agreed to equity participation in Japan InfrastructureInvestmentPartnersL.P.,afundestablishedtoinvestinlargescaleinfrastructureprojectsinNorthAmericaandEurope,andmanagedbyasubsidiaryofMitsubishiCorporation.ThroughparticipationintheGlobalStrategicInvestmentAlliance10,thefundwillinvestinairports,railways,portsandharbors,powertransmissionanddistribution,gaspipelinesandotherlargescaleinfrastructureprojectsprimarilyinNorthAmericaandEurope,andisexpectedtoexpandtheinfrastructure-relatedinvestmentopportunitiesforJapanesecorporateandinstitu-tionalinvestors.

Partial Acquisition of Publicly Placed Samurai Bonds Issued by the Mexican Government:Supporting Diversification of the Mexican Government’s Funding Sources and Invigoration of the Samurai Bond Market

Buyer’s Credit for Exporting Railway Cars:Supporting Japanese Exports of Railway Cars

Equity Participation in a Fund Investing in Large Scale Infrastructure Projects Mainly in North America and Europe:Supporting the Expansion of Infrastructure-related Investment Opportunities for Japanese Investors

46


3


utcomes in FY

2012

Examples of Business Outcomes Relating to Support for SMEs2·

DAIHO INDUSTRIAL Co., Ltd.Manufacturing and Sales Business of Plastic Products

TOYO METAL TREATING CORPORATIONHeat Treated Metal Processing Business

Momoi Fishing Net Mfg. Co., Ltd.Manufacturing and Sales Business of Fishing Nets

NAGAOKA INTERNATIONAL CORPORATIONManufacturing and Sales Business of Plant Facility Production

TOKOKOSEN CORP.Manufacturing, Sales and Wholesale Business of Automobile Parts and Other Products

Japan Chemical Engineering & Machinery Co., Ltd.Plant Engineering Business

IndonesiaC

hina

Indonesia

China

ThailandThailand

JBICsupportsSMEsinawiderangeofindustrieswiththeiroverseasbusinessdeployment.

1. Ingasmoldingtechnology,gasisinjectedintotheplastictoformapreciseshapematchingthemold.2. Monofilamentisasinglefilamentfiber;thesinglefiberextrudedfromeachnozzleinthespinningprocessformsastrandoflinethatisusedforfishinglinesorbrushes.

2. Examp

les of Business O

utcom

es Relating to Sup

po

rt fo

r SMEs

NAGAOKAINTERNATIONALCORPORATION(NIC)haslongpossessedtop-mosttechnologicalcapacityforscreeninter-nals,whichareusedasmajorequipmentfortheimprove-ment,desulfurizationandotherprocessesinpetrochemicalplantsandrefineries.NagaokaHitachiZosenEquipment(Dalian)Co.,Ltd.,itssubsidiaryinChina,planstoproduce

andsellplantfacilities,includingthoseforpet-rochemicals, refineriesandthewater relatedsector.JBICprovidedaloantoNICforinvestinginthissubsidiary.

TOYOMETALTREATINGCORPORATION(TOYOMETAL)isengagedinmetalheattreatprocessingprimarilyforsteelrodsandothermetalmaterialsandmetalpartsusedextensivelyinautomobiles,constructionmachines,equipmentforshipsandmachinetools.TOYOMETALTREATING(CHANGZHOU)CO.,LTD,itssubsidiaryinChina,conductsmetaltreatmentforsteel

rods (to be used forsteeringwheelsystemsand other products).JBICprovidedloanstoTOYOMETALforinvest-inginthissubsidiaryandfor parent-subsidiarylending.

DAIHOINDUSTRIALCo.,Ltd.manufacturesandsellsabroadrangeofplasticproducts,includingpartsforair-conditionercabinetsandotherhouseholdelectricalappliances,andenginecoversandothermoldedplasticpartsformotorvehicles,andisaleaderinlargeinjectionmoldingandgasmoldingtech-nologies1.TheIndonesiansubsidiaryPT.DAIHOINDONESIA

manufacturesandsellsplastic products forOA equipment. JBICprovidedaloantoPT.DAIHOINDONESIAtobuildanewfactory.

MomoiFishingNetMfg.Co.,Ltd.undertakesallprocessesoffishingnetmanufacture,fromsourcingrawmaterialstothefinalfinishedproduct,andisJapan’sleadingmanufacturerofgillnets, thecompany’smainproduct,usingprimarilymonofilament2.Thecompany’s IndonesiansubsidiaryP.T.IndoneptuneNetMfg.,Co.manufacturesandsellsfishingnets,

andJBICprovidedaloantoP.T.IndoneptuneNetMfg.,Co.toacquiread-ditionalmachineryandequipment.

JapanChemicalEngineering&MachineryCo.,Ltd.(JCEM)isthefirstdeveloperofanalcoholdistillationplantinJapanandhasbeenexpandingitsscopeofbusinessfromthemanufac-tureandconstructionofvarioustypesofequipmentforthechemicalindustrytoengineeringforenvironmentally-friendlycleanerplants.NIKKAKI(THAILAND)CO.,LTD.,itssubsidiary

inThailand,isengagedinengineering business ofchemical,foodanddrink,andenergyplantmachin-eriesandequipment.JBICprovidedloanstoJCEMforinvestinginthissubsidiaryandforparent-subsidiarylending.

TOKOKOSENCORP.(TOKOKOSEN) isatradingcompanyspecializedintradewithChina.Inrecentyears,ithasbeenmakingactiveeffortstoconductthebusinessthatintegratesmanufacturingandtrading.Itsmajorbusinessismanufacturingandsellinggarments,andfabricusedforautomobilesatitsdomesticandoverseasproductionbases.KosenFibertec

(Thailand)Co.,Ltd., itssubsidiary inThailand,manufactures,sellsandwholesalesautomobilepartsandotherprod-ucts. JBIC provided aloantoTOKOKOSENtoincreaseinthecapitalofthissubsidiary.

47


Daika Kogyo Co., Ltd.Manufacturing and Sales Business of Plastic Film

BELLSONICA CORPORATIONManufacturing and Sales Business of Automobile Parts and Other Products

TAISHODO CORPORATIONManufacturing and Sales Business of Electronic Circuit Boards

Ryonan Electric CorporationManufacturing and Sales Business of Automobile Parts

SHOSHIBA MANUFACTURING COMPANY LTD.Manufacturing and Sales Business of Automobile Parts and Other Products

HIROSE CorporationManufacturing and Sales Business of Power Distribution Boards

ThailandIndia

Viet N

am

IndiaM

exicoIndia

3. EPS(ElectricPowerSteering)brushholderassembliesareelectricpowersteeringcomponentparts.

3


utcomes in FY

2012 2. Exam

ples o

f Business Outco

mes Relating to

Supp

ort

for SM

Es

DaikaKogyoCo.,Ltd.hasachievedstableproductqual-ityinitsmanufactureofabroadrangeofplasticfilmfromfoodpackagingtoindustrialmaterialthroughitsintegratedproductionstructure.Thecompany’sThaisubsidiaryDaikaKogyo(Thailand)Co.,Ltd.manufacturesbreathablefilmusedasabacksheetfordisposablediapers.JBICprovidedaloan

toDaikaKogyoCo.,Ltd.to expand the manu-facturing facilitiesandequipmentatthelocalsubsidiary.

TAISHODOCORPORATIONundertakesallprocessesofelectroniccircuitboardmanufacture,fromprintedcircuitboardpatterndesign,throughpartsprocurementtoboardmountingandtest-ing,andisanindustryleaderinitstechnologicalexpertiseandqualitycontrolcapabilitiesunderpinnedbyitsuniquehigh-mix,low-volume,short-runproductionsystem.TheVietnamesesub-

sidiaryTaishodoVietnamCo., Ltd. manufacturesandsellselectroniccir-cuitboards.JBICprovideda loan to TAISHODOCORPORATION’s HongKong subsidiary to fi-nance the Vietnamesesubsidiaryforitsfactoryexpansion.

BELLSONICACORPORATION(BELLSONICA)hasstrengthintheintegratedproductionprocess—rangingfromproductdesigntowelding,paintingandassembling,inadditiontoitshightechnologicalcapabilitiesinmanufacturingmetal-stampedparts,whichwillconstituteamajorframeworkofautomo-biles.BellsonicaAutoComponentIndiaPrivateLimited,itssubsidiaryinIndia,manufacturesandsellsautomobileparts.

JBICprovidedaloantoBELLSONICAforfinanc-ingtheexpansionofthesubsidiary’splant.

RyonanElectricCorporationmanufacturesandsellselectricalcomponentpartsformotorvehicles,primarilywireharnesses,basedonitsowndesignforeachvehiclemodel.Thecom-pany’sstrengthisintheoutstandingqualityofitsproducts.TheIndiansubsidiaryRYONANELECTRICINDIAPVT.LTD.manufacturesandsellselectricalcomponentpartsformotor

vehicles, includingEPSbrush holder assem-blies3.JBICco-financedwith The HyakujushiBank, Ltd. the fundsnecessaryfortheIndiansubsidiary’scapital in-vestment.

HIROSECorporationdesigns,manufacturesandsellshigh-voltagepowerdistributionboardsandawide rangeofcontrolpanels,anditsstrengthisinitsintegratedbusinessstructurethatalsoincludestheinstallationandmaintenanceofthoseproducts.Thecompany’sIndiansubsidiaryASAHISwitchgearProductsLimitedmanufacturesandsellspower

distributionboards.JBICco-financed with TheHyakujushi Bank, Ltd.thefundsnecessaryfortheIndiansubsidiarytoestablishanewplatingandpaintingplant.

SHOSHIBAMANUFACTURINGCOMPANYLTD.(SHOSHIBA)manufacturesandsellspress-moldedsafetypartssuchasairbagcasesandseat frames.SHOSHIBAMEXICANAS.A.deC.V., itssubsidiary inMexico,manufacturesandsellsautomobilepartsandotherproducts.JBICprovidedloanstoSHOSHIBAforinvestinginthissubsidiaryandforparent-

subsidiarylending.

48


3


utcomes in FY

2012 3. Exam

ples o

f Business Outco

mes Relating to

the Enviro

nment

Supporting Environmental Conservation and Improvement Projects

Nowadays,achievingeconomicdevelopmentcompatiblewithenvironmentalsustainabilityisrecognizedasacommonchal-lengefacingdevelopedanddevelopingcountriesalike.Giventhisself-realization,therearegrowingexpectationsacrosstheworldonimplementingprojectsconducivetoenvironmentalconservationandimprovement. Awiderangeofeffortsareunderwayallovertheworldinthissector,includingenergyefficiencyimprovementprojects;renewableenergyharnessingprojectssuchassolarandwindpowergeneration;highlyefficient,highperformancecoal-firedthermal power generation and natural gas-fired combinedcyclepowerprojectsthatreducecarbondioxideemissions;urban transport projects such as transit rails that mitigatetrafficcongestionandreduceairpollution;smartgridprojects

thatsupplyefficientpowerbyusingITandeco-cityprojectsthataimtorealizeenvironmentallysustainablecities. Amidthesedevelopments,JBICisdevotingitselftosup-portingenvironmentconservationandimprovementprojects,nottomentionenvironmentalandsocialconsiderationsbeingmadeinindividualprojects.JBICalsolaunchedGREEN(GlobalactionforReconcilingEconomicgrowthandENvironmentalpreservation)operations inApril2010andhassincebeenactivelyfocusingitssupportoneffortstoconservetheglobalenvironment, suchasprojects thatareexpected tosignifi-cantlyreducegreenhousegas(GHG)emissions,whiletakingaccountoftheglobaldisseminationofJapan’sinternationally-acclaimedadvancedenvironmentaltechnologies( see p. 59).

Examples of Business Outcomes Relating to the Environment3·

Supporting Renewable Energy and Waste-to-Energy Projects in Malaysia

Providing Local Currency Loans to Support Japanese Companies’ Participation in Renewable Energy Power Generation

JBICestablishedacreditlineforRHBBankBerhad(RHB),oneoftheleadingcommercialbanksinMalaysia.ThecreditlineisextendedundertheGREENoperationstoprovidenecessaryfundingforbio-masspowergenerationandotherrenewableenergyprojectsandwaste-to-energyprojectsinMalaysia.Environment-relatedbusinessopportunitiesare increasing inMalaysiawith the introductionofsubsidiesforrenewableenergyprograms,suchasthefeed-intariffsystem.Thiscreditlineisexpectednotjusttocontributetoareduc-tion inGHGemissions, but also toprovide Japanese companieswithgreaterenvironment-relatedbusinessopportunitiesinMalaysia.

