JAPAN BANK FOR INTERNATIONAL COOPERATION FINANCIAL HIGHLIGHTS · P1 Financial Highlights 00.12.14 3:03 PM ページ 1. Looking at the global economy during the fiscal year ended March

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JAPAN BANK FOR INTERNATIONAL COOPERATION

FINANCIAL HIGHLIGHTS

THE BANK

Six Months Ended March 31, 2000

For the Six Months

Loan and Investment Commitments .........................................................................

Disbursements ............................................................................................................

Guarantees ..................................................................................................................

At Six Months-end

Total Assets .................................................................................................................

Loans and Investments Outstanding .........................................................................

Guarantees Outstanding.............................................................................................

Capital of the Account for International Financial Operations.................................

Capital of the Account for Overseas Economic Cooperation Operations .................

Borrowings ..................................................................................................................

INTERNATIONAL FINANCIAL ACCOUNT


For the Six Months


Disbursements ............................................................................................................

Guarantees ..................................................................................................................

At Six Months-end

Total Assets .................................................................................................................


Guarantees Outstanding.............................................................................................

Capital.........................................................................................................................

Borrowings ..................................................................................................................

OVERSEAS ECONOMIC COOPERATION ACCOUNT


For the Six Months


Disbursements ............................................................................................................

At Six Months-end

Total Assets .................................................................................................................


Capital.........................................................................................................................

Borrowings ..................................................................................................................

Notes: 1. Japan Bank for International Cooperation was established on October 1, 1999, and its initial fiscal period was the six months endedMarch 31, 2000.

2. U.S. dollar amounts are converted for convenience only at ¥106.15 per US$1 (the rate at the end of fiscal 1999), unless otherwisestated.All figures in this annual report have been rounded in the process of calculation.“0” indicates that the relevant figure, when rounded, is zero; “—” indicates that the relevant figure is precisely equal to zero.

Millions of U.S. dollars

$ 12,061

10,043

574

$ 215,154

204,211

3,227

9,284

53,645

140,631


$ 5,328

5,919

574

$ 114,719

105,684

3,227

9,284

95,259


$ 6,733

4,124

$ 100,435

98,528

53,645

45,372

Millions of yen

¥ 1,280,281

1,066,046

60,909

¥22,838,568

21,677,026

342,517

985,500

5,694,444

14,927,972

Millions of yen

¥ 565,526

628,314

60,909

¥12,177,411

11,218,319

342,517

985,500

10,111,734

Millions of yen

¥ 714,755

437,732

¥10,661,157

10,458,708

5,694,444

4,816,238

P1 Financial Highlights 00.12.14 3:03 PM ページ 1

Looking at the global economy during

the fiscal year ended March 31, 2000,

countries and regions worldwide strug-

gled to overcome a myriad of difficul-

ties. In Japan, extensive restructuring

efforts were undertaken to address the

prolonged recession. In Asia, many

countries were faced with rebuilding

after the damaging currency crisis. In

other parts of the world, particularly

in developing countries, severe prob-

lems such as poverty, social injustice

and environmental degradation con-

tinue. This situation prompted efforts

to structurally reform the interna-

tional financial architecture, including

Bretton Woods, which addressed the roles of

the International Monetary Fund (IMF) and

World Bank.

The year 2000 marked the start of a new era,

rekindling the sense of urgency to develop new

approaches. This spirit led to a new beginning

in Japan’s external economic policies with the

October 1, 1999 merger of the Export-Import

Bank of Japan ( JEXIM) and the Overseas

Economic Cooperation Fund, Japan (OECF) to

form the Japan Bank for International

Cooperation ( JBIC). This new financial institu-

tion is responsible for implementing Japan’s

external economic policies and managing over-

seas economic cooperation.

In International Financial Operations, JBIC

supports globalization of Japanese enterprises in

the form of export loans, import loans and

overseas investment loans, taking over the ser-

vices formerly provided by JEXIM. Another role

is to extend untied loans to developing coun-

tries and to contribute to the stability of the

international financial system. In Overseas

Economic Cooperation Operations, JBIC is con-

tinuing previous efforts to assist developing

countries in building infrastructure, as well as

economic and social foundations for healthy

growth. We continue to provide official devel-

opment assistance (ODA) provided by OECF in

the form of ODA loans and private-sector

investment finance.

The integration of the former institutions

also represents an opportunity for more effec-

tive use of their human resources and accumu-

lated expertise coupled with improved effi-

ciency brought about by an internal restructur-

ing, so as to provide comprehensive support to

Message from the Governor

2

section1 p2-3 00.12.14 3:04 PM ページ 2

the efforts of the international economic com-

munity to realize sound development. We are

confident in our ability to carry out such a

mandate as a new and unique governmental

financial institution.

JBIC, inclusive of its forerunners, has been

not only providing direct support to Asian

countries suffering from the currency crisis, but

also giving priority to crisis-affected Japanese

firms’ affiliates, including small- and medium-

sized enterprises, which play an important role

for these countries’ economies in terms of

production, employment, exports, etc. As a

result, using a variety of facilities and functions,

these organizations provided a cumulative total

of ¥5,250 billion in commitments as of the end

of the previous fiscal year. We believe this effort

certainly contributed to the recovery of Asian

countries.

Fortunately, these exceptional operations,

responding to an emergency situation such as

the currency crisis, have almost come to an end.

Nevertheless, in Asia and other regions,

countries are in need of private-sector funds to

stimulate their economies and engage in eco-

nomic structural reform and efforts for sustain-

able economic growth. JBIC support continues

to be critical to such efforts.

At the Okinawa Summit, information tech-

nology became a symbol of the technological

revolution, representing a new era of unlimited

possibilities and accelerated high-level growth.

Accompanying this is the challenge of elimina-

ting financial disorder and bridging the

so-called digital divide that leads to economic

and social inequalities worldwide.

JBIC is keenly aware of its multifaceted mis-

sion. While promoting stability of the interna-

tional financial orders, we are working to assist

improvement of social and economic infrastruc-

tures in developing countries to establish

building blocks of their economic activities.

Furthermore, in order to ensure that the efforts

of developing countries we assist will lead to

well-balanced and sustainable development, it

is essential to simultaneously support environ-

mental protection, social development and

human resources development in these coun-

tries. We will make the fullest use of our finan-

cial function, experience and expertise to carry

out this mission and to rapidly and flexibly

meet the challenges of the new age.

It is our hope that this first annual report

will clarify our current activities, programs, and

stance for the future. We ask for your continued

understanding and support.

October 2000

Hiroshi Yasuda

Governor

3

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4

Japan Bank for International Cooperation: Its Role and Activities

1. Japan Bank for International Cooperation

2. International Financial Operations

3. Overseas Economic Cooperation Operations

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Japan Bank for International Cooperation1

On October 1, 1999, the Japan Bank for InternationalCooperation (JBIC) was established as a result of amerger between the Export-Import Bank of Japan(JEXIM) and the Overseas Economic CooperationFund, Japan (OECF). JBIC is a governmental financialinstitution that conducts Japan’s external economicpolicy and economic cooperation in response to achanging world economic and social climate. JBIC

took over JEXIM and OECF operations as its core operations: International Financial Operations andOverseas Economic Cooperation Operations, respec-tively. JBIC expects to take advantage of synergies generated by accumulated expertise of operations and human resources inherited from the respectiveorganizations, and to create further efficiency by reorganization.

FY1999

FY1985

FY1975

FY1965

Overseas Economic Cooperation Operations ODA

InternationalFinancial

Operations

Overseas Economic Cooperation Operations (Commitments)International Financial Operations (Commitments)

61.3

213.7

974.4

888.4

1,649.2

FY1955

6.2

183.0

568.6

1,054.6152.2 (9%)

6.2 (100%)

161.1 (88%)

21.8 (12%)

552.0 (97%)

16.5 (3%)

1,053.7 (100%)

0.9 (0%)

661.2 (40%)544.8 (33%)

132.2 (8%)

157.7 (10%)

356.4 (40%) 101.4 (11%)

182.4 (21%)233.5 (26%)

0.5 (0%)14.2 (2%)

618.4 (63%)

14.7 (2%)

12.5 (1%)

46.4 (22%)148.5 (69%)

8.2 (4%) 7.9 (4%)2.7 (1%)

60.3 (98%)

1.0 (2%)

80.5 (8%)

128.2 (13%)

120.1 (12%)

GuaranteesGovernmental loansUntied loans and othersOverseas investment loansImport loansExport loans Private-Sector Investment FinanceODA loans

¥ billion (%)Changing Makeup of Loan and Investment Commitments

1. Export Loans2. Import Loans3. Overseas

Investment Loans4. Untied Loans

5. Bridge Loans6. Refinancing 7. Equity

Participation8. Studies

The primary objective of International Financial Operations is to contribute to the promotion of Japanese exports and imports, as well as Japanese economic activities overseas, and to the stability of the international financial order.

The basic activity of Overseas Economic Cooperation Operations is the provision of funds that encourage the self-help efforts of developing countries for self-reliance.

1. ODA Loans2. Private-Sector Investment Finance3. Studies

Government Investment FundsFILPInternal Funds, etc.

FILPBond IssuesInternal Funds, etc.

Sources of Funds

Sources of Funds

The Operations of JBIC

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1) Export LoansJBIC supports exports of plants and technologies by Japanesefirms by providing supplier credits (S/C) to Japaneseexporters, and buyer credits (B/C) or bank loans (B/L) to for-eign importers or foreign financial institutions.

Since plants such as power generation and communica-tion facilities embody advanced technology and various tech-nical features, plant exports have contributed to lifting theindustrial base of developing countries to higher levels. At thesame time, countries that acquire these plants gain from eco-nomic benefits that stimulate economic independence anddevelopment through industrial infrastructure development,expansion in employment opportunities and acquisition ofskills through operational guidance.

However, long-term financing for developing countries is

subject to country risk, interest-rate risk and foreign exchangerisk. These risks are often too large for private financial insti-tutions to act under their own initiative. Because mitigationof such risks is beneficial for the international economic com-munity, other advanced industrial countries also have officialinstitutions similar to JBIC, promoting plant exports: theExport-Import Bank of the United States, the Export CreditsGuarantee Department (ECGD) of the United Kingdom, theKreditenstalt für Wiederaufbau (KfW) of Germany, theCompagnie Française d’Assurance pour le CommerceExtérieur (COFACE) of France, and the Export DevelopmentCorporation (EDC) of Canada.

2) Import LoansJBIC supports imports of natural resources, manufacturedproducts and technologies. Loans are provided to Japaneseimporters or foreign exporters.

International Financial Operations2

JBIC’s International Financial Operations contribute to thepromotion of Japanese exports and imports, as well asJapanese economic activities overseas, and to the stability of the international financial order. In response to the Asiancurrency crisis, JBIC extended untied loans to Asian countriesin order to stabilize the international financial order, and atthe same time to support Japanese affiliates in the regionwhich experienced difficulties in deteriorating business condi-tions and credit constriction.

An important source of finance is funds from the FiscalInvestment and Loan Program (FILP), which manages postal

savings deposits, employee pension funds and national pen-sion funds. Other sources include bond issues in internationalcapital markets and internal funds including retained interestincome from past loans.

International Financial Operations are bound by anobligation to maintain “financial soundness” in order toensure effective and efficient undertakings. Specifically, theJapan Bank for International Cooperation Law requires thatrepayment for the loans and guarantees should be ascertained(“certainty of repayment”) and that expenditures should notexceed revenues (“sufficient revenues to cover expenditures”).

International Financial Operations Support Japanese Corporate Activities and Ensure the Stability of InternationalFinancial Order

Function of International Financial Operations

Export Loans

Foreign importer

Foreign financial institution, etc.

Japanese exporter

LoansLoans (S/C)

Loans (B/C)

Export of plants, etc.

Loans (B/L)

JBIC

Import Loans

Foreign exporterJapanese importer

LoansLoans

Import of manufactured products, natural

resources and technologies

JBIC

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Due to scarcity of natural resources, stable and long-termimport of natural resources is essential for Japan’s economicactivities. Import loans are utilized for supporting develop-ment and import of energy resources, such as oil and naturalgas, and also mineral resources such as iron ore. For Japan’sprosperity as a trading nation, promotion of free trade shouldcontinue to remain a cornerstone of Japanese policy. In par-ticular, improving Japan’s trade imbalance is a priority to pre-vent the world economy from reverting to protectionist poli-cies in order to ensure sound development of the world econ-omy. Import loans are designed to facilitate entry of foreignfirms into the Japanese market as a way to achieve this policygoal in line with domestic initiatives for deregulation.Accordingly, the Japanese government promotes imports ofmanufactured products from abroad, allowing Japanese usersto benefit from high-quality, inexpensive goods and equip-ment. It is expected that such imports will raise the level ofsophistication of Japanese industries and increase the stan-dard of living in Japan.

3) Overseas Investment LoansJBIC supports overseas investment through providing loans to Japanese investors, joint ventures where Japanese firmshave equity interests, and to foreign governments or banksmaking equity investment in or providing loans to such joint ventures.

In parallel with the accelerated trend toward globaliza-tion, a number of Japanese companies are engaging ininternational operations. Progress in Japanese overseas invest-ment enhances the Japanese industrial structure and con-tributes to building a harmonious international division oflabor. Overseas direct investment transfers capital, technol-ogy, and management expertise in an integrated fashion todeveloping countries with less of a liability to the recipientcountries. Accordingly, economic benefits such as expanded

employment, transfer of technologies, and acquisition ofhard currencies will accrue to recipient countries, which inturn will lead to greater economic interchange betweenindustrial and developing nations.

However, overseas investment entails initially unforeseenrisks to investors, such as a sudden change in economic poli-cies, financial collapse and economic disorder. JBIC providesadvice and information on the investment environment inforeign countries, primarily to small- and medium-sizedenterprises. Also, as a public-sector lender, JBIC works to miti-gate such risks through negotiations with the host countrygovernments and governmental institutions.

4) Untied LoansAn untied loan is a form of financial assistance provided todeveloping countries attempting to establish the basis for eco-nomic activities or implement structural adjustments.Provision of loans is not conditional on procurement ofequipment or machinery from Japan.

Developing and transition economies are often burdenedwith a wide range of economic problems such as difficultiesin serving external debt, underdeveloped infrastructure andcapital markets, a lack of internationally competitive indus-tries, and environmental pollution. Untied loans are providedto help overcome these difficulties and stimulate economicactivities of recipient countries. This revitalization contributesto the overall development of the international economy.Specifically, untied loans bring about the following signifi-cant benefits: (1) maintaining stability in the internationalfinancial order; (2) expanding opportunities for internationaleconomic activities such as trade and foreign direct invest-ment; (3) securing energy resources for Japan; and (4) rein-forcing efforts to improve environmental problems.

Overseas Investment Loans

Jointventure

Japanese firm

Jointventurepartner

Foreigngovernment,

etc./bank

Japanese investor

Loans

Loans

LoansLoans

Loans

Loans and/or equity investment

Equity investment

Loans and/or equity

investment

JBIC

Project in the recipient country

Untied Loans

ExporterForeign importer

Loans

Imports of equipment, technology

Foreign government, etc./bank/firm

JBIC

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Untied loans also serve to strengthen partnerships withinternational organizations. JBIC exchanges information andviews about economic conditions and investment climates indeveloping countries. Moreover, JBIC holds regular consulta-tion meetings annually with international organizations.

5) GuaranteesJBIC provides guarantees for sovereign bonds issued by for-eign public entities and loans extended by private financialinstitutions. Mostly, JBIC guarantees sovereign bonds to help governments in developing countries mobilize private-sector funds.

6) Bridge LoansBridge loans are provided for short-term financing of foreigncurrencies as required for external transactions to the govern-ments of developing countries, which have difficulties ininternational balance of payments.

7) Equity ParticipationEquity participation is the investment of financial capital injoint ventures of Japanese firms planning an overseas project.

Guarantees

Foreigngovernment,

etc.

Issue of public bonds, etc.

InvestorsPrivate financialinstitution, etc.

GuaranteesGuarantees

Loans

JBIC

Imports or other external transactions

Bridge Loans

Loans from IMF, World Bank, etc.

Loans

Conditionality

Foreign government,etc. / bank

JBIC

Equity Participation

Joint venture of Japanese firm, etc.

Equity Participation

JBIC

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Overseas Economic Cooperation Operations3

JBIC’s Overseas Economic Cooperation Operations consist oftwo operations: ODA loans and Private-Sector InvestmentFinance. These are a part of Japanese official developmentassistance (ODA) extended to developing countries with anobligation for repayment. The objective of these operations isto assist developing countries in their self-help efforts todevelop social and economic infrastructures and stabilize theireconomies through provision of concessionary finance with along-term repayment period and low-interest rate. This finan-cial assistance is designed to meet various needs of recipients,while research with regard to development issues and projectsis conducted to reinforce the operations. Specifically, ODAloans are a key form of financial assistance for developingsocial and economic infrastructures that are essential for eco-nomic development in recipient countries. ODA loansaccount for 46% of Japan’s ODA, making Overseas EconomicCooperation Operations a main pillar of Japanese ODA policy.

Recent trends are the increase in financial demand forpoverty alleviation and social development, and risingrequirements to address global issues such as environmentalconservation. This represents a diversity of developmentneeds in different countries, calling for varied and sophisti-cated functions of assistance.

The sources of finance for Overseas EconomicCooperation Operations are comprised of contributions fromthe general budget, funds from the Fiscal Investment and LoanProgram (FILP) and others. The former comes from tax rev-enues and government bond issues, whereas the latter is bor-rowings under the FILP, which manages postal savingsdeposits, employee pension funds and national pension funds.

Assistance for Nation Building in Developing Countries

1) ODA LoansOn December 1, 1999, JBIC announced the “Medium-TermStrategy for Overseas Economic Cooperation Operations”,which sets forth the priority focus of ODA loan operations.

ODA loans are long-term, low-interest, concessional creditswith a grant element of at least 25%, and are provided todeveloping countries to assist their development efforts.

The basic approach of JBIC in providing ODA loans is toassist self-help efforts toward economic takeoff and ownershipin development. With a particular focus on the Asian region,ODA loans are provided to cover three priority areas: (1)poverty alleviation and economic and social development; (2)problems that are global in scale; and (3) economic structuralreforms. Specifically, JBIC seeks to strike a desirable balancebetween (1) sustainable economic growth through economicand social infrastructure development and industrial develop-ment, and (2) a fair distribution of the fruits of growththrough measures that reduce poverty and enrich social devel-opment. JBIC will also intensify its efforts to address problemsrelated to the environment, energy and food.

Function of Overseas Economic Cooperation Operations

Grant Aid

Technical Cooperation

MultilateralODA

Loans

Grants

Official Development Assistance

(ODA)

BilateralODA

JBICOverseas Economic

Cooperation Operations

ODA Loans

Project for development

Economic stabilization plan

Loans

The government of the developing countries/

governmental institutions, etc.

JBIC

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1 Project PreparationProjects are determined in developing countries based onthe objectives and strategies of medium- and long-termdevelopment plans. Based on the findings of macroeco-nomic surveys and examinations in various sectors, JBICengages in policy dialogues to exchange opinions on theurgency and priority of projects with the governments ofdeveloping countries. At this preparation stage, each projectis also investigated and analyzed from economic, social,technical, and environmental aspects. This takes the formof a feasibility study, either produced entirely by the gov-ernment of the developing country, or by technical assis-tance from the Japan International Cooperation Agency(JICA) or international organizations.

2 Loan RequestThe governments of developing countries submit loanrequests, together with materials produced in the prepara-tion stage.

3 Examination/AppraisalJBIC examines the materials submitted by the governmentsof developing countries. The Japanese government may dis-patch teams and consult with the government of the bor-rower country. Following this step, JBIC dispatches a pro-ject appraisal team that will make a more detailed analysisof the project from economic, technical and environmentalaspects based on discussions with staff and surveys at theproject site.

When it is judged that a supplementary study isrequired prior to examination and appraisal, JBIC may con-duct a Special Assistance for Project Formation (SAPROF)study. Even if a high level of need is recognized, a lack of funds and technical expertise may pose obstaclesto developing countries in their efforts to create a full pro-ject plan. The support provided by an additional SAPROFstudy can help overcome such obstacles.

4 Exchange of Notes and Loan AgreementsThe Japanese government determines the amount of loanand conditions based on the JBIC appraisal results. An

ODA loans are carried out in accordance with a series ofsteps which starts from project preparation leading toappraisal, signing of a loan agreement, project implementa-tion, and then to post-evaluation and follow-up activitiesafter project completion. Lessons learned in the final step of

post-evaluation and follow-up activities are used as feed-back for preparatory work in subsequent new projects.Because these procedures form a cycle, the whole process isreferred to as a “project cycle”.

ODA Loan Procedures and the Project Cycle

4. Exchange of Notes/Loan Agreements

1. Project Preparation

3. Examination/ Appraisal

2. Loan Request

6. Completion/ post-evaluation and follow-up activities

5. Project Implementation

Special Assistance for Project Formation

(SAPROF)

Special Assistance for Project Procurement

Special Assistance for Project Sustainability

(SAPS)

Special Assistance for Project Implementation

(SAPI)

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2) Private-Sector Investment Finance (Support forPrivate-Sector Activities)

Business activities of private enterprises in developing coun-tries generate employment and other economic effects thatimprove people’s lives by activating the economies. Othereffects, such as the acquisition of foreign currencies and tech-nology transfers, can also be expected. However, such projectsin developing countries tend to find it difficult to attract loansfrom private financial institutions due to obstacles such ashigh risks and low profit outlook. When such a situation isapparent, JBIC supports private enterprises planning to under-take business in developing countries with funds provided aseither equity investments or loans.

Exchange of Notes (E/N), diplomatic documents exchangedbetween the governments of developing countries andJapan, is then concluded. Thereafter, JBIC concludes a LoanAgreement (L/A) with the country receiving the loan.

5 Project ImplementationAfter the conclusion of the L/A, the project enters into theimplementation stage. The procurement of goods and services necessary for the project is carried out throughinternational competitive bidding, which is the most eco-nomical and efficient method. The actual disbursement offunds is normally carried out in response to requests fromthe recipient countries as demand for funds arise.

The entity implementing the project is the recipientcountry. However, JBIC cooperates by supervising andmonitoring implementation and providing advice or con-sultation to ensure smooth progress. Such project supervi-sion and monitoring have become increasingly important,and when considered necessary, JBIC undertakes a SpecialAssistance for Project Implementation (SAPI) study, in order

to ensure smooth implementation of the project andachievement of its goals. By employing consultants andexperts, SAPI carries out additional and supplementaryinvestigations to find out what measures should be takenfor improving project implementation.

6 Completion, Post Evaluation and Follow-upActivities

Completed projects require a post-evaluation to make thebest use of the lessons learned for future projects.Administration and operation after completion of projectsare the responsibilities of the recipient countries, but JBICendeavors to keep in touch with the situation and providesadvice as the need arises.

Also, if requested by the borrower country, JBIC maydecide to undertake a Special Assistance for ProjectSustainability (SAPS) survey to identify and recommendconcrete policies and measures to sustain or improve effec-tiveness and performance of completed projects.

Private-Sector Investment Finance

Project for development

Japanese firm /local joint venture, etc.

Loans and investment

JBIC

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JBIC Operations in Fiscal 1999

1. Overview of Operations

2. Assistance Extended to Asian Countries

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1 Overview of Operations

On October 1, 1999, the Japan Bank for InternationalCooperation (JBIC) was established as a result of a mergerbetween JEXIM and OECF. JBIC inherited the functions ofboth JEXIM and OECF. Services provided by JEXIM such asexport loans, import loans, overseas investment loans anduntied loans are the components of International FinancialOperations, while ODA loans and Private-Sector InvestmentFinance undertaken by OECF comprises Overseas EconomicCooperation Operations. In addition, JBIC is equipped withnew facilities: guarantee for government bonds for developingcountries in order to assist mobilization of foreign private cap-ital in developing countries; and study facility forInternational Financial Operations to assist identification andpreparation of new projects.

The results for fiscal 1999 as listed below are the aggrega-tion of activities of JEXIM and OECF for the initial six-monthperiod and the those of JBIC for the latter six-month period.

In fiscal 1999, total commitments amounted to ¥2,546billion. Disbursements reached ¥2,436.4 billion. Repaymentswere ¥1,801.9 billion. As of the end of fiscal 1999, loans andequity participation outstanding stood at ¥21,677 billion.Total commitments for fiscal 1999 dropped sharply from theprevious year’s level of ¥4,648.1 billion. This is because finan-cial assistance to Asia decreased following the rapid recoveryof the Asian economy, wherein JBIC’s commitments returnedto the level prior to the Asian currency crisis.

In terms of loan commitments by region, Asia was thelargest recipient region with 180 commitments worth¥1,436.5 billion (56% of the total amount of commitments).In other regions, JBIC made 40 commitments to LatinAmerica and the Caribbean worth ¥412.1 billion (16%); 17 tothe Middle East worth ¥206.9 billion (8%); 24 to Europeworth ¥168.6 billion (7%); 48 to North America worth ¥123billion (5%); one to an international organization worth¥116.5 billion (5%); 18 to Africa worth ¥62.6 billion (2%); and26 to Oceania worth ¥19.8 billion (1%).

