ANNOUNCEMENT 28 May 2009In May 2009, the government of Japan announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
As part of the Japanese stimulus packages announced by Prime Minister Aso, the Japanese Bank for. Internaitonal Cooperation (JBIC) was to take the following steps to finance the overseas operations of Japanese firms. According to the translated summary of the contents of those stimulus packages on the website of the Japanese Cabinet Office, the JBIC-related measures include:
"Support for Japanese companies' capital procurements for overseas businesses through the Japan Bank for. International Cooperation (JBIC)
·Add an export credit system, through which credits are directly given to exporting companies in Japan
·Establish a loan system for Japanese companies' businesses in developing countries; make it possible to provide loans directly to locally-incorporated companies abroad, and for headquarters in Japan to provide loans" (page 6)
and "expansion of loans to Japanese companies' overseas businesses" (page 7).
On 28 May 2009 JBIC announced that it was loaning US$200million to Malayan Banking Berhad (Maybank), a Malaysian commercial bank. In the associated press release, JBIC noted:
"1. Specifically, the loan will provide long-term financing to Japanese companies in Malaysia, where 1,432 Japanese firms are operating businesses mainly in the manufacturing sector, as well as local companies within their supply chain in Malaysia through Maybank, the largest bank in Malaysia.
2. A plunge in economic activity worldwide triggered by the global financial crisis has seen Japanese affiliates and Malaysian firms confronted with severer business conditions and rapid decrease in production. This is especially pronounced in the export sector. In January this year, the Japanese Chamber of Trade and Industry, Malaysia (JACTIM) submitted an urgent proposal, which included financing measures to counter a rapid downturn in the business environment, to the Malaysian government. This reflected growing expectation for an effective policy response. To meet the needs of the firms in a timely manner, JBIC has considered this loan as a concrete support measure. This is the first loan that JBIC has provided to Maybank, the largest commercial bank in Malaysia, and is expected to help promote smooth credit flows to Japanese affiliates and their local business partners by utilizing Maybank's broad network."
It is noteworthy that this measure seeks to provide long-term financing and not just fill in any short-term financing gap that might have arisen during any credit squeeze in Malaysia.
Notably, JBIC provided a similar loan to Maybank the following year, see related measure.