JBICisprovidingaprojectfinanceloanforrenewableenergyprojectsinCanadainwhichaJapanesecompanyinvests.Asdevelopedcoun-triesinparticularadoptpoliciesthatadvancetheuseofrenewableenergy,businessopportunitiesforJapanesecompaniesaswellwillcontinuetoexpand.Underthisproject,aconsortiumwillbuildandoperatewindpowerstationsandsolarpowerstationsinOntarioandBritishColumbia,Canada,andsellthegeneratedpoweroverthefollowing20years.Thisprojectisalong-terminvestmentwithrevenue received in the local currency, so JBIC isminimizing theriskinherentinforeigncurrencyborrowingsbyextendingfinanceinCanadiandollars.Inthisway,JBICisprovidingsupportforlong-termoverseasprojectsbyJapanesecompanies.

49


Supporting Renewable Energy Projects in Colombia

Participation in the East Asia Low Carbon Growth Partnership Dialogue

Partnerships and Knowledge Sharing in the Environmental Sector

Asenvironment-relatedprojectsareexpectedtobeimple-mented in many places across the world with the aim ofrealizing global environmental conservation and a lowcarboneconomy,JBICissupportingJapaneseoverseasbusi-nessdeploymentaswellaseffortsbeingmadeby foreigngovernments,notonly infinancingbutthroughinformation

sharingandknowledgedisseminationbyholdingseminarsandparticipatinginrelevantevents,whileformingclosepartner-ships with foreign governments and government agencies,domesticprefecturalandmunicipalgovernments,andotherstakeholders.

3


utcomes in FY

2012 3. Exam

ples o

f Business Outco

mes Relating to

the Enviro

nment

JBIChasestablishedacreditlineforBancodeBogotáS.A.(BancodeBogotá)inColombiaundertheGREENoperationstoprovideneces-saryfundingforenvironmentalprojectsutilizingrenewableenergyinColombia,includingsmall-scalerun-of-the-riverhydroelectricgenera-tionandbiomasspowergeneration.TheColombiangovernmentispursuingenvironmentalpoliciesthat includenumericaltargetstocutitsGHGemissions,andthiscreditlineisexpectedtogivefurthermomentumtotheintroductionofrenewableenergyandcontributetothereductionofGHGemissionsinColombia.ItisalsoexpectedtofacilitatethespreadofJapan’sinternationallyrecognizedadvancedenvironmentaltechnologiesinColombia.

JBIC, togetherwith theWorldBankand theAsianDevelopmentBank,participatedintheEastAsiaLowCarbonGrowthPartnershipDialogueheldinTokyoinApril2012. TheDialoguediscussedacooperativestructureforpromotinglowcarbongrowthinEastAsiawiththeaimofreconcilingglobalen-vironmentalpreservationwitheconomicgrowththroughthespreadofenergy-savingtechnologiesinEastAsiancountries.Participantsincludedgovernmentministersresponsibleforenvironmentalandenergy-relatedpolicyfrom18membercountriesoftheEastAsiaSummit (EAS). TheDialogue reachedanagreement that govern-mentofficials,researchinstitutions,andtheprivatesectorwillworktogethertobuildanetworkthatcanrealizelowcarbongrowthandsocietiesthataremuchmoreresilienttoclimatechange.

50


3


utcomes in FY

2012 4. Exam

ples of Business Outcomes Relating to Studies, and Collaboration with

Overseas Government Organizations and International Organizations

JBICisundertakingstudiesandresearchrelatingtooverseasinvestmentsandinternationalfinance.Inregularcontactwithoverseas government organizations, foreign and domesticresearchinstitutions,andexperts invarioussectors, JBICisengaged ingatheringandanalyzinga rangeof informationandsharingknowledge.

Survey Report on Overseas Business Operations by Japanese Manufacturing Companies

JBIChasbeenconductingtheSurveyonOverseasBusinessOperationsbyJapaneseManufacturingCompanies,aques-tionnairesurvey,everyyearsince1989,andthefiscal2012surveywasthe24th.Thisannualsurveyattractswidespread

interest because ofits distinctive charac-ter and continuity inidentifyingthecurrenttrendsandfutureout-look of the overseasbusiness operationsof Japanesemanufac-turingcompanies.

JBICcompilestheresultsofthesurveyintoareport,andmakesthisreportandtheinformationitcontainswidelyavail-ableinbookletform,ontheJBICwebsite,andalsothroughseminarsheldincollaborationwithchambersofcommerceand regional banks throughout Japan. JBIC explained theresultsof thesurveyat the “Overseas InvestmentSeminar:Overseas Business Operations by Japanese ManufacturingCompanies”heldinTokyoinDecember2012,andalsoJBICheldexplanatorymeetingswithoverseasJapanesechambersofcommerceandindustryandforeigngovernmentsforcom-municatingtheseresultstotheirmembers.Thefindingsofthesurveywerealsousedeffectivelyinmakingpolicyproposalstoforeigngovernments. Survey results and seminarsarewidely reportedonbynewspapersandothermedia,andarticlesandcommentariescoveringthesurveyareprovidedtothevariousbranchesofthemassmedia.

Collaboration with Overseas Government Organizations and International Organizations

InMay2012,theEconomicForumofTheExport-ImportBankofChina,TheExport-ImportBankofKoreaandJBICwasheldinKorea.Theforumbroughttogethereconomistsfromtheeconomic research and sovereign risk assessment depart-mentstodiscussvariousissuesfacingtheglobaleconomyandpoliticalandeconomicconditionsinemerginganddevelop-ingcountries.Theforumwasthesixthheldsincethefirstin2009,andwashostedbyTheExport-ImportBankofKorea.ParticipantsdiscussedpoliticalandeconomicissuesfacingsixcountriesinEastAsia,theMiddleEast,SoutheastAsia,andLatinAmerica,andalsotheEuropeanfinancialcrisis.

TheInternationalMonetaryFund(IMF)andtheWorldBankAnnualMeetingswereheldinTokyoinOctober2012,thefirsttimesince1964.DuringtheperiodoftheMeetings,JBICheldthe“JBICInfrastructureDevelopmentSeminar”withthecoop-erationoftheMinistryofFinanceJapan,theWorldBank,andtheJapaneseBankersAssociation.FeaturingkeynotespeakersanddiscussionsamongpanelistsofinfrastructureexpertsfromJapanandoverseas,theseminaraimedatbuildingcommonground among the players concerned about the optimumformofcollaborationbetweenthegovernmentandprivatesectorsandthedivisionofresponsibilitiestomeetgrowinginfrastructuredemandespecially inemergingmarketcoun-tries.Theseminarhadanattendanceofapproximately200representativesfromJapaneseandforeignprivatecompanies,financialinstitutionsandgovernmentagencies,andembassiesinTokyo,andgeneratedconsiderableinterestandawarenessaboutinfrastructuredevelopmentthroughPPP(PublicPrivatePartnership).

AlsoinOctober2012,JBICtogetherwiththeBancoNacio-naldeDesenvolvimentoEconômicoeSocial(BNDES)heldthe“BNDES-JBICSeminarCommemorating50YearsofCoopera-tion”inTokyo.LikeJBIC,BNDESisagovernmentalfinancialinstitution,andoverthese50yearsofcooperation,thetwobankshavedevelopedastrongrelationshipinwhichJBIChasprovidedBNDESwithfundsamountingtoatotalof3.5billionU.S.dollarsfor14projects.Roughly300representativesfromJapanesecompaniesandJapaneseinvestorswereinvitedto

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

4·

JBICInfrastructureDevelopmentSeminar

TheSixthEconomicForumofTheExport-ImportBankofChina,TheExport-ImportBankofKoreaandJBIC

51


theseminar,andaswellasreflectingonthehalf-centuryofcooperationbetweenthetwobanksandBrazil’seconomicdevelopment,theseminardiscussedthecourseoffutureco-operationaimedatpromotingeconomicexchangesbetweenthetwocountries.

InNovember2012,JBICparticipatedintheIslamicBankingSummitAfricaheldinDjibouti.ThesummitfeaturedaspecialaddressbythePresidentofDjiboutiandakey-noteaddressbytheGovernoroftheCentralBankofDjibouti,aswellaspresentationsbyseniorofficialsofinternationalorganizations.Thesummitdiscussedabroadrangeoftopics,includingriskmanagement,legalandaccountingissuesinIslamicfinancing,Islamiccapitalmarkets,and the Islamic insurance (takaful)market.

Collaboration with Universities, Research Institutions and Academic Societies

InresponsetoaninvitationfromtheFacultyofEconomicsofUniversitasIndonesia,inMay2012JBICsentamemberofstafftogiveaspeciallectureondevelopmentfinanceinAsiaandinfrastructurefinancingthroughPPP. AlsoinMay2012,JBICpresentedareportentitled“RisksinpolicyprescriptionsfortheEuropeansovereign-debtcrisis:Muddlingthroughortrappedinaviciouscircle?”atthe“TheCausesoftheEurozoneDebtCrisis” internationalfinancingpanelheldasapartoftheJapanSocietyofMonetaryEconom-ics2012SpringAnnualMeetingProgram. In June2012, JBICcosponsoredaseminarentitled “WeJapaneseshouldbeabletodobusinessbetterinIndia.Whynot?” with the Graduate School of Management of KyotoUniversity.Speakersfromabroadrangeoffields,includingJBIC,whichareconductingbusinessinIndia,gavepresenta-tionsandheldapaneldiscussiononpoints for successfulbusinessoperationsinIndia.AsecondseminarwasheldinMarch2013.InSeptember2012,JBICalsocosponsoredtheseminar“ProjectFinanceinOverseasProjectManagement”withtheGraduateSchoolofManagementofKyotoUniversity,and the Japan Institute forOverseas Investment (JOI). Theseminarwasattendedbyabout200people,and featured

presentationsandpaneldiscussionson the importanceofimprovingoverseasprojectmanagementcapabilities,andtheeffectiveuseof and recent trends inproject financeusingexamplesofactualinfrastructureprojects.

JBICheldthefollowingjointforumsandseminarswiththeNationalGraduateInstituteforPolicyStudies(GRIPS). InJuly2012,JBICandGRIPSheldtheseminar“Philippines’PolicyChallengesAhead:Public-PrivatePartnershipsandGov-ernance.”TheseminarinvitedaUniversityofthePhilippinesprofessorwhoalsoformerlyservedastheDirectorGeneralofNationalEconomicandDevelopmentAuthoritytospeak,anddealtwithPPPsinthePhilippines,wherethereisgreatbusinesspotentialandappealtoJapanesecompanies,andstillconsiderablescopeforinfrastructuredevelopment. InNovember2012,JBICandGRIPSheldtheseminar“Myan-mar’sPoliticalLandscapeandEconomicProspects.”FollowingapresentationbyanotedMyanmaresepoliticalandeconomicresearcherinvitedfromtheInstituteofSoutheastAsianStudies(ISEAS)inSingapore,JapaneseresearchersjoineddiscussionsfocusingonMyanmar’seconomicoutlook. InJanuary2013,JBICandGRIPSheldtheforum“Prospectsfor Indonesia’s Sustainable Growth—Is This Time DifferentfromthePre-AsianCrisisLandscape?”Followingapresenta-tionontheprospectsforIndonesia’ssustainablegrowthbytheformerGovernorofBankIndonesia,centralbank,arangeofviewswereexchangedonthesignificantpoliticalandeco-

Seminar“ProjectFinanceinOverseasProjectManagement”

BNDES-JBICSeminarCommemorating50YearsofCooperation

JBIC-GRIPSjointforum“ProspectsforIndonesia’sSustainableGrowth—IsThisTimeDifferentfromthePre-AsianCrisisLandscape?”