International Financial OperationsInternational Financial Operations commitments totaled¥1,491.4 billion, representing a total of 269 commitments.With regard to loan commitments by purpose of financing,there were 57 commitments for export loans amounting to¥152.2 billion, 37 commitments for import loans worth¥133.2 billion, 158 commitments for overseas investmentloans worth ¥544.8 billion, and 17 commitments for untiedloans worth ¥661.2 billion. Disbursements totaled ¥1,646.5billion, and the outstanding balance of InternationalFinancial Operations amounted to ¥11,218.3 billion.

By region, Asia accounted for 40% of the total commit-ments of International Financial Operations. Due to the rapidrecovery of the Asian economy, the amount returned to alevel comparable to the annual level prior to the onset of theAsian currency crisis. Latin America and the Caribbeanaccounted for 20% of the total commitments of InternationalFinancial Operations, which is a sharp increase compared tofiscal 1998 due to large-scale investments related to naturalresource development projects, including the biggest oil fieldin Mexico, copper and zinc mines in Peru and a natural gasprocessing project in Brazil.

Overseas Economic Cooperation OperationsOverseas Economic Cooperation Operations commitmentstotaled ¥1,054.6 billion. The breakdown of these commit-ments is comprised of 84 commitments for ODA loans worth¥1,053.7 billion, and one commitment for Private-SectorInvestment Finance worth ¥0.9 billion. Disbursements were¥789.9 billion, and the outstanding balance of the OverseasEconomic Cooperation Operations amounted to ¥10,458.7billion. By region, loan commitments to Asian countries con-tinued to account for the highest percentage, representing80% of all loan commitments.

International Financial Operations

Export Loans 67.5 — 7.3 42.1 3.6 — 31.8 — 152.2

Import Loans 1.8 4.1 4.8 50.7 0.6 71.2 — — 133.2

Overseas Investment Loans 201.4 15.7 44.5 1.3 9.8 51.8 220.4 — 544.8

Untied Loans, etc. 305.8 — 112.0 40.3 11.9 — 74.8 116.5 661.2

Sub Total 576.4 19.8 168.6 134.3 25.9 123.0 327.0 116.5 1,491.4

Overseas Economic Cooperation Operations

ODA Loans 859.2 — — 72.6 36.7 — 85.1 — 1,053.7

Private-Sector Investment Finance 0.9 — — — — — — — 0.9

Sub Total 860.1 — — 72.6 36.7 — 85.1 — 1,054.6

Total 1,436.5 19.8 168.6 206.9 62.6 123.0 412.1 116.5 2,546.0

Note: Figures exclude debt rescheduling.

AsiaThe Middle

EastInternational

Organizations, etc.TotalOceania Europe Africa

NorthAmerica

Latin America andthe CaribbeanPurpose of Financing

Region

Fiscal 1999 Commitments by Region and Purpose of Financing(¥ billion)

Section 3 p12-15 00.12.14 3:19 PM ページ 13

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(¥ billion, %)

FY1997 FY1998 First Half of FY1999 Second Half of FY1999

Number Total Share Number Total Share Number Total Share Number Total Share


Export Loans 51 221.9 11 59 379.8 11 36 99.6 11 21 52.5 9

Shipping 1 2.9 0 — — — 3 3.2 0 2 2.0 0

Plant 50 219.0 11 58 379.7 11 33 96.4 10 19 50.6 9

Technical Service — — — 1 0.1 0 — — — — — —

Import Loans 32 127.5 6 50 125.1 4 23 91.9 10 14 41.3 7

Natural Resources Development 17 83.7 4 7 15.9 0 4 52.6 6 4 5.0 1

Manufactured Goods 15 43.8 2 43 109.2 3 19 39.3 4 10 36.4 6

Technologies — — — — — — — — — — — —

Overseas Investment Loans 211 894.9 45 540 1,576.8 45 122 370.9 40 36 173.9 31

Natural Resources 65 247.3 12 66 190.5 5 28 132.9 14 15 86.2 15

Others 146 647.5 32 474 1,386.3 39 94 238.0 26 21 87.8 16

Untied Loans, etc. 18 752.8 38 32 1,453.1 41 11 363.5 39 6 297.8 53

Untied Loans 18 752.8 38 32 1,453.1 41 11 363.5 39 6 297.8 53

Bridge Loans — — — — — — — — — — — —

Equity Participation — — — — — — — — — — — —

Governmental Loans — — — — — — — — — — — —

Sub Total 312 1,997.1 100 681 3,534.9 100 192 925.9 100 77 565.5 100


ODA Loans 95 1,028.6 100 79 1,111.6 100 29 338.9 100 55 714.8 100

Private-Sector Investment Finance 4 1.2 0 3 1.6 0 1 0.9 0 — — —

Loans 3 0.8 0 1 0.1 0 1 0.9 0 — — —

Investment 1 0.5 0 2 1.5 0 — — — — — —

Sub Total 99 1,029.9 100 82 1,113.2 100 30 339.8 100 55 714.8 100

Total 411 3,027.0 — 763 4,648.1 — 222 1,265.7 — 132 1,280.3 —

Note: Results for the first half of FY1999 are from The Export-Import Bank of Japan for International Financial Operations and from The Overseas Economic Cooperation Fund, Japan for Overseas EconomicCooperation Operations, respectively.

Loan and Equity Participation Commitments by Purpose of Financing

(¥ billion, %)

FY1997 FY1998 First Half of FY1999 Second Half of FY1999

Number Total Share Number Total Share Number Total Share Number Total Share


Asia 159 1,237.8 62 477 2,353.0 67 91 509.6 55 19 60.1 11

Oceania 33 39.9 2 27 16.9 0 18 14.8 2 8 5.0 1

Europe 25 110.2 6 35 367.7 10 16 38.5 4 10 136.8 24

The Middle East 14 92.0 5 6 126.9 4 8 76.5 8 5 57.8 10

Africa 5 28.5 1 6 10.3 0 6 23.6 3 6 2.3 0

North America 29 167.6 8 83 331.7 9 29 59.1 6 19 63.9 11

Latin America and the Caribbean 45 320.8 16 44 326.9 9 24 203.8 22 9 123.2 22

International Organizations, etc. — — — — — — — — — 1 116.5 —

Other 2 0.3 0 3 1.6 0 — — — — — —

Sub Total 312 1,997.1 100 681 3,534.9 100 192 925.9 100 77 565.5 100


Asia 78 860.6 84 69 1,007.9 91 21 225.4 66 47 634.7 89

Oceania 1 2.3 0 — — — — — — — — —

Europe 2 22.0 2 3 29.5 3 — — — — — —

The Middle East 1 7.1 1 — — — 2 41.8 12 2 30.8 4

Africa 7 44.7 4 6 39.4 4 1 9.7 3 5 27.1 4

North America — — — — — — — — — — — —

Latin America and the Caribbean 9 92.6 9 2 35.0 3 6 62.9 19 1 22.1 3

International Organizations, etc. — — — — — — — — — — — —

Other 1 0.5 0 2 1.5 0 — — — — — —

Sub Total 99 1,029.9 100 82 1,113.2 100 30 339.8 100 55 714.8 100

Total 411 3,027.0 — 763 4,648.1 — 222 1,265.7 — 132 1,280.3 —

Notes: Results for the first half of FY1999 are from The Export-Import Bank of Japan for International Financial Operations and from The Overseas Economic Cooperation Fund, Japan for OverseasEconomic Cooperation Operations, respectively.With regard to International Financial Operations, Central Asia and Caucasus regions were previously categorized within Europe for the first half of FY1999, and thereafter, from the second half ofFY1999, have been categorized within Asia.

Loan and Equity Participation Commitments by Region

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15

2 Assistance Extended to Asian Countries

(¥ billion)

Thailand Indonesia Republic of Korea Philippines Malaysia Others Total


Overseas Investment Loans 410.6 254.3 10.9 93.0 123.0 480.2 1,371.9

- First Stage 92.0 90.5 — 0.6 2.2 74.7 260.0

- Second Stage 95.8 34.6 — 16.1 4.2 8.8 159.5

- Third Stage 192.4 84.8 10.9 24.6 41.6 238.5 592.8

- Regular Loans 30.4 44.4 — 51.7 75.0 158.2 359.6

Untied Loans 708.1 393.4 650.4 207.6 195.5 — 2,155.0

- IMF Parallel Loans 480.0 — — — — — 480.0

- Two-Step Loans 40.0 170.0 130.0 — — — 340.0

- New Miyazawa Initiative 188.1 223.4 520.4 207.6 195.5 — 1,335.0

Sub Total 1,118.7 647.7 661.3 300.6 318.5 480.2 3,526.9


ODA Loans - Regular Loans 223.5 365.2 — 120.7 65.5 253.0 1,027.9

- New Miyazawa Initiative 181.8 152.4 — 172.0 114.1 — 620.3

- Special Yen (ODA) Loans — — — — 53.8 21.3 75.1

Sub Total 405.3 517.6 — 292.7 233.4 274.3 1,723.3

Total 1,524.0 1,165.3 661.3 593.3 551.9 754.5 5,250.2

Notes: 1. First Stage: Based on “Emergency Economic Package to Stabilize the Economies of Southeast Asia” as of February 20, 19982. Second Stage: Based on “Comprehensive Economic Measures” as of April 24, 19983. Third Stage: Based on “Emergency Economic Measures” as of November 16, 1998

*Special Yen (ODA) Loan: Following the announcement of the “Emergency Economic Measures” in November 1998, the Japanese government announced a “Scheme of Special Yen

(ODA) Loan Facility” for promoting economic reform and productivity recovery in Asian countries affected by the currency crisis. In order to assist rapid recovery of Asian economies, this

facility focuses on projects having ample economic stimulation effects and improving the conditions for private-sector investments. The project scale is a maximum total of ¥600 billion

over three years starting from 1999.

Results of JBIC’s Support Activities for Asia (Commitment basis) (As of March 31, 2000)

Since the onset of the Asian currency crisis in July 1997,JEXIM, OECF, and subsequently JBIC following the merger ofthe two former organizations, undertook the greatest chal-lenge ever in providing support for Asian countries in eco-nomic difficulties. The financial support JBIC provided toAsian economies totaled ¥5,250.2 billion in commitments bythe end of fiscal 1999.

Of this total, International Financial Operations com-prised ¥2,155 billion in untied loans to support macroeco-nomic stabilization and improvement in the economic envi-ronment; and ¥1,371.9 billion in overseas investment loans tosupport overseas Japanese companies. Overseas EconomicCooperation Operations amounted to a total of ¥1,723.3 billion in ODA loan commitments. A part of the loans wasextended to create employment opportunities for people inpoverty who have suffered the most from the effects of thecurrency crisis.

On a country basis, total commitments of ¥1,524 billionwere provided to Thailand, ¥1,165.3 billion to Indonesia,¥661.3 billion to Korea, ¥593.3 billion to the Philippines,

¥551.9 billion to Malaysia, and ¥754.5 billion to other countries.

In October 1998, “A New Initiative to Overcome theAsian Currency Crisis — New Miyazawa Initiative” waslaunched, with an assistance package totaling US$30 billion,which was designed to assist Asian countries in overcomingtheir economic difficulties and to contribute to the stability ofinternational financial markets. JBIC operations comprisedUS$15 billion of this total and addressed medium- to long-term financial needs for economic recovery in Asian coun-tries, providing comprehensive support by InternationalFinancial Operations and Overseas Economic CooperationOperations. Disbursements during fiscal 1999 reached ¥265billion (US$2.2 billion equivalent) for five projects withinInternational Financial Operations and ¥365.8 billion for 22projects within Overseas Economic Cooperation Operations.By the end of fiscal 1999, JBIC had committed almost all ofthe US$15 billion allocated to its operations. Special Yen(ODA) Loans* in fiscal 1999 totaled three commitments toViet Nam and Malaysia, amounting to ¥75.1 billion.

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16

Summary of Operations by Region

East Asia

Southeast Asia

South Asia

Central Asia and Caucasus

Oceania

Europe: Western Europe, Central and Eastern Europe and Russia

The Middle East

Africa

Americas: North America, Latin America and the Caribbean

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17

While some effects of the 1997 currency crisis inEast Asia are still being felt, macroeconomic recov-ery is taking place. However, structural problemsstill exist in the financial and corporate sectors ofeach country, requiring further economic reform.

China maintained a relatively high rate ofgrowth during the currency crisis, yet faced seriousproblems such as continuing stagnant demand inthe private sector. This has held back growthdespite active fiscal policies and increased exportsdue to economic recovery in neighboring countries.In 1999, economic growth dropped to 7.1% from7.8% for the previous year. To maintain a highgrowth rate, continuous efforts to implementreforms in three areas are essential: state-ownedenterprises, financial-sector reform and administra-tive reform. In addition, it is important tostrengthen the social security system for maintain-ing social stability in China. Increasing the competi-tiveness of Chinese domestic industries is anothercrucial issue for China with the growing expecta-tions that China may join the World TradeOrganization (WTO) following an agreementbetween China and the United States.

In the Republic of Korea, domestic demand

recovered, led by increased consumer spending. In addition, exports to Asian countries expanded. As a result, the Republic of Korea saw an impressive10.7% economic growth in 1999, signaling a recov-ery from the severe recession in the previous year.Despite an increase in imports, the Republic ofKorea’s balance of payments amounted to a surplusequivalent to 6.4% of GDP, while foreign exchangereserves at the end of 1999 increased to the equiva-lent of 6.4 month’s worth of imports. Meanwhile,reforms in the financial and corporate sectors areyet to be achieved under the current recoveryprocess.

In Mongolia, low prices for copper and otherprincipal exports led to a drop in the value ofexports, holding economic growth in 1999 to 3.5%,the same as 1998. While the deficit in the currentaccount was significantly reduced by a decrease inimports, the country’s fiscal deficit remains large,making fiscal reform an important issue.

Taiwan maintained economic growth of 5.7% in1999 despite heavy earthquake damage.

Hong Kong posted negative growth in 1998, yetrapidly moved toward recovery in 1999, achievingan economic growth rate of 2.9%.

Economic and Social Conditions

EastAsia

International Financial Operations andMajor ProjectsIn fiscal 1999, JBIC made 35 loan commitments in EastAsia worth a total of ¥272.2 billion. The Republic of Koreaexperienced the fastest recovery among Asian countriesaffected by the currency crisis. As the new era of Japanese-Korean relations was proclaimed, JBIC actively providedfinancial assistance to the Republic of Korea through

International Financial Operations. JBIC also extendeduntied loans to the Korean Peninsula Energy DevelopmentOrganization (KEDO), an international organization pro-viding funds for constructing the Light-Water NuclearReactor Project in the Democratic People’s Republic of Korea.

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Development of Semiconductor IndustryIn order to correspond to the advancements in informa-tion technology in the Ninth Five-Year Plan, constructionof advanced semiconductor manufacturing facilities is tak-ing place through joint ventures with foreign-capital affili-ated companies. JBIC provided an overseas investmentloan of US$300 million to supply long-term capital to theShanghai Huahong NEC Electric Company (HHNEC), ajoint venture between a Chinese company and a majorJapanese electric company. As one area of economic coop-eration in line with the Chinese government’s policy ofpromoting the domestic semiconductor industry, this pro-ject is expected to provide employment while enabling thetransfer of semiconductor pre-processing technology andmanagement expertise.

Buyer Credit for Railroad ExpansionTogether with two other commercial banks, JBIC cofi-nanced a loan totaling US$338 million to the Kowloon-Canton Railway Corporation (KCRC), a company whollyowned by the Government of the Hong Kong SpecialAdministrative Region. This is the first buyer creditextended to a corporation incorporated in Hong Kong.The proceeds of the loan will be used to purchase 250 rail-way cars from Japanese manufacturers—154 for the 30kmWestern Line that KCRC will build on the KowloonPeninsula, and 96 for the existing 34km Eastern Line. TheWestern Line is scheduled for completion in 2003.Japanese manufacturers were selected for their superiornoise-prevention and energy-saving technologies. Thisrepresents the first time that KCRC will import a com-muter type of rolling stock from a country other than

Advancement of Steel Manufacturing Technology The Chinese government’s Ninth Five-Year Plan for 1996-2000 envisages enhancement of technologies and promo-tion of economic development in China through imple-mentation of various types of projects.

JBIC is providing an untied loan of ¥35 billion for theWuhan Second Rolling Mill Project in Hubei Province topurchase a new hot-rolling mill. China is targeting steelmanufacturing as one of the core industries to be strength-ened for economic development and making efforts toimprove production technology in this industry. TheWuhan project is part of this effort.

Manufacturing of Large-scale ConstructionMachinerySimilarly, JBIC also provided an untied loan of ¥1.33 bil-lion to construct manufacturing facilities for large-scalehydraulic excavators at the Huanghe ConstructionMachinery Plant in Shaanxi Province. The production ofthe hydraulic excavators is undertaken by the HuangheConstruction Machinery Plant located in Xi’an, ShaanxiProvince, a city in the inland region of China. The excava-tors will be used to help develop infrastructure in theinland areas. Thus, this project is expected to contribute todevelopment of the inland provinces and lead to furthereconomic development in China as a whole by bolsteringdomestic demand.

18

CHINA

Semiconductor fabrication plant

HONG KONG

¥20,943 million (7.7%)

¥88,322 million (32.4%)

¥162,947 million (59.9%)

Republic of Korea

China

Hong Kong

Total¥272,212million

Loan Commitments of International Financial Operations to East Asia in FY1999

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19

China¥192,637million

¥192,637 million (100%)

Loan Commitments of Overseas Economic Cooperation Operations to East Asia in FY1999

business alliances, technical tie-ups, cross-shareholdingarrangements, and cooperation in third country marketswith their Korean counterparts.

In order to assist the Republic of Korea’s economicrecovery, JBIC provided an untied loan to the KoreanDevelopment Bank (KDB) totaling ¥121.52 billion. Theloan will be used to: 1) implement power, telecommunica-tions, transportation and other infrastructure projectsessential for improving the business environment and foracquisition of foreign currencies; 2) help carry out envi-ronment and energy conservation projects; and 3) assistKorean firms that are building or strengthening businessalliances with Japanese companies. It is expected that theimprovement in the investment climate and the resultantincrease in domestic demand will lead to sustained recov-ery in the Republic of Korea’s real economy, stabilizationof the entire Asian economy, and closer industrial cooper-ation between Korea and Japan.

Overseas Economic Cooperation Operationsand Major ProjectsIn fiscal 1999, ODA loan committed to East Asia was 19loans to China totaling approximately ¥192.6 billion. Thisfiscal year marks the 20th anniversary of Japanese ODAloans to China. During that time, assistance has diversifiedfrom basic economic infrastructure development to pro-jects directly concerned with the well-being of people inrecipient countries. In particular, reflecting the growingneed for environmental conservation and improvements,14 out of 19 loans were for environment-related projects.

Great Britain. In order to alleviate traffic congestion and todevelop suburban areas for future population increases,the Government of the Hong Kong Special AdministrativeRegion places one of the highest priorities on the con-struction of railway networks in its overall transportationpolicy for Hong Kong. The purchase of railway cars consti-tutes part of the plan to expand railway transportationcapacity.

Assisting Domestic Demand Stimulation andRecovery of Real EconomyIn response to the currency crisis in 1997, the Governmentof the Republic of Korea has kept a tight rein on its macro-economic management and addressed structural reformsin the financial sector and among business conglomerates,or chaebols. Although such efforts have achieved signifi-cant results and lifted the country out of serious recession,in early 1999, it could not yet to be judged that full-fledged recovery had begun. While progress is being madein corporate restructuring and financial reform, furthereconomic recovery and reduction of unemploymentremained urgent issues for the government. In the private-business sector, there was a tendency among Korean firmsto pursue restructuring through forming partnerships andalliances with foreign companies. Some Japanese enter-prises followed this movement by entering into mergers,

New model railway car

REPUBLIC OF KOREA

Signing ceremony for export loan to the Kowloon-CantonRailway Corporation (KCRC)

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20

Environmental Protection Measures AgainstPollutionEnvironmental pollution accompanying rapid economicgrowth has become a grave problem in China, one thatalso affects Japan and the rest of the world. To provideeffective assistance toward environmental issues, JBIC pro-vided an ODA loan of ¥6,266 million for the GuiyangEnvironmental Model City Project. Guiyang will become amodel city for intensive environmental improvementmeasures, with the aim of accumulating successful exam-ples of environmental protection measures to be appliedto other cities.

Guiyang is a city with heavy and chemical industriesand depends on coal as a main source of energy. This hasresulted in extremely severe air pollution, which the pro-ject will address. The loan will be used to purchase materi-als and equipment essential for developing gas tanks, dustextractors and other facilities to combat factory sources of pollution.

Provision of Safe and Stable Water SupplyOne example of assistance to social infrastructure develop-ment was a ¥3,641 million ODA loan for the GuangxiWater Supply Project in the Guangxi Autonomous Region(Zizhiqu) near China’s border with Viet Nam. Rapid eco-nomic growth has occurred since 1992, when China’sState Council designated it as the main transportation linkto China’s Southwest region. Ongoing development and population growth has spurred demand for water, as haseconomic growth in the new development region alongthe Nanning-Kunming Railway constructed with supportfrom ODA loans. Projections indicate the existing watersupply will not meet steadily increasing demand.

Moreover, the Guangxi Autonomous Region’s thirdlargest city, Guilin, is an internationally recognized touristdestination having been developed through tourist andagriculture industries. This city also has to raise the capacity of its water supply for future increases in population growth.

The project involves construction of such facilities as water purification plants and water mains to increasethe supply of safe drinking water for the two areas in the region.

Yangtze River Flood Control JBIC provided a ¥24.0 billion ODA loan for urban floodcontrol in Hunan Province. Dongtinghu Lake, China’s second-largest freshwater lake located in the northernregion of the province, is the Yangtze River’s principalflood control basin. Cities in the surrounding DongtinghuLake Plain, such as the capital city of Changsha and theindustrial cities of Bingyang and Changde, along with thearea’s water transportation and railroad facilities, form oneof China’s social and economic centers. Since many citiesin the basin lack adequate flood control, every year flood-ing from the Yangtze and four other river systems causeserious damage. In the summer of 1998, a major flood inthe Yangtze River basin claimed over 1,300 lives andcaused approximately ¥3 trillion in damage.

The ODA loan provided by JBIC will be used for con-struction of pumping stations including equipment andmaterials, repairing and improving dikes and banks, andother flood-control measures. This project was undertakenin conjunction with emergency relief supplies provided byJapan through the Japan International CooperationAgency (JICA) immediately after the flood and withJapanese grant aid for introducing advanced flood controltechnologies such as steel core walls and revetments. Inorder to enhance the effectiveness of assistance, the pro-ject also takes into account the results of consultation with the World Bank, which is planning a project in agricultural villages in the Yangtze area.

CHINA

Severe air pollution in Guiyang

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21

Although the major countries of Southeast Asiarecorded negative growth in 1998 due to the cur-rency crisis, recovery has proceeded at a far briskerpace than anticipated as each country returned topositive growth in 1999. Supported by the NewMiyazawa Initiative and assistance from a variety ofinternational institutions, sound macroeconomicmanagement led to economic stability. A recoveryin consumer spending and exports together withstimulation by fiscal policy contributed to positiveeconomic performance. Foreign currency reserveshave also recovered because of substantial currentaccount surpluses. Private-sector investment, however, remained lackluster, requiring domesticfinancial-sector reform and corporate restructuringto continue.

In Thailand, steady economic managementimproved the country’s balance of payments andstabilized the exchange rate of the local currency.The recovery process started from consumer spend-ing and exports, supported by a policy of fiscalexpansion. Economic growth rebounded to 4.2% in1999 from a negative 10.4% in 1998, and isexpected to reach 4.5% in 2000. In addition toemergency stimulus packages, the Thai governmenthas established measures for facilitating the disposalof non-performing loans in the financial sector andthe restructuring of debt in the corporate sector.However, for full-scale economic growth to resume,a recovery in private-sector investment is needed,which requires further progress in the reforms ofthe financial and corporate sectors.

Malaysia attracted the world’s attention withthe decision to adopt fixed exchange rates and controls on capital transactions. In fiscal 1999, arebound in export activity led by semiconductorsand electrical equipment and a recovery in con-sumer spending resulting from expansionary fiscalpolicies contributed to economic growth of 5.4%,which is expected to rise to 6.0% for 2000.However, private-sector investment, which is essen-tial for full-scale economic growth to take root, hasyet to recover. The government is making efforts tofacilitate the disposal of non-performing loansthrough provision of capital to financial institutions,

and to begin restructuring of financial institutionsfor strengthening competitiveness. Internationalattention will remain focused on the progress infinancial-sector reforms as well as on Malaysia’sfixed exchange rate system and the regulations oncapital transactions.

In the Philippines, the effects of the currencycrisis were comparatively mild. Economic growthimproved considerably from a negative 0.5% in1998 to 3.2% in 1999, supported by a recovery inthe agricultural industry helped by favorableweather conditions. In 2000, growth is expected toreach 4.5%. Thus far, recovery has primarily beenfueled by consumer spending, exports and active fiscal spending. However, investment has remainedsluggish, and a recovery in this area is still deemednecessary. Fiscal reform has also become increas-ingly essential, while privatization of state-ownedenterprises remains an important policy issue.

