ANNOUNCEMENT 03 Jun 2016In June 2016, the government of Japan announced new support for the overseas expansion of domestic firms.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation press release of 3 June 2016: Project Finance and Political-Risk Guarantee for Central Java Coal-Fired Power Generation Project in Indonesia: http://www.jbic.go.jp/en/information/press/press-2016/0603-48595
JBIC information on overseas investment loans: http://www.jbic.go.jp/en/finance/investment
On 3 June 2016, the Japan Bank for International Cooperation (JBIC) signed a USD 2.052 billion overseas investment loan agreement with PT Bhimasena Power Indonesia (BPI) in project financing. Additionally, a number of commercial banks co-financed the loan with JBIC providing a political risk guarantee for this co-financed portion. The Japanese companies Electric Power Development Co., Ltd. and ITOCHU Corporation are investors of the Indonesian company.
The loan finances BPI's Central Java coal-fired power generation project. In this project the Indonesian company will build and operate an ultra-supercritical coal-fired power generation plant as well as later sell the generated energy. The loan will facilitate the participation of the above Japanese investors in both the operation and management as well as utilizing technologies of Japan.
In this context JBIC stated: 'The loan thereby contributes to maintaining and strengthening the international competitiveness of Japanese industries. The project is also in line with the Japanese government's strategy of promoting Japanese involvement in projects including the design, construction, operation, and management of infrastructure.'
Project financing loans include preferential terms such as repayments being solely made from the project's cash flow generation and secured on the basis of the project's assets alone. As such the loan agreement is tied to the project's finances and not the company in question.
Overseas investment loans
JBIC provides direct loans named overseas investment loans to Japanese companies, overseas affiliates or joint ventures where Japanese companies hold equity interests and governments or financial institutions partying with such overseas affiliates. Loans support projects in specific sectors or with a specific purpose of interest to Japan. Further information can be found on the Bank's website under overseas investment 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.