3


utcomes in FY

2012 4. Exam



52


nomictransformationthathastakenplaceinIndonesiasincetheAsianfinancialcrisis. InSeptember2012,JBICco-hostedthe“SecondIMF-SCIDConferenceonEmergingAsia:Asia’sRebalancingandGlobalImplications”with the IMFand the StanfordCenter for In-ternationalDevelopment(SCID)ofStanfordUniversity.Thetwo-dayconferencegavethenumerousattendingexpertsandeconomists from Japaneseuniversities, StanfordUniversity,andAsiancountriesincludingChina,Malaysia,thePhilippines,SingaporeandThailand,theopportunityfordiscussiononabroadrangeofcriticaltopicsforthefutureoftheAsianandglobaleconomy. In November 2012, JBIC gave a presentation entitled“ProspectsofIndonesiaandThailand:PoliticalandEconomicConflictinMiddle-IncomeCountries”atthepubliclectureonAsiaco-hostedbytheInternationalCentrefortheStudyofEastAsianDevelopment(ICSEAD)andtheCityofKitakyushu.ICSEADisaresearchinstitutionestablishedwiththeaimofconductingresearchoneconomicsandsocialissuesinEastAsiaandcontributingtointernationalandregionalsociety. InDecember2012,JBICparticipatedinthe“InternationalConference:TheChangingParadigmofIndia-JapanRelations”hostedbytheIndianpolicythink-tankIndianCouncilforRe-searchonInternationalEconomicRelations(ICRIER).HeldinNewDelhi,thetwo-dayconferencewasbrokendownintofivesessionscoveringabroadrangeofthemes.Guestspeakersincludedexpertsfromtheindustrial,academicandgovern-mentsectorsfromJapanandIndia.

Collaboration with Private-sector Financial Institutions

JBICisholdingdiscussionsandexchanginginformationwithprivate-sectorfinancialinstitutionsconcerningthepoliticalandeconomicsituationincountriesimportanttoJapan,theirfutureprospects,andalsoriskanalysisandassessmentrelatingtothosecountries. In fiscal 2012 JBIC held workshops on the followingthemeswithofficialsresponsibleforsovereignriskscreeninginprivate-sectorfinancialinstitutions. InJuly2012,JBICheldtheforum“Philippines’PolicyChal-lengesAhead:Public-PrivatePartnershipsandGovernance.”AprofessorfromtheUniversityofthePhilippineswasinvitedtogiveapresentation,afterwhichdiscussionswereheldonthe economic prospects of the Philippines and the policychallengesthecountryfaces. InNovember2012,JBICheldtheforum“Myanmar’sPoliticalLandscape and Economic Prospects,” and hosted a seniorresearchfellowfromISEAS.Theworkshopservedtodeepenparticipants’ understanding of the political and economicsituationinMyanmarasJapanandothercountriesandinter-nationalorganizationssteadilymovetowardrecommencingsupportandassistance. At the forum “Prospects for Indonesia’s Sustainable

Growth—IsThisTimeDifferentfromthePre-AsianCrisisLand-scape?”heldinJanuary2013,JBIChostedtheformerGovernorofBank Indonesia,centralbank,who iscurrentlyaprofes-soroftheNanyangTechnologicalUniversity’sS.RajaratnamSchoolofInternationalStudies.DiscussionswereheldonthecurrentstateoftheIndonesianeconomyandprospectsforsustainablegrowthcomparedtothesituationbeforetheAsianfinancialcrisis. InFebruary2013,JBICheldthe“ResilienceIndex”work-shop,andhadtheopportunitytodiscusstheresilienceindex,developedbyanoverseas teamofexperts.This indexas-sessesthedegreeofresiliencethatdeveloped,developingoremergingcountrieshaveagainstanexternalshock,andidentifiesthebackgroundfactorstothis.

Sovereignriskworkshop

3


utcomes in FY

2012 4. Exam



53


4Financial Instruments

1 Financial Instruments 56

2 Prominent Initiatives in Recent Years 65

3 Framework for Supporting Globalization Efforts of SMEs 66

55


Financial Instruments1·

Export Loans

Financial institution, etc., in foreign country

Importer(s) in foreign country(ies)Japanese exporter(s)

Loan(B/L)*2

Loan(B/C)*1

Exportsofplants,etc.

Loans

ExportloansareprovidedtooverseasimportersandfinancialinstitutionstosupportfinanceexportsofJapanesemachinery,equipmentandtechnologymainlytodevelopingcountries.Inparticular,productssuchasmarinevessels,powergenera-tionfacilitiesandothertypesofplantequipmentincorporatea large amount of advanced technology, and their exportcontributestoenhancingthetechnologicalbaseofJapaneseindustries.Further,Japaneseshipbuildingandplantfacilitiesindustrieshaveabroadrangeofsupportingindustriesinclud-ingSMEsproducingpartsandcomponents.ExportloansJBICprovides are also expected topositively contribute to thebusinessoftheseJapanesecompanies.Exportloansarealsoavailabletodevelopedcountriesineligiblesectors(seenote). Terms and conditions of export loans are determined

based on the OECD Arrangement. In principle, the loanamountshouldnotexceedthevalueofanexportcontractortechnicalservicecontract,andexcludesdownpayment.Whilelocalcostscannot,inprinciple,beappliedtotheloan,suchcostsmaybecoveredprovidedthattheamountiswithinthescopeprescribedbytheOECDArrangement.

(Note)EligibleSectorsofExportLoansinDevelopedCountries(AsofJuly31,2013)[IntegratedInfrastructureSystemProjects]

Railways(high-speed,inter-cityprojectsandprojectsinmajorcities),waterbusi-ness,biomassfuelproduction,renewableenergypowergeneration,nuclearpowergeneration,powertransformation,transmissionanddistribution,highlyefficientcoal-firedpowergeneration,coalgasification,carboncaptureandstorage(CCS),highlyefficientgas-firedpowergenerationandsmartgrid

[OtherExportTransactions]Ships,satellites,aircrafts,medicalpositronbeamtherapyequipment

*1.Loantoforeignimporters(Buyer’sCreditor“B/C”).*2.Loantoforeignfinancialinstitutions(Bank-to-BankLoanor“B/L”).

4

Financial Instruments

1. Financial Instruments

Supporting Japanese Companies’ Export to Overseas Water Infrastructure Project Supporting Export of Bulk Carriers by Japanese Companies

private-sector financial

institutions

JBICprovidesabuyer’scredittoHydrochem(S)PteLtd.(Hydro-chem),awhollyownedsubsidiaryofHyfluxLtd.(Hyflux)inSingaporewhich is one of the world’s leading fully-integrated water solu-tionscompanies.Thisloanis intendedtofinanceHydrochemtopurchasekeycomponents(reverse-osmosismembraneelementsmanufacturedbyTorayIndustries,Inc.andhighpressurepumpsmanufacturedbyTorishimaPumpMfg.Co., Ltd.) forSingapore’slargestmembrane-basedseawaterdesalinationplantfromMitsui&Co.PlantSystems,Ltd.Water-relatedbusinesshasbeengrowingatthegloballevel,aswatershortagescausedbypopulationgrowthandexpandingeconomicactivitieshavebeendrawingincreasinginteresttowaterissues.Thisloanwillthuscontributetomaintain-ingandimprovingtheinternationalcompetitivenessof Japanesecompaniesinwater-relatedbusiness.

JBIC signed buyer’s credit agreements with PB Vessels HoldingLimited(PBVH)intheBritishVirginIslandsforfundingitspurchaseoffourbulkvessels.PBVHisawhollyownedsubsidiaryofHongKong’s leading shippingoperator, PacificBasin Shipping Limited(PacificBasin).TheseloansareintendedtofinancePacificBasintopurchasefouroftheirbulkcarriersbuiltbythreeJapaneseshipbuild-ersrespectivelyintheirdomesticshipyards.Thisloanwillsupportto enhance the international competitiveness of the Japaneseshipbuildingindustry,whichfacesstiffcompetitionfromshipyardsinothercountries,andprovidessupporttoasectorthatplaysasignificant role in local economiesby furthering employment atmanySMEs,aswellasotherrelatedcompanies.

56



institutions

Import Loans

Foreign exporter(s)Japanese Importer(s)

Loan

Importsofnaturalresources

Loan

Importloanssupportimportsofstrategicallyimportantgoodsincludingnaturalresources.TheyareextendedtoJapaneseimportersorforeignexporters.AsJapanispoorlyendowedwithnatural resources,stable importsofnatural resourcesoverthelongtermareoneofthekeyfactorsunderpinningdomesticeconomicactivity.Importloansfinancethedevelop-mentandimportofenergyresources,includingoilandLNG,andmineralresources,includingironore,copperandotherrarematerials. Inadditiontonaturalresources,JBICprovidesaguaranteefacilityforgoodsandservicesessentialtothesounddevelop-mentof the Japaneseeconomy, suchas for the import ofaircraft.

Products Eligible for Import Loans (Natural Resources)Oil,petroleumgas,LNG,coal,uranium,metallicore,metals,mineral phosphate, fluorite, salt, lumber, wood chip, pulp,andothermaterials

4



Supporting Secure Long-Term Access to Mineral Resources by Japanese Companies

Financing for Japanese Power Companies to Support Stable Supplies of LNG

Stablesupplyoftheenergyresourcesthatsustainourdailylivesandeconomicactivityisavitalissue,andLNGhasrecentlybecomeincreasinglyimportantasaprimarysourceofenergy.Inresponsetothesecircumstances,JBICprovidesJapanesepowercompanieswiththefundingnecessaryforimportofLNG.Thisfinancing,bysupport-ingLNGprocurementbyJapanesepowercompanies,contributestoastablesupplyofenergyresourcesforJapan,andthestabilityofpowersuppliesthatareessentialtodailylife.

JBICprovidesanimportloantoCorporaciónNacionaldelCobredeChile(CODELCO)inChiletoensureastableprocurementofmolybdenumoxide.Molybdenumisabyproductusedasanaddi-tivetoenhancetheheatresistanceandstrengthofsteel(specialsteel)andincreasethefunctionofchlorineresistance,etc.Thus,itisanindispensableraremetalformanufacturinghigh-qualityspecialsteelsuchasstainlesssteel.Recently,growingdemandinemergingmarketcountrieshasaffectedtheglobaldemand-supplybalanceofthismaterial.Thus,nineJapanesecompanieshavebeenmakingeffortswith the supportof theMinistryof Economy,TradeandIndustryandotherstosecurestableprocurementofmolybdenumoxidefromCODELCO.ThisloanwillbeextendedtoCODELCO,whichproducesmolybdenumproducts,onthepremiseoflong-termpurchaseofmolybdenumoxidebyJapanesecompanies.TheloanwillbeusedasfundsnecessarytoestablishanewrefineryplantofCODELCO.TheloanhashighsignificanceinsecuringmediumandlongtermaccesstomineralresourcesforJapan.

molybdenumoxide

57



institutions

Government, financial institution, etc., in foreign country, Japanese bank

Japanese affiliate(s)

Joint venture partner(s)

Japanese company

Project(s) in foreign country(ies)

Loan

Loansand/orequityparticipations

Loan

Loans

Loans

Equityparticipations

Loan

Loans

Overseas Investment Loans

Overseasinvestmentloanssupport Japaneseforeigndirectinvestments. They are extended to Japanese companies(investors),overseasaffiliatesincludingjointventureswhereJapanesecompanieshaveequityinterestsandgovernmentsorfinancialinstitutionsthatmakeequityparticipationsinorextendloanstosuchoverseasaffiliates. DirectloanstoJapanesecompaniesareintendedforSMEs,aswellasforprojectsaimedatdevelopingorsecuringinter-ests in overseas resources that are strategically importantto Japan, or for projects to assist with merger and acqui-sition (M&A) activities and other agreements (including tolargecompanies).Moreover,JBICisabletoprovidetwo-steploans(TSLs)tosupporttheoverseasbusinessdeploymentof

JapanesecompaniesincludingSMEs,aswellasTSLsintendedtosupporttheirM&Aactivities.JBICisalsoabletoprovideshort-term loans for overseas business operations whenbridge loansarerequiredtofill thefinancinggapbefore itofferslong-termloans.JBICisfurtherempoweredtoextendinvestmentloansforprojectsindevelopedcountriesforeli-giblesectors(seenote).

(Note)EligibleSectorsofOverseasInvestmentLoansinDevelopedCountries(AsofJuly31,2013)Railways(high-speed,inter-cityprojectsandprojectsinmajorcities),waterbusiness,renewableenergypower generation, nuclearpower generation, power transfor-mation,transmissionanddistribution,highlyefficientcoal-firedpowergeneration,coal gasification, carboncaptureand storage (CCS), smart grid, developmentoftelecommunicationsnetwork,biomassfuelproduction,highlyefficientgas-firedpowergeneration,aircraftmaintenanceandsales,M&Aactivities,etc.