Indonesia has most deeply felt the impact of thecurrency crisis, with economic recovery laggingbehind other countries. However, a recovery in consumer spending and exports pushed economicgrowth from a negative 13.2% to a positive 0.2% in 1999, with a projected increase to 3% in 2000. On the other hand, private-sector investment stillremains weak due to excess capacity in the manu-facturing sector and the effect of corporate debtrestructuring. While banking and corporate sectorreforms remain as a top priority, attention will focuson how the new government, which came to powerin October 1999, will address these key issues.

In Viet Nam, the currency crisis adverselyaffected exports and led to a large reduction indirect investment. However, recovery in neighbor-ing Asian countries and a rise in crude oil pricesresulted in an economic growth of 4.8%. Furthergrowth is expected in 2000 in accordance withrecovery in the region’s economies, given that VietNam’s dependence on trade and direct investmentwithin the region is high. For sustainable economicgrowth in the long run, reform of state-ownedenterprises and the banking sector as well as pro-motion of free trade and other structural reformsare necessary.


SoutheastAsia

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International Financial Operations andMajor ProjectsIn fiscal 1999, JBIC made 71 loan commitments totaling¥292.6 billion. JBIC has continuously supported countriessuffering from the economic slump in Southeast Asia sincethe currency crisis in July 1997. As economies in Asiarecover, support for countries affected by the crisis hasdeclined to pre-crisis levels.

Economic Restructuring to Improve Balance ofPaymentsIn response to the grave damage caused by the Asian currency crisis, Indonesia has embarked on an economicrestructuring plan based on an economic program agreedupon with the International Monetary Fund (IMF). Underthe New Miyazawa Initiative, JBIC provided an untiedloan of ¥11.5 billion as part of the Policy Reform SupportLoan (PRSL) II. Undertaken with the World Bank, the loanwill provide necessary funds for imports while supportingreform efforts in the corporate and banking sectors.Considerable improvement in Indonesia’s current accountbalance has already been achieved by a rapid fall inimports due to a recession in the real economy. From acapital account standpoint, private-sector capital

continues to flow out of the country, and the country’sbalance of payments structure still remains fragile. Theloan is intended to revive market confidence in Indonesia, stem the outflow of capital and improve the balance of payments.

Increase in Fertilizer Production to Bolster the FoodSupplyWith over 200 million people, Indonesia must establish astable food supply. The Government of Indonesia has thusundertaken an agricultural development policy, putting apriority on raising the domestic supply ratio of rice. Inrecent years, as farmland increased under this policy,domestic demand for fertilizer has climbed steeply. In thisrespect, higher fertilizer production is key in preventingcivil unrest due to rice and other food shortages. Inresponse, the government plans to construct three fertil-izer plants to be run by P.T. Pupuk Kalimantan Timur, astate-owned company. JBIC cofinanced a loan (buyercredit) of US$217 million along with other institutions forthe second project, following the loan for the first plantproject in December 1998. Buyer credits of ¥83.2 billionhave been extended to date, representing JBIC’s significantcontributions to Indonesian fertilizer production.

Promotion of Exports and InfrastructureImprovement In order to promote exports and improve infrastructureconditions in Malaysia, through untied loans, JBIC cofinanced a loan totaling ¥24 billion to the Bank IndustriMalaysia Berhad (BIMB) and another loan totaling ¥48 bil-lion to the Bank Pembangunan dan Infrastruktur MalaysiaBerhad (BPIMP). The real economy in Malaysia suffered asevere slowdown due to the Asian currency crisis, whilethe emergence of non-performing loans in the financialsector from plummeting stock prices and other factorshave led to a contraction in domestic credit. The loan isexpected to contribute to an early economic recovery byproviding support for exports taking into account theimportance of trade in the country, and for infrastructuredevelopment leading to better economic conditions.

Project Support between Malaysian and JapaneseCorporationJBIC provided an overseas investment loan worth US$90million for the production and sales activities of vinylchloride monomers (VCM) and polyvinyl chloride (PVC)

22

MALAYSIA

INDONESIA

Thailand

Malaysia

Indonesia

The Philippines

Singapore

Viet Nam

¥36,992 million (12.7%)

¥75,217 million (25.7%)

¥68,812 million (23.5%)

¥102,815 million (35.1%)

¥8,405 million (2.9%)

¥353 million (0.1%)

Total ¥292,594million

Loan Commitments of International Financial Operations toSoutheast Asia in FY1999

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23

by Vinyl Chloride (Malaysia) Sdn. Bhd., a joint venturebetween the state-owned Petroliam Nasional Berhad(PETRONAS) and a major Japanese corporation. Withdemand for VCM and PVC expected to increase in Asia,this project combines the abundant natural gas resourcesin Malaysia with the technological prowess and marketingpower of the Japanese corporation.

Support of Industrial Structural ReformUnder the IMF program, Thailand has made steadyprogress in economic and financial reforms, resulting inimprovement of key economic indicators such as the cur-rent account balance, foreign currency reserves, currencyexchange rate and interest rates. However, the domesticeconomy remained sluggish due to shrinking creditamong private-sector financial institutions, a decrease ininvestment reflecting excess capacity, depressed consumerspending caused by the deteriorating employment climate,and weak exports due to the recession throughout Asia.Accordingly, economic and industrial structural reformsand recovery in the real economy remained important priorities.

JBIC provided an untied two-step loan totaling ¥60billion to the Industrial Finance Corporation of Thailand(IFCT). This loan is intended to provide financing that ismuch needed amid the growing credit crunch. It is aimedat supporting a structural shift in manufacturing andrelated industries by raising competitiveness and produc-tivity, and strengthening the foundations of business oper-ations. The loan will help Thailand forge ahead in corpo-rate restructuring under the industrial structure reformplan drawn up by the Thai government. The proceeds ofthis loan will be disbursed through the government’sfinancial institution, and will be used not only by Thaimanufacturing enterprises but also by Japanese affiliatesthat are playing an important role in manufacturing andrelated industries to finance their investment in plant andequipment as well as working capital.

THAILAND

●�

●�Malaysia

Kuala Lumpur

Project Site

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Overseas Economic Cooperation Operationsand Major ProjectsDuring fiscal 1999, JBIC made 36 ODA loan commitmentsequivalent to ¥591.4 billion to Southeast Asia. A SpecialYen (ODA) Loan Scheme was established in December1998 to support economic structural reform in Asia. In1999, this loan scheme was used for harbor and bridgeprojects in Viet Nam, and power projects in Malaysia.

Improvements in Distribution to Support EconomicDevelopmentSince the loans to provide ¥1,277 million for the PhrekTnot Dam Construction Project in 1969 and 1971, noODA loan had been committed to Cambodia on accountof the prolonged war and internal turmoil. An ODA loanto Cambodia has been resumed after an interval of almost30 years.

A new ODA loan of ¥4,142 million was provided tothe Sihanoukville Port Urgent Rehabilitation Project toconstruct a new container terminal at Sihanoukville Port,the only port for international trade in Cambodia. It islocated 240km south of Phnom Penh. By improving thecargo-handling capacity of the port, the project will con-tribute to improvement of the country’s transport systemand play a catalytic role in promoting foreign and domes-tic investment in the area surrounding the port.

Resumption of ODA assistance to Cambodia reflectsJapan’s decision to assist reconstruction and developmentefforts of Cambodia in view of political stability; thesteady progress of democratization and economic reformunder the new government of Prime Minister SamdechHun Sen, which was established last November; the donorconference held in Tokyo in February 1999; and,Cambodia’s accession to ASEAN in April 1999.

24

CAMBODIA

¥125,625 million (21.2%)

¥135,740 million (23.0%)

¥102,159 million (17.3%)

¥151,790 million (25.7%)

¥71,928 million (12.2%)

¥4,142 million (0.7%)

Thailand

The Philippines

Malaysia

Viet Nam

Indonesia

Cambodia


�

Loan Commitments of Overseas Economic Cooperation Operations toSoutheast Asia in FY1999

View of Sihanoukville Port

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25

Social Safety Net Project to Assist EconomicRestructuringThe wave of currency crises started in Thailand in July1997 greatly damaged the economy of Indonesia. To prevent further damage, the Indonesian governmentembarked on an economic restructuring program in agree-ment with the IMF. Under these terms, an important issueis to create a social safety net to protect the poor from theharsh effects of the economic crisis.

Together with the World Bank, JBIC provided theSocial Safety Net Adjustment Loan worth ¥71,928 millionto assist the Government of Indonesia. The objective ofthe loan is to assist the government’s efforts to supplyfood, create employment and provide basic social servicesfor the socially vulnerable group of people affected by theeconomic crisis. In addition, the project assists implemen-tation of essential reforms, for example, establishment of aframework to ensure that funds are used appropriately.

Prior to the 1997 currency crisis, the Malaysian economyenjoyed a rapid increase in direct investment, with annualgrowth of the economy averaging over 8%. The govern-ment had held down fiscal spending by encouraging pri-vate-sector infrastructure development, leading to annualbudget surpluses from 1993 to 1997. Official external debtwas restricted as a means of averting currency risks, thus,Malaysia did not request Japanese ODA loans between1994 and 1998. After the crisis, however, due to an abruptslowdown of the economy, the government requestedJapanese ODA loan assistance for the first time since 1994.In order to assist the Malaysian government’s restructuringefforts and to support long-run economic development,JBIC provided five loans to Malaysia in fiscal 1999 totalingapproximately ¥125.6 billion.

Development of Human Resources Through HigherEducationJBIC provided an ODA loan totaling ¥5,285 million for theHigher Education Loan Fund Project (HELP) (II). The firstphase of this program has provided funding for studentsto attend two years of training at a Malaysian educationalinstitution followed by four years of university educationin scientific fields at a Japanese university. Already in its

fifth term, the program has placed over 311 students inJapanese universities. In March 1999, the 52 students start-ing in the first term graduated from their respective uni-versities, and the program made its first contribution toproviding human resources for medium- to long-termdevelopment of Malaysia’s economy.

After the currency crisis, however, recession createdsevere budgetary conditions for the Malaysian govern-ment, and far fewer students could be sent overseas forstudy. Although the government continued sending stu-dents to Japan, the costs were deemed far greater than similar programs in Europe or the United States. HELP (II)aims to improve the cost efficiency of the program byintroducing a “twinning” program for undergraduatecourses in which students spend part of their universitytime in Malaysia, and credits earned there are countedtowards a degree at a Japanese university. This reduces thetime students must spend in Japanese universities. Underthe HELP (II) program, Malaysian students join Japaneseuniversities from their second year onwards.

MALAYSIA

INDONESIA

Students studying to join Japanese universities

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Public Hygiene Improvement through BetterSewerage Systems Provision of a loan totaling ¥48,489 million to theSewerage Treatment Plant Project is intended to buildsewage treatment centers, pollution treatment centers andpipe and pump stations for cities where sewage facilitieshave lagged behind industrial development and popula-tion expansion and for areas where public hygiene is wors-ening due to inadequate sewage facilities. It is expectedthat this project will result in appropriate water qualityand a reduction in the number of cases of infectious dis-eases transmitted via water, such as cholera, dysentery andtyphoid fever. The broader goal is to improve publichygiene throughout Malaysia and protect the environ-ment through cleaner river water.

Special Yen (ODA) Loan for Stable ElectricitySuppliesThe first special yen (ODA) loan to Malaysia of ¥53,764million was provided for the Port Dickson (Tuanku Jaafar)Power Station Rehabilitation Project (II) in the province ofNegeri Sembilan, where thermal power generation facili-ties began operations back in 1977. Having been in use for 20 years, the existing facilities have deteriorated, areinefficient and are producing gas emissions causing agreenhouse effect. This project will replace these old facili-ties with a highly efficient 750MW gas combined cyclethermal power plant that reduces the power station’s environmental impact. This is expected to stabilize electri-cal supplies in the region while reducing the burden onthe environment.

In fiscal 1999, 13 ODA loans totaling ¥135.7 billion wereextended to the Philippines. JBIC assisted the Philippine’sself-help efforts to recover from the hardship of the cur-rency crisis and to strengthen its society and economy ona structural basis.

Promotion of Manufacturing and Small- andMedium-Scale Supporting IndustriesThe fostering of the manufacturing industry is essential foreconomic development of the Philippines. Promotion ofsmall- and medium-sized enterprises is necessary to createmore advanced manufacturing in every sector, boostingthe value added of products, and dispelling employmentfears caused by the currency crisis. To address these issues,JBIC provided an ODA loan of ¥35,350 million for the

Industrial and Support Services Expansion Program (PhaseII). This project plans to provide medium- and long-termfinance to the manufacturing industry and related sup-porting industries, particularly to small- and medium-sizedbusinesses, through the Development Bank of thePhilippines (DBP). It will also provide technical supportsuch as technological and management training and marketing advice to enterprises in supporting industries.The primary objective is to promote manufacturing and its supporting industries in the Philippines, while thebroader goal is to create employment and promote overall development.

Improvement of Primary Education One major policy initiative of former President FidelRamos was the Social Reform Agenda (SRA) addressingeradication of poverty and establishment of social justice.In particular, the expansion of basic education was priori-tized under the SRA, a goal still pursued by the currentgovernment. Against this background, in March 1997, anODA loan supported the expansion of basic educationfocusing on the provinces given priority by the SRAthrough the Third Elementary Education Project (TEEP)cofinanced with the World Bank.

However, compared to elementary education, sec-ondary education in the Philippines is not widespread(attendance rate: elementary: 95%, secondary: 64%), andthe completion rate is a mere 52% compared with 74% forelementary education. To address this problem, JBIC pro-vided another ODA loan of ¥7,210 million for theSecondary Education Development and ImprovementProject, which targets 26 poor provinces identified by theSRA and the Philippines Commission to Fight PovertyPrograms, and aims for both qualitative and quantitativeimprovements in secondary education. Under cofinancingwith the Asian Development Bank (ADB), the loan will beused for renovation and expansion of school facilities,upgrade of education materials, training for instructorsand distribution of textbooks. Based on a survey of condi-tions in each province, the project will establish detailedplans for educational investment, and will implement abottom-up scheme based on talks with municipal govern-ment authorities, school principals and Parent-TeacherAssociations (PTAs). The aim of the project is not only toimprove the standard of secondary education but also toincrease the policy implementation capacity of theregional offices of the Department of Education, Cultureand Science (DECS) and local governments. In parallelwith the ongoing TEEP, the project aims at expandingbasic education in a sustainable fashion based on thecooperation of the educational administration, schoolsand communities.

26

PHILIPPINES

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27

Recovery of Volcano-Damaged RegionsJBIC provided an ODA loan of ¥9,013 million for thePinatubo Hazard Urgent Mitigation Project (Phase II). InJune 1991, Mt. Pinatubo, which is located in the center ofLuzon, experienced its biggest eruption in the 20th cen-tury. Every year since the eruption, rains from typhoons orother storms have produced runoffs of volcanic rock leftover from the eruption, resulting in massive mudslidedamage in areas around rivers. In particular, a landslidecaused by a major secondary eruption in October 1993washed the upper reaches of the Sacobia River into the Pasig River. Since then, secondary disasters occur frequently when there is torrential rain in the lowerreaches of the river, causing mudslides and raising riverbottoms and resulting in congestion of river channels.This project is a follow-up to the original loan of March1996, the Pinatubo Hazard Urgent Mitigation Project, pro-vided for rehabilitation from disasters after the eruption.In order to support recovery of the region, the proceeds of the loan will be used to dredge rivers and to constructreinforcements for riverbanks (mega-dyke) to reduce damages from mudslides and flooding. The broader goal is to improve living standards and safety for the local people, and, in turn, to promote the development of theregion’s economy.

In fiscal 1999, JBIC provided six ODA loans totaling¥151.8 billion to Thailand. The loans were intended tocontribute to development of economic and social infra-structure, environmental conservation, and improvementof investment conditions. After the currency crisis, assis-tance was extended to support economic stabilization inThailand and expansion of a social safety net under theNew Miyazawa Initiative.

Subway Construction to Alleviate Traffic CongestionJBIC provided its 21st, 22nd and 23rd loans to the MRTAInitial System Project (Blue Line) (IV) in fiscal 1996, 1997and 1998, respectively. As a follow-up to these loans, JBICextended a ¥64,228 million ODA loan to support construc-tion of the Bangkok subway. In response to the city’s noto-rious traffic congestion, and as an alternative to roads, anew 20km subway line will be built in central Bangkokfrom Hua Lamphong Central Railway Station to Bang SuRailway. As Bangkok’s transportation system is highlydependent on roads, the new line is expected to reducetraffic and the resulting air pollution. The loan is to be

used for civil works for constructing tunnels, stations,depots and tracks. JICA experts will also be sent to MRTAto advise on subway construction and operations.

Improvement of Measurement Standards for HigherQuality of Industrial ProductsThe National Metrology System Development Project (I)(¥722 million) aims for improvement in Thailand’snational measurement standards through expansion andupgrading of the National Institute for Metrology,Thailand (NIMT). The Thai industrial sector has broughtrapid economic growth of the country since the 1980s,especially through the expansion of its exports, but inrecent years its price competitiveness relative to its Asianneighbors has been declining. In response, the Thai gov-ernment has recognized that production of higher-qualitygoods and components in compliance with the interna-tional standard is the key to promote exports. However,there has been no credible measurement standard that isessential to improve the quality of industrial products.This project will enable domestic firms and calibrationinstitutions to adopt more accurate and internationallyaccepted measurement standards through NIMT at lowcost and in a short period of time. Consequently, the reliability of Thai industrial products will increase andexports are expected to expand.

Construction of Well-Balanced Waterworks System JBIC provided an ODA loan of ¥1,268 million for theSeventh Bangkok Water Supply Improvement Project (I).Bangkok’s population is expected to increase from 7.56million in 1998 to 8.64 million by 2003, making adequatewater supply a serious issue. The project will strengthenthe clean water supply capacities on the western side of

THAILAND

Construction of the Bangkok subway

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the Chao Phraya River and expand the existing Bang Khenwater treatment plant with the aim of constructing a well-balanced water supply system in the Bangkok metropoli-tan area. This in turn will lead to improving public sanita-tion and living environments.

In fiscal 1999, 10 ODA loans totaling ¥102.2 billion weremade to Viet Nam, including special yen (ODA) loan pro-jects newly introduced in fiscal 1999. Among the total ofthree special yen (ODA) loan projects committed in fiscal1999, two were provided to Viet Nam for the Hai PhongPort Rehabilitation Project (II) and the Binh BridgeConstruction Project. These projects were chosen after dueconsideration of the projects’ contributions to Viet Nam’seconomic recovery, including stimulative effects to theVietnamese economy, creation of employment, andimprovement of the private investment environmentthrough increasing the efficiency of transport and distribu-tion systems.

Improvement of Freight-Handling Capacity at HaiPhong PortHai Phong Port is the main port for distribution to north-ern Viet Nam. However, this river port has a limitation tothe size of vessels it can accommodate. Specifically,because of siltation in the river, vessels larger than3,000DWT cannot enter the port. Other substantial restric-tions are deterioration of the facilities and failure to fullyhandle recent increases in container freight. The HaiPhong Port Rehabilitation Project (II), providing ¥13,287million, will improve the route into the port to accommo-date larger vessels, thus addressing the largest problem.New facilities capable of handling containers will also beconstructed to improve freight handling capacity inresponse to an increase in demand. This project followsthe Hai Phong Port Rehabilitation Project (I) signed in fiscal 1993 to finance the funds for upgrading the portfacilities.

Construction of Binh Bridge to ImproveTransportation in Hai PhongThe city of Hai Phong has developed mostly in the areasouth of the Cam River. By 2010, the city’s urban develop-ment plan calls for development of the north side, whichis lagging behind the south owing to separation from thesouth side and the lack of transportation across the riverapart from ferries currently used. In recent years, ferry

traffic has increased substantially, approaching maximumcapacity. The situation is particularly bad for the Binhferry near the Hai Phong Port, with a queuing time reach-ing almost one hour during rush hours, creating majorobstacles to smooth passage through the city. The BinhBridge Construction Project to finance ¥8.02 billion forconstruction of a new 1,300m bridge across the Cam River will improve transportation in and around HaiPhong while contributing to economic development insurrounding areas. The project will also involve construc-tion of related facilities, such as attached roadways. Theseefforts are expected to improve distribution in northernViet Nam.

Upgrading Quality of Television BroadcastingJBIC provided a loan of ¥19,548 million for the Viet NamTelevision Center Project, which aims to expand broad-casting time and increase program production capabilitiesin Viet Nam through the construction of a fully equippedbroadcasting center for production and broadcasting oftelevision programs. The project will contribute not onlyto increasing the amount of information available accord-ing to viewers’ demand but also to improving the standardof education and knowledge through broad familiarizationwith the latest technological and scientific news, provisionof useful and precise information on health and medicalissues, and attainment of public recognition of equal education opportunities.

Note) DWT: Deadweight ton – the difference between theweight of a ship when it is completely empty and itsweight when fully loaded.

28

VIET NAM

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International Financial OperationsThree overseas investment loans totaling ¥1.3 billion wereprovided to South Asia in fiscal 1999.

Though South Asia was only slightly affected by theAsian currency crisis, the area’s economies were sig-nificantly impacted by India-Pakistan tensions, polit-ical instability and natural disasters such as floods.

India was not significantly affected by the cur-rency crisis as well as its economic sanctionsimposed after its 1998 nuclear testing. Gradualexport recovery and expansion of agricultural pro-duction in 1999 led to 6.8% economic growth.Despite chronic budget deficits, fragile infrastruc-ture, and ongoing concerns with Pakistan, the coali-tion government elected in October 1999 offeredimproved political stability, which is expected toaccelerate economic reform.

Pakistan, retaliating against India’s nuclear test-ing with testing of its own, was deeply affected bythe ensuing international sanctions, leading to diffi-culties with Pakistan’s balance of payments. An eco-nomic crisis was subsequently avoided with therelaxation of sanctions and rescheduling of foreigndebt in early 1999. Pakistan’s economic growth rate,however, remained unchanged from the previous

year at 3.1%. Eliminating corruption and rebuildingthe economy were priorities of the military govern-ment created after the coup of October 1999. Theinternational community is hoping for improvedrelations with India, as well as implementation ofgovernment-led economic reform as a condition forfinancial aid from the IMF and other internationalorganizations.

In Bangladesh, despite flooding in 1998 anddamage to the garment industry, favorable agricul-tural production boosted the 1999 economicgrowth rate to 4.3%. Bangladesh is highly depen-dent on foreign aid. Geographically vulnerable tofloods and drought, and with a fragile manufactur-ing sector, the country is plagued by chronic budgetdeficits, frequent general strikes, and a structurallyunstable political system. Resolving problems associ-ated with poverty in Bangladesh is a major issue.

Sri Lanka, beset by a chronic budget deficit, terrorist activity and political instability, saw its economic growth rate falling to 4.2% in 1999 from4.7% in the previous year.


SouthAsia

¥1,172 million (91.0%)

¥116 million (9.0%)

Sri Lanka

India

Total¥1,288million

Loan Commitments of International Financial Operations to South Asiain FY1999

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Overseas Economic Cooperation Operationsand Major ProjectsNine ODA loans totaling ¥39.9 billion were extended toSouth Asia in fiscal 1999. This low figure, the same as theprevious year, was influenced by economic sanctionsagainst India and Pakistan.

Although its economic growth rate in recent years hasaveraged 4-5%, Bangladesh has an annual per capita GDPof approximately US$250, which qualifies it as one of theLeast Less Developed Countries (LLDCs) with a high needfor socio-economic infrastructure improvement. JBIC hasextended ODA loans in accordance with the country’s sec-tor priority development plan for the areas of electricpower, gas, mining, transportation, communications andrural development. A total of ¥16.4 billion in ODA loansfor the following three projects was extended toBangladesh in fiscal 1999.

Rural Infrastructure DevelopmentAn ODA loan totaling ¥6,593 million was committed forthe Northern Rural Infrastructure Development Project.Approximately 80% of the population lives in rural areas,where the majority is engaged in farming, yet over half ofthe agricultural workers do not own land. Agriculturaldevelopment in these areas, along with the developmentof other industries, is the key to economic growth and areduction in poverty. To support development of rural

30

BANGLADESH

¥23,476 million (58.9%)

¥16,412 million (41.1%)

Sri Lanka

Bangladesh


Loan Commitments of Overseas Economic Cooperation Operations toSouth Asia in FY1999

infrastructure, the project is aimed at 13 prefectures in thenorthern area where the ratio of the poverty class is highand development is delayed, focusing on the developmentof roads (called “Feeder B Roads,” connecting rural mar-kets and trunk road networks) in rural areas where inhabi-tants’ needs are strong and the economic return isexpected to be high. The present low pavement rate ofapproximately 23% of Feeder B Roads in the target areaswill be improved to approximately 50% as a result of the project.

