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Katsunori Kudo Resident Executive Director for the Americas Japan Bank for International Cooperation June 15, 2005 JBIC Finance ALIDE35, Rio de Janeiro Slide 2 Table of Contents 1.Outline of JBIC P.2 2.Role and Function of JBICP.12 3.ConclusionP.17 4.Clean Development Mechanism P.20 5.Recent JBIC Press Release on Latin AmericaP.26 6.Contact Lists P.28 (Reference) Address by Prime Minister Junichiro Koizumi on the Latin America and Caribbean Policies (Extract)P.29~P.35 Slide 3 2 Profile of JBIC Name : Japan Bank for International Cooperation (JBIC) Establishment: October 1, 1999 Purposes : Contributing to the sound development of the Japanese economy as well as international economy, under the principle that it will not compete with financial institutions in the private sector, through lending and other operations for: 1.Promotion of Japanese exports, imports or Japanese economic activities overseas 2.Stability of international financial order 3.Economic and social development Slide 4 3 Operation of JBIC Overseas Economic Cooperation Operations (OECO) International Financial Operations (IFO) 1)Official Development Assistance (ODA) loans 2)Studies 1)Export loans 2)Import loans 3)Overseas Investment loans 4)Untied loans 5)Equity participation etc. The primal 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 international financial order. The primal objective of Overseas Economic Cooperation Operations is to assist developing countries in their efforts to develop economic and social infrastructure and stabilize their economies. Borrowings from Fiscal Investment and Loan Program (FILP) Bond Issues Internal Funds, etc. Sources of Funds Capital Contributions from the Government Borrowings from FILP Internal Funds, etc. Sources of Funds Principles 1. Policy-Lending Institution to Implement Japans External Economic Policy 2. Complementing and Encouraging Private-Sector Financial Institutions 3. Ensuring Financial Soundness Slide 5 4 Organization Chart Overseas Representative Offices Osaka BranchJBIC Institute Industrial Research Office Credit Analysis Department Project Finance Department Advisory and Consulting Office for SME Corporate Finance DepartmentEnergy and Natural Resources Finance DepartmentPolicy and Strategy Department for International Financial Operations International Finance Department I Asia (excluding Central Asia and the Caucasus, Pakistan and Afghanistan) International Finance Department II Central Asia and the Caucasus, Pakistan, Afghanistan, the Middle East, Africa and Europe International Finance Department III North America and Latin America and the Caribbean Development Assistance Operations Evaluation Office Project Development DepartmentSector Strategy Development Department Development Assistance Strategy Department Development Assistance Department I Southeast Asia (excluding Cambodia, Laos and Viet Nam) Development Assistance Department II East Asia, Cambodia, Laos, Viet Nam, Bangladesh and Sri Lanka Development Assistance Department III South Asia (exc. Bangladesh & Sri Lanka), Middle East, Central & Eastern Europe, Russia Development Assistance Department IV Latin America and the Caribbean, Africa (excluding Egypt) and Central Asia and Caucasus Treasury DepartmentPolicy Planning and Coordination DepartmentAdministration and General Services DepartmentAudit DepartmentLegal DepartmentPersonal Department Public Relations OfficeAccounting Office Loan Administration and Information Systems Department Information Systems Office Country Economic Analysis DepartmentEnvironment Analysis Department Governor Deputy Governor and Managing Directors Senior Executive Directors Executive Directors Special Advisor Secretariat Office Operation (OECO)Operation (IFO)Administration & SupportAnalysis Slide 6 5 JBIC Worldwide Network Mexico City Toronto New York Washington D.C. Lima Bogota London Paris Frankfurt Moscow Nairobi Cairo Sydney Colombo Buenos Aires Rio de Janeiro Tokyo Osaka Beijing Hong Kong Manila Hanoi Bangkok Singapore Jakarta Dhaka New Delhi Islamabad Kuala Lumpur 29 Offices in the World Slide 7 6 JBIC Commitments to the Latin America (by type, average amount in each period) Slide 8 7 Outstanding Balance of IFO Loans IFO Loans to Latin America: Total US$13,464 million JBICs (IFO) Loans to the World: Total US$ 77,980 million As of March 2005 (Exchange Rate: JPY109/US$) Slide 9 8 As of March 2005 (Exchange Rate: JPY109/US) Total ODA Loan Commitments JBICs ODA Commitments to Latin America: Total US$13,683 million JBICs ODA Commitments to the World: Total US$210,104 million Slide 10 9 (1) The main loans for Latin America in 2004-2005 BorrowerCountryAmount The Date of Signing The Purpose of Loan BNDESBrazil500M$ May 27, 2005 To improve the business environment for local Japanese affiliates BANCOMEXT Mexico100M$ April 11, 2005 To financially support Japanese companies' investments in Mexico CABEI100M$ July 29, 2004 To support exports by Japanese firms to the Central American region Slide 11 10 (2) Existed Loans for ALIDE Members BorrowerCountryAmount The Date of Signing The Purpose of Loan FEN Colombia 15M$ April 11, 1997 To financially support Japanese companies' investments COFIDEPeru22M$ May 20, 1990 To support exports by Japanese firms BNDESBrazil300M$ March 18, 2003 To improve the business environment for local Japanese affiliates BRADESCOBrazil20M$ December 19, 2003 To support exports by Japanese firms Banco do Brasil Brazil20M$ Febrary 9, 2004 To support exports by Japanese firms Slide 12 11 (3) Candidate Loans for ALIDE Members BorrowerCountryThe Purpose of Loan BNDESBrazil To financially support Japanese companies' investments COFIDEPeru To support exports by Japanese firms Slide 13 12 JBICs International Financial Operation JBICs International Financial Operations (IFO) is conducted according to the following Objectives. Promote Japanese Exports and Imports Support Japanese Direct Investment in Developing Economies Promote Local Industries in Developing Economies Ensure the Stability of International Financial Order Slide 14 13 JBICs International Financial Operation Loans for the export of goods and services by Japanese firms. 1.To be provided to Japanese exporters (Suppliers Credit (S/C)) 2.To be provided to foreign importers (Buyers Credit (B/C)) 3.To be provided to foreign financial institutions (Bank Loan (B/L)) Export Loans Japanese Exporter Foreign Importer Foreign Financial Institutions Loans Loans (S/C) Loans (B/L) Export of plants, etc. Loans (B/C) JBIC Loans to support Japanese direct investment in developing countries. Overseas Investment Loans Foreign Government/ Bank etc. Joint Venture Partner Joint Venture Project in the recipient country Loans Japanese firms JBIC Loans Loans and/or Equity Investment Loans and/or Equity Investment Slide 15 14 JBICs International Financial Operation Lending facility that aims at creating an external environment conductive to Japans global economic activities, including trade and investment, and supporting structural adjustment in developing countries etc. (not conditional on the procurement of equipment or machinery from Japan.) Untied Loans Foreign Government/ Bank/Firm etc. Project in the recipient country Exporter Loans Imports of equipment, technology JBIC Foreign Importer Investment Guarantees provided to loans extended by commercial banks, etc. and to sovereign bonds and bonds issued by public entities. Guarantee to Private Syndicated Loan Foreign Government etc. Private Financial Institutions Investors JBIC Guarantees Loans Issues of Public Bonds etc. Note: No compete to the Export Loans Slide 16 15 JBICs Overseas Economic Cooperation Operation The principal purpose is to assist developing countries in their efforts to develop economic and social infrastructure and stabilize their economies. ee P.16 ODA* Loans: Low-interest and long-term loans to assist developing countries in their self-help efforts toward sustainable economic development, by financing the building of their economic and social infrastructure (Basic Strategy of Japans ODA Loan: See P.16 Studies: Studies required to implement the above operations *ODA: Official Development Assistance Slide 17 16 Latin American Region In the Latin American region, destruction of valuable ecosystems in Amazon and other areas, and air pollution and water contamination in cities have become increasingly serious problems. We will thus give high priority to assistance for environmental protection projects. In this region, wide economic and income disparities exist among regions inside individual countries. We will therefore place high priority on assistance relating to the construction of economic and social infrastructure to rectify such gaps, human resource development, restoration of employment and safety, and poverty reduction. Furthermore, promotion of regional integration is believed to be the key to future development of an economic society in this region. For this reason, we will place high priority on assistance to regional integration initiatives. When providing such assistance, we will assign importance to coordination of efforts with international organizations, bilateral aid organizations and other stakeholders in view of the specific needs and actual conditions of each country as well as the trends towards regional integration. In addition, we will energetically take on intellectual cooperation and technical assistance. Basic Strategy of Japans ODA Loan Source : Medium Term Strategy for Overseas Economic Cooperation Operations (April 1, 2005 March 31, 2008) April, 2005 Japan Bank for International Cooperation (JBIC) Slide 18 17 Latin America and JBIC How JBIC is working with the Latin American governments to promote Japanese investments in the region and what types of projects you are considering in accordance with Japanese government