4



Supporting Financing for Large-Scale LNG Project Led by Japanese Companies

Supporting Japanese Company’s Business Activities by Providing Loan in Local Currency

JBICprovidesloanstofinanceAustralia’slarge-scaleIchthysLNGProjectwhereJapanesecompanieshavebeentakingtheleadindevelopingthegasandcondensatefieldsandproducingLNGandotherpetroleumproducts.TheglobaldemandofLNGisprojectedtoincreaseduetogrowingdemandinemergingmarketcountriesandheightenedenvironmentalawareness.InJapan,therehavebeenincreasinghopesforastablesupplyofLNGinrecentyears.ThisprospecthasmadeAustralia,withitsabundantgasreservesandpoliticalandeconomicstability,increasinglyimportantasasupplysourceofLNG.Inthiscontext,supportingJapanesecompaniesforleadingthedevelopmentofenergyresourcesinthisprojecthasasignificantimplicationforsecuringastableLNGsupplytoJapan.

JBICprovidesaloandenominatedinIndonesiarupiahtoPT.JTEKTINDONESIA(JID),anIndonesiansubsidiaryofJapaneseJTEKTCOR-PORATION.ThisloanisintendedtofinanceJIDtoaddadditionalequipmentfacilitiesforexpandingtheirmanufacturingandsalesofautomobileandmotorcyclepartssuchaselectricpowersteering,bearingsandstarterclutches.Indonesiaisapromisingmarketwithsustainedgrowth,whichisindicatedbyitsannualproductionofover1.0millionautomobilesin2012.ThisloanwillcontributetomaintainingandimprovingtheinternationalcompetitivenessoftheJapaneseautomobilepartsindustry.

58


Untied Loans

Untiedloansarefinancingbasicallytodevelopingcountriesnecessary to implementprojectsand importgoods,or forsuchcountriestoleveltheirinternationalbalanceoftrade,orstabilizetheircurrency.Loansarenotconditionalonprocure-mentofequipmentandmaterialsfromJapan. Capital procured from untied loans is used to: Securestable supplies of energy and mineral resources to Japan;PromotebusinessactivitiesofJapanesecompanies;MaintainandexpandtradeanddirectinvestmentfromJapan;Financeprojects having significant effect on global environmentalpreservation;andFinanceprojectsmaintaininginternationalfinancialorder.

4



Project(s) in the recipient country(ies)

Exporter(s)

Government, financial institution, etc.,

in foreign country

Foreign importer(s)

Importsofequipmentand

technology

Loan


institutions

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

Eligible Entity:

Eligible Projects:

Foreigngovernment,governmentalagenciesorlocalgovernments,publicenterprisessuchasutilitiesoperatingcloselywithgovernment,

foreignfinancialinstitution,multilateralinstitution.

1. Favorableimpactonpreservationoftheglobalenvironment,suchassignificantlyreducingGHGemissions.

2. AcceptingJBIC-MRV*processontheeffectoftheenvironmentalpreservation. (e.g.Energyefficiencyimprovement,Renewableenergy,etc.)*JBICoriginalmethodologyforMeasurement,ReportingandVerification.

JBIClaunchedGREEN(GlobalactionforReconcilingEconomicgrowthandENvironmentalpreservation)operationsinApril2010. Previously, JBIC’s financing operations had centeredmainlyonprojectsdirectlyaimingtomaintainandimproveinternationalcompetitivenessofJapaneseindustries,suchasprojectsinvolvingJapanesecompanies’investmentandma-chinery/equipmentexports.Accordingly,projectsdedicatedsolelytopreservationoftheglobalenvironmentweresofarnoteligibleforJBICsupport.LaunchingGREENoperationsen-abledJBICtofocusitsfinancingonprojectsseekingtopreservetheglobalenvironment,suchasthosethatmateriallyreducegreenhousegas(GHG)emissions,whilepropagatingadvancedJapaneseenvironmentaltechnologiesacrosstheworld.

Private Flows

Guarantees

Equityparticipations/Loans

Supporting GHG Emission Reduction Projects in Brazil Supporting Japanese Business Activities Affected by Flood Damage

JBICprovidesaloanforKASIKORNBANKPublicCompanyLimited(KBANK),acommercialbankinThailand,tosupporttherecoveryandbusinesseffortsofanumberofJapaneselocalaffiliatesthatsuffereddirectlyorindirectlyfromtheunprecedentedfloodthatoccurredmainlyinAyutthayaandPathumthaniProvinces,andthecapitalcity,Bangkok in2011. Itprovides long-termsub-loanstosubsidiariesof JapaneseSMEsaswellasthose localcompaniesthatconstitutesupplychainsofJapaneseaffiliatesthroughKBANK.

Thisloanistherebyaimingata speedy recovery of Japa-nese business activities. Tenregional financial institutionsacross Japan having partner-shipwithKBANKparticipatedinthisloanascofinancers.

JBICprovidesalong-termloantoPetróleoBrasileiroS.A.(PETRO-BRAS),astate-ownedoilcompanyofBrazilunderJBIC’sGREENop-erations.TheloanwillsupportreduceGHGemissionsbyfinancingtheco-generationprojectatComperjoilconcessionsandtheflaringgasreductionprojectatmultipleoffshoreoilfieldsintheCamposBasin1.This loanwill support reduceGHGemissionsaswell asfurtherstrengthentherelationshipbetweenJBICandPETROBRAS,whichhashighpresenceinBrazil,asitholdsthemajorityofthe

country’soilandgasreserves,andonwhichJapanesecom-panieshavefocusedattentionasabusinesspartner.

1. ThisprojectaimstoreduceGHGemissions by diverting flaringgas, which was being wastedpreviously,toincreasethesup-plyfordomesticconsumptioninBrazil,uponthestabilizationandcapacityexpansionsofcompres-sorsetc.

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Japanese company(ies)






Equityparticipa-

tions

Equityparticipa-

tions

Equityparticipa-

tions

Majorrole

Businessalliance

Overseas project

Foreign company

Fund

Fund

Other investor(s)

Other investor(s)

Equityparticipation

Equityparticipation

Equityparticipation

Equityparticipation

consortium

Equity Participations

EquityparticipationsarecapitalcontributionstothecompanieswhichJapanesecompanieshaveequitystakessetupbyJapanesecompaniestoundertakeoverseasprojectsandfundswhereJapanesecompaniesperformasignificantrole.Inprinciple,equityparticipationstakethefollowingforms.

Japanese companies make equity participation in an overseas project

Japanese companies acquire equity interests in a foreign company to form business alliance

Japanese companies participate in fund (and perform such major role as general partner in their management and investment decisions)

Japanese companies form a consortium and participate in an international fund

4



2. TheDMICprojectisaJapan-IndiajointdevelopmentprojectwhichaimstobuildafreightraillinetoconnectDelhiandMumbaianddevelopinfrastruc-turealongthelinesuchasindustrialestates,logisticsparks,powerplants,roads,ports,residentialareasandcommercialfacilitiesmainlybymobilizingprivateinvestments.

Supporting Japanese Companies’ Participation in Infrastructure Projects

Supporting Japanese Companies’ Participation in Infrastructure Projects in Southeast Asian Countries

JBICcontributestoDelhiMumbaiIndustrialCorridorDevelopmentCorporationLimited(DMICDC)inIndiabyitsequityparticipation.DMICDChasbeenincorporatedforcarryingoutprojectdevelop-mentactivitiessuchaspreparingfeasibilitystudyanddevelopmentmasterplansandforcoordinatingtheimplementationofthevariousprojectsincludingsupporttoobtainnecessarylicensesfortheDelhiMumbaiIndustrialCorridor(DMICDC)project2,cooperatingwiththecentralgovernmentofIndiaandStategovernmentsinDMICregion.WiththisequityparticipationinDMICDC,JBICintendstoadvisestructuringinfrastructureprojectsintheDMICregionfromtheirearlystagesandtherebysupporttheparticipationofJapanesecompaniesintheseprojects.

JBICcontributescapitaltoTheCapAsiaASEANInfrastructureFundIIIL.P.(theFund)managedbyCapitalAdvisorsPartnersAsiaPte.Ltd.,(CapAsia),afundmanagementcompanyinSingapore.TheFundisaprivateequityfundtargetinginvestmentininfrastructureprojectsinSoutheastAsiancountries.AlsoinvestorsintheFundare:TheBankofTokyo-MitsubishiUFJLtd.(BTMU),TheRohatynGroup(TRG),thefundmanagementcompany in theU.S.,andCIMBGroup(CIMB),amajorfinancialgroupinMalaysia.TRGandCIMBaretheparentcompaniesofCapAsia.ThroughparticipatingintheFund,CapAsia,TRG and CIMB will identify new projects by making use of theirexistingnetworks.Additionally,BTMUaimstoprovideitscustomerswithbusinessrelationshipsbetweentheFundportfoliocompaniesaswellasprovidefinancialinstrumentstotheportfoliocompaniesandpromotecooperationwithJapanesecompanies.TheparticipationofBTMUandJBICintheFundisexpectedtoleadtostrengtheningsupportfortheoverseasbusinessexpansionofJapanesecompaniesanddeployingJapaneseoverseasinfrastructurebusinesspromotedunderthecooperationbetweenthepublicandprivatesectors.

60


Inadditiontoloansandequityparticipations,JBICalsoprovidessupportthroughitsguaranteefacility.Guaranteesareprovidedforloansextendedbyprivatefinancialinstitutions,bondsissuedbygovernmentsofdevelopingcountriesoroverseasJapanesecom-panies,andcurrencyswaptransactions.JBICalsoissuesreassuranceforguaranteesfromexportcreditagenciesinothercountries.

Private financial institution, etc.

Investor(s)

Investor(s)


Japanese importer(s)

Japanese affiliate (Issuer)

Government, etc., in foreign country

Overseas infrastructure projects,etc.

Foreign exporter(s)

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

Private financial institution, etc.

Swap counterparty in overseas

Private financial institution

Guarantee

Guarantee

Guarantee

Importofproducts

Guarantees

Loan

Currencyswap

contract

Loan

IssueofbondsCounterguarantee

Issuesofpublicbonds,etc.

Invest-mentOperationGuarantee

Subguarantee

LoanGuarantee

Localcurrency

loan

Guarantees

Guarantees for Imports of Manufactured Products

Guarantees for Corporate Bonds Issued by Japanese Affiliates

Guarantees for Co-financing, Overseas Syndicated Loans and Public Sector Bonds

Guarantees for Currency Swaps

JBIC has a guarantee facility forthe borrowings made by Japanesecompanies to finance the importof aircraft and other manufacturedproductsthatareimportantforJapan.

JBICsupportsJapaneseaffiliatesop-eratingoverseasbyprovidingguaran-teesforthebondstheyissueinlocalcapitalmarkets.

Loanstodevelopingcountriesinvolve,among others, currency conversionand transfer risks,andcountry risk.GuaranteesthatJBICissuestocoversuchriskswillenableJapaneseprivatefinancialinstitutionstoprovidemediumandlongtermfinancingfordevelop-ingcountries,supportingdevelopingcountriestobringinprivatecapitalandfacilitatingprivatecompaniesexpand-inginternationalbusinessactivities.

JBIC provides guarantees for swaptransactions to support the localcurrencyfinancingofoverseasinfra-structure projects, etc., undertakenbyJapanesecompanies.

4



61


Foreign company(ies)


Foreign importer(s)

Foreign ECA

Private bank(s)

Export

Counterguaran-

tee

Loan

Guarantee

Loans from the IMF, World Bank, etc.

Government, financial institution, etc.,

in foreign country

Import or other external transaction(s)

Loan(Condi-

tionality)

Counter Guarantees for Export Credits

InthecasewhereJapanesecompaniesexportma-chineryandequipmentjointlywithothercountry’scompanies, JBICprovidesacounterguaranteeforthe guarantee provided by that country’s ExportCreditAgency(ECA).ThisfunctionenablesJBICtoparticipateinmultilateralmutualguaranteeschemeswithotherECAs,whichreducestheadministrativeburdenofexportersandexpeditesthearrangementoffinancing.Throughsuchschemes,JBICsupportstheexportsbyJapanesecompaniesincooperationwithforeignexporters.

Bridge Loans

Acquisition of Loan Assets and Public and Corporate Bonds

Research and Studies

JBICprovidesshort-termfinancingforgovernmentsofdevelopingcountriestomeettheir foreigncur-rencyneedsforexternaltransactionswhentheyfacebalance-of-paymentdifficulties.