Rural Electrification and Efficient OperationFinancing of ¥4,376 million was provided for the PowerDistribution & Efficiency Enhancement Project.Electrification, particularly in rural areas, is a key issue for Bangladesh, with the ratio of households having anelectricity supply being only 15% — far lower than neigh-boring countries. This project is formed with two compo-nents: the rural electrification project and the system lossreduction pilot scheme in urban distribution networks.The rural electrification project will support the electrifica-tion of a total of 170,000 households by developing powerdistribution networks in two newly established rural elec-trification cooperatives. In the system loss reduction pilotscheme, specific distribution networks were selected in sixjurisdictions of the Bangladesh Power Development Boardand the Dhaka Electric Supply Authority, which are incharge of distribution in urban areas. The loss will bereduced on the selected networks through such methodsas rehabilitation and meter installation. Based on theresults of project evaluation, system loss reduction plansfor other urban areas will be proposed.

Fertilizer Plant RenovationSince Bangladesh scarcely has extra space for extendingagricultural cultivation, it is indispensable to increase foodproduction by improving agricultural productivity, usingchemical fertilizers. The Ghorasal Urea Fertilizer Factory,one of the fertilizer factories under the umbrella ofBangladesh Chemical Industries Corporation (BCIC),started operation in 1970, but due to aging of facilities inrecent years, the factory has incurred problems. For exam-ple, production capacity has declined due to a drop inenergy efficiency and leakage of high-concentration rawammonium caused by a deterioration of systems. In addi-tion, under unfavorable conditions in Bangladesh, it is notpossible to secure a stable supply of electric power, thusthe plant has suffered frequent suspension of operations.Through provision of ¥5,443 million for the Energy Savingand Improvement of the Ghorasal Fertilizer Factory, thisproject will aim toward improving energy efficiency, pre-venting ammonium leakages and securing a stable power

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aries between banks (participating financial institutions)and end-users (borrowers). As well as overseeing lendingoperations, they will train end-users in order to helpimprove repayment rates and project effectiveness. Withits close working relationship and exchange of informa-tion with NGOs, along with enhancement of end-usertraining schemes, this microfinance loan project aims atimproving the living standards of loan recipients and alleviating poverty.

International Airport Renewal to Meet IncreasingCargo DemandOne of the projects combining an ODA loan and JICA’sdetailed design scheme is the Bandaranaike InternationalAirport Development Project to which JBIC will provide¥12,384 million. In 1997, 2.32 million international pas-sengers and 97,000 tons of air cargo passed through theBandaranaike International Airport in Sri Lanka, the onlyinternational airport in Sri Lanka. Both import and exportair cargo statistics are favorable, and are continuing toshow double-digit increases. However, parts of the taxiwayand apron are damaged, while the capacity of the existinginternational arrival and departure areas, security checks,and baggage claim areas are insufficient. Moreover, theoutdated air traffic control facilities are in need of modern-ization. Measures need to be taken to meet the rapidlyincreasing demand for air cargo services. Given these conditions, this project entails repair and expansion ofBandaranaike International Airport’s passenger terminal,modernization of its air traffic control facilities and construction of an air cargo terminal building.

Waterworks Renewal for Stable Water SupplyAnother collaboration effort with JICA to utilize itsdetailed design facility is the Project for Reduction of Non-Revenue Water, as supported by provision of a loan total-ing ¥4,217 million. Demand for the supply of water in theGreater Colombo area has increased rapidly with anincrease in population. Moreover, forecasts suggest thatdemand will exceed supply by 2003. In addition, non-revenue water in the Greater Colombo area accounts for47%, while the figure is as high as 57% in areas under thejurisdiction of the Colombo Municipal Council. In orderto achieve a stable water supply and to reduce non-revenue water, this project will repair and reinforce theaging water supply system in the surrounding areas underthe jurisdiction of the Colombo Municipal Council andwill include a rehabilitation program in low-income areas.

Note) Non-revenue water: Revenue lost as a result of leakageor water not paid for.

supply, as well as focusing on renovation of existing plantfacilities and installation of a new gas turbine generator.

Six ODA loans totaling ¥23.5 billion were extended to Sri Lanka in fiscal 1999. These included JBIC’s first microfinance project in the country. There were two loansfor which detailed design (D/D) will be undertaken by adevelopment study of JICA. This new type of collaborationwith JICA was introduced in fiscal 1998, which combinesODA loans with JICA’s technical assistance. Through this comprehensive scheme combining two different assistance tools, high performance of Japan’s ODA program is expected.

Microfinance Project to Improve Living Standards ofthe PoorThe first ODA loan for a microfinance project amountingto ¥1,368 million was extended to Sri Lanka for thePoverty Alleviation Microfinance Project. This project willprovide unsecured loans in small amounts to low-incomeborrowers who do not have access to funds through for-mal credit institutions. It aims to promote local economicdevelopment and to reduce the income gap by helpingindividuals among the poorer population start their ownbusinesses and engage in income-generating activities. Theproject will provide necessary financing to low-incomehouseholds in six districts to engage in manufacturing,commercial/service industries, agriculture, livestock orother enterprises. In carrying out this project, local NGOsand Project District Offices (PDOs) will serve as intermedi-

SRI LANKA

Bangladesh

Dhaka

●�

●�

Project Site

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International Financial Operations andMajor ProjectsJBIC provided a total of ¥10.3 billion for three projects inCentral Asia and the Caucasus in fiscal 1999. Since itsindependence in 1991, Uzbekistan has carried out eco-nomic reform taking a gradualist approach to minimizenegative effects of restructuring on economic activitiesunder the leadership of President Karimov. All of the projects in the region in fiscal 1999 were designed to assistthis effort.

In the early 1990s, following the collapse of theSoviet Union, the economies of the five CentralAsian countries of Kazakhstan, Kyrgyz, Tajikistan,Turkmenistan and Uzbekistan, and the threeCaucasian countries of Armenia, Azerbaijan andGeorgia, all suffered from substantial contraction ofoutput and hyperinflation. However, the Caucasiancountries turned to positive economic growth from1994 to 1996, as did the economies of the CentralAsian countries during the period from 1996 to1998. Inflation has also been brought under control.

Most Central Asian countries have ample naturalgas resources. Kazakhstan and Turkmenistan,located near the Caspian Sea, have abundant petro-leum and natural gas reserves. Similarly, Azerbaijanhas petroleum as its principal product. However, theregion’s geography presents transportation difficul-ties that hinder an expansion of shipments to coun-tries other than former Soviet republics. To comple-ment the pipelines that pass through Russia, a planis now in place to construct a new pipeline across

the Caucasus through Turkey to the Mediterranean.Securing stable transportation routes is an impor-tant issue having an influence on the economicdevelopment in these countries.

The Russian economic crisis that broke out in1998 adversely affected Kazakhstan, Georgia andsome Central Asian countries. The recovery of oilprices in 1999 spurred relatively high economicgrowth in Azerbaijan and Turkmenistan, whileKazakhstan also recovered in late1999 due to higheroil prices and increased grain harvests. However,declines in market prices for raw cotton and goldworsened Uzbekistan’s balance of payments. InGeorgia, despite the March 1999 opening of thepipeline between Baku and Supsa, the balance ofpayments position remained fragile. While eachfaces particular economic problems, the countries ofCentral Asia and the Caucasus are expected to con-tinue efforts to achieve progress in macroeconomicstability and economic reform.


Uzbekistan


¥10,321 million (100%)

Loan Commitments of International Financial Operations to Central Asiaand Caucasus in FY1999

CentralasiaandCaucasus

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New Cotton Spinning Mill ProjectJBIC cofinanced a loan through a bank loan, totaling ¥5.7billion, to the National Bank for Foreign EconomicActivity of the Republic of Uzbekistan (NBU). The loan isbeing used to purchase equipment and services necessaryto implement a new Cotton Spinning Mill Project inChinozu city, located 70km north of Tashkent. The newcotton spinning plant will be operated as a joint ventureby Uzbek, Turkish and Japanese companies. JBIC also cofi-nanced another loan of ¥6.0 billion to NBU, through abank loan, for a similar project in Shakhrisabz, locatedapproximately 700km south of Tashkent. JBIC has previ-ously extended four loans to Uzbekistan, all of which wentto the energy sector. The new loans are the first credit forthe non-energy sector.

Uzbekistan is the fifth largest raw cotton producer inthe world. However, under the industrial policy of the former Soviet regime, a cotton-oriented, monoculturaleconomy had been imposed on Uzbekistan. As a result,the country’s industrial base is now largely made up ofagriculture and agriculture-related sectors. Diversifyingthis lopsided industrial structure has long been a primaryobjective of Uzbekistan to ensure its economic stability.Meanwhile, economic development efforts have beenmade to domestically produce high-value-added cottontextile products for export, independently from the formerSoviet republics. The two projects supported by JBIC loanswill create manufacturing facilities capable of producingan estimated 10,000 tons of cotton yarn and cotton fabricsannually. Along with adding higher value to the productsof the textile industry, these projects will enableUzbekistan to acquire foreign currencies through exportsto neighboring countries.

Overseas Economic Cooperation and MajorProjectsJBIC made ODA loan commitments totaling ¥36.2 billionin fiscal 1999 for four projects in Central Asia and theCaucasus where democratization and development of mar-ket economies are promoted. JBIC is extending assistanceaccording to the extent to which economic developmentis taking place in each country.

Support for Construction of a Gas Combined CyclePower PlantDespite a significant decline after independence from theformer Soviet Union in 1991, the Azerbaijan economy hasbeen back on a recovery path since 1996. As demand forelectricity was expected to rise with increasingly vigorouseconomic activity, the Government of Azerbaijan desig-nated development of the power sector as the most impor-tant project in its Medium-Term Public InvestmentProgram (1997-1999), which was drawn up in 1997. Morespecifically, faced with the current existence of aging andobsolete oil-fired power plants as well as massive SOx (sulfur oxides) emissions, the Government has been reno-vating these plants and converting them into more energyefficient and more environment-friendly natural gas-firedcombined cycle power plants.

JBIC extended ¥18,332 million in ODA loans to theSevernaya Gas Combined Cycle Power Plant Project II.

AZERBAIJAN

UZBEKISTAN

¥2,318 million (6.4%)

¥18,332 million (50.6%)

¥15,563 million (43.0%)

Azerbaijan

Uzbekistan

Kyrgyz


Loan Commitments of Overseas Economic Cooperation Operations toCentral Asia and Caucasus in FY1999

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This project is aimed at constructing a gas combined cyclepower plant (400MW) to replace the existing oil-fueledthermal power plant (150MW) on the outskirts of Baku,the capital of Azerbaijan. The project is designed to ensurea stable supply of electricity to the metropolitan areawhere demand is expected to grow in line with theprogress of petroleum development. From an environmen-tal standpoint, construction of a power plant having amore efficient combustion system using natural gas willlead to reduction of air pollution and greenhouse gasemissions, a leading cause of global warming.

Reforming the Social Security SystemIn Kyrgyz, problems with regard to the pension systemand other social security systems are placing severe con-straints on the national budget. For example, Kyrgyz hasbegun moving from a system in which payments are madeto pensioners regardless of contributions paid into the system to one in which payments are made dependingupon paid contributions as well as retirement age.Nevertheless, because the system still relies on governmentsubsidies, adjustment of pension payments cannot keepup with the rise in inflation, which adversely affects thestandard of living of pensioners. Concerning social secu-rity, various types of services overlap, while sufficientamounts of security payments do not reach beneficiariesin need of assistance. Kyrgyz is currently making efforts toamend the social security system through implementingvarious reforms.

In this respect, JBIC extended ¥2,318 million in ODAloans to assist the Social Sector Adjustment Program. The Russian financial crisis of 1998 adversely impacted the Kyrgyz economy. This program, cofinanced with the World Bank, was designed not only to assist the government’s efforts to reform its social security system,including the pension program, but also to improve thecountry’s serious balance of payments position.

Improvement of Social and Economic Infrastructure In fiscal 1999, assistance to Uzbekistan through ODA loanstotaled ¥15.6 billion for two projects.

Uzbekistan has carried out a gradual economic reformprogram since independence from the former SovietUnion in 1991. Although positive economic growth wasachieved since 1996, improvement of the social and eco-nomic infrastructure developed during the Soviet erarequires urgent improvement. To help meet this need,JBIC extended two ODA loans, one amounting to ¥12,692million for the Telecommunications Network ExpansionProject (II) and the other amounting to ¥2,871 million forthe Three Local Airports Modernization Project (II).

The Telecommunications Network Expansion Project(II) will improve general telecommunications service inthe central and western regions, in particular theKarakalpak Republic, Bukhara, Navoi and the Khorezmregion, where telecommunications networks have notbeen well-developed to date, by installing digital switchingdevices and setting up a transmission system, a broadcast-ing system, and wireless telephone networks. This isexpected to contribute to well-balanced industrial development in Uzbekistan.

Following the ODA loan providing ¥15,526 million in fiscal 1996, the Three Local Airports Modernization Project(II) will assist refurbishment of runways, improvement ofpassenger terminals, and construction of flight controlfacilities for the Samarkand, Urgench, and Bukhara air-ports in order to ensure flight safety and increase flighttraffic. In ancient times, these airport cities were onceflourishing oasis towns, and historical buildings thatreflect the original Silk Road culture have been preserved.Airport improvements are also expected to contribute to development of tourism, and thus, to economic development in Uzbekistan.

UZBEKISTAN

KYRGYZ

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International Financial Operations andMajor Projects26 loans totaling ¥19.8 billion were provided to Oceaniain fiscal 1999. Major lending to Oceania involved supportfor reforestation projects and development of a liquefiednatural gas (LNG) project. The reforestation projects notonly contribute to a stable supply of wood chips but alsoto amelioration of global warming by reducing levels ofcarbon dioxide in the atmosphere.


Oceania comprises 23 distinct nations and entities,including self-governing territories and overseaspossessions, along with 16 independent countriessuch as Papua New Guinea and Fiji, and the twolargest countries, Australia and New Zealand.

Australia has enjoyed a high level of prosperitysustained by healthy consumer spending, postingstable long-term economic growth since fiscal 1990,with an economic growth rate of 4.6% in 1998,thereafter dropping slightly to 4.3% in 1999 accord-ing to government projections. Australia has alsoembarked on a tax-reform program that includesthe introduction of a 10% tax on goods and servicesfrom July 2000.

In New Zealand, the Labor Party returned topower for the first time in nine years following theNovember 1999 general election. In contrast toAustralia, the economy has suffered from the Asiancurrency crisis, with economic growth falling to anegative 0.3% in 1998. Subsequently, however, thedepreciation of New Zealand dollar has bolsteredexports, leading to economic recovery. A growthrate of 3-4% has been projected for 1999.

In Papua New Guinea, the government headedby Mekere Morauta, who came into power in July

1999, has promoted structural reforms agreed uponin negotiations with the World Bank, the IMF andother donors to regain the confidence of theinternational community. Although the country’seconomy suffered greatly from factors such asdrought and the 1997 Asian currency crisis, a returnto positive economic growth was achieved in 1998as a result of increased mining production and otherpositive developments. Government projectionsnow point to economic growth of 3.8% for 1999.

In Fiji, the sugar industry, a mainstay economicpillar, was severely damaged by a long drought,leading to negative economic growth in 1998.However, a healthy tourist industry and a suddenupturn in sugar production led to a return to higheconomic growth in 1999. Projections indicate aneconomic growth rate of 3% in 2000.Notwithstanding, conflict between native Fijiansand ethnic Indian Fijians remains a social issue forconcern. A positive sign in May 1999 was the elec-tion of an ethnic Indian Fijian as Prime Minister in the first general election since the 1997 constitutional reform.

Oceania

¥19,642 million (99.3%)

¥148 million (0.7%)

Australia

New Zealand


Loan Commitments of International Financial Operations to Oceaniain FY1999

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Western Europe

Europe:Western Europe, Central andEastern Europe and Russia

Despite the global effects of the 1997-98 currencycrises, which struck Western European economies toa non-negligible degree, in 1999, Western Europeaneconomies have maintained favorable economicperformances. The European Union (EU) anticipatesthat this economic growth in the 15 EU member countries for the year 2000 will be 3.4%. Over thenext two years, it is expected that this economicgrowth will create about four million new jobs,while reducing the number of unemployed from16.3 million in 1999 to 14.4 million in 2000. Factorsbehind this improvement include increases in consumer spending spurred by the creation of new jobs, a strengthening of competitiveness inexport industries in countries using the euro due toits depreciation, and healthy growth in corporate-sector capital investment.

Among the leading EU countries, Germany isnotable in that there were no signs of recovery inthe first half of 1999; however, expansion of con-sumer spending, strong performance in manufactur-ing, and active capital investment brought the economy back to a recovery process in the latterhalf of 1999. Germany’s forecasted growth ratethroughout 1999 was revised upward, from 1.4% to 3.0%, with further growth of 2.8% predicted for 2000.

In France, in spite of a divergence in economicperformance across industries in 1999, the country’seconomic growth rate rose slightly from 0.4% in thefirst quarter to 1.1% in the fourth quarter. In 2000,France’s growth is expected to increase significantlyto 3.5%, primarily due to a strong performance inexports, expansion in consumer spending and a rise in investment underscored by a depreciation of the euro.

In the United Kingdom, although the strengthof the sterling has had a damaging effect on someexport industries, robust performance in the finan-cial and service sectors, vigorous consumer demand

and private capital investment are driving economicgrowth, which is projected to rise from 2.0% in1999 to 3.3% in 2000. While the economy hasgrown strongly, the Bank of England concentratedon holding inflation below the government’s targetof 2.5%. As a result, inflation has been kept belowthis target despite the buoyancy of the economy.Meanwhile, the rate of unemployment fell from4.3% in 1999 to 3.9% as of April 2000, the lowestlevel since the mid-1970s.

In contrast to Europe’s firm economic perfor-mance, is the issue regarding the declining value ofthe euro. Since the currency was launched inJanuary 1999, it has steadily fallen against both theU.S. dollar and the yen. In the U.K., which has notadopted the euro, Prime Minister Tony Blair has saidthat there would be a referendum to decidewhether the country should join the euro federationafter the country’s next general election. Publicopinion polls in mid-1999 showed that no morethan about 30% of U.K. voters favor adopting theeuro. While the anti-euro side is gaining ground,observers are keenly watching Prime Minister Blair’scourse of action.

Attention is also focused on EU expansion. Atthe 1997 EU summit, Cyprus, the Czech Republic,Estonia, Hungary, Poland and Slovenia were admit-ted as the first group of six candidates to negotiateEU membership. At the 1999 EU summit, Bulgaria,Latvia, Lithuania, Malta, Romania and Slovakia werenamed as the next group of six. Disagreements onagricultural and other issues have delayed progressin negotiations, with developments being closelyobserved. In addition to the 12 countries nominatedthus far, eastward expansion has also been a pointof interest, with the Ukraine, the countries of theformer Yugoslav federation, Albania, Moldova,Georgia, Armenia and Azerbaijan, all expressinginterest in joining.

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Central and Eastern Europe and Russia

Gaps have emerged in economic performancesamong the countries of Central and Eastern Europein the decade since they separated from the com-munist regime. Poland, Hungary, the CzechRepublic and Slovakia, which quickly embarked onstructural reforms, have posted positive economicgrowth in a relatively short period. Conversely,Bulgaria and Romania have been slow in implement-ing structural reforms. In early 1997, Bulgaria washit with hyperinflation, and Romania has sufferednegative economic growth in the three-year periodextending from 1997 through 1999. However, in1999, despite the conflict in Kosovo, Bulgaria’s rateof economic growth exceeded 2%, while at thesame time, Romania’s balance of foreign exchangereserves improved. Poland and Hungary areexpected to achieve growth rates of over 4%, whileeconomic growth rates for the Czech Republic andSlovakia are projected between 0-1%. Bulgaria,Romania and other countries in the second group ofnations admitted as EU candidates in 1999 areexpected to move ahead with reforms essential forjoining the EU.

In the early 1990s, Russia experienced hyperin-flation and a large drop in production, followed by a

financial crisis in 1998 in which the ruble plunged invalue. Led by industries substituting imports, how-ever, production rose in 1999, pushing the eco-nomic growth rate above 3.0%. In addition, Russia’sfiscal position and balance of payments alsoimproved following a rise in oil prices. Nevertheless,productive investment is still insufficient due toproblems related to capital flight, and the countryseems unable to solve problems of nonpaymentbetween enterprises, as well as nonpayment oftaxes. Further, much remains to be done related tostructural reforms. Specifically, the financial system,corporate management systems, and the legal sys-tem are all in need of amelioration.

Moreover, Russia remained in political turmoil inmid-1999 as President Yeltsin dismissed two primeministers. However, bolstered by apparent publicsupport for the war in Chechnya endorsed by thennewly appointed Prime Minister Vladimir Putin, theYeltsin camp was victorious in the December 1999parliamentary elections. Subsequently, Yeltsinstepped down, paving the way for the election ofPutin as president in March 2000. As a result of thelatest outcome, there are hopes for the political situ-ation to stabilize.

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International Financial Operations andMajor Projects17 projects for a total commitment of ¥53.4 billion wereapproved for Western Europe in fiscal 1999, while sevenprojects for a total commitment of ¥115.2 billion wereapproved for Central and Eastern Europe. Loan commit-ments to Europe in fiscal 1999 centered on overseasinvestment loans for Western Europe and untied loans forRussia. Loans extended to provide long-term funds neededfor manufacturing and sales of automobiles and automo-bile parts were continued from the previous fiscal year.JBIC also continued support for Japanese enterprises in thepromising business of aircraft operating leases.

Buyer Credit to Improve Medical ServicesRomania's economy has been stagnant over a long periodsince the revolution in December 1989. However, eco-nomic reform has been carried out at a rapid pace sincePresident Constaninescu took office in November 1996. InJune 1999, the government signed an agreement for thePrivate Sector Adjustment Loan of US$300 million withthe World Bank, whereby structural reform was carriedout. In August 1999, the country signed a new stand-byagreement with the IMF for a SDR 400 million loan(approximately US$548 million). Subsequently, at the EUSummit in Helsinki in December of the same year,Romania was formally invited to begin negotiations for EUmembership along with five other countries.

Under these conditions, JBIC signed a buyer creditagreement totaling US$21 million with the Romanian cor-poration Romtehnica R.A. The loan will be used to pur-chase medical equipment from Japan for 13 hospitalswhich have problems related to deterioration of facilityresources. This was the first buyer credit provided by JBICsince the change in the political system, and is expected tocontribute to the improvement of medical services inRomania.

Supporting Recovery of the Real EconomyInstability continued in Russia as the financial crisis thatbroke out in Russia in August 1998 led to suspension ofthe IMF’s Extended Fund Facility (EFF) and the WorldBank loans as well as JBIC’s preparations for new untiedloans. In April 1999, the World Bank and Russia at lastcame to a basic agreement to put together the ThirdStructural Adjustment Loan (SAL). As part of theHashimoto-Yeltsin Plan to assist Russia, JBIC signed anagreement to provide an untied loan of ¥112 billion to aWorld Bank cofinanced program for facilitating structuralreforms while financing capital for Russia's imports.

The structural adjustment programs to be imple-mented under the loan requirement include assistance inthe introduction of market competition in the monopo-lized infrastructure sector, development of investment sys-tems, strengthening of the private sector through privati-zation and enhancement of soundness and transparencyof the financial sector, among others. Through thesereforms, it is expected that Russia's economic reforms andrecovery of the real economy will be promoted.ROMANIA

¥112,439 million (66.7%)

¥12,576 million (7.5%)

¥20,747 million (12.3%)

¥10,429 million (6.2%)

¥7,184 million (4.3%)

¥5,203 million (3.1%)

Russia

Cyprus

France

The Netherlands

Norway

Others


Loan Commitments of International Financial Operations to Europe in FY1999

RUSSIA

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Highly dependent on oil exports, tourism and otherspecific sectors, the economies of the Middle Eastare fragile and easily influenced by external factors.In 1997 and 1998, a slump in oil prices and popula-tion growth contributing to high unemploymentamong younger workers resulted in stagnant eco-nomic growth. In 1999, however, a sharp upturn inoil prices in the latter half of the year greatlyincreased exports by Saudi Arabia, the United ArabEmirates and other oil producing states, leading togeneral economic recovery in the region.

In Turkey, general political stability has beenachieved, with the ruling party holding 64% of theseats in parliament. An agreement on a stand-byarrangement was reached with the IMF inDecember 1999. Under this program, measureswere aggressively taken to reduce inflation.Moreover, the country has revised the banking lawwhich led to the establishment of a governmentsupervisory body, revised the constitution enablinginternational mediation for disputes related to for-eign investment made in Turkey, and implemented

social security reform. Further to these reforms, pri-vatization of state enterprises and structural reformsin the agricultural sector are vigorously being car-ried out. One result is that inflation is steadily beingbrought under control. Despite this progress, eco-nomic growth suffered as a result of two largeearthquakes that struck the country, one in Augustand the other in November. Economic growth forthe year was a negative 5%.

The economic situation in Jordan has beensevere. In the four years since1996, the country’srate of economic growth has been below its rate ofpopulation growth. Economic growth in 1999 wasprojected at 1.3%, down from the 2.2% rate in1998. In response, the government, under the lead-ership of the new sovereign King Abdullah II, is car-rying out an aggressive economic reform programcentered on privatization. Positioning the communi-cations and tourist industries as the driving force forgrowth, the country is promoting foreign invest-ment in these industries.

