ANNOUNCEMENT 14 Mar 2016In March 2016, the government of Japan announced a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation press release of 14 March 2016: Buyer's Credit for National Power Company of Indonesia: http://www.jbic.go.jp/en/information/press/press-2015/0316-47130
JBIC information on export loans: http://www.jbic.go.jp/en/finance/export
On 14 March 2016, the Japan Bank for International Cooperation (JBIC) signed a buyer's credit loan agreement amounting to JPY 9.8 billion (approx. USD 86 million) and USD 107 million with the Indonesian state-owned power company PT PLN (Persero). Additionally, the Japanese Sumitomo Mitsui Banking Corporation will co-finance the buyer's credit loan with the Japanese governmental agency Nippon Export and Investment Insurance (NEXI) providing insurance for the co-financed portion.
The loan finances PT PLN (Persero)'s purchase of various facilities for the expansion of the Lontar coal-fired power plant in Java, Indonesia. This includes the purchase of steam turbines, generators and boilers from Japanese companies.
In this context JBIC stated: 'Through JBIC's support for the export of power generation equipment by Japanese companies, this loan is expected to support Indonesia's economic development by realizing steady power supply, and, at the same time, will contribute to maintaining and strengthening the international competitiveness of Japanese industries.'
Buyer's credit agreements
JBIC provides direct loans named buyer's credit to overseas importers. Loans are obtained if it finances the purchase of Japanese machinery, equipment or technology in specific eligible sectors. The Bank hereto stated that these loans are intended to 'positively contribute to Japanese companies'. Further information can be found on the Bank's website under export loans.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
Affected trading partners are identified based on UN Comtrade's import data from 2014.