JBIC provided bridge loans (short-term bridgingloans)forMyanmarinJanuary2013tosupportclearthearrearsofpastloansfromtheAsianDevelop-mentBank(ADB)andtheInternationalDevelopmentAssociation(IDA),oneoftheWorldBankGroup.

When JBIC provides export loans, import loans, overseasinvestment loans and untied loans, JBIC can also providecredits, in addition to providing loans and guarantees, bypurchasing loanassetsandacquiringpublicandcorporatebonds1issuedbyborrowersforfunding.Theobjectiveofsuch

JBICconductsresearchandstudiesonindividualprojectsdur-ingtheirinitialstage,aswellasresearchandstudiesfocusedonspecificregionsorindustrysectorsthatmayhaveabearingonspecificprojectsoccasionally.Thisisaneffectivemeansofuncoveringpotentiallyfavorableprojects,andsupportstoincreaseexportsofmaterialsandservicesfromJapanforthatproject,aswellastoexpandopportunitiesforparticipationbyJapanesecompanies.Researchandstudiesareconductedateachstagenecessaryforrealizationoftheproject,includingcreationofamasterplanforanindividualproject,conductingofprefeasibilityandfeasibilitystudies(Pre-F/S,F/S),frontend

operationsistopromoteprivatefinancialinstitutions’loansininternationalfinanceandJapanesecompanies'fundingininternationalcapitalmarkets.

engineeringdesign(FEED),andstudiesofregionsandindustrysectors linked to specific projects. After the research andstudiesarecompleted,follow-upreviewsareconductedatleastonceeachyeartoconfirmtheprogressoftheproject.Researchandstudiesareconductedinthefollowingorder.1.Selectionofaresearchandstudysubject2.Selectionofthecontractortoconductresearchandstudies3.Conductoftheresearchandstudies4.Completionoftheresearchandstudyreport5.Follow-up

1. Thescopeofassetsandsecuritiesacquired includespublicbonds,corporatebonds,debtsecuritiesandtrustbeneficiaryrights.

4



62


Special purpose company(SPC)

Overseas Local companies

Originator

Private financial institutions, etc.

Overseas Japanese affiliates

Obligor

Overseas Japanese affiliates

Private financial institutions

Investors (in Japan and overseas)

Investors

Transferofloans

Accountsreceivable,etc.

Guarantee

GuaranteeGuarantee

Loans

Assignmentofaccountreceivable

Purchaseofasset-backedsecurity

Issueofasset-backedsecurity

SPC or Trust

Proceeds

Asset-backedsecurities

Proceeds

JBICprovidessupportforsecuritization,etc.inordertosupplementandencouragetheactivitiesofprivatefinancialinstitutions.

Securitization, etc.

1. Securitization (Guarantees)

3. Securitization of Receivables, etc.

2. Securitization (Acquisition of Securities)

Incaseswherespecialpurposecompanies (SPCs)or trustcompanies issue asset-backed securities or other financialproductswithloansorotherassetsascollateral,JBICguaran-teesthepaymentofsuchasset-backedsecuritiestoreducecountryandstructurerisks,therebysupportingtheissuanceofbondsintheemergingcapitalmarkets.

JBICprovidesguaranteesforthereceivablesandothermon-etaryclaimsheldbyoverseassubsidiariesofJapanesecom-panies,inordertofacilitatethepurchaseofsuchreceivables

JBICsupportsbondissuesbyacquiringaportionoftheasset-backed securities issuedby SPCsor trust companieswithloansorotherassetsascollateral.JBIC’sacquisitionwillcon-tributetothesmoothissuanceofbonds,aswellasstimulatesthemarketbycirculatingtheacquiredbondsbackintothemarketwhenmarketconditionsallowit.

bybanks.JBICisalsoabletoprovideguaranteesforsecuritiesissuedbySPCsortrustcompaniestosecuremonetaryclaimstheyhaveacquiredfromoverseasJapanesesubsidiaries.

TheabovediagramsdepicttheschemeswhereSPCsareused,buttheclientscanalsouseschemeswheretrustsareusedorJBICacquiresorprovidesguaranteesforassetsbackedbysecuritization.

4



Supporting Securitization of Credit Card Receivables in Thailand

JBICacquiresapartofasset-backedsecuri-ties(ABS)inasecuritizationtransactionofthecreditcardreceivablesoriginatedbyAEONThanaSinsap(Thailand)PublicCompanyLimited(ATS),asubsidiaryofAEONFinancialServiceCo.,Ltd.JBICalsoprovidesguaranteefortheremainingpor-tionofthisABSandanasset-backedloanfundedbyprivateinvestors.Thistransac-tionisthefirstsecuritizationdealwiththeinvestorsoutsideThailandforATSandthe

firstcreditcardreceivablessecuritizationdealforJBIC.WithJBIC’spartialacquisitionandguaranteeprovisiontothesecuritizedproduct,thistransactionisexpectedtocontributetomeetingtheneedsofATSfordiversificationof fundingaswellastoprovidinginvestmentopportunitiestoprivateinvestorsinthemarketbymitigatingcountryriskandstructuringrisk.

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4



ProjectProponent

JBIC

Disclosure

Category A

Category B

Category FI

Category C

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

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

Screening form is submitted at time of funding request.

Information necessary for the Environmental Review is submitted.

Status report is presented on implemen-tation of measures for environment and social considerations (monitoring).

The Environmental Review and Screening Form are disclosed on the JBIC website (with the exception of Category C projects).

Catego-rization

Funding Commit-ment

Confirmation of Monitoring (Site inspections con-ducted as necessary)

Environmental Review (Site in-spections are in principle conduct-ed for all Category A projects)

Environmental Review*

For Category A projects, an environment impact assessment (EIA) report must be submitted.

Japan Bank for International Cooperation Guidelines for Confirmation of Environmental and Social Considerations

Growinginterestinenvironmentalconservationhasledtoaworldwidetrendformorerigorousenvironmentalregulations.Therearenotafewcases,especiallyinoverseasprojects,inwhichinsufficientriskmanagementofpossibleenvironmentalandsocialimpactshasseriouslyaffectedprojectimplementa-tionorunderminedsocialreputation. Inconductingtheseoperations,JBICconfirmswhethertheborrowermakesappropriateconsiderations for localcom-munitiesandthenaturalenvironmentinalltheJBIC-financedprojectsbasedonthe“JapanBankforInternationalCoopera-

tionGuidelinesforConfirmationofEnvironmentalandSocialConsiderations”(EnvironmentalGuidelines). TheEnvironmentalGuidelinessetouttheprocedures,cri-teriaandrequirementsthatJBIC-financedprojectsmustmeetinconfirmationofenvironmentalandsocialconsiderations.When JBIC judges the project proponents have not madeappropriateenvironmentalandsocialconsiderations,itwillencouragethemtotakeremedialmeasures. Ifappropriateenvironmentalandsocialconsiderationshavenotbeentaken,JBICmaydecidenottoextendfunding.

Procedure for Confirmation of Environmental and Social Considerations

Prospectiveprojectsarescreenedpriortofunding,andclassifiedintocategoriesaccordingtothedegreeofpotentialenvironmentalimpact.AnEnvironmentalReviewisthenconductedtoverifythattheenvironmentalandsocialimpactshavebeenconsideredinapropermanner.Afterfundinghasbeenapproved,projectsaremonitoredtoassesstheactualimpact.

Projectsareclassifiedintooneofthefollowingfourcategoriesinrelationtothedegreeofenvironmentalimpact,basedontheinformationprovidedbytheprojectproponentduringthescreeningprocess.

CategoryA: Projectwiththepotentialforaseriousandadverseimpactontheenvironment.

CategoryB: Projectwiththepotentialforanadverseimpactontheenvironment,butlessthanthatofCategoryAprojects.

CategoryC: Projectwiththepotentialforminimalornoadverseimpactontheenvironment.

CategoryFI: ProjectforwhichJBICprovidesfundingtoafinancialintermediary,andafteracceptanceofJBICfunding,thefinancialintermediaryselectsandconductsscreeningsforspecificsubprojects,incaseswheresubprojectscannotbedeterminedpriortoacceptanceofJBICfunding,andwheresuchsubprojectsareanticipatedtohaveanimpactontheenvironment.

*ForCategoryFIprojects,JBICconfirmsthroughthefinancialintermediarythattheproperenvironmentalandsocialconsiderationsindicatedintheEnvironmentGuidelineshavebeenfollowedfortheproject.

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Prominent Initiatives in Recent Years2·

Efforts to Meet Local Currency Needs

TheJapaneseyen,U.S.dollarandEuroarethestandardcur-renciesoffinancingofJBIC,andinordertomeettheincreas-ingdemandsforfinancingdenominatedinothercurrencies(includingcurrenciesofdevelopingcountries),JBIChasbeenworkingonthefollowingfinancingmenu:1. Direct loans (in local currency):DirectloansincurrenciesotherthantheJapaneseyen,U.S.dollarandEurocanbeconsideredonacase-by-casebasisbyconfirmingtheavailabilityoffundinginsuchcurrencies.2. Two-step-loans (TSLs) through local financial institutions:JBICprovidesloanstolocalfinancialinstitutionsindevelopingcountries(includinglocalsubsidiaries/branchesofJapanesefinancialinstitutions)intheJapaneseyenorU.S.dollar,who,inturn,extendsub-loansinlocalcurrencies.

3. Guarantees for corporate bond issues denominated in local currencies:JBICprovidesguaranteesforbondsissuedinlocalcurrenciesbyJapanesesubsidiariesoperatingoverseas,undertheAsianBondMarketsInitiatives(ABMI)agreedatthe6thASEAN+3(Japan,ChinaandKorea)FinanceMinisters’MeetinginAugust2003.4. Guarantees for loans denominated in local currencies:JBICprovidesguaranteesforloansinlocalcurrenciesprovidedbyprivatefinancial institutionstosupportlocalcurrencyfi-nancing.5. Guarantees for currency swaps:InApril2012,JBICstartedtheguaranteeoperationsforcross-currencyswaptransactions inordertofacilitatefundingoflocalcurrencies.

*Thefacilityisnotafundoraccount,butaprogramwithspecificproce-duresformanagingoperations.

4


2. Prom

inent Initiatives in Recent Years

JBIC Facility for African Investment and Trade Enhancement (FAITH)

JBIC launched in June 2013 the JBIC Facility forAfrican In-vestmentandTradeEnhancement(“FAITH”)tosupportthepromotionofprivatesector-ledgrowthandtheaccelerationofinfrastructuredevelopmentinAfricancountriesbydrawingonitsfinancialinstrumentssuchasloans,equityparticipationsandguarantees.FAITHwasexpandedandevolvedfromtheJBICFacilityforAfricanInvestment(“FAI”)launchedinApril2009.Under FAITH, JBICwill actively extend loans, includ-ingthosein localcurrency,makeequityparticipationsandprovideguaranteesinAfricancountriesincooperationwithinternationalorganizations.InTICADV,theGovernmentof

JapanexpressedthatitwouldworktowardexpandingtradeandinvestmentinAfricancountriesintandemwiththeprivatesector. Under FAITH,it is expected thatsuchfinancial supportwould approximatelyamountto5billionU.S.dollarsoverthenext5years.

Promoting Sustainable and Resilient Growth

Loan/EquityParticipation/Guarantee

EquityParticipation

Loan

Loan

LoanLoan

African Countries

Private Sector-led Growth

— Promoting Trades— Supporting Manufacturing

Sector Investment— Natural Resource

Development

Accelerating Infrastructure Development

— Building Electricity Supply Capacity

— Development of Financial Sector

International Organizations

FAITH

Japanese Private-sector Financial

Institutions

Japanese Companies

Local Financial Institutions

Export

Investment

Businesscooperation

Co-financing

Guarantee

JBIC signed a loan agreementwiththeDevelopmentBankofSouthernAfricaLimited(DBSA).The loan is aimed to supportrenewable energy projects inSouthernAfricancountries

65


Japan Bank for International Cooperation (JBIC) and JapanExternalTradeOrganization(JETRO).”Underthispolicy,JBIChas been working with the Regional Banks Association ofJapanandotherentitiestostrengthencooperationwithlocalfinancialinstitutionsindevelopingcountrieswhileidentifyingwhatkindofsupportJapaneseSMEsneedthroughJapaneseregionalfinancialinstitutionstoexpandtheirbusinessopera-tionsoverseas.