ThemiddleEast

¥50,706 million (37.8%)

¥83,010 million (61.8%)

¥578 million (0.4%)

Turkey

Iran

Saudi Arabia


Loan Commitments of International Financial Operations to theMiddle East in FY1999

International Financial Operations andMajor ProjectsIn fiscal 1999, JBIC made 13 loan commitments totaling¥134.3 billion for the Middle East. A wide range of supportwas extended on a comparatively same-scale basis, inclu-sive of export loans, import loans, and untied loans.

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Economic Development Based on Export PromotionTurkey is situated in a geopolitically important location atthe crossroads of Asia and Europe, and as a member ofNATO, the country plays a significant role in maintainingthe stability of the Middle East. In recent years, Turkey hasalso attracted attention as an export route as well as a mar-ket for energy resources from Azerbaijan, Turkmenistanand other countries around the Caspian Sea. The country’smacroeconomic stability and sustained economic growthare important factors supporting the stability and development of neighboring economies.

Accordingly, the Turkish government is pursuing economic stabilization and structural reform, and is focus-ing efforts on promoting exports for improvement of thebalance of payments and economic growth. In particular,one of the government’s top priorities is to strengthen theoperations of the Export Credit Bank of Turkey, Inc.(ECBT), the official Turkish export credit agency. In orderto boost the country’s exports, JBIC signed a loan agree-ment totaling ¥30 billion with ECBT for a Second UntiedTwo-Step Loan. The proceeds of the loan will be used toprovide funds to ECBT for its mid- to long-term loan operations designed to support Turkish exports of capitalgoods to Central Asia and Caucasus, the Black Sea, the Balkans and other regions where Turkey has close economic ties. As direct support to the ECBT, this commit-ment was made not only to support economic develop-ment and the government’s export promotion efforts inTurkey, but also to strengthen economic relations betweenTurkey and Japan. The cooperation JBIC extends to Turkeyhas several linked effects, such as strengthening the rela-tionship between Turkey and countries in the Caucasusand Black Sea regions, which also receive JBIC support.

JBIC also signed a loan agreement for an untied two-step loan totaling ¥27.5 billion to the Turkish governmentto support small- and medium-sized enterprises that suf-fered damage from the earthquake in western Turkey inthe summer of 1999.

Overseas Economic Cooperation Operationsand Major ProjectsIn fiscal 1999, JBIC provided ODA loans worth ¥72.6 billion to assist four projects in the Middle East. Three ofthese projects were the first ODA loans to Turkey in threeyears. For the countries in the Middle East, JBIC aims tocontribute to regional stability and economic develop-ment through promotion of private-sector investment,construction of infrastructure essential for industrial development and human resource development.

Infrastructure Development for Tourism to SecureForeign CurrencyJordan has a rich cultural heritage and is blessed with natural beauty, particularly around the Dead Sea. Bothform the basis for the country’s tourism industry. Thenumber of tourists is increasing thanks to a peace treatybetween Israel and Jordan, with tension in the Middle Eastabating in recent years.

JBIC provided ¥7,199 million in ODA loans for theTourism Sector Development Project. This project consistsof six sub-projects: establishing a tourism zone in the capital city of Amman; constructing a National Museum in Amman; building an observatory overlooking the DeadSea; building a road around the Dead Sea; and, tourisminfrastructure development in El Karak and also in Es Salt.

The project seeks to improve the tourism infrastruc-

JORDAN

TURKEY

¥65,431 million (90.1%)

¥7,199 million (9.9%)

Turkey

Jordan


Loan Commitments of Overseas Economic Cooperation Operations tothe Middle East in FY1999

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ture in Jordan, making tourism resources more attractiveto tourists from abroad. As a result, the project aims tocontribute to strengthening the country’s capacity toacquire foreign currencies through tourism, which isessential for economic stabilization in Jordan.

In fiscal 1999, ODA loans totaling ¥65.4 billion were provided for the three projects outlined below.

Contribution to Earthquake RecoveryOn August 17, 1999 a devastating earthquake with a mag-nitude of 7.4 hit northwestern Turkey. Over 17,000 peoplewere killed, more than 43,000 were injured, and approxi-mately 200,000 homes and buildings were more than half-destroyed, leaving over a half million people homeless.The damage is estimated at more than US$6 billion. TheTurkish government’s “Emergency Earthquake RecoveryPlan” calls for: 1) restoring or rebuilding damaged homesand buildings; 2) providing emergency assistance to vic-tims; 3) repairing social infrastructure, including trans-portation, education, electric power and others; and 4)extending special loans to assist in recovery from the damage. An ODA loan of ¥23.6 billion has been providedfrom JBIC to assist the implementation of this plan. Theproject is expected to contribute to improving Turkey’s

balance of payments position,economic stability, and recoveryresulting from earthquake damage.

Transportation InfrastructureDevelopment for IndustryDevelopment Promotion andEnvironmental ProtectionOther ODA loan projectsincluded a ¥29,367 million loanfor the Bozuyuk-Mekece RoadImprovement Project and a¥12,464 million loan for theBosphorus Rail Tube CrossingProject (I). ——The Bozuyuk-Mekece area targeted by the Bozuyuk-MekeceRoad Improvement Project islocated along the north-southnational highway, Route 650,which is used for the distribution

of industrial products from the Marmara region in thenorth, and agricultural and light industrial products fromthe Mediterranean region in the south. The project isdesigned to widen the national highway from two lanes tofour. The project also includes construction of a bypassaround the city of Bozuyuk (11km), 32 bridges, and twotunnels. This road improvement is expected to meetincreasing demand for surface transportation, and hencestimulate various industrial activities in Turkey.

The population of Istanbul has risen by an average3.3% annually since 1990, and roads are extremely con-gested. Traffic on the two bridges across the BosphorusStrait (dividing the residential Asian side and the commer-cial European side) averages 320,000 vehicles per day(1997), resulting in chronic traffic congestion. Air pollu-tion caused by large amounts of vehicle emissions as wellas the over-consumption of energy during traffic slow-downs has become a serious problem. The purpose of theBosphorus Rail Tube Crossing Project (I) is to alleviateincreasingly severe traffic jams and environmental pollu-tion in Istanbul and surrounding areas by constructing a subway connecting eastern and western Istanbul. Thesubway is scheduled to begin operation in 2007. It will be13.3km long and will have four stations.

TURKEY

Amman, Jordan

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Structural reform programs have been carried out inNorth Africa since the latter half of the 1980s. As aresult, economic stabilization, market liberalization,and private-sector reinforcement are being pro-moted. Economic growth began improving slightlyin the second half of the 1990s, and through flexibleeconomic management, the region managed toavoid the effects of recent economic crises in otherparts of the world.

Morocco’s agricultural-based economy is heavilyaffected by weather conditions, which cause bigfluctuations in the rate of economic growth. Poorweather in 1999 led to a steep fall in annual growthto a negative 1.5%, down from 6.3% in 1998.

Economic growth in Tunisia decreased to 5.0%in 1998 due to drought. With recovery in the agri-cultural sector, economic growth is expected toresume during 1999, with a projected rise to 5.8%.

In Algeria, due to a slump in agriculture, theeconomic growth rate is projected to fall to 3.3% in 1999, down from 5.1% in 1998. However, arecent recovery in oil prices is giving new impetus to growth.

In Egypt, progress of an economic reform program centered on privatization, combined witha rise in oil prices, is contributing to an ongoingtrend of stable economic growth, which reached5.4% in 1999. However, an increase in imports has

led to a decrease in foreign currency reserves, creat-ing concerns about exchange rate trends and thecountry’s balance of payments position.

Plagued by heavy cumulative external debt andfiscal deficits, many Sub-Saharan countries facedeconomic collapse in the 1980s. As a result of struc-tural adjustments carried out under the World Bankand the IMF guidance, economic growth for the firsthalf of the 1990s was 1.4%. Although theeconomies of Ghana and Uganda have benefitedfrom economic reforms, continuing political strifeelsewhere has led to an economic downturn inmany countries in the region.

The economy of Kenya has been stagnant inrecent years. Projections for 1999 indicate economicgrowth will decline to 1.4%. The slowdown is attrib-uted to a decrease in agricultural production due to drought and flood damage, a drop in directinvestment and a stagnant manufacturing sector.

In South Africa, healthy performance in thecommunications and financial sectors resulted in1.2% growth in 1999. The outlook anticipates arecovery of domestic investment and consumptioninduced by a fall in interest rates, expansion ofexports due to a rise in prices of primary products,and an increase in investment in response to privatization.

Africa

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Assistance for Industrial DevelopmentTunisia, sharing borders with Algeria and Libya, has flourished from ancient times as a transportation hub.Recently, the country has been making efforts to diversifyits economic structure, improve productivity and promoteexports under the 9th National Development Plan(1997–2001). The government has also been pushing for-ward a trade liberalization policy as the first country inAfrica to sign the Free Trade Agreement with the EuropeanUnion. It is in this context that raising the internationalcompetitiveness of the electric and machinery industries,alongside the major export industries such as the textileand food-processing industries, is an important agenda forTunisia. To support this effort of industrial developmentin Tunisia, JBIC provided ¥12 billion in an untied two-steploan to the Banque de Développement Economique deTunisie (BDET). This is the fourth loan of this type pro-vided to BDET following earlier loan commitments in1989, 1993 and 1995, which were effectively used for such projects as modernization of equipment at garmentfactories and mineral water companies and construction of hotels.

The proceeds of the loan will be used for fundsrequired for capital investment in Tunisia’s export indus-try, as well as in the manufacturing and tourist industries,from which Tunisia is able to generate employment andacquire foreign currencies. This loan is also expected tocontribute to fostering further development of Tunisianindustries through collaboration with the technical assis-tance of JICA. In that JICA is giving technical advisory ser-vices to Tunisian electric and machinery companies underthe Study of Development of Technical Support System forIndustry, the loan will provide these companies withopportunities to receive loans from BDET.

International Financial Operations andMajor ProjectsCommitments totaling ¥25.9 billion were made for 12 pro-jects in Africa in fiscal 1999. A particular focus was on pro-jects in the power sector in southern Africa contributing toeconomic development of the region.

Export Credit Line to Bolster Algeria’s Plant Market Algeria is the largest plant importer in Africa. However, the world plant markets, including Algeria, were adverselyinfluenced by the financial crises in Russia and Asia.

JBIC extended a ¥10 billion export credit line toAlgeria’s state-owned hydrocarbon producer,SONATRACH, to provide financing for the company’simports of plant and equipment and related services fromJapan. JBIC had previously provided SONATRACH with atotal of ¥370.8 billion in buyer credit and a total of ¥8.7billion in untied loans.

ALGERIA

¥18,182 million (70.3%)

¥594 million (2.3%)

¥860 million (3.3%)

¥3,496 million (13.5%)

¥1,303 million (5.0%)

¥1,425 million (5.5%)

Tunisia

Mozambique

Egypt

Algeria

Ghana

Niger


Loan Commitments of International Financial Operations to Africa inFY1999

TUNISIA

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Construction of Power Transmission Lines inSouthern AfricaIn southern Africa, the Southern Africa DevelopmentCommunity (SADC) has been formed to promote eco-nomic development in the region around South Africa.SADC’s activities include forming joint markets andstrengthening economic ties. One of the key efforts is toset up effective regional distribution of South Africa’sabundant electric power. The Republic of South Africa, theKingdom of Swaziland and the Republic of Mozambiquehave formed a joint company, Mozambique TransmissionCompany (MOTRACO) to construct, maintain and man-age two power transmission lines stretching from SouthAfrica across Swaziland to Mozambique. JBIC extended anuntied loan of ¥4,994 million to MOTRACO to support the project based on indications that such economic infrastructure development will effectively lead toimprovement of the investment climate of the region. The aluminum refinement business, utilizing the electric-ity conveyed through transmission lines, exemplifies oneof the benefits of the project.

Overseas Economic Cooperation Operationsand Major ProjectsODA loan commitments totaling ¥36.7 billion were madefor six projects in Africa in fiscal 1999 to help activate the private sectors in each country, promote economicdevelopment and construct basic infrastructures.

Water Supply for Rural ResidentsIn Morocco, social infrastructure development is laggingin rural areas compared with that of urban areas, with thisdifference in development levels posing a major problemfor the country’s sustainable development and social sta-bility. To reduce this gap, the Moroccan government hasbeen undertaking a rural water supply project through theOffice National de l’Eau Potable (ONEP) and the Ministryof Equipment since 1996. Under this project, about 11million people in 31,000 villages will gain access to watersupplies across the country.

In fiscal 1999, JBIC extended an ODA loan of ¥5,004million to assist the Rural Water Supply Project (I). Thisloan is aimed at supporting the rural water supply projectcurrently being undertaken by the Moroccan government.As part of this project, existing waterlines in the prefec-tures of Fes and Safi and the province of Tiznit will beextended to outlying areas. This will secure a safe watersupply for 140,000 people, making a significant contribu-

MOROCCO

MOZAMBIQUE

South Africa

Mozambique

Lesotho

Swaziland

●�Maputo

●�●�

Project Site

¥15,642 million (42.6%)

¥16,085 million (43.8%)

¥5,004 million (13.6%)

Morocco

Tunisia

GhanaTotal

¥36,731million

Loan Commitments of Overseas Economic Cooperation Operations toAfrica in FY1999

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tion to raising the standard of living. This project has alsoreceived financial assistance from the World Bank, KfW ofGermany, and AFD of France.

The Tunisian economy has been characterized by healthygrowth supported by an expansion of investment, a highsavings rate and export growth, particularly in the textileindustry. Sustaining expected continued growth willrequire the following: 1) strengthening the competitive-ness of industries; 2) stabilizing production in the agricul-tural sector; 3) correcting regional development imbal-ances; 4) securing stable employment; and 5) environmen-tal conservation activities. To address these problems, theTunisian government is carrying out its 9th NationalDevelopment Plan (1997–2001). In support, JBICextended ¥16,085 million in ODA loans for three projectsin fiscal 1999: the Rural Water Supply Project, theIntegrated Reforestation Project, and theTelecommunications Network Development Project (III).

Water Supply in Rural AreasA loan of ¥3,352 million was extended for the Rural WaterSupply Project, which is being undertaken as part of abroader effort to correct imbalances in developmentbetween urban and rural areas. This is a rural developmentproject, covering 17 prefectures and serving some 100,000residents in Tunisia. The project aims at improving thewater supply ratio in rural areas and upgrading the socialand living environment of local residents through theimprovement of the small-scale water supply infrastruc-ture. In addition, the project is designed to ensure parti-cipation of the beneficiaries at each stage of implementa-tion in order to establish sustainable beneficial effects.

Conservation of Forest Resources and Improvementin Living Standards of Local ResidentsTunisia’s forests have been seriously depleted due to nat-ural disasters and excessive deforestation. The goals of the¥4,080 million Integrated Reforestation Project being car-ried out in four different regions are 1) to improve forestconditions (forest maintenance, rehabilitation of the forestecosystem, and preservation of water and soil) anddevelop the infrastructure necessary for these improve-ments; and 2) to promote development in the forestry sec-tor (regional improvement, research, human resourcesdevelopment and forestry management). Over half ofTunisia is semi-arid, and reforestation is extremely impor-

tant in preventing soil runoff and protecting the environ-ment. This project is expected to contribute greatly todeveloping sustainable use of forest resources whileimproving living standards of the local people socially andeconomically, protecting ecosystems and conserving soiland water.

Communications Network Development to EnrichEconomic Infrastructure The ¥8,653 million Telecommunications NetworkDevelopment Project (III) is being undertaken to constructmicrowave transmission routes (wireless transmissionroutes) and optical fiber cable transmission routes (cabletransmission routes) as feeder transmission lines inTunisia. In addition, wireless local loop (WLL) systems willbe set up as part of the subscriber network to provide gen-eral telephone services to areas that are currently not con-nected to telephone lines. According to the 9th NationalDevelopment Plan, the number of telephone subscribers,including mobile phones, is expected to reach 1.4 millionpeople in 2001, a sharp increase from 0.65 million in1997. Along with expanding the capacity of switchboards,this will necessitate the expansion of a communicationsnetwork. The improvement in digital technologies to beapplied in main trunk lines will serve to increase the relia-bility of telecommunication lines and communicationspeed in Tunisia, which is expected to add stability andimpetus to the country’s economic infrastructure develop-ment. Also, the introduction of WLL systems is expectedto revitalize regions that will have access to telephonelines for the first time.

TUNISIA

Integrated Reforestation Project

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In fiscal 1999, two ODA loans equivalent to ¥15.6 billionwere provided to Ghana.

Assisting Economic Reform ProgramSince 1983, the annual rate of economic growth in Ghanahas averaged more than 4.5%. The country’s political situ-ation has also been remarkably stable among Africannations. However, a recent slump in the markets for cacaoand gold, Ghana’s main products, has adversely affectedits balance of payments position. In response, Ghana isundergoing structural reform under the guidance of theWorld Bank and IMF. Recently, the government haslaunched a further effort to privatize national enterprisesto promote the transition to a private-sector-led economicsystem. JBIC provided ¥5,991 million in ODA loans for theEconomic Reform Support Operation.

Acknowledging the importance of collaborationamong donors, JBIC has stressed working within theSpecial Program of Assistance for Low-Income Debt-Distressed Countries in Sub-Saharan Africa (SPA), a specialdevelopment assistance framework established under aninitiative of the World Bank in December 1987 to assiststructural adjustment in low-income Sub-Saharan coun-tries burdened by cumulative debt. Under the frameworkof SPA, JBIC proceeded with preparatory work in coopera-tion with the World Bank and the African DevelopmentBank to make this loan possible. JBIC has provided contin-uous assistance to promote private-sector activities andother necessary reform efforts in Ghana by extending sixODA loans for structural adjustment programs.

Construction of Trunk HighwaysAs one activity in fiscal 1999 to support infrastructureimprovement, JBIC provided ¥9,651 million in ODA loansto the Achimota-Anyinam Road Improvement Project.This followed assistance provided in 1997 to the HighwaySector Investment Project (Phase II), an improvement pro-ject for the highway between Accra and Yamoransa. Thesouthern area of Ghana enclosed between Kumasi,Takoradi and Accra is called the Golden Triangle. With ahigh population density and an abundance of mineral andagricultural resources, this represents the core area ofGhana’s economy. The most important trunk road inGhana is the stretch between Achimota and Anyinam,which makes up half of the southern part of the trunkroad linking the capital of Accra with the second largestcity of Kumasi. Thus, the section of road targeted by thisproject is one of Ghana’s main distribution channels.

Its improvement is expected to alleviate congestion andreduce transport costs, thereby stimulating agriculture and industry and promoting exports. In addition, theimproved road surface will reduce the incidence of trafficaccidents, while the construction work will generateemployment. The project will also decrease traffic bottlenecks, which have worsened significantly in recentyears, for example, streamlining the transport of agricul-tural products to Accra and making commuting easier for workers.

GHANA

Ghana

●�

●�

Accra

Anyinam

Achimota

Kumasi

●�

●�

Project Site

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AmericasNorth America, Latin America and the Caribbean

North America

In 1999, the U.S. economy recorded a 5.5% increasein consumer spending, largely as a result of theasset effect from record levels of stock prices.Strong economic performance continued thelongest period of economic growth in history, whichbegan in March 1991. In particular, a rise in produc-tivity spurred by technological innovation in thetelecommunications sector along with corporate sector investment in information technologies (IT)contributed to an economic growth of 7.3 percent-age points in the fourth quarter, the highest fourth-quarter growth rate in 16 years. The growth rate forthe entire year was as high as 4.2%, virtually thesame as 4.3% posted in 1998. In addition, theunemployment rate dropped to 4.2%, the lowest in30 years. The Federal Reserve Board gradually raisedthe prime interest rate to minimize inflation.Despite a total increase in inflation from 1.6% in1998 to 2.2% in 1999, the consumer price index,excluding the influence of a sharp rise in oil prices,remained low at 2.0%, almost the same as 2.3%recorded in 1998. The question of whether the ITrevolution—the driving force for the New Economy-has brought about structural change in the U.S.economy, contributing to low inflation and higheconomic growth, is currently being hotly debatedin the corporate and academic arenas.

The strong U.S. economy has also broughtincreased tax revenues, resulting in a large govern-ment fiscal surplus of US$350 billion. Despite suchhealthy fundamentals of the U.S. economy, voicesare being raised suggesting that stocks, particularlyhigh-technology stocks, are excessively overvalued.Notwithstanding increased exports, there was no

improvement in the large deficit in the currentaccount balance, which grew from US$220.6 billionin 1998 to US$338.9 billion in 1999, an increase inthe GDP ratio to 3.7%.

In 1999, the Canadian economy grew 4.2%, thehighest rate in five years and significantly beyondprojections. This improvement of over 3.0% in 1998was achieved while the worldwide recovery fromthe currency crises took place. It is particularlyattributable to an increase in exports—mainly to theUnited States where demand is buoyant, a rapidexpansion in domestic demand, and improvementin other negative factors for economic growth. Thesurplus in Canada’s balance of trade increased fromCDN$11.9 billion in 1998 to CDN$27.3 billion in1999. Meanwhile, the current account deficitdecreased markedly from CDN$16.4 billion toCDN$4.3 billion.

Although inflation increased from 0.9% in theprevious year to 1.7% in 1999 due to steep pricerises in crude oil, natural gas, and other energysources, the figure was well below the governmentprojection of 1 to 3%. Unemployment decreased to7.6%, the lowest in 18 years. Moreover, with twosuccessive years of fiscal surplus, the governmenthas been able to base its fiscal policy on a robustfinancial state of affairs, enabling it to successfullymaintain historically low interest rates. Furthermore,the value of the Canadian dollar relative to the U.S.dollar, which had been trending downward since1997, improved in 1999, reflecting such factors asthe improved current account balance and healthyeconomic fundamentals.

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Latin America and the Caribbean

In 1999, the countries of Latin America and theCaribbean faced economic recession of even greaterseverity than in 1998. Due to the decline in confi-dence in emerging markets, which began in 1998,Brazil was unable to stop capital outflow despite thestart of fiscal adjustments, forcing a move from acrawling peg to the U.S. dollar to a floatingexchange rate in January 1999. Lowered confidencein Brazil and a drop in primary commodity prices ledto a decline in capital inflow to Latin America andthe Caribbean. Meanwhile, tight fiscal and mone-tary policies and a change in exchange rate regimesresulted in negative growth in many countries in1999. Overall, economic growth throughout theregion fell to 0.3% in 1999, while unemploymentincreased to 8.3%. Tight monetary policies and economic recession pushed inflation down to 6.1%,the lowest since the early 1970s. Conversely, in2000, economic recovery is foreseen mainly due to low interest rates and an increase in exports. It is anticipated that growth in 2000 will be approximately 4%.

A noteworthy development in 1999 was theshift of currency exchange policies in Latin Americaand Caribbean countries, which had previously useda crawling peg to the U.S. dollar. Ecuador, Chile andColombia shifted to floating exchange rates inFebruary, August and September, respectively.Ecuador, in particular, further moved from a floatingexchange rate to conversion to the U.S. dollar inMarch without being able to undertake sufficienteconomic adjustment policies after defaulting on aBrady bond in September and a subsequent changeof government in January 2000.

Among the region’s leading countries, Brazilfaced serious economic troubles after shifting to afloating exchange rate system in January 1999. Atone point, Brazil’s currency depreciated to two realsto the U.S. dollar, which aroused a concern thatinflation might break out again due to a subsequentrise in the price of commodity imports. Nevertheless,the real recovered to a rate of 1.6 to the U.S. dollarby April as the country’s economy began to recovermuch more rapidly than anticipated. Meanwhile,reduced international financial confidence inArgentina and other neighboring countries, andlowered confidence on the part of internationalfinancial markets in the fiscal adjustment policyadopted by the Brazilian government led to fluctu-ating economic conditions from the first to thirdquarters in 1999. However, industrial productionrecovered in the fourth quarter, and the economic

growth rate for the year ended at approximately1%. Inflation was contained at 8.9% due to therecession and a change in monetary policy involvingthe use of an inflation targeting method.

In Argentina, such factors as a drop in commodity prices, a decline in export sales due tothe depreciation of the Brazilian real, and concernabout expansionary fiscal policy related to therecent presidential election led to a decrease in pri-vate investment, dampening economic growth to anegative 3.0%. However, the election of PresidentFernando de la Rua, the continuation of the coun-try’s currency board system, and the adoption of afiscal adjustment policy based on an IMF programled to greater optimism, with forecasts for positivegrowth in 2000.

Mexico recorded 3.7% growth in 1999, sup-ported by thriving exports to the United States.Unemployment stayed at a low 2.5%, while inflationwas contained at 12.3%, which was below the gov-ernment’s previously set target following the stabi-lization of its currency and a decrease in agriculturalproduct prices. Although the current account deficitwas approximately 2.9% of GDP, approximately80% of this deficit was financed by direct invest-ment, as international investor confidence increasedwith regard to Mexico’s future economic outlook. In2000, Mexico is expected to achieve high growthbased on continued healthy exports and a recoveryof private consumption.

In Colombia, a high interest rate policy and adrop in commodity prices led to a decline in theeconomic growth rate to a negative 4% in 1999. Asa result, the rate of unemployment has decreased.Exacerbated by a lack of clarity regarding conditionsfor economic recovery, selling of the Colombianpeso accelerated, subsequently resulting in a shift toa floating exchange rate at the end of September1999. However, in the first quarter of 2000, theColombian economy shifted toward positive growth,and Colombia is expected to continue to keep aclose reign on managing its economic recovery.

In Peru, the economic growth rate in 1998 waslow due to the damage caused by “El Niño” to thefishing and agricultural industries. However, in1999, recovery in the two sectors was seen, as wellas a high rate of growth in the manufacturing sec-tor, particularly the production of fish powder. Withregard to demand, exports drove the economy, andeconomic growth of approximately 3% wasrecorded in 1999.

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International Financial Operations andMajor ProjectsIn fiscal 1999, JBIC made 81 loan commitments to theAmericas, totaling ¥450 billion. A feature of the loans toLatin America and the Caribbean in fiscal 1999 was theincrease of resource development projects including a copper mine project in Peru and an oil project in Brazil.

Electric Power Plant Construction and Management JBIC extended an export credit totaling US$102 million to AES Parana-S.C.A. This was the first export credit to aproject company incorporated in Argentina as an indepen-dent power producer (IPP). The project was also cofi-nanced with the Inter-American Development Bank, forcombined credit totaling US$214 million. Under this project, AES Corporation and PSEG Global Inc. of theUnited States will construct and operate a natural gas-firedcombined power plant with a capacity of 826MW at SanNicolas in the Province of Buenos Aires to supply power tothe metropolitan area. The proceeds of the loan will beused to purchase Japanese equipment and facilities for the project.

Since 1989, the government of Argentina has beenvigorously carrying out a plan to privatize public enter-prises and encourage foreign capital inflow in order toreduce its fiscal deficit and strengthen the competitiveness

of Argentine industries. In the power sector, where secur-ing stable power supplies and upgrading plant efficiencyare urgent tasks, the government has been privatizingstate-owned power companies since 1991. Previously, thisbusiness was vertically integrated, but, at present, it hasbeen divided into generation, transmission and distribu-tion. In the power generation sector, free entry and com-petitive bidding has made generation at lower prices possible. This JBIC loan enables the introduction of ahighly efficient power plant and equipment produced inJapan to the electric power industry in Argentina, provid-ing cheaper electric power to the people of Argentina.

Modernization of Scientific and Engineering R&D FacilitiesTo contribute to the modernization of equipment used inBrazil’s scientific and engineering research and develop-ment, JBIC extended a buyer credit of ¥18 billion to the government of Brazil. The loan will be used viaFinanciadora de Estudos e Projetos (FINEP) to carry out themodernization project through providing essential capitalfor purchasing equipment and services at universities andresearch institutions. FINEP was established in 1967 as agovernment-owned company under the Ministry ofScience and Technology. It is designed to support research and development efforts in the areas of the economy, society, science and technology by providingmedium- and long-term financing according to the government’s plans. FINEP is playing a central role in thismodernization project.

Effective Utilization of Associated GasJBIC provided an overseas investment loan totalingUS$850 million for a project to process associated gas generated during the extraction of crude oil in fields off-shore from Campos. Brazil currently depends on importsto meet approximately 40% of its petroleum demand. Thefinancing provided by this project will contribute toBrazil’s efforts to increase and improve its oil production.The use of associated gas is considered as one means of increasing Brazil’s self-sufficiency in gas. The currentproject, which will also help control associated gas com-bustion, will help protect the environment by reducing air pollution and the effects of global warming.

BRAZIL

ARGENTINA

¥95,209 million (21.1%)

¥95,787 million (21.7%)

¥120,478 million (26.8%)

¥87,590 million (19.5%)

¥49,123 million (10.9%)

United States

Peru

Brazil

Mexico

Others


Loan Commitments of International Financial Operations to theAmericas in FY1999

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Private-Sector Telecommunications Developmentand Technology TransferNEC do Brasil S.A. (NDB) was established in 1968 to operate in cooperation with the country’s policy to promote the production of telephone switchboards inBrazil. In July 1997, Telecomunicacoes Brasileira, S.A.(TELEBRAS), an important client of NDB, was separatedand privatized. Subsequently, entry of many othertelecommunications firms has led to a competitive marketstructure. In response, NDB is stepping up its R&D activi-ties and production facilities for next-generation mobiletelecommunications technology. JBIC provided an over-seas investment loan worth US$282 million as long-termcapital for NDB’s production and sales operations in electronic telecommunications equipment. The loan isexpected to help improve infrastructure in Brazil’s privatetelecommunications field. The additional benefit of tech-nology transfer in the manufacturing of electronictelecommunications equipment is also expected.

Improvement of Electric Power and Natural GasDistribution NetworksColombia ranks fourth among South American countriesin total electric power generation, producing some 44.1billion KWh annually in 1997. However, electric powerdistribution is considered inadequate, since Colombia’sper-capita electricity consumption of 1,100KWh is belowthe South American average of approximately 1,700KWh.

Production of natural gas was approximately 46 billion cubic feet in 1997, the third highest in SouthAmerica, while confirmed reserves of natural gas totaledsome 14.2 trillion cubic feet. An advantage of using nat-ural gas as an energy source is that its cost is only one-fifthof that of electricity. Nearly 50% of electric power demandis for household use. Therefore, in order to reduce electricpower demand, it is expected that the use of natural gasenergy at the household level will be promoted.

Under these conditions, JBIC extended an untied loantotaling ¥25,764 million to provide Empresas Públicas deMedeillín (EPM) with capital to implement the Electricityand Natural Gas Distribution Project in Colombia’s secondlargest city of Medeillín and the surrounding area. Theproject will contribute to a stable and efficient power sup-ply, while promoting the use of natural gas in MedeillínCity and the surrounding area. Since this area is one of thecountry’s largest commercial and mining centers, infra-structure improvement through this loan is also expectedto improve business conditions in Colombia.

Financial Support for Investment in Plants andEquipmentPeru achieved robust economic growth in the 1990sthanks to an economic stabilization policy to lower infla-tion and restore economic growth. While the unfavorableimpact from the El Niño phenomenon resulted in lessgrowth than expected in 1998, the government continuesits all-out effort to achieve sustained economic growthwith a balanced national budget. In positively evaluatingthis situation, JBIC provided a bank loan totaling ¥5 billion to the Corporación Financiera de Desarrollo S.A.(COFIDE) to support efforts for medium- and long-termeconomic growth.

The loan to COFIDE was the third loan following pre-

PERU

Telecommunications equipment line

●�

●�

Rio de Janeiro

São Paulo

Brazil

Project Site

COLOMBIA

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vious loans in October 1982 and September 1993. It willbe used to purchase equipment and services from Japanthrough COFIDE that are necessary for Peru’s economicdevelopment. The loan will support new investment inplants and equipment and help its import of capital facili-ties by supplying medium- to long-term credit, which isnot adequately available in the domestic market.

Development of Private Enterprise and the Financial SectorJBIC’s second untied loan since February 1996, totaling¥28 billion, was extended to the Peruvian government,which through COFIDE and private financial institutionsprovides private firms with medium- and long-term creditfor capital investment. The Russian financial crisis in 1998led to a tightening of credit in emerging markets, whichadversely affected the Peruvian economy. JBIC’s untiedloan was formulated to meet private-sector credit demandby supporting loans provided by private financial institu-tions. This is expected to contribute to the development of private-sector activities in general and the country’sfinancial sector.

Another untied loan amounting to ¥37.2 billion wasalso provided. The aim is to make the financial sector amore efficient tool for recovery of the real economy bypromoting banking reform, capital market development,and pension fund reform.

Infrastructure Development in Rural AreasEconomic growth in Peru began to slacken in 1998.Particularly noticeable are the struggling local economieswith declining income levels. Roads and other infrastruc-ture have yet to be developed in the country. In addition,municipalities are lagging behind in their efforts to restoreroads and other infrastructure that were damaged byflooding and other natural disasters. In July 1999, thePeruvian Government embarked on the LocalGovernment Basic Equipment Program to develop eco-nomic and social infrastructure, as well as to boost theeconomies in these regions. This program aims at ensuringthat the central government purchases and delivers con-struction equipment required by the local governments, tohelp develop local infrastructure including regional roads.The program is also designed to create employment andbolster regional economies. JBIC provided a buyer credittotaling ¥19.5 billion for this program for purchasing con-struction machinery and other materials required in thecourse of rural infrastructure development.

Development of Copper and Zinc MinesJBIC extended an overseas investment loan totalingUS$350 million to Companía Minera Antamina S.A. inorder to support the development of the Antamina copperand zinc mines. Japan has the capacity to refine and man-ufacture some 1,320 tons of copper and 697,000 tons ofzinc annually, while depending almost entirely on importsfor copper and zinc ores. This project is recognized as significant for Japan to secure a stable, long-term supply of these metals.

Nitrogen Production and its Supply to Oil FieldsJBIC provided US$374 million for an overseas investmentloan on a project finance basis as long-term capitalrequired by a nitrogen production and supply projectundertaken by Companía de Nitrogeno de Cantarell S.A.de C.V. (CNC), a Mexican corporation in which Japanesecompanies have invested. The project is related to theCantarell oil field redevelopment project promoted byMexico’s state-owned oil entity, Petróleos Mexicanos(PEMEX). The aim of this project is to support CNC’sefforts to improve oil production efficiency at theCantarell oil field. The production and supply of nitrogen,necessary for secondary recovery of crude oil, will be carried out by the Build, Own and Operate (BOO) method.

The redevelopment of the Cantarell oil field, one ofthe largest oil fields in Latin America, is expected to helpmaintain and improve crude oil production in Mexico.The project is also expected to contribute to stabilizationand future development of the Mexican economy, as well

Construction machinery for infrastructure improvement

MEXICO

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as mid- and long-term stabilization of supply to meetinternational demand for crude oil. Financing through theproject is expected to promote cooperation between Japanand Mexico in future oil development activities.

Overseas Economic Cooperation Operationsand Major ProjectsIn fiscal 1999, JBIC made seven ODA loan commitmentsin Latin America and the Caribbean worth a total ¥85.1billion. From the 1980s to the beginning of the 1990s,most ODA loans in Latin America were structural adjust-ment loans supporting economic reforms in each country.Through these loans, a stable macroeconomic conditionhas been achieved and it has become possible to conductdevelopment projects in the region. Accordingly, projectloans have become the major type of loan extended inrecent years.

Rural Road Development and Improvement After achieving domestic peace in 1996, the governmentof Guatemala faces the tasks of regional development andthe alleviation of poverty. The biggest impediment, how-ever, is the delayed improvement of basic infrastructure asa result of the long years of civil war. In response, the gov-ernment has embarked on a development plan for 1996-2000 that stresses improvement in basic infrastructure.

Under this plan, the government has also established amid-term investment plan for 1997-2000 for roadimprovement, which is now being energetically carriedout, and is receiving support from the World Bank and theInter-American Development Bank.

In fiscal 1999, JBIC provided an ODA loan worth¥5,781 million for the Rural and Main RoadsRehabilitation Project to improve Guatemala’s main roads,which are defined as important in the mid-term invest-ment plan. Specifically, this project undertakes re-pavinginternational highway CA-1W between Chimaltenangoand Tecpan (36km paved road) and paving national high-way RN-7W (162km unpaved road). The improvement ofthese main roads will enhance the efficiency of transportand the distribution of goods. The project will also enablethe government to better carry out social services, includ-ing education and health, in areas that suffered the mostin the civil war. The loan is extended through cofinancingwith the World Bank.

In fiscal 1999, JBIC extended ¥57.2 billion in ODA loansfor five projects in Peru.

Repair of Roads Damaged by El Niño The El Niño phenomenon observed between spring 1997and summer 1998 was the largest in the history of itsobservation, with resulting damage to roads being particu-larly serious. Destroyed roads and bridges accounted for30% of the estimated total damages of US$1 billion.Although the Peruvian government established an El NiñoEmergency Assistance Program in November 1997, andcarried out emergency repair of damaged places in all sectors suffering from the disaster, full-scale reparationactivities still lie ahead. JBIC provided an ODA loan worth¥15,833 million for the government’s El Niño-AffectedHighway Rehabilitation Project, designed to improve seriously damaged paved and unpaved main roads con-necting coastal sites and mountain areas. The project aims to achieve smooth distribution of goods in areas onlypartially or temporarily repaired after the disaster.Accordingly, economic activity in the damaged areas willbe stimulated. The project also includes natural disastercountermeasures to protect roads from possible futuredamages due to natural disasters.

PERU

GUATEMALA

¥57,153 million (67.2%)

¥5,781 million (6.8%)

¥22,148 million (26.0%)

Peru

Mexico

Guatemala


Loan Commitments of Overseas Economic Cooperation to theAmericas in FY1999

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Poverty Alleviation and Environmental Conservationin Mountainous AreasIn Peru, some 10.5 million people, or almost half of thecountry’s population of 23.5 million, live in poverty.Specifically, in 1995, some 4.5 million people, or 19.3% ofthe population, were defined as living in extreme poverty;thus, assistance for the impoverished is an urgent task. Thegovernment has mounted full-scale efforts to combatpoverty as part of a program extending from 1995 to 2000.Most of those in poverty or in absolute poverty live inmountainous regions under harsh natural conditions, producing agricultural commodities such as potatoes, corn and cattle by traditional methods with low produc-tivity. The government is planning poverty reduction andenvironmental conservation projects targeting farmers in mountainous areas. JBIC provided ODA loans worth¥7,259 million to the Sierra-Natural ResourcesManagement and Poverty Alleviation Project (II), which is one of the above-mentioned projects planned by thegovernment. This project will cover approximately 150small basins in mountainous regions above 2,000m(Sierra) and target approximately 900 farming communi-ties. It aims to alleviate poverty and conserve the environment in those areas.

A project description is as follows: 1) evaluation of soiland water resources in each valley and preparation of aplan; 2) investment in rural development (i.e., soil conser-vation, building small-scale irrigation facilities, planting,protection of woodlands); 3) support for training activitiesfor communities; and 4) project monitoring by the execut-ing agency (including staff training and support withequipment and materials). The project will be carried outwith participation of residents.

Similarly, JBIC provided an ODA loan worth ¥7,003

million to another poverty alleviation project, the SocialSector Development Project in Sierra Area. Through theNational Social Development Fund (FONCODES), estab-lished to reduce poverty, the project carries out small-scaleprojects for low-income regions in four mountain prefec-tures in order to improve a social health infrastructure,including construction of simple water supply and simple sewerage facilities. This project is a follow up to the Social Sector Development Project in Amazon Areasigned in November 1997. With participation of residents,the project will improve the social and public health infra-structure in low-income regions, thereby alleviatingpoverty and improving the living environment in thoseareas. The provision of a water supply will reduce the laborexpended by women and children in collecting water.

Water Supply and Sewerage System Improvementand Expansion in Rural Areas In addition to the above projects, JBIC also provided anODA loan of ¥13,901 million for the Provincial CitiesWater Supply and Sewerage System Improvement andExpansion Project (Piura-Castilla and Chimbote). Becauseof the absence of investment in water and sewerage worksin the 1980s, the national average diffusion rates for watersupply and sewerage are both only 60%. Water supply andsewerage facilities in provincial cities are particularly dilap-idated, and breakdowns occur constantly. This project willaid the improvement and expansion of water supply andsewerage infrastructure in provincial cities, where thedevelopment of such infrastructure is lagging behind. Thisproject will improve the quality and availability of drink-ing water, reduce its production cost and raise sewagetreatment capacity in Piura and Chimbote, two of Peru’smain provincial cities. These improvements will improvepublic health conditions in these cities, reduce morbidityrates and raise the rate of permanent settlement, reducingpopulation drift to the capital city of Lima.

Assist in poverty alleviation

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Infrastructure Improvement in Water and SewerageSystemsIn fiscal 1999, JBIC provided ODA loans worth ¥22,148million to the Baja California State Water Supply andSanitation Project in Mexico. Mexico has traditionallyplaced a priority on its economic relationship with theUnited States. Accordingly, development efforts have beenmade in the states bordering the United States. Located inthe northwest corner of Mexico, Baja California hasrecorded the highest rate of economic growth in recentyears. In this state, there has been increasing migration ofworkers toward the export processing zones, orMaquiladoras, including those in Tijuana, Mexicali andEnsenada, the state’s three largest cities. However, majorwidespread delays in the improvement of such basic infra-structure as water supply and sewerage systems for thegrowing population have created a serious impediment tofuture economic growth. Furthermore, the rapid develop-ment of this area has caused environmental problems insurrounding regions. For example, unprocessed wastewaterflows into the Salton Sea and the Gulf of California sharedwith the United States—a matter that is becoming a bilat-eral issue between Mexico and the United States.

The Project is designed to develop infrastructureincluding the construction of water purification facilities,sewage treatment facilities, and water and sewage pipes inthe three major cities of Tijuana, Mexicali and Ensenada.This will help improve living conditions for the urban resi-dents in these cities and mitigate water pollution in theSalton Sea and the Gulf of California.

Improve living conditions through developing water and seweragesystems

MEXICO

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Supporting Operations

1. Studies and Assessments for Overseas Economic Cooperation Operations

2. Environmental Protection and Social Development

3. Cooperation with Other Agencies

4. JBIC Supports Small- and Medium-sized Enterprises in Japan

5. Knowledge Transfer Activities

6. Research Institute Activities

7. Information Disclosure and Dissemination

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Studies and Assessments for Overseas EconomicCooperation Operations1

Special Assistance Facility (SAF) JBIC has been conducting Special Assistance Facility (SAF)studies in order to enhance effectiveness and efficiency ofODA loan projects. Within the project cycle (see page 10), SAFstudies are carried out for supporting and ensuring project formation, project implementation, and sustainability of com-pleted projects. In SAF studies, private consultants and variousspecialists are hired while NGOs also participate more frequently.

In fiscal 1999, JBIC conducted SAF studies to support avariety of projects. Four different types of studies, which areclassified by purpose, are described below.

Special Assistance for Project Formation (SAPROF)The formation of a development project requires incorpora-tion of expertise of specialists in such fields as economics,finance, institutional development, environment, and socialdimensions. However, because of financial and technical limitations, developing countries are often unable to under-take detailed project planning. In such cases, when a countryrequests or indicates the intention to request an ODA loan,JBIC can carry out a SAPROF study, as additional assistance forthe developing country to plan an effective project.

In fiscal 1999, a total of 20 SAPROF studies were con-ducted including the Engineering Services for Pahang-SelangorRaw Water Transfer Project in Malaysia. Special features ofstudies conducted during fiscal 1999 are three-fold. First, aparticipatory approach and social development wereaddressed in projects in which local participation wasinevitable for success. One example was a study conducted forthe Ilocos Norte Irrigation Project (Stage 2) in the Philippines.

A second feature of SAPROF studies involved concertedefforts to cooperate with NGOs, from the planning to theimplementation stage. One example was the InfrastructureConstruction Project in the Greater Faridpur InfrastructureDevelopment Project in Bangladesh.

Third, greater attention was paid toward promoting envi-ronmental protection. For example, in some studies, reviewsof environmental impact assessment (EIA) reports made by recipient countries were conducted. In addition, studies con-tributing to the formation of environmental projects wereimplemented. For example, the Environment Model CityProject was undertaken in China.

Special Assistance for Project Implementation (SAPI) When a development project is moved forward to the imple-mentation stage, actual conditions will sometimes differ fromthose initially anticipated in the preparatory stage. Suchchanges may cause difficulty in project implementation.However, in such cases, with the aim of achieving projectcompletion and smooth implementation, SAPI studies involv-ing detailed investigations and analyses of the problems areconducted to offer proposals representing improvements orsolutions to problems.

In fiscal 1999, a total of 14 SAPI studies were conductedincluding the study for the Small-Scale Industry PromotionProgram in Thailand. Some SAPI studies undertaken duringthe year under review have the following features: 1) a greaternumber of studies to facilitate the progress of projects by analyzing the capability of executing agencies and providingnecessary recommendations to solve respective problems (e.g.,Hanoi Drainage Project for Environment Improvement (I) &(II) in Viet Nam); and, 2) incorporation of social developmentand participatory approach, such as a study for a continuouseducational campaign to raise public awareness of environ-mental or public health issues (e.g., Yamuna Action PlanProject in India).

Special Assistance for Project Sustainability (SAPS) There are some cases in which, after project completion,administrators in the recipient countries have difficulties inproject management and maintenance. While appropriateremedies are required, various constraints often make it diffi-cult to clarify problems and find necessary solutions. In suchcases, SAPS is able to support project sustainability andenhance the effectiveness of a completed project. Problemsthat constitute obstacles to effective post-completion opera-tions are thoroughly studied, leading to the development ofproposals for concrete solutions or improvements. In 1999,seven SAPS studies were conducted, including one study tosupport the National Highway No. 5 Improvement Project (I),(II) and (III) in Viet Nam.

Special Assistance for Procurement ManagementIn fiscal 1999, Special Assistance for ProcurementManagement was introduced to facilitate fair, transparent andprompt procurement practices in the special yen (ODA) loanprojects. The studies assist in the preparation of bidding documents, implementation of bid evaluations and other matters related to procurement.

Generally, the main sectors targeted in Overseas EconomicCooperation Operations have been transport and energy,which have accounted for approximately 50% of all projects.Recently, however, poverty alleviation and social develop-ment have been gaining importance, and a higher percentageof the total has been related to projects in the social infra-structure sector (e.g., water supply and sewerage systemsdevelopment) and the agriculture sector (e.g., rural irrigation).This trend is reflected in the higher percentage of SAPROF,SAPI and SAPS studies implemented for projects related tosocial development and local living conditions.Environmental protection has also become a major focus,with nearly all SAPROF studies containing investigations onenvironmental issues.

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Post-Evaluation ActivitiesPost-evaluation examines the performance of project imple-mentation, management and operation of facilities or enter-prises after completion, and the actual project effects.Evaluations determine whether the desired level of perfor-mance and effects have been achieved by comparing theactual results with the initial plans. In addition to examiningindividual projects, post-evaluations are also used as a methodto assess the economic and social impact of a group of projectson a specific region or sector.

The results of these evaluations are accumulated withinJBIC in order to benefit from the learning of prior experiences,and also to provide feedback to ODA loan recipients and exe-cuting agencies. Therefore, post-evaluation is an extremely

important way of enhancing the effectiveness of developmentassistance in the future. Further, the results of post-evaluationstudies should best be generalized as a means to make thisinformation applicable to other countries and regions. In thisrespect, additional studies and seminars are conducted to con-sider whether or not this is practicable.

Post-evaluations are usually carried out by JBIC staff, butto improve their objectivity and quality, JBIC engages in eval-uations jointly or mutually with other organizations, orentrusts evaluations to third parties and individuals with spe-cial knowledge and expertise.

In 1999, 38 post-evaluations related to 59 projects were conducted, including seven evaluations directed by third parties.

Disseminating Traffic Safety RegulationsThis project was undertaken to improve National HighwayNo. 5 linking the capital city of Hanoi with Haiphong. Dueto the completion of the project, the existing two-lanehighway was widened to four lanes, or six lanes in someparts, enabling the highway to function as an expresswaywith a speed limit of 80km/h. However, in Viet Nam, espe-cially in the north where the project was carried out, roadsallowing such speeds are extremely rare. This led to anincrease in traffic accidents owing to the variety of heavyand light vehicles using the new highway, together com-pounded by a lack of experience with traffic conditions andtraffic safety.

To address these problems,specialists on traffic system plan-ning, traffic safety facilities andtraffic safety education werebrought together to conduct a SAPSstudy. The comprehensive studycame up with proposals to the government on measures for trafficsafety improvement based on afact-finding survey on traffic lawsand traffic safety education activi-ties. As a result, four types of easy-to-read brochures were producedfor different types of highway users

and for different circumstances. In addition, a traffic safetycampaign was held, and the brochures were distributed atelementary schools located in the proximity of the high-way. Also suggested for immediate implementation werethe construction of pedestrian bridges and the installationof devices to detect traffic conditions and vehicle speeds.After the SAPS study, the Vietnamese government has beenadvancing the improvement of traffic safety via seminars.Support has also been received from the International RedCross for building emergency medical stations.

SAPS Study on the National Highway No. 5 Improvement Project (I), (II) and (III) in Viet Nam

Traffic safety campaign

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Environmental Protection and Social Development2

(1) Environmental Efforts

Environmental preservation is a crucial issue worldwide, andit is no less important for JBIC to give consideration to thenatural and social environment when carrying out its operations.

The merger between JEXIM and OECF to establish JBIChas produced a shared store of knowledge and expertise, whilecreating synergies that increase JBIC’s consideration to theenvironment. Specific new measures include the creation ofthe Environment and Social Development Departmentthrough the merger of two similar departments from JEXIMand OECF. This department is responsible for verifying thatrecipient countries and executing agencies of JBIC-assistedprojects are taking appropriate measures as related to environ-mental issues. As indicated below, it also provides technicalinformation and expertise to support JBIC’s InternationalFinancial Operations and Overseas Economic CooperationOperations in forming projects that preserve and improve theenvironment.