Cooperation with Local Financial Institutions in Developing Countries

OnDecember21,2010,theFinancialServicesAgency,theMinistryofFinance,andtheMinistryofEconomy,TradeandIndustryannouncedajointpolicycalledthe“DevelopmentandStrengtheningofSupportSystembyFinancialInstitutionsfor Small andMediumEnterprises’ Entry intoAsia throughCoordinationamongJapaneseRegionalFinancialInstitutions,

Framework for Supporting Globalization Efforts of SMEs3·4


3. Framew

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alization Effo

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Es

Organization of JBIC’s Finance Groups (from April 2012)

Country Local Financial Institutions in Developing Countries When MOU was signed Number of participating Japanese Regional Financial Institutions

Thailand KASIKORNBANKPublicCompanyLimited May2011 25(asofMay2,2013)

Indonesia PT.BankNegaraIndonesia July2011 31(asofMay7,2013)

India StateBankofIndia August2012 38(asofMarch13,2013)

ThePhilippinesBDOUnibank,Inc.(BDO) March2013 7(asofJuly23,2013)

MetropolitanBankandTrustCompany(Metrobank) March2013 33(asofJuly23,2013)

Energy, Natural Resources and Environment Finance Group

Infrastructure Finance Group Industry Finance Group

Oil and Gas Finance Department

Mining and Metals Finance Department

Nuclear and Renewable Energy Finance Department

Power and Water Finance Department

Transportation and Telecommunication Finance

Department

Corporate Finance Department

Marine and Aerospace Finance/Financial Products Department

Special Advisor for SMEs

Finance Division for SMEs of East Japan

West Japan Office

Finance Division for SMEs of West Japan

SpecializedunitshavebeenestablishedtosupportSMEs.Theyarealsodesignedtostrengthenthecooperationofregionalfinancial

institutionsinJapanandlocalfinancialinstitutionsindevelopingcountries.

Local Financial Institutions in Developing Countries and Participating Japanese Regional Financial Institutions

Strengthening the Framework for Supporting SMEsFollowingtheinaugurationofJBICinApril2012,JBICassignedoperatingofficersdedicatedtoprovidingsupportforJapaneseSMEswiththeiroverseasbusinessdevelopment,inordertoconductoperationsmoreresponsivelyandflexibly.Theseof-ficersareresponsibleforSMEsinEastJapanandWestJapan,separately.JBICalsosetupunitsthatspecializeinthesupportofoverseasbusinessdevelopmentofSMEsatitsHeadOfficeinTokyoandWestJapanOfficeinOsaka,respectively.Thesearrangements,togetherwiththe16overseasrepresentativeoffices in JBIC’sworldwide network, have further strength-enedtheframeworkforsupportingSMEs.ThisallowsJBIC,forexample,abetteropportunityforprovidinginformationonspecificloansandinvestmentclimatesabroad.

Astheglobalizationoftheworldeconomyadvances,ithasbecomeimperativeforJapanesemid-tierenterprisesaswellassmallandmediumenterprises(collectively“SMEs”)toactivelydevelopoverseasbusiness.JBICsupportssuchactivitiesbyprovidinginformationandholdingseminarsontheoverseasinvestmentclimate,aswellasdirectlysupportingthefinancingofoverseasoperationsthrough loansandequityparticipa-tion.JBICalsosupportstheseeffortsthroughitscollaborationwithregionalfinancialinstitutionsinJapanandlocalfinancialinstitutionsindevelopingcountries.

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InNovember2012,JBICsignedanMOUonoperationalcooperation with The Hyakujushi Bank, Ltd. (114Bank) ofJapanforthreemajorpurposes:(i)supportingoverseasbusi-nessactivitiesof Japanesecompanies,particularlySMEs intheSetouchiareawherethe114Bankhasitsmainbusinessbase; (ii)exchanging informationon investmentclimates inforeigncountries; and (iii) expandingcofinancing for them.UnderthisMOU,JBIC,incooperationwith114Bank,signedaloanagreementinthesamemonthwithASAHISwitchgearProductsLimited,anIndiansubsidiaryofHIROSECorporation.BasedinMitoyoCity,KagawaPrefecture,HIROSECorporationisanSMEthatdesigns,manufactures,andsellshighvoltagedistributionswitchgearsandcontrolpanelsofvariouskinds. JBIC’seffortsinthisregardwerenotlimitedtoJapanonly.InJuly2012,JBICorganizedameetinginBangkok,Thailand,withlocalrepresentativesofJapaneseregionalfinancialinstitutionstoexchangeviewsonhowtosupportJapanesecompaniesoperating locally. This is just one example of JBIC’s ongo-ingeffortstofurtherstrengthentheframeworkforassistingJapaneseSMEstoexpandtheiroverseasbusinessoperationsincooperationwithJapaneseregionalfinancialinstitutions.

Information Services, Seminars, etc.JBICorganizesseminarsandconsultationsessionsonover-seasbusinessexpansionincooperationwithotherJapaneseentities, including regional banks and other local financialinstitutions,prefecturalandmunicipalgovernments,andlo-cal chambers of commerce and industry. It also conductsfieldstudiestoassessinvestmentclimatesincountrieswhereJapanesecompaniesareactivelydoingbusiness.Thefindingsof these studies are compiled into guidebooks, which areavailableinbookformandonJBIC’swebsite. DuringFY2012, JBICpublished four suchguidebooks inJapanese:“InvestmentClimateinThailand,”“InvestmentCli-mateinVietNam,”“InvestmentClimateSeriesinChina:AnOverview,”and“InvestmentClimateinIndonesia.” Moreover,JBICprovidesknowledgeandadviceoninvest-ingoverseasandhowtostartbusinessesoverseas. Italso

In FY2011 and FY2012, JBIC signed a memorandum ofunderstanding(MOU)withseverallocalfinancialinstitutionsinThailand,Indonesia,India,andthePhilippinestoprovideaframeworkforsupportingJapaneseSMEsinexpandingtheiroperationsoverseasthroughregionalfinancialinstitutionsinJapan.UndertheseMOUs,JBIChasencouragedtheselocalfinancialinstitutionsinthefourcountriestonewlysetupasinglecontactpointforJapanesecompanies(“JapanDesk”)orexpandsuchJapanDeskifonealreadyexists.IthasalsobuiltaframeworkforcontinuousconsultationwitheachofthemonspecificmeanstocooperateinsupportofJapaneseSMEsindoingbusinessthere.ManyregionalfinancialinstitutionsinJapanhavealreadyjoinedsuchframeworks.

Cooperation with Japanese Regional Financial Institutions

JBIC has signed MOUs on the operational cooperation ofregional financial institutions in Japan chiefly to exchangeinformation on overseas business operations of Japanesecompanies,particularly JapaneselocalSMEs,aswellasontheinvestmentclimateofoverseascountries.

4


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Es

Aseminaronoverseasinvestment

MOUsignedwiththeStateBankofIndia

67


offers an itinerant advisory service in many parts of Japanincooperationwithprefecturalandmunicipalgovernmentsandlocalchambersofcommerceandindustrythatsupportlocalcompaniesinexpandingtheiroperationsoverseas.Thisservice,whichisavailableonaregularbasisinSendai,Ota,Tokyo,andNagoya,offersadviceontheoverseasinvestmentclimateandhowtoobtainlong-termfinancing,amongothertopics.Aspartofitsadvisoryservices,JBICalsooffersadviceontaxes,accounting,andlegalmattersinrelationtoChina,India,andASEANcountries,throughexternalexperts,asearlyasthepreliminaryconsultationphase.

4


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5Operational and Administrative Policies

1 Corporate Governance 70

2 Risk Management 74

3 Public Information and Disclosure 77

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Board of Corporate AuditorsAccounting Auditor

Management Advisory and Evaluation Committee

Risk Advisory Committee

Internal Audit Committee

Internal Audit Department

Office of Corporate Auditor

Board of Directors

Shareholder Meeting

Executive Committee

Credit Committee

Corporate Risk Management Committee

Compliance and Customer Protection

Management Committee

Personnel Committee

Preliminary Credit Committee

ALM Committee

Global Head Committee

Supervisory and Evaluation Function

[Deliberative Committees]

[Decision Making Committees]

Executive Function

Outside Corporate Auditors Outside Director

Corporate Governance1·

Fundamental Approach to Corporate GovernanceJBICismakingeffortstobuildcorporategovernancestructureinconductingoperationswithparticularattentiontointegrity

How National Government is Involved in JBICAsJBIChasitsshareswhollyownedbytheGovernmentofJapan, it is subject to the control of the Japanese govern-ment, itssoleshareholder.Additionally, it issubjecttothenationalbudgetpassedintheDiet,inspectionsbytheBoardof Audit of Japan, by the Competent Minister and by theFinancialServicesAgencywhoseinspectionisdelegatedbytheCompetentMinister.

Supervisory and Evaluation Function and the Conduct of JBIC Operations

Tostrengthenthesupervisoryandevaluativefunctionofthe

andefficiency,asitseekstofulfillthemissionsetoutunderthe JBIC Act (Law No. 39, 2012) and realize its corporatephilosophy.

BoardofDirectorsaswellasconductspeedyandflexibleoperations,JBIChasestablished,inadditiontotheBoardofDirectors,theBoardofCorporateAuditorsandotherorgansrequiredbytheCompaniesAct,theManagementAdvisoryand Evaluation Committee, the Risk Advisory Committee,theInternalAuditCommitteeandtheExecutiveCommittee.Furthermore, a variety of committees were set up by theExecutiveCommitteethatdelegatedspecifictaskstothem.(1) Board of DirectorsTheBoardofDirectorsconsistsof5members,ofwhichonememberisanoutsidedirectorassetforthintheCompaniesAct. The external director supervises the conduct of JBIC

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operations fromthepointofviewofacorporateoutsider,apart from representativedirectorsof JBIC. In addition, hecontributestoimprovingthegovernanceofJBICasamemberoftheManagementAdvisoryandEvaluationCommitteeaswellastheRiskAdvisoryCommittee.

(2) Board of Corporate AuditorsTheBoardofCorporateAuditorsconsistsof3auditors,ofwhich two are outside corporate auditors, as set forth intheCompaniesAct.OutsidecorporateauditorscontributetoimprovingthegovernancestructureofJBIC,astheycooperatewiththefull-timeauditorinauditingtheconductofitsopera-tions.Asasectionhelpingthemexecutetheirresponsibilities,thereistheOfficeofCorporateAuditor.

(3) Management Advisory and Evaluation CommitteeTheManagementAdvisoryandEvaluationCommitteeconsistsof 3 to 7 external experts and the outside director. TheymakeassessmentandofferadviceonthemattersreferredtothembytheBoardofDirectorspertainingtothebusinessoperationsandmanagementofJBIC.

List of Members of the Management Advisory and Evaluation Committee

List of Members of the Risk Advisory Committee

Name Occupation

〇 ShujiroUrata Professor,GraduateSchoolofAsia-PacificStudies,WasedaUniversity

AkiraKondoh JBICManagingDirector(OutsideDirector)

YoshikatsuSuzuki SeniorCommentatorofJijiPressLtd.

◎ YuzoTakagi Chairman&RepresentativeofAuditCorporationGODAI,CertifiedPublicAccountant

MikikoFujiwara CEOofAlphaAssociatesCo.,Ltd.

HirokazuYoshikawa SeniorCorporateAdviserofDOWAHoldingsCo.,Ltd.

◎Chairman　〇Deputy–chairman(Listedintheorderof50characterkanasyllabary,namelistedwithouthonorifics)

Name Occupation

ShuheiAbe President,CEO&CIOofSPARXGroupCo.,Ltd.

AkiraKondoh JBICManagingDirector(OutsideDirector)

ToshikiTomita Professor,FacultyofLaw,ChuoUniversity

ChiekoMatsuda ProfessorofManagement,GraduateSchoolofSocialSciences,TokyoMetropolitanUniversity

(4) Risk Advisory CommitteeTheRiskAdvisoryCommitteeconsistsof3to7externalex-pertsandtheoutsidedirector.Theyofferadviceonthemat-tersreferredtothembytheBoardofDirectorspertainingtoriskmanagementandassessmentframeworkassociatedwithlarge-lotdebtorsandriskexposuretolarge-scaleprojects.