Environmental AssessmentWhile promoting appropriate measures for environmentalissues to be taken by the executing agencies of JBIC-assistedprojects, JBIC has established Environmental Guidelines to serve as a procedural manual for making accurate and effective checks and assessments. These activities form thebasis of assessing environmental issues related to JBIC-assistedprojects.

Knowledge Transfer and Surveys As part of efforts to share knowledge and support environ-mental efforts in developing countries, JBIC engaged in a dialogue on environmental issues with the State EnvironmentalProtection Administration of China in March 2000. JBIC maderecommendations to the Administration with regard toChina’s environmental policy and its level of environmentalprotection, based on the experiences accumulated throughprojects under International Financial Operations.

In the Philippines, JBIC held an EnvironmentalManagement Seminar including a session in the Metro Manila Air Quality Improvement Sector DevelopmentProgram, and worked to share its knowledge by providingexperience and expertise on Japan’s environmental policiesregarding air pollution.

With regard to global warming issues, JBIC not only provided project-based assistance but also undertook researchaimed at identifying priority areas in developing global warm-ing countermeasures and research focused on evaluating theeffectiveness of reduction measures for greenhouse gas emis-sions. In addition, with the help of external specialists, JBICestablished an Export Committee on Climate Change1, whichworked to reach a fundamental consensus on effective countermeasures against global warming.

1 This committee is chaired by Professor Yoichi Kaya, Keio University.

Collaboration with International and BilateralInstitutions, Local Governments and NGOsAs part of its International Financial Operations, JBIC contin-ues to be involved in a set of discussions on environmentalmeasures for export credit projects following the discussionsat the G8 Summit and other entities. For this, JBIC pursues tie-ups with other export credit institutions through the OECDWorking Party on Export Credits and Credit Guarantees.Within Overseas Economic Cooperation Operations, JBIC alsopursues a variety of types of collaboration with local govern-ments and NGOs, each possessing significant expertise andstaff well versed in environmental issues, through facilitatingtheir participation in project formation and implementation.

Further collaboration is being undertaken with interna-tional organizations through information and opinionexchanges in both primary areas of JBIC operations.

Information Gathering JBIC has contributed to efficient and effective environmentalactivities by gathering useful information on environmentalconservation issues in Japan and in other countries. Thisincludes information on the efforts of a variety of institutionsworking to reduce greenhouse gas emissions.

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(2) Social Development

The aim of development is to raise the quality of peoples’lives by realizing balanced economic growth and ensuring afair distribution of benefits created by such growth. Economicgrowth strategies developed from a macro perspective are necessary for eliminating poverty and fulfilling basic humanneeds. At the same time, reducing great disparities in wealthand creating a social safety net are essential in protectingthose members of society who do not directly benefit from orare adversely affected by economic growth. This philosophyforms the basis of JBIC’s Medium-Term Strategy for OverseasEconomic Cooperation Operations, announced in December1999, which places social development and poverty allevia-tion as one of the core goals. JBIC has traditionally madeefforts to promote social development through OverseasEconomic Cooperation Operations. In line with the increasein social development projects in recent years and the grow-ing demand for further considering social dimensions in individual projects, the founding of JBIC presented an oppor-tunity to create a Social Development Division within theEnvironment and Social Development Department. Throughthis new division, JBIC has increased its capability to addresssocial issues in a variety of areas in Overseas EconomicCooperation Operations.

The general tasks of the Social Development Divisioninclude social assessment of individual projects (considerationregarding gender, impoverished groups, minority groups, etc.)and promotion of social development projects (small-scaleirrigation, elementary and secondary education, local watersupply, etc.), as well as activities to increase awarenesstowards social development.

Specifically, social assessment regarding an ODA loanproject is carried out by checking whether appropriate consid-eration is given to impoverished groups, minority groups,gender issues and local participation. When social dimensionsrepresent a particularly important aspect of a project, theSocial Development Division makes an onsite survey of

conditions. In addition, for social development projects wherethe participation of the local beneficiaries is crucial, the SocialDevelopment Division provides support for surveying socialconditions in SAF studies made as early on as the project for-mation stage.

An important focus of recent activities has been onefforts to reduce poverty. Reducing poverty in developingcountries requires sustainable social and economic develop-ment. JBIC has traditionally provided ODA loans to assist indeveloping the basic infrastructure essential for social andeconomic development in developing countries, particularlyin Asia. At the same time, providing support to projects hav-ing direct benefits to low-income groups is also very impor-tant in reducing poverty. Therefore, JBIC has also provideddirect assistance for alleviating poverty through its projectsfor road development in rural areas, electrification in low-income regions, microcredits, and elementary education inlow-income areas.

In addition to these activities, in fiscal 1999, JBIC pub-lished the Handbook on Social Dimensions for ODA Loans.Covering concrete methods, information and importantpoints concerning consideration of social dimensions ofdevelopment assistance, this publication was targeted toward consultants and members of executing agencies inrecipient countries.

As part of collaborative works with the internationalcommunity, JBIC introduced its contributions in social devel-opment at the Manila Social Forum, the Regional Workshopon Microfinance for Asia and the Pacific similar events, andalso participated in a wide range of discussions and exchangeof opinions through these opportunities. Furthermore, JBIChas actively participated in international conferences onsocial development and poverty alleviation, including theDAC Gender Working Party Meeting and the DAC PovertyReduction Informal Network Meeting.

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Cooperation with Other Agencies3

JBIC works together with a variety of agencies in order to facil-itate a more comprehensive exchange of information and topursue effective and efficient operations. One major benefit ofthe merger between JEXIM and OECF, which created JBIC, isthe integration of knowledge and expertise, which broadenedthe range of areas for collaboration and deepened the con-tents of discussions with other institutions.

Collaboration with International OrganizationsA variety of collaborative activities, particularly cofinancing,are intended with such international organizations as the IMF, the World Bank, the Asian Development Bank and theInter-American Development Bank. These organizations playkey roles in maintaining international financial stability, providing financial assistance and implementing developmentpolicies in developing countries. JBIC has also worked withinternational organizations on such key issues as the Asiancurrency crisis and other global issues. Daily communicationfacilitates the exchange of information on projects and theeconomic situation of developing countries, while regularlyheld meetings with international organizations provide stagesfor discussions on assistance policies for developing countries.

Collaboration with Export Credit AgenciesJBIC has signed agreements for cooperation with many exportcredit agencies (ECAs), including the Export-Import Bank ofthe United States, and promoted partnership with these ECAsthrough the exchange of information and cofinancing fortrade expansion, investment promotion and project assistance.

In addition to these bilateral efforts, JBIC is active in lead-ing discussions on issues related to export credit as well as pro-moting cooperation and information exchange in the frame-work of international organizations, for instance, the OECD.One recent example of such activities is the discussion onexport credit and the environment in the OECD WorkingParty on Export Credits and Credit Guarantees, as mentionedearlier.

In Asia, JBIC actively participates in the annual meetingsof Asian export-import banks, which are held for the purposeof facilitating collaboration among these banks. In October1999, a fifth meeting was held in Indonesia.

JBIC is also active in cooperating with export-importbanks of developing countries. Recent support was providedwith regard to the establishment of the PT Bank EksporIndonesia through transferring specialists.

Collaboration with Japan InternationalCooperation Agency (JICA)Collaboration between JBIC, responsible for ODA loans, andthe Japan International Cooperation Agency (JICA), mainlyresponsible for technical assistance, is important in increasingthe efficiency and effectiveness of Japan’s ODA program. Thetwo organizations are working to strengthen this partnershipand to improve cooperative relations at all phases of the pro-

ject cycle, from project formation and planning to implemen-tation, post-completion maintenance and supervision. Thisrelationship assures not only financial support but also represents a much more comprehensive form of assistance.Below are the cooperative activities undertaken with JICA infiscal 1999.

Project Formation and Preparation StageAs one example, JBIC regularly participates in Country andIssue-Wise study groups organized by JICA, and actively takespart in discussions regarding assistance policies and otherimportant issues in developing countries. Another example isthe participation in Advisory Committees organized by JICAfor examining the progress and substance of developmentstudies undertaken by JICA. JBIC staff participated in the com-mittees for Bangladesh, the Philippines and other countriesfor the purpose of exchanging respective viewpoints. Of the75 project-type ODA loan commitments for which loan agree-ments were signed in fiscal 1999, JICA carried out develop-ment studies for 13 projects (17.3%).

Also, in fiscal 1999, there were four JBIC-assisted ODAloan projects for which detailed design (D/D) were undertakenby JICA development studies, including the Project forReduction of Non-Revenue Water in Sri Lanka and the Ho Chi Minh City Water Environment Improvement Project inViet Nam.

Project Implementation and Supervision StageFor smooth implementation and supervision of its projects,JBIC attempts to incorporate technical assistance with thecooperation of JICA experts and to improve institutional capability and human resource development of the executingagencies in recipient countries. In fiscal 1999, a total of 61JICA experts were dispatched to provide both long- and short-term technical assistance for the implementation of 36 JBIC-assisted ODA loan projects.

JBIC also holds annual ODA loan seminars with JICA forthe training of staff related to ODA loan projects in recipientcountries. In fiscal 1998, four special courses of the ODA LoanSeminar were newly established to meet specific demands ofODA loan operations: 1) Development Finance for JBIC’s Two-Step Loans for SME, 2) JBIC’s Two-Step Loans for PollutionPrevention, 3) Improvement for Operation of Electric PowerFacilities, and 4) Smooth Implementation of JBIC’s Loans toNew and Non-annual Recipient Countries.

Post-Completion StageJBIC and JICA have been conducting joint post-evaluations. In fiscal 1998 and fiscal 1999, the two organizations jointlyconducted a post-evaluation of the Eastern SeaboardDevelopment Plan in Thailand.

In fiscal 1998, the grant aid scheme has been strength-ened for the rehabilitation of ODA loan projects experiencing post-completion difficulties and requiring additional action.

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Two examples of projects benefiting from this scheme (reha-bilitation grant) in fiscal 1999 were the Project for theRehabilitation of Gresik Steam Power Units 1 and 2 inIndonesia and the Project for Rehabilitation of Banias PowerStation in Syria.

Collaboration with NGOsExchange of information with NGOs familiar with the localconditions in recipient countries and possessing much exper-tise and specialized knowledge is crucial to ensure that pro-jects are formulated to meet the needs of local people, as wellas to ensure projects are implemented efficiently and effec-tively. JBIC collaborates with NGOs primarily in relation toOverseas Economic Cooperation Operations.

Specifically, JBIC encourages the participation of NGOs inmeetings to exchange opinions on environmental and socialdevelopment.

In addition to general collaboration efforts and theexchange of general information, JBIC utilizes NGOs to assistin the formation and implementation of individual projectsbeing studied by the Special Assistance Facility (SAF). In fiscal1999, one such example was the Agrarian ReformInfrastructure Support Project (Phase II) in the Philippines.This project provides basic infrastructure, such as irrigationfacilities and farm roads, and assists farmers’ self-help effortsthrough instructing how to form agricultural cooperatives. Fororganizing agrarian reform communities, JBIC is working incooperation with local NGOs. Since NGOs engage in everyproject-assisted community, they play an important role.

One direct support activity aimed at reducing poverty isthe Poverty Alleviation Micro Finance Project in Sri Lanka.With the aim of assisting the self-help efforts of low-incomegroups, NGOs advise and assist in all aspects of this project,from teaching how to keep records to instructing how to drawup loan-repayment plans.

In the Philippines, with its many islands and numerouscoral reefs, JBIC worked closely with NGOs in a SAF study forthe Environmentally Sustainable Tourism DevelopmentProject in Northern Palawan (I) in evaluating the compatibil-ity of environmental protection and development of tourismfor acquiring foreign currency. The study involved discussionson: the local fishing industry and its importance to local people; how the fishing industry would be affected bytourism; and what kind of effects environmental protectionmeasures would bring about.

Cooperation with Local GovernmentsPreviously, Japan’s major development assistance had beenundertaken on the national level. However, the beginning of the 1990s saw a marked increase in international coopera-tion activities on the part of Japan’s local and municipal governments, many of which have accumulated a wealth ofexperience and expertise in such areas as urban development,anti-pollution policies and municipal management.

JBIC is actively working with local governments in Japanin their efforts to assist developing countries. JBIC also pro-vides lecturers for talks sponsored by local governments tryingto promote internationalization.

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JBIC Supports Small- and Medium-sized Enterprises in Japan4

The rapid expansion of economic globalization in recent yearshas made the internationalization of trade and managementan indispensable task for Japanese companies. In many cases,these companies do not downsize their domestic bases whilethey are advancing into overseas countries, but aim for totalbusiness expansion, which includes their existing business inJapan. Using advancement in Asia as an opportunity, someJapanese companies have made effective use of loans fromJBIC, and have expanded their sales channels as European andAmerican companies operating in Asia have recognized thequality of their products. In order to assure smootherinternationalization of these Japanese firms, it is essential toprovide them with both a stable source of capital and appro-priate information on the foreign countries in which theyoperate. As most small- and medium-sized enterprises (SMEs)in Japan are not capable of facilitating these requirements bythemselves, JBIC provides comprehensive services as follows.

Establishment of the Advisory and ConsultingOffice for SMEAlong with the merger of JEXIM and OECF into JBIC, theAdvisory and Consulting Office for SME was established in theCorporate Finance Department of JBIC’s head office. The newoffice was created by transferring the functions of the OverseasInvestment Consulting Office, which was formerly a part ofthe Research Institute for International Investment andDevelopment within JEXIM. This new office aims to providesupport activities for SMEs. For companies in western Japan,the Osaka branch of JBIC supports the internationalization ofSMEs by providing loans and essential information while work-ing closely with the Advisory and Consulting Office for SME.

Support for Fund Procurement JBIC has traditionally offered preferential treatment to SMEs.Recently, a need for local fund procurement using local assetsas collateral has been increasing among SMEs. Since these companies lack sufficient collateral to raise capital in Japan,and because of the hard lessons learned from the Asian cur-rency crisis, they are now interested in securing more localcurrency-based loans.

Accordingly, JBIC assists such enterprises in securing bankloans to provide funds for local projects through banks inthose countries. JBIC also assists in negotiations with localbanks, while extending support for fund procurement forthese companies in various other ways.

Cooperation with Other OrganizationsAs JBIC has only two bases in Japan, in Tokyo and Osaka,close cooperation with local municipalities, support organiza-tions of SMEs and financial institutions is essential for small-and medium-sized Japanese companies to make use of our services. Since many local banks have downsized or with-drawn their overseas bases in recent years, these companiesincreasingly rely on JBIC for overseas-based information andindividual investment consultation. To respond to such needs,we provide free information on overseas investment condi-tions to trade information centers and financial organizationsin cities throughout Japan. JBIC also organizes regular invest-ment consultations in many cities in the greater Tokyo andOsaka regions, as well as in other regional cities, includingFukuoka, Hiroshima, Nagoya, Sapporo, and Sendai.

In fiscal 1999, JBIC held lectures in numerous cities incooperation with local organizations. Lectures were held inToyama (Northeast Asia Region Economic Exchange EXPO, inOctober 1999), Niigata (Natural Gas Seminar in December1999), Osaka (IBO Lecture in February 2000) and Hokkaido(Sakhalin Business Seminar in February 2000). In addition,JBIC also held lectures on foreign investment conditions atlocal chambers of commerce and industry in several cities,including Hamamatsu, Kawasaki, Kobe, Nagoya and Osaka.

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Knowledge Transfer Activities5

JBIC provides its expertise in international finance and devel-opment to developing countries and countries in transition toa market economy. JBIC endeavors to promote knowledgetransfer activities for these countries through organizing vari-ous types of seminars and meetings contributing to a betterunderstanding of JBIC’s role and operations. For JBIC toadvance policy dialogues with governments in other countriesand execute smooth and effective operations, assisting humanresources development is just as essential as financial opera-tions.

Since the 1970s, both JEXIM and OECF have organizedtraining programs for the officials of developing countries.The merger of the two institutions in October 1999 into JBICcreated a larger network for this activity and allowed for agreater variety of seminars in a wider range of areas.

Regularly Organized Seminars

ODA Loan SeminarInviting management staff of governments and executingagencies related to ODA loan projects, JBIC organizes the ODALoan Seminar in order to promote a comprehensive under-standing of ODA loan projects from a variety of perspectives.The curriculum includes lectures and discussions on the basicprocedures of ODA loans concurrent with the project cycle,Japan’s overall ODA policy, and the system of grant aid andtechnical assistance. In collaboration with JICA, this annualseminar has been held since 1977, with the number of partici-pants totaling 424 as of the 22nd seminar held in fiscal 1998.In November 1999, JBIC held the first seminar since themerger of JEXIM and OECF, in which 29 people participatedfrom 29 countries.

JBIC Seminar for International Finance (JSIF)JSIF invites management staff from governments, centralbanks and financial institutions in countries having strongties with JBIC’s International Financial Operations. The semi-nar aims to deepen the participants’ understanding of the

principal role of JBIC with particular focus on its InternationalFinancial Operations, as well as of Japanese society, economyand industry. In addition to promoting deeper mutual under-standing, the seminar is useful for building up systems andpolicies that are fundamental to development plans in recipi-ent countries. Since 1976, JBIC has invited a total of 260 par-ticipants to this annual seminar. In December 1999, the semi-nar invited 15 participants representing 13 countries and oneinternational institution.

JBIC Seminar for Countries in TransitionThis seminar is organized specifically for countries pursuingdevelopment through transition to a market economy. As away of assisting these countries, the seminar provides knowl-edge leading to a deeper understanding of JBIC’s role andoperations, as well as the experience and the current situationof the Japanese economy. The seminar for Overseas EconomicCooperation Operations (ODA operations) has been heldannually since 1997. Six participants representing six coun-tries attended the seminar in March 2000, with the number ofparticipants registered at 17 in total since the program began.A seminar introducing International Financial Operations hasbeen held on an annual basis since 1992, hosting a total of 80 participants in eight seminars. The two seminars will becombined in fiscal 2000.

Seminar Reunion for Alumni The network of seminar alumni extends around the world,representing an important asset not only for JBIC but also forthe participants themselves. Alumni meetings offer places forreunions as well as updating information on JBIC activities. InFebruary 2000, 25 seminar alumni from the Philippines gath-ered for a reunion in Manila, where they received an explana-tion of the establishment of JBIC and deepened their relation-ship with each other through the exchange of respective opin-ions.

Training Seminars Jointly Organized with JICAIn collaboration with JICA, in fiscal 1999, JBIC held four special ODA loan seminars aimed at providing more detailedand practical knowledge on recent topics which are com-monly important among development policy issues in devel-oping countries. In contrast to targeting the management staffof government organizations participating in the ODA LoanSeminar, the main objective of these seminars is to train theadministrative staff in recipient countries. Through learningpractical knowledge of ODA loan operations, participants willbe able to improve the performance of ODA loan projects.

ODA Loan Seminar

JBIC Seminar for International Finance

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Development Finance for JBIC’s Two-Step Loans forSMEIndustrial development is an important task for developingcountries. Public-sector financial activity is particularly crucialin fostering SMEs in industries that support such development.With the aim of increasing the capabilities of public-sectorfinancial institutions in countries receiving two-step loans,JBIC organizes a training seminar for administering officers ofintermediary financial institutions of these countries toexplain the overview of Japanese public-sector financial insti-tutions, along with the specific activities of institutions pro-viding finance to SMEs. The fiscal 1999 seminar was heldbetween November and December in which 11 participantswere invited from six countries.

JBIC’s Two-Step Loans for Pollution PreventionJBIC has provided financing regarding pollution prevention inthe form of ODA loans to assist prevention efforts in develop-ing countries. To ensure that pollution prevention projectscontinue to progress smoothly, JBIC invites officers adminis-tering these projects at the relevant financial institutions inrecipient countries to give lectures on Japan’s experienceregarding pollution prevention efforts and the current chal-lenges, Japanese public-sector financial operations, and JBICenvironmental guidelines. The fiscal 1999 seminar held inFebruary 2000 hosted 11 participants from six countries.

Improvement for Operation of Electric Power Facilities JBIC has been assisting numerous projects to develop powerfacilities in countries around the world. In order to enhanceefficient use of power utility networks in recipient countries,JBIC holds lectures and onsite training programs for engineersresponsible for power-facility-related ODA loan projects. Anespecially large emphasis is placed on system loss countermea-sures. The fiscal 1999 seminar was held from February toMarch 2000, inviting 19 participants from 16 countries.Following this seminar in Japan, JBIC organized an onsitetraining program in Thailand to introduce an example ofpower system management in a developing country.

Smooth Implementation of JBIC’s Loans to New andNon-Annual Recipient Countries The number of countries receiving ODA loans has increasedsteadily in recent years. As of March 31, 2000, the cumulativenumber of recipient countries was 93. Not all of these coun-tries are receiving JBIC ODA loans on a regular basis and thus,they are not familiar with procedures of ODA loans. In orderto ensure that projects in these countries run smoothly, JBICorganizes a seminar for respective government officials andprovides a general explanation of ODA loan procedures andJapanese economic assistance policy. The fiscal 1999 seminar was held from February to March 2000, in which 16participants from 14 countries in Africa were invited.

Special-Purpose Training SeminarsIn addition to regularly scheduled seminars, JBIC also holdsspecial-purpose seminars, as necessary, to respond more com-prehensively to various specific needs. As part of a requestfrom the World Bank, JBIC held a training seminar inNovember 1999 as a knowledge transfer activity for the ExportProgram of the Saudi Fund for Development. Conducted forcore staff at the Export Program, a newly established sectionfor export promotion in the Saudi Fund for Development, theseminar provided lectures on JBIC’s International FinancialOperations with particular focus on export credit schemes.

JBIC also cooperates actively with regard to a variety oftraining seminars organized by JICA or other agencies by providing lecturers or instructors.

JBIC Seminar for Countries in Transition

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Research Institute Activities6

The Research Institute for Development and Finance is thecentral organ for conducting surveys and research in JBIC. TheInstitute’s activities are related to International FinancialOperations and Overseas Economic Cooperation Operations,which were previously handled by the Research Institute forInternational Investment and Development of JEXIM and theResearch Institute of Development Assistance of OECF, respectively.

The Institute undertakes a broad range of survey andresearch activities in areas such as foreign direct investment,trade, international finance, economic cooperation, anddevelopment assistance. The information gathered throughthe Institute’s activities is utilized for improving JBIC’s financ-ing activities and policy recommendations for developingcountries. The Institute also engages in joint research activitieswith foreign and domestic researchers, effecting a higher qual-ity of results and covering a wider range of areas. Results ofsuch activities are publicly available as research papers or usedas material in ongoing information exchanges with interna-tional organizations, universities and other research institu-tions in Japan and abroad.

Research undertaken in 1999 in the area of InternationalFinancial Operations includes the JBIC FY1999 Survey on theOutlook of Japanese Foreign Direct Investment and the Summaryof Energy Balance Simulations to 2010 for China. In relation toOverseas Economic Cooperation Operations, SpecialAssistance for Development Policy and Projects (SADEP) is aprogram to provide developing countries with policy-relatedadvice and recommendations based on research regardingdevelopment policies and institutional issues. SADEP studiesin fiscal 1999 includes Issues of Sustainable Development inAsian Countries: Focused on Small- and Medium-Scale Industries inThailand and Malaysia. These research results are shared withJapanese and foreign institutions as feedback, with designatedresults as selected reported at seminars and symposiums.

PublicationsThe Institute produces a broad range of publications, includ-ing both regular publications on its survey and research activi-ties and occasional reports and papers covering special sub-jects. Publications issued in fiscal 1999 are described below.

Research Journals In the first half of fiscal 1999, JEXIM published the EXIMReview, Number 1- 3, Volume 19. During the same period,OECF published the Journal of Development Assistance, Number1, Volume 5.

After the establishment of JBIC, the Institute began a newsemi-annual publication, JBIC Review, which was first pub-lished in May 2000. This publication contains translations ofselected papers from the original quarterly-published Japanesejournal, Journal of Development and Finance, covering such top-ics as international finance, foreign direct investment anddevelopment issues. JBIC Review is distributed to foreign gov-ernment organizations, research institutes and universities.

Research PapersNearly all of the surveys and research conducted by theInstitute are compiled and published as research papers. Thefollowing papers were published in fiscal 1999:

* Issues of Sustainable Economic Growth from the Perspective of theFour East Asian Countries: Focusing on Suggestions of Economistsand Corporate Questionnaires of Thailand, Indonesia, thePhilippines and China (December 1999)

* Organizational Capacity of Executing Agencies in DevelopingCountries: Case Studies on Bangladesh, Thailand and Indonesia(December 1999)

* Urban Development and Housing Sector in Viet Nam (December1999.)

* Urban Public Transportation in Viet Nam: Improving RegulatoryFramework (December 1999)

* Current Situation of Rice Distribution System in Indonesia(December 1999)

* Energy Balance Simulations to 2010 for China and Japan (March 2000)

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Interaction Among Researchers/Local SeminarsThe Institute offers knowledge transfer activities for recipient

countries through various occasions including local seminarsand workshops as indicated below. It also expands its researchpartnerships through active participation in workshops orga-nized by other institutions.

In the workshop on Lessons Learned from the AsianCurrency Crisis, held in Bangkok in June 1999, the Institutereported the results of research on the Asian currency crisis.Inviting the Finance Minister, Mr. Tarrin Nimmanahaeminda,and other policy makers in Thailand, the workshop providedan opportunity for an active exchange of opinions with theThai participants regarding challenges and issues to beaddressed following the currency crisis.

A workshop on the Study of the Viet Nam UrbanDevelopment & Housing Sector was held in Hanoi in July 1999,delivering a research report to representatives of donor institu-tions and the officials of the Vietnamese government institu-tions such as the Ministry of Construction, the Ministry ofPlanning and Investment, and the Hanoi Peoples’ Committee.

Similarly, in July 1999, policy dialogue based on theresults of the Study on the Effectiveness and Major Issues ofCapital Controls Policy in Malaysia was carried out in KualaLumpur, visiting seven Malaysian institutions, including theMinistry of Finance, the Economic Planning Unit (EPU), andthe Central Bank. The dialogues were characterized by livelyexchanges of opinions on issues in Malaysia such as the eco-nomic situation, capital controls, disposition of non-perform-ing loans and corporate debt.

Other activities included a seminar in the Philippines inJuly for feedback on the post-evaluation of the Calaca Coal-fired Thermal Power Plant Project, and a seminar in Thailandin August for feedback on the impact evaluation of the EasternSeaboard Development Program.

New Information Dissemination EffortsThe Institute has placed a primary emphasis on the dissemina-tion of information through expanding its publications.Furthermore, concerted efforts have been made to publishthese materials online on JBIC’s website, responding to greateravailability of information technology worldwide.

The Institute is also moving ahead with preparations tobecome one of the hubs of the Global Development Network(GDN), a system that will enable links between research insti-tutions in the field of development assistance.

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Title Author Abstract

EXIM JAPAN 1998 SURVEY The Outlook of JapaneseForeign Direct Investment (FDI): The Asian Crisis andProspects of Foreign Direct Investment by JapaneseManufacturers

The Credit Crunch in Thailand During the 1997-98 Crisis:Theoretical and Operational Issues

An Understanding of the 1997 Korean Economic Crisis

Savings and Financial Intermediation in the Philippines

The Effects of Asian Crisis on Japan’s Manufacturing FDI

The Asian Economic Crisis: Impacts on U.S. MultinationalCorporations

A Comparative Analysis of Globalization of Japanese andAmerican Corporations from the Viewpoint of ForeignDirect Investment Strategies Following the AsianEconomic Crisis

Summary of the findings of a survey on foreign directinvestment conducted in fiscal 1998 among Japanesemanufacturing firms

Empirical examination as to whether a credit crunchoccurred in Thailand following the currency crisis

Description regarding the background of the financialcrisis in Korea in 1997 and analytical findings

Following a summary of the effects of the savings rate onthe Philippine economy, especially on the balance ofpayments, the author attempts to identify factors thatdetermine the savings rate in the country.

The impact of the Asian crisis on direct investments byJapanese firms is considered based on the findings of a survey of FDI plans among key manufacturing firms in Japan.

Analysis of how direct investments by U.S. multinationalcorporations were affected by the Asian crisis

Analysis of the impact of the Asian crisis on the futuredirect investments of Japanese and U.S. firms, respec-tively, followed up by a comparison and contrast of FDIstrategies and investment behavior of these two entities

Yohei Nishiyama, Teruyasu Kushima,Hidehiko Noda

Takatoshi Ito, Luiz A.Pereira da Silva

Jisoon Lee

Bernhard Fritz-Krockrow

Shigeki Tejima

Mark Mason

Shigeki Tejima

Papers Presented in the EXIM Review in FY1999


Aid Reconsidered: Its Future Challenges

The World Bank and the Overseas Economic CooperationFund in the New Millennium

Role and Challenges for the Inter-American DevelopmentBank Beyond the Year 2000

From Recovery to Accelerated Development: Some KeyIssues for 21st Century Africa

Evaluation as to how development should be pursued inthe context of the Asian currency crisis. Also examinesroles and challenges of the Research Institute ofDevelopment Assistance (RIDA) in light of the recenttrends of development assistance.

The experience of the Asian currency crisis is recognizedas verification of the importance of a comprehensiveapproach to development assistance. The increasinglyimportant roles of knowledge sharing and advisory ser-vices along with financial assistance for donors like theWorld Bank and OECF are also addressed.

Description of the challenges of the IDB toward poverty,inequality, financial instability and other issues to be con-sidered beyond 2000

Discourse on the need to accelerate the pace of growthto eliminate poverty in Sub-Saharan regions. Investmentpromotion policy, strengthening of regional markets,economic liberalization to enhance competitiveness, anddiversification of agricultural products are stressed by theauthor as particularly essential.

Toru Shinotsuka

Joseph Stiglitz

Ricardo L. Santiago

Delphin G. Rwegasira

Papers Presented in the Journal of Development Assistance in FY1999

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Development and Poverty

Governance, Economic Development, and Aid: In Pursuitof Functional Policies

Issues and Prospects for Regional Development Planningin an Age of Globalization

New Developments in East Asian Economies and theRethinking of Development Aid by InternationalOrganizations

Asian Currency Crisis: Its Origin and Background

Future Challenges for Sustainable Growth of the Four EastAsian Economies

The Search for Knowledge Management of DevelopmentAid: Message from RIDA

Summary of the main points related to poverty as a sub-ject for debate in the field of development economics,with points of discussion expanding upon how anti-poverty projects should be implemented

In recent years, the importance of good governance foreconomic development and effective aid have beenemphasized. However, the international debate overgood governance presents some problems in relation todevising effective policy proposals. This paper focuses onidentifying the elements of strategic governance whichhold the key to starting sustained development.

The environment in which regional development is tak-ing place continues to change dramatically amid the cur-rent of globalization since the 1980s. This thesis mainlyconsiders this situation as it applies in East and SoutheastAsia, and examines the characteristics of industry situ-ated in a globalized age and the applicability of pastregional development plans.

Conceptual and empirical research into the globalizationand external integration of the economies of developingcountries, with further discussion based on the prognosisthat the degree to which developing countries benefitfrom globalization depends on how far internal reformtoward marketization progresses and thereby enhancesthe economy’s capability of absorbing the exogenousdemands of globalization

Examination of the causes of the currency crisis, andexploration of various models for gaining a properunderstanding of the Asian currency crisis which cannotbe explained by the existing crisis model

Examination of measures for export promotion, improve-ment of business finance, and human resource develop-ment based on an enterprise survey of local manufactur-ing firms

Discourse based on the message that knowledge-intensive development assistance is crucial. Four majorthemes addressed by RIDA are explained: (1) macrodevelopment management; (2) institutional infrastruc-ture development; (3) micro development management;and (4) the East Asian crisis.

Hideki Esho

Yasutami Shimomura

Tetsuo Kidokoro

Shigeru Ishikawa

Takatoshi Ito

Junichi Yamada, Masayuki Tachiiri, Harue Shimato

Kazumi Goto

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Information Disclosure and Dissemination7

JBIC puts a great deal of effort in disclosing and disseminatinginformation on its activities to the widest possible audiencewithin Japan and around the world to ensure that its opera-tions are known and well understood.

With the establishment of JBIC in October 1999, a book-let, The Role and Functions of JBIC, was published to introducethe new organization and its operations. Currently, JBIC pro-duces a newsletter, JBIC Today, on a regular basis. JBIC Todaycontains valuable articles featuring the latest news and infor-mation on JBIC’s operations as well as reports from represen-tatives working on the front lines in various countries aroundthe world.

JBIC’s website (http://www.jbic.go.jp/) provides a widerange of information which is constantly updated. It containsexplanations of operations, press releases, publications, infor-mation for investors and researchers, and information onenvironmental activities. In March 2000, JBIC launched an e-mail service to deliver press releases and information on newpublications to interested organizations and individuals.

In order to promote understanding of ODA loan projectsamong Japanese citizens, JBIC offers cooperation in relationwith the ODA monitoring system organized by the Ministry ofForeign Affairs and ODA-related institutions in fiscal 1999.Through this system, Japanese citizens from each prefecturevisit some ODA project sites in developing countries. With thesame spirit, JBIC participated in the festival (October 2 and 3,1999: Tokyo) commemorating the International Cooperation

Day on October 6, organized the International CooperationSymposium (October 20, 1999: Tokyo), and the One WorldFestival (February 26 and 27, 2000: Osaka). JBIC is alsoinvolved in designated educational activities. Lectures on conditions in developing countries and JBIC’s approach aregiven during visits to junior high schools, high schools anduniversities, as well as to high school students who visit theJBIC head office on school trips. For helping students’ comprehension of JBIC ODA loan activities, a booklet explaining JBIC’s activities in an easy-to-understand way, ispublished as supplementary reading for social study classes athigh schools and junior high schools.

In addition to the Tokyo head office, JBIC has the Osakabranch to promote internationalization of the enterprises inwestern Japan through overseas investment loans. In particu-lar, JBIC offers various ranges of services to SMEs in coopera-tion with potential cofinanciers. In addition, it offers a varietyof information for internationalization of local economies inwestern Japan through holding talks on trade investmentbusiness, offering investment consulting, and holding invest-ment seminars jointly with local chambers of commerce andindustry. Furthermore, as a representative office for OverseasEconomic Cooperation Operations in western Japan, theOsaka branch provides information regarding ODA projects to consultants based in western Japan, NGOs and the general public.

Publications

Title Contents

JBIC Today

Annual Report

ODA Loan Report

The Role and Functions of JBIC

Introduction of JBIC

JBIC Profile

Introduction of JBIC’s activities to international audience

Explanations of JBIC's activities throughout the year, including detailed financial data

Detailed explanation of Overseas Economic Cooperation Operations

Summary of JBIC's mission and functions

Brief introduction of JBIC's operations

Brief introduction of JBIC's operations with selected basic data

General Publications

Title Contents

Guidelines for Procurement under Untied Loans

Environmental Guidelines for JBIC InternationalFinancial Operations

Procurement Guidelines for Untied Loans

Guidelines for consideration of environmental issues for International Financial Operations


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Title Contents

Medium-Term Strategy for Overseas EconomicCooperation Operations

Operational Guidance on the Preparation ofJapan's ODA Loan Projects

Post-Evaluation Report for ODA Loan Projects

Guidelines for Procurement under JBIC ODA Loans

Guidelines for Employment of Consultants underJBIC ODA Loans

Handbook for Procurement under JBIC ODA Loans

JBIC Sample Bidding Documents for Pre-qualifica-tion, Civil Works, Goods, Smaller Contracts andSelection of Consultants

Evaluation Guide for Prequalification and Biddingunder JBIC ODA Loans

JBIC Environmental Guidelines for ODA Loans

Social Dimensions of ODA Loans of JBIC

Description of the overall policy direction of ODA loans, priority issues, and countrystrategies

Basic information on ODA loans intended to give guidance to recipient countries andexecuting agencies

Evaluation of completed ODA projects

Guidelines to be followed by borrowers of ODA loans in procuring equipment and services

Guidelines to be followed by borrowers of ODA loans in the employment of consultants

Explanation of guidelines for procurement and employment of consultants under JBIC ODAloans

Formats of standard tendering documents, which borrowers and executing agencies arerecommended to use in procuring necessary equipment and services for ODA projects

Explanation on evaluation of prequalification and bids in accordance with the guidelinesand the expected roles of consultants

Guidelines for consideration of environmental issues for ODA loan projects

Relevant information for executing agencies of ODA loan projects with respect to theconsideration of social dimensions of projects


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00

Organization and History

Principal Officers

Organization

Overseas Network

History

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Principal Officers (As of August 1, 2000)

Governor Hiroshi Yasuda

Deputy Governorand Managing Director Kyosuke Shinozawa

Deputy Governorand Managing Director Youseki Nagase

Senior Executive Director Isao Otsuka

Senior Executive Director Tomio Utchida

Senior Executive Director Shinichi Jin

Senior Executive Director Kazunori Umeda

Senior Executive Director Kazuhisa Marukawa

Senior Executive Director Koichi Kosumi

Senior Executive Director Mitsuyasu Iwata

Auditor Takao Watanabe

Auditor Yasutami Shimomura

Executive Director, Research Institute for Development and Finance Yoshihiko Morita

Resident Executive Director, Osaka Branch Takayuki Kurata

Executive Director Yoshihiko Kono

Resident Executive Director for Asia and Oceania Takuma Hatano

Resident Executive Director for Africa Koji Fujimoto

Resident Executive Director for the Americas Masataka Hattori

Kyosuke Shinozawa, Hiroshi Yasuda and Youseki Nagase (seated, left to right)Koichi Kosumi, Kazunori Umeda, Tomio Utchida, Isao Otsuka, Shinichi Jin, Kazuhisa Marukawa and Mitsuyasu Iwata (standing, left to right)

Takao Watanabe (left) and Yasutami Shimomura

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Special Advisors

Director General, Secretariat Office

Director General, Legal Department

Audit Department

Personnel Department

Policy Planning and Coordination Department

Treasury Department

Administration and General Services Department

International Finance Policy Department

International Finance Department I

International Finance Department II

International Finance Department III

Energy and Natural Resources Finance Department

Corporate Finance Department

Development Assistance Strategy Department

Development Assistance Department I

Development Assistance Department II

Development Assistance Department III

Development Assistance Department IV

Loan Administration and Information Systems Department

Project Development Department

Project Finance Department

Development Project Analysis Department

Corporate Analysis Department

Country Economic Analysis Department

Environment and Social Development Department

Research Institute for Development and Finance

Osaka Branch

Overseas Representative Offices

Accounting Office

Advisory and Consulting Office for SME

Information Systems Office

Development Assistance Operations Evaluation Office

Industrial Research Office

(Beijing, Hong Kong, Bangkok, Hanoi, Jakarta, Kuala Lumpur, Manila,Singapore, Colombo, Dhaka, Islamabad, New Delhi, Sydney, Moscow,Frankfurt, London, Paris, Cairo, Nairobi, Los Angeles, New YorkWashington, D.C., Buenos Aires, Lima, Mexico City, Rio de Janeiro,Santafe de Bogota, D.C.) (Toronto Liaison Office)

International Financial Operations to Asia (excluding Central Asia and Caucasus, Pakistan, Afghanistan)

International Financial Operations to Central Asia and Caucasus,Pakistan, Afghanistan, the Middle East, Africa, and Europe

International Financial Operations to North America, and Latin Americaand the Caribbean

Projects for Natural Resources for International Financial Operations

Overseas Economic Cooperation Operations to Southeast Asia(excluding Cambodia, Laos, Viet Nam)

Overseas Economic Cooperation Operations to East Asia, Cambodia,Laos, Viet Nam, Bangladesh, Sri Lanka

Overseas Economic Cooperation Operations to South Asia, (excluding Bangladesh and Sri Lanka) the Middle East, Central andEastern Europe and Russia

Overseas Economic Cooperation Operations to Latin America and theCaribbean, Africa, Central Asia and Caucasus

Organization (As of March 31, 2000 / Number of Employees: 889)

Overseas Investment Loans and Import Loans for International FinancialOperationsPrivate-Sector Investment Finance for ODA Loans

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Representative Office in Beijing3131, 31st Floor, China World TradeCenterNo. 1 Jian Guo Men Wai AvenueBeijing 100004, The People’s Republicof ChinaTEL: 86-10-6505-8989, 3825~8, 1196,

1197FAX: 86-10-6505-3829, 1198

Hong Kong OfficeSuite 3706, Level 37, One Pacific Place88 Queensway, Hong KongTEL: 852-2869-8505~7FAX: 852-2869-8712

Representative Office in Bangkok14th Floor, Nantawan Building,161 Rajdamri Road, Bangkok 10330, ThailandTEL: 66-2-252-5050FAX: 66-2-252-5514~5

Representative Office in Hanoi4th Floor, 63 Ly Thai To Street, Hanoi,Viet NamTEL: 84-4-8248934~6FAX: 84-4-8248937

Representative Office in JakartaSummitmas II, 7th Floor,Jl. Jenderal Sudirman, Kav. 61- 62Jakarta 12190, IndonesiaTEL: 62-21-522-0693 FAX: 62-21-520-0975

Representative Office in Kuala Lumpur22nd Floor, UBN Tower, Letter BOX No. 59,Jalan P, Ramlee 50250,Kuala Lumpur, MalaysiaTEL: 60-3-232-3255, 2201~2FAX: 60-3-2322115

Representative Office in Manila31st/Floor, Citibank Tower,Valero St. corner Villar St.Makati, Metro Manila, PhilippinesTEL: 63-2-848-1828, 63-2-752-5682FAX: 63-2-848-1833~35

Representative Office in Singapore9 Raffles Place, #53-01 Republic Plaza,Singapore 048619TEL: 65-557-2806, 239-5701, 5702FAX: 65-557-2807

Representative Office in ColomboLevel 13, Development Holdings 42,Navam Mawatha, Colombo 2, Sri LankaTEL: 94-1-300470~2FAX: 94-1-300473

Representative Office in DhakaSonargaon Hotel (Room No. 351~355)107 Kazi Nazrul Islam Avenue, Dhaka, BangladeshTEL: 880-2-811-1005, 2011 (Hotel)

(Ext. 4351~5) 811-4081, 6700 (Direct)FAX: 880-2-811-3336 (Direct)

Representative Office in IslamabadHouse No. 62, Ataturk Avenue, G-6/3, Islamabad, PakistanTEL: 92-51-820119FAX: 92-51-822546

Representative Office in New Delhi3rd Floor, DLF Centre, Sansad Marg, New Delhi, 110001, IndiaTEL: 91-11-371-4362~3, 7090, 6200FAX: 91-11-371-5066, 373-8389

Representative Office in SydneySuite 2501, Level 25, Gateway 1 Macquarie Place Sydney, N.S.W. 2000, AustraliaTEL: 61-2-9241-1388FAX: 61-2-9231-1053

Representative Office in Moscow123610 Moscow Krasnopresnenskaya Nab. 12 World Trade Center, Office No. 905, Russian FederationTEL: 7-095-258-1832, 1835, 1836FAX: 7-095-258-1858

Overseas Network

● Tokyo

● Moscow

● Hong Kong

Beijing ●

Bangkok ●● Hanoi

Jakarta ●

● Manila

Kuala Lumpur● ● Singapore

●

Colombo

●Dhaka

● Islamabad

New Delhi ●

Sydney ●

● Frankfurt

London●

●

Paris

● Cairo

● Nairobi

Osaka ●

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Representative Office in FrankfurtTaunustor 2, 60311 Frankfurt am Main, GermanyTEL: 49-69-2385770FAX: 49-69-23857710

Representative Office in London4th Floor, River Plate House 7-11 Finsbury Circus, London EC2M 7EX, U.K.TEL: 44-20-7638-0175FAX: 44-20-7638-2401

Representative Office in Paris21, Boulevard de la Madeleine,75038 Paris Cedex 01, FranceTEL: 33-1-4703-6190FAX: 33-1-4703-3236

Representative Office in CairoAbu El Feda Bldg, 16th Floor, 3 Abu El Feda Street, Zamalek, Cairo, EgyptTEL: 20-2-738-3608~9; 342-3078FAX: 20-2-738-3607

Representative Office in Nairobi6th Floor, International House, Mama Ngina Street, P.O. Box 49526 Nairobi, KenyaTEL: 254-2-221420, 221637FAX: 254-2-221569

Representative Office in Los Angeles601 South Figueroa Street, Suite 4590 Los Angeles, CA 90017, U.S.A. TEL: 1-213-627-3500FAX: 1-213-627-3900

Representative Office in New York520 Madison Avenue, 40th Floor, New York, NY 10022, U.S.A.TEL: 1-212-888-9500~2FAX: 1-212-888-9503

Representative Office in Washington, D.C.1909 K St., N.W., Suite 300,Washington, D.C. 20006, U.S.A.TEL: 1-202-785-5242FAX: 1-202-785-8484

Representative Office in Buenos AiresAv. del Libertador No. 498, Piso 19, 1001 Capital Federal Buenos Aires,ArgentinaTEL: 54-11-4394-1379, 1803, 1763FAX: 54-11-4394-1789, 1763

Representative Office in LimaAv. Central, 643, San Isidro Lima 27, PeruTEL: 51-1-442-3031FAX: 51-1-440-9657

Representative Office in Mexico CityPaseo de la Reforma 265 Piso-16Col. Cuauhtemoc, Mexico, D.F. 06500, MexicoTEL: 52-5-525-67-90FAX: 52-5-525-34-73

Representative Office in Rio de JaneiroPraia de Botafogo, 228-801B Botafogo, Rio de Janeiro, RJ, CEP 22359-900, BrazilTEL: 55-21-553-0817FAX: 55-21-554-8798

Representative Office in Santafe de BogotaCalle 100, 8A-55, Oficina 715 World Trade Center, Torre C Santafe de Bogota, D.C., ColombiaTEL: 57-1-621-1828, 1838, 1845, 1849,

1878, 1889FAX: 57-1-610-7293

Toronto Liaison OfficeP.O. Box 493, 2 First Canadian Place, Suite 3660 Toronto, Ontario, M5X 1E5, CanadaTEL: 1-416-865-1700FAX: 1-416-865-0124

75

Los Angeles ●

● New YorkWashington, D.C. ●

● Buenos Aires

Lima ●

Mexico City ●

● Rio de Janeiro

● Santafe de Bogota, D.C.

● Toronto

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History

March 31, 1995 The Cabinet decided to merge The Export-Import Bank of Japan and the Overseas EconomicCooperation Fund, Japan.

February 9, 1999 The Cabinet issued resolution on The Japan Bank for International Cooperation Law, and submitted thisresolution to the Diet.

April 23, 1999 Japan Bank for International Cooperation Law enacted.

September 16, 1999 Directive issued to execute Japan Bank for International Cooperation Law.

September 30, 1999 Official publication carried regulations on operation of The Japan Bank for International Cooperation Law.

October 1, 1999 Japan Bank for International Cooperation established.

December 1, 1999 Medium-Term Strategy for Overseas Economic Cooperation Operations established.

December 15, 1950 “Japan Export Bank Law” enacted.February 1, 1951 The Export Bank of Japan started operation.

April 1, 1952 Added import loans; guarantees.The bank changed name to “The Export-Import Bank ofJapan.”

August 1, 1953 Added overseas investment loans.May 20, 1957 Added expanded operations in overseas investment loans and

raising of borrowing limit.October 31, 1958 Southeast Asia Development Cooperation Fund was accepted.

December 27, 1960 Transferred Southeast Asia Development Cooperation Fundaccount to Overseas Economic Cooperation Fund, Japan.

April 15, 1963 Opened Osaka Office.April 1, 1964 Added refinance and guarantees to ODA loans.

April 1, 1970 Added petroleum and natural gas to eligible commodity itemsfor import loans.

September 22, 1972 Started foreign currency loan system.November 15, 1972 Expanded import loans and overseas investment loans. Untied

loans started.June 2, 1976 Foreign bond issuing empowered.July 1, 1977 Opened Osaka Branch.

December 20, 1977 Launched emergency import foreign currency loan system.Bank permitted to conduct foreign exchange operations.

January 19, 1983 Issued first foreign bonds.February 1, 1983 Expanded range of financial organizations for cofinancing.

November 1, 1983 Launched manufactured goods import loan scheme.June 7, 1985 Expanded overseas investment loans.

June 28, 1989 Equity participation function empowered.

March 31, 1992 Short-term loan programs for foreign governments, etc.,[bridge loans] empowered, and issue of Euro-yen bonds.

April 10, 1992 Expanded the range of cofinancing with financial organizations.

April 9, 1999 Expanded the range of cofinancing with financial organizations.

December 27, 1960 “The Overseas Economic Cooperation Fund, Japan Law”enacted.

March 16, 1961 The Overseas Economic Cooperation Fund, Japan (OECF) wasestablished, and took over Southeast Asia DevelopmentCooperation Fund.

March 31, 1961 OECF started operation (at first, OECF only handled foreigninvestment loans for Japanese private companies; direct ODAloans to developing countries began in 1966).

June 15, 1965 Added provisions to allow OECF to borrow funds, issue bonds,and accept subsidies. A borrowing limit based on a 1:1principle was set, with the total amount of current debt.

May 30, 1968 Added provision for offering commodity loans.

November 15, 1972 Started direct ODA loans on untied basis.

May 9, 1979 Law revised (1:1 principle was revised, to raise the limit forborrowings and bond issuance to three times total capitalplus reserves. Government guarantee for debt related to long-term borrowing and bond issuance by OECF was added).

March 21, 1980 Issued first government-guaranteed OECF bond.

1987 Started Special Assistance for Project Sustainability (SAPS).1988 Started Special Assistance for Project Formulation (SAPROF).

October 1, 1990 Established Research Institute of Development Assistance.

1992 Started Special Assistance for Project Implementation (SAPI).

1996 Started Special Assistance for Development Policy andProjects (SADEP).

December 16, 1998 Started Special ODA Loans.

October 1, 1999 Japan Bank for International Cooperation established.

1950

1960

1970

1980

1990

The Overseas Economic Cooperation Fund, JapanThe Export-Import Bank of Japan

Reference Dates

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