Name Occupation

〇 KeisukeYokoo AdvisorofMizuhoSecuritiesCo.,Ltd.

◎ NaoyukiYoshino Professor,FacultyofEconomics,KeioUniversity

◎Chairman　〇Deputy–chairman(Listedintheorderof50characterkanasyllabary,namelistedwithouthonorifics)

(5) Internal Audit CommitteeTheInternalAuditCommitteeconsistsofrepresentativedi-rectorsandtheoutsidedirector.Theymakedecisionsanddeliberations concerning important matters pertaining tointernalaudit,asdelegatedbytheBoardofDirectors.

(6) Executive CommitteeTheExecutiveCommitteeconsistsofrepresentativedirectors,executivedirectorandall themanagingexecutiveofficers.Theymakedecisionsanddeliberationsconcerningimportantmanagerialmatters,therebytakingresponsibilityforconduct-ing flexible JBIC operations, as delegated by the Board ofDirectors.Certaindecisionssuchasfinancing toa specificprojectaredelegatedtothefollowingcommittees.(i) Credit CommitteeThe Credit Committee makes decisions and deliberationsconcerningimportantmattersonloan,guaranteeandequityparticipation by JBIC, as delegated by the Executive Com-mittee.(ii) Corporate Risk Management CommitteeTheCorporateRiskManagementCommitteemakesdecisionsanddeliberationsconcerningimportantmatterspertainingtothecorporateriskmanagementofJBIC,asdelegatedbytheExecutiveCommittee.(iii) Compliance and Customer Protection Management

CommitteeThe Compliance and Customer Protection ManagementCommittee makes decisions and deliberations concerningimportantmatterspertainingtothecomplianceandcustomerprotectionmanagementofJBIC,asdelegatedbytheExecutiveCommittee.(iv) Personnel CommitteeThePersonnelCommitteemakesdecisionsanddeliberationsconcerningimportantmatterspertainingtothepersonnelofJBIC,asdelegatedbytheExecutiveCommittee.(v) Preliminary Credit CommitteeThePreliminaryCreditCommitteemakesdeliberationscon-cerningimportantmatterspertainingtoassessmentpoliciestowardloan,guaranteeandequityparticipationandcreditpolicytowardlarge-lotdebtors,asdelegatedbytheExecutiveCommittee.(vi) ALM CommitteeThe ALM Committee makes deliberations concerning im-portantmatterspertainingtotheasset-liabilitymanagement(ALM)ofJBIC,asdelegatedbytheExecutiveCommitteeandtheCorporateRiskManagementCommittee.

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Internal Audit Department

Corporate Group

Managing Director

(GlobalHeadofCorporateGroup)

Outside Managing Director

(ResponsibleforManagementAd-visoryandEvalu-ationCommittee,andRiskAdvisory

Committee)

Energy, Natural Resources and Environment

Finance Group

Managing Executive

Officer

(GlobalHeadofEnergy,NaturalResourcesand

EnvironmentFinanceGroup)

Infrastructure Finance Group

Managing Executive

Officer

(GlobalHeadofInfrastructureFinance

Group)

Industry Finance Group

Managing Executive

Officer

(GlobalHeadofIndustryFinance

Group)

Credit, Assessment, and Systems

Group

Managing Executive

Officer

(GlobalHeadofCredit,Assess-

ment,andSystemsGroup)

COO, Senior Managing Director

(ResponsibleforBusinessoperation)

CEO, Executive Managing Director

(Governor’ssupport/ResponsibleforCredit,Assessment,andSystemsGroup)

Governor

(GovernorofJBIC/ResponsibleforInternalAuditDepartment)

MemberofExecutiveCommitteeMemberofInternalAuditCommitteeMemberofBoardofDirectors

(vii) Global Head CommitteeTheGlobalHeadCommitteemakesdeliberationsconcern-ing cross-cutting matters among internal groups, includingoperationalpolicyforeachcountryorregion,asdelegatedbytheExecutiveCommittee.

Adopting Mission/Sector-Specific Group StructureJBIC reconstituted its organization and adopted mission/sector-specificgroupstructure in July2011. Itsobjective istostrengthenthecapacitytoformulateprojectsbybringingtogetherknow-howandexpertiseineachsectorandarea,therebyfacilitatingJBICtoperformthefunctionsinitsmission

moreflexiblyandstrategically. Specifically,CorporateGroup;Energy,NaturalResourcesandEnvironmentFinanceGroup;InfrastructureFinanceGroup;IndustryFinanceGroup;andCredit,Assessment,andSystemsGroupweresetup,witheachGrouphavingdepartmentswithspecialexpertise. For each Group, the responsible board member is ap-pointed,andthemanagingdirectororamanagingexecutiveofficerperformsasGlobalHeadofeachGroup.EachGroupismanagedinanintegralmannerundertheGlobalHeadoftheGroupinanefforttoconductspeedy,flexibleandefficientoperations.

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Fundamental Policy on Internal ControlAsaninternalcontrolsystemforoveralloperations,JBIChasappropriateinternalauditprocedurestoreview,aswellasevaluatetheirappropriatenessandeffectivenessandmakerecommendationstoimprovethem.Forthesepurposes,JBIChastheInternalAuditCommittee,whichincludestheoutsidedirector,asadecision-makingbodyindependentoftheExecu-tiveCommitteethatisresponsibleforconductingoperations.ThereisalsotheInternalAuditDepartmentindependentofthelinedepartmentsanddirectlyreportingtotheGovernor. The Internal Audit Department exchanges relevant in-formationandcooperateswithCorporateAuditorsandanAccountingAuditorforexecutingefficientinternalaudit.( See p. 139 for the Fundamental Policy on Internal Control)

Maintenance and Control of Information AssetsJBICsets forth its fundamental “SecurityPolicy”concerningtheuseandmanagementofinformationassets( see p. 141) in order to secure high standard information security andimplementproperandefficientoperations.Basedonthestan-dard,JBICproperlyhandles,manages,protectsandmaintainsinformationassets.

ComplianceJBIChassetforth in itsCodeofConductto“Maintainhighethicalstandardsandalaw-abidingspirit.Observeourmoralcodeasa JBICmemberatall times.” Itsmanagementandstaffmembersarekeenlyawareofthepublicmissionsandsocialresponsibilitiescalledforintheinternationalcommunityandincivilsociety.Itisalsowellrecognizedthatanyactinviolationoflaws,regulationsorrulesbyitsmanagementandstaffwillleadtodenigratingconfidenceinJBICasawholeandhaveamateriallyadverseeffectonitsoperations.Attentivetotheseneeds,JBICisconstantlystrivingtowardcomplianceandoperationalintegrity. JBICmakespositiveeffortstoimprovecompliance,primar-ilythroughtheComplianceandCustomerProtectionManage-mentCommittee,andhasestablishedtheLegalAffairsandComplianceOfficeasanintegratedcompliancemanagementunit. EachgroupandoverseasrepresentativeofficeservingasaregionalheadquarterhasanIntegratedComplianceOfficer,whileeachdepartmentandoverseasrepresentativeofficehasaComplianceOfficerformakingpositiveeffortsincompliance,suchasfosteringsuchawarenessamongJBICemployees. To foster in-depth understanding of compliance, JBICmakesgooduseofitsComplianceManualandprovidestrain-ingsessionsforitsmanagementandstaffmembers.Italsodevelopsacomplianceprogrameveryfiscalyearasabasisformakingnecessarycompliancearrangementsandprovidingrelevanttraining. Inadditiontothereportingproceduresinitsordinarylineofbusiness,JBIChasputinplaceandisproperlyoperating

aninternalreportingsystemsuchthatitiscapableoffindingsignificant compliance issues at an early stage and takingappropriateremedialaction.

Protection of Private InformationJBIC has drawn up and disclosed its Privacy Policy ( see

p. 142)whichstipulatesappropriatemanagementofprivateinformationheldbyJBICpursuanttotheprovisionsoftheActontheProtectionofPersonalInformationHeldbyIndependentAdministrativeAgencies,etc.

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Risk Management2·

Ingeneral,theoperationsoffinancialinstitutionsinvolvevari-ousrisks,includingcreditrisk,marketrisk(suchasinterestrateandexchangeraterisk,etc.),liquidityriskandoperationalrisk.Asapolicy-basedfinancialinstitution,JBICconductsfinancialoperationstoachievepolicyobjectives.Thus,JBICdiffersfromprivatefinancialinstitutionsinitsnatureaswellastheextentofrisksinvolvedinitsoperationsandwaystodealwiththem.Nonetheless,recognizingtheimportanceofappropriateriskmanagementasafinancialinstitution,JBIChasputinplaceaninstitutionalsystemforriskmanagementcommensuratewithdifferenttypesofrisksandforaddressingintegratedriskmanagement. Morespecifically,JBICdefinestheobjectiveofriskmanage-mentasidentifying,measuringandmonitoringvariousrisksJBICisexposedtointheprocessofconductingoperationstoensurethesoundnessandintegrityofoperationsandincrease

Creditriskreferstothepotentiallossfromadeclineorlossofthevalueofcreditassetsduetodeteriorationinthefinancialconditionsofadebtor.ThisriskisinherentinJBIC’soperationsasitprimarilyengagesinlendingactivities.CreditriskexposuretoJBICmaybeclassifiedinto:sovereignrisk,whichinvolvesfinancingforeigngovernments;corporaterisk,whichinvolvesfinancingbusinessfirms;projectrisk,whichoccurswhenaprojectfinancedinprojectfinancing—afinancingstructureinwhichaloanisprimarilysecuredonthecashflowgeneratedfrom theproject—fails togenerate theplannedcashflow;and country risk, which involves financing foreign firms aswellasprojects located in foreigncountries (a riskaddedtocorporate riskandproject riskarising from thecountrywherethedebtorresidesandtheprojectislocated).GiventheverynatureoffinancialsupportJBICprovidesforpromot-ingoverseasdevelopment and securementof strategicallyimportant resources to Japan, for maintaining and improv-ingtheinternationalcompetitivenessofJapaneseindustries,andforpromotingtheoverseasbusinessforpreservingtheglobalenvironment,suchaspreventingglobalwarming,JBICfrequentlyextendsloanstoforeigngovernments,governmentagenciesandcompanies.Therefore,sovereignandcountryrisksaccountforaconsiderableshareofthecreditrisksac-companyingJBIC’soperations.

Managing Credit RiskThe cornerstone of credit risk management at JBIC is theevaluationofanindividualborrower’screditworthinessintheprocessleadingtocreditapproval.Whenanewloanapplica-tionisbeingprocessed,therelevantfinancedepartmentandtheCreditDepartment collect andanalyze informationontheborrower.Theoverseasrepresentativeofficesalsoplay

transparency.Forthispurpose,JBIChasdesignatedthestaffresponsibleformanagingvariousrisksandhasadepartmentworkingontheoverallriskmanagement. Inaddition,therearetheCorporateRiskManagementCommitteeandtheALMCommitteethatmakediscussionsandconsiderationsfortheeffective functioningof riskmanagement. JBIChasalsosetuptheRiskAdvisoryCommittee,whichconsistsofexternalexperts,toprovidetheJBICBoardofDirectorswithadviceontheriskmanagementandassessmentsystemwithrespecttolarge-lotdebtorsandonissuesreferredtobytheJBICboardofdirectorswithrespecttorisksassociatedwithlarge-scaleprojects. ThefollowingsectionsdescribehowJBICmanagesrepre-sentativerisksJBICisfacing,amongvariousotheroperationalrisks, in conducting operations as a policy-based financialinstitution.

apartincollectinginformationonforeigngovernmentsandcompanies.Itisbasedonthisinformationanditsanalysisthatcreditappraisaltakesplace,withchecksandbalancesatworkbetweenthesedifferentdepartmentsthroughoutthisprocess,leadingtothefinaldecisionbymanagement. Inprovidingcredit for foreigngovernmentsandcompa-nies,JBICmakesthemostofitsuniquepositionasanofficialfinancier,asitexchangesviewsandinformationwiththegov-ernmentsandrelevantauthoritiesintherecipientcountries,multilateral institutions suchas the InternationalMonetaryFund(IMF)andtheWorldBank,otherofficialexportcreditagenciesand,furthermore,withprivatefinancialinstitutionsindevelopedcountries.Usingallthesechannels,JBICevalu-atessovereignandcountryrisksbasedonabroadrangeofinformationcollectedonborrowinggovernments,governmentagenciesandpoliticalandeconomicconditionsintheircoun-tries. Inprovidingcredit fordomesticandforeigncompanies,there isaneed toevaluate theircreditworthinessand theappropriatenessofthecollateraltheyoffer.Inparticular,forcreditprovisionrelatedtooverseasprojects,creditevaluationinvolvescheckingandexaminingthecertaintyofconductingtransactionstobefinanced,feasibilitystudiesoftheprojectsandtheindustryinwhichtheborroweroperates.

Internal Credit RatingJBIChasestablishedan internalcredit ratingsystemwhichcovers,inprinciple,alltheborrowers.Internalcreditratingsarethecornerstoneofcreditriskmanagement,beingusedfor conducting individual credit appraisals and quantifyingcreditrisks.

Credit Risk

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(AsofMarch31,2013;100millionsofyen)

Contract Amounts / Notional Amounts Credit Risk Amounts

Interest Rate Swaps 24,560 895

Currency Swaps 41,497 6,047

Forward Exchange Contracts 1 0

Other Derivatives ─ ─Credit Risk Reductions through Netting (2,845)

Total 66,058 4,097

Marketriskreferstothepotentiallossfromchangesinthevalueofassetsandliabilitiesasaresultoffluctuationsininter-estratesandforeignexchangerates.JBICmanagesspecificmarketrisksasfollows.

Exchange Rate RiskForeigncurrency-denominatedloansinvolvetheriskassoci-atedwithexchangeratefluctuations. JBIChasaconsistentpolicyofhedgingthefullamountofsuchexposurethroughcurrencyswapsandforwardexchangetransactions.

Interest Rate RiskInterestraterisk for foreigncurrency-denominatedloans ishedgedthroughinterestrateswapswithwhichbothforeigncurrency-denominatedloansandtheirfundingaremanagedinfloatingrates.Althoughyen-denominatedloansaremostlymadeinfixedinterestrates,theirinterestrateriskislimitedsincethematuritiesofloansandtheircorrespondingfundingaremoreorlessmatched.Inaddition,JBICcarefullycalculatesandanalyzesprojectionsofitsfutureasset/liabilitystructureandprofitsandlosses.

Derivatives Transactions(1) Basic Policy for Derivatives TransactionsJBICengages inderivatives transactionsexclusively for thepurposeofhedgingexchangerateandinterestraterisks.

(2) TransactionsDerivativestransactionsofJBICincludeinterestrateandcur-rencyswapsandforwardexchangecontracts.Thefollowing

tablegivesasummaryofthesetransactions.

Market Risk

Internal Assessment of Asset PortfolioJapaneseprivatefinancialinstitutionsundertaketheinternalassessmentofassetportfoliosinaccordancewithInspectionManualforDeposit-TakingInstitutions(the“FinancialInspec-tion Manual”) of Japan’s Financial Services Agency. JBIC issimilarlyundertakingtheinternalassessmentofitsloanport-folio,basedontheFinancialInspectionManualsothatthecharacteristicsofitsloanassetswillbeaccuratelyreflectedonitsassessment.Inthisprocess,thefirst-stageassessmentis conductedby the relevant financingdepartments,whilethesecond-stageassessmentisconductedbytheCreditDe-partmentandtheCountryCreditDepartment,whichistheninspectedbytheAuditDepartment.Theresultsof internalassessment conducted on the portfolio are not only usedinternallyforthecontinuousreviewsoftheloanportfoliobut

arealsoreflectedinthedisclosureofassetqualitytoenhancethetransparencyofJBIC’sfinancialposition.

Quantifying Credit RiskInadditiontoindividualcreditriskmanagement,JBICiswork-ingonquantifyingcreditriskswithaviewtoevaluatingtheriskoftheoverallloanportfolio.Toquantifycreditrisks,itisimportanttotake intoaccountthecharacteristicsof JBIC’sloanportfolio,whichholdsasignificantproportionoflong-termloansandloansinvolvingsovereignandcountryrisks.Alsotobetakenintoaccountaremechanismsforsecuringassets,suchastheParisClub1auniqueframeworkfordebtmanagement by official creditor countries. The credit riskquantificationmodelincorporatingthesefactorsismeasuringcreditrisksandisutilizedforinternalcontrol.

1. Aninformalgroupofofficialcreditorswhoseroleistofindcoordinatedandsustainablesolutionstothepaymentdifficultiesexperiencedbydebtornations.Sincethefirstmeetingtookplacein1956toresolvethedebtproblemofArgentina,themeetinghasbeenheldinParis,withtheFrenchTreasuryactingasitssecretariat.Hence,ithascometobecalledtheParisClub.

Credit Risk of Derivatives, etc.

(Note)“Thecreditriskamounts”arecalculatedunderUniformInternationalStandardsinaccordancewiththeBankingActofJapanandtherelatedregulations.

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(3) Risks Involved in Derivatives TransactionsDerivativestransactionsinvolvethefollowingrisks. Counterparty Credit RiskThepotentiallossfromthefailureofacounterpartytoperformitsobligationsinaccordancewiththetermsandconditionsofthecontractgoverningtransactionsduetobankruptcyoritsdeterioratingbusinessperformance. Market RiskThepotentiallossfromchangesinthemarketvalueoffinan-cialproductsduetofluctuationsininterestratesorexchangeratesinthemarket.

(4) Measures to Address These Risks Counterparty Credit RiskJBICconstantlymonitorsthemarketvalueofaderivativein

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Market RiskJBICutilizesderivativestransactionsexclusivelyforthepur-poseof hedging.Therefore, themarket riskonderivativestransactions and the risk on hedged (lending or funding)transactions,inprinciple,offseteachother.

Liquidityriskreferstothepotentiallossresultingfromdifficul-tiesinfundingduetoamaturitymismatchbetweenfinancingandfundingcausedbyunexpectedcash-outsorfrombeingforcedtofundataninterestratesignificantlyhigherthaninnormalcircumstances,aswellasthepotentiallossresultingfrom a failure to make transactions in the market due tomarket turmoilor frombeing forced tomake transactionsatasignificantlydisadvantageouspricecomparedtonormal

Operational risk refers to thepotential loss resulting frominadequateorfailedinternalprocesses,peopleandsystemsorfromexternalevents.Apartfromadministrativeandcomputersystemrisks,JBICrecognizesthatitsoperationsinvolvevariousdirectandindirectrisks.JBICwillproactivelyidentify,assessandmanagesuchrisks.

Administrative RiskAdministrativeriskistheriskofafinancialinstitutionincurringlosses fromtheneglectbyofficersandemployeestocon-ductadministrativeworkproperly,accidentscausedbythem,andviolationoflawsandregulationscausedbythem,etc.,conductedinthecourseoftheadministrativeworkprocess.JBIChasbeenminimizingthisriskbyensuringsoundopera-tionsthroughscrupulouschecksonworkprocesses,creatingoperationalmanuals,improvingtrainingprograms,andstream-liningandadoptingsystematicprocedures. Inaddition,theAuditDepartment,independentfromotherdepartmentsandreportingdirectlytotheGovernor&CEO,conductsinternalauditingofJBIC.

circumstances. JBICisminimizingliquidityriskthrougheffectivecashflowmanagementand thediversificationof its fundingsources,includingborrowingsundertheFiscalInvestmentandLoanProgram(FILP),government-guaranteedbondissuesininter-nationalcapitalmarketsandFILPagencybondissuesinthedomesticcapitalmarket.

Computer System RiskComputersystemriskreferstothepotentiallossfromabreak-downormalfunction incomputersystemsaswellas fromtheirmisuse.JBIChasbeenminimizingcomputersystemriskbyincreasingreadinesstorespondeffectivelytoemergencysituations.Specifically,(a)measureshavebeentakentopre-ventsystemmalfunctionsandleakageofclientinformation;and(b)contingencyplanshavebeenpreparedtorespondtosystemmalfunctionscausedbyaccidentsandothercauses,anddisaster-responsedrillshavebeenconducted.

Liquidity Risk

Operational Risks

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makingtransactionwitheachcounterparty,creditriskexpo-suretoitanditscreditworthiness.Suchinformationisthenused to assess the appropriateness of making transactionwithit.

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Public Information and Disclosure3·

JBIC isprovidinganddisseminating information toabroadrangeof thedomestic andoverseaspublic in an effort topromotefurtherunderstandingofitsoperationsandactivities. TheJBICInformationCenterattheHeadOfficeandtheWestJapanOfficemakeavailabletothegeneralpublicvariousbrochures, annual reports, public relations magazines andothermaterials.Inaddition,avarietyofinformationaboutJBICisprovidedtothedomesticandoverseaspublicthroughtheJBICwebsite(http://www.jbic.go.jp/en/).

PublicationsJBIC publishes its annual operations and activities, and fi-nancialconditionsinvariousdisclosurematerials, includingannual reports, business reports, financial statements, andtheForm10-KsubmittedtotheU.S.SecuritiesandExchangeCommission. Otherpublicationsavailabletothepublicinclude:apublicinformationmagazine,“JBICTODAY ,”whichreportsJBIC’slat-estactivitiesandtopicsonitsoperationsandotherrelevantissues;“JBICProfile:RoleandFunction,”abrochuredescribingJBICoperations;and“JBICProjectFinanceInitiatives.”

WebsiteThewebsiteprovidesaccesstoJBICinformation,includingitsfinancialinstruments,pressreleases,invitationstoseminars,overseasinvestmentclimatereports,reportsonvariousstud-ies,activitiesonenvironmentalissues,annualreports,variousbrochures,IRinformationforinvestors,JBICvideos,andothervarioustypesofinformation.

JBICwebsite

JBICProfile:RoleandFunction JBICProjectFinanceInitiatives

JBICToday

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(Principal) Materials for Providing Information

Source of Information Access

BusinessReport

AvailableattheHeadOfficeandtheWestJapanOffice

DistributedtotheNationalDietLibraryandeconomicorganizations,etc.

FinancialStatements

ListofAssets

ReportonSettlementofAccounts

Auditor’sOpinion

AuditReport

AnnualReport(JapaneseandEnglish)PublicRelationsMagazine,etc.

AvailableattheHeadOfficeandtheWestJapanOffice

Distributedtointerestedpersons/institutions

Website: TypeofBusiness

Operations,BusinessResults,OverviewofOrganization,FinancialComposition,etc.

Ontheinternet Address: http://www.jbic.go.jp/en/

Information Dissemination for the MediaAsidefrominformationdisseminationthroughvariouspublica-tions,thewebsiteandothermeans, JBICinformsthenewsmediaaboutitsoperationsandactivitiesthroughpressconfer-encesandmeetings,etc.

DisclosureJBICdisclosestothepublicoperationalandfinancialinforma-tiontopromotefurtherunderstandingofitscurrentactivitiesasfollows.

Information Dissemination from OverseasJBIC’soverseasrepresentativeofficesareactivelycontributingreportsandarticlestothenewsmediatoprovideinformationfromoverseas.TheyhavealsoappearedinTVnewsprogramsto provide timely topics that can only be reported at thelocal grassroots level, such as individual consumption andinformationontaxation,etc.

Promoting International ExchangeSince1976, JBIChasannuallyheld ‘JBICSeminars’ in Japantopromotemutualunderstandingwithitsoverseasbusinesspartnersandrelevantorganizationsbyinvitingofficialsfromforeigngovernments,governmentagencies,privatecompa-niesandfinancialinstitutions,etc.Thecumulativenumberofseminarparticipantshasexceeded600sofar.

GovernorOkudaatthepressconference

ParticipantsattheJBICSeminar

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Participating in Various EventsJBICparticipates invariouseventsboth in Japanandover-seas to introduce its functions, role, and supportactivitiesinenvironmentalandothersectors.InDecember2012,JBICparticipatedinEco-Products2012,heldatTokyoBigSight,bysettingupitsownboothandmakingpresentations.OutsideJapan,JBICtookpartintheseminarondigitalterrestrialtelevi-sionbroadcasting(DTTB),whichwasheldinQuito,EcuadorinJuly2012,topromotethetransfertoDTTBinthecountry.InFebruary2013,JBICattendedthe“InvestinginAfricanMiningIndaba2013,”conference,oneoftheworld’slargestminingconferences,heldinCapeTown,SouthAfrica.Moreinforma-tionontheseandothereventsinwhichJBIChasparticipatedisavailableontheJBICwebsite.

Eco-Products2012

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Documents

Profile of JBIC