policy? Next page you are able to find out my simple answer. Slide 19 18 Major Areas for Establishment of Complementary Relationship between Latin America and JBIC Manufacturing Industry/SME Natural Resources & Food Infrastructure CDM Projects Strengthen Economic Ties between Latin America and Japan JBIC Support Japan Latin America DFI Support DFI : Development Financing Institutions SME: Small or Medium Sized Enterprise Slide 20 19 MDGs : Poverty Reduction Economic Growth JBIC Infrastructure Private Flows Official Flows ODA, OOF Trade FDI MDGs: Millennium Development Goals MDGs and JBIC Slide 21 20 JBICs Engagement to Kyoto Mechanisms 1.JBICs contribution to Prototype Carbon Fund (PCF) of World Bank (Committed Total Amount: USD180 million) Committed USD10 million along with 8 Japanese companies (May 2000) 2.Support for the Capacity Building in the Host Countries Support for Mobilizing Institutional Framework, having a seminar regarding Kyoto Mechanisms 3.Financial Support for CDM/JI Projects through: International Financial Operations (Export loan, Overseas investment loan, Untied loan, Guarantee, Equity participation), and Overseas Economic Cooperation Operations (ODA loan) 4.Establishment of the Japan Greenhouse Gas Reduction Fund (JGRF) and Japan Carbon Finance,Ltd. (JCF) The first GHG Reduction Fund in Asia to contribute the achievement of the GHG Reduction target of Japan defined by Kyoto Protocol, and to contribute the sustainable growth in Non Annex I countries Slide 22 21 General Outlines of Japan Carbon Finance,Ltd. (JCF) (1) Objectives : To purchase CERs and ERUs (ERs) issued for the crediting period until 2012 from CDM/JI Projects (2) Fund Pool : Called Japan GHG Reduction Fund (JGRF), which JCF can utilize to purchase ERs (3) Committed Fund Amount: Approx. USD 140 million (4) Establishment: December 1, 2004 (5) Location: Tokyo, Japan (6) Fund Providers: Major Japanese Private Enterprises & Policy- lending Institutions JCF was established by some of Major Fund Providers including Japanese Policy-lending Institutions (JBIC, Development Bank of Japan). (7) Project Development Cost (PDD Preparation, Validation, etc.): To be borne by JCF in principle with a certain ceiling (8) Timing of Payment : Payment on Delivery in principle (Upfront Payment is to be made on case-by-case basis) Slide 23 22 General Outlines of Japan Carbon Finance,Ltd. (JCF) CDM/JI Project Entities (ERs Seller) Japan Carbon Finance, Ltd. (ERs Buyer) Japan GHG Reduction Fund (Fund Pool) Relationship between JCF & JGRF ERs Payment ERs Emission Reduction Purchase Agreements (ERPAs) Emission Reduction Resale Agreement Slide 24 23 JBIC DBJ Japanese Company A Japanese Company B Japanese Company C Loan Agreement (L/A) Emission Reduction Purchase Agreement ERPA) *Fund Provision through JGRF JBIC Japanese Commercial Banks JCF ERs Buyer) Underlying Finance (Untied Loan, Export credit, Overseas investment loan, ODA loan, etc) Payment for ERs generated during the Crediting Period of the Project * * * * * CDM/JI Project (ERs Seller) JCF/JBIC Collaboration Scheme Slide 25 24 JBIC CDM/JI Projects Untied Loan, etc Equity Investment Purchase of CER (Carbon Finance) Overseas Investment Loan Japanese Companies or Japanese J/V Government or Financial Intermediary JCF Debt Investment and/or Sponsorship On-lending for equipment, working capital etc Example Model for Underlying Finance provided for CDM Projects by JBIC Slide 26 25 Advantages of JBICs financing for CDM/JI Projects Strong relationship with host country (government agencies and private sector) built through years of financing operations and our overseas networks of representative offices Smooth Implementation of Projects Collaboration and Support with/from JBIC Underlying Finance Extensive knowledge and know-how in dealing with environmental projects in developing countries Intermediary Functions: Close and Tight Relationship with Japanese Industry having interest in CDM/JI Projects Accumulation of experience through investment in PCF Slide 27 26 JBIC Signs Cooperation Agreement on the Kyoto Mechanisms with Corporacin Andina de Fomento CAF): Partnership to Help Achieve Japan's GHG Emissions Reduction Target (April 5, 2005) Website: http://www.jbic.go.jp/autocontents/english/news/2005/000030/index.htm JBIC Signs Cooperation Agreement on the Kyoto Mechanisms with the Colombian Government: Partnership to Help Achieve Japan's GHG Emissions Reduction Target (April 11, 2005) Website: http://www.jbic.go.jp/autocontents/english/news/2005/000034/index.htm JBIC Provides Investment Two-Step Loan to BANCOMEXT: Supporting Japanese Firms' Investment Activities in Mexico through the Cooperation of Two Governmental Financial Institutions in Line with the Japan-Mexico Economic Partnership Agreement (April 12, 2005) Website: http://www.jbic.go.jp/autocontents/english/news/2005/000035/index.htm JBIC Signs Memorandums of Understanding with the IDB Group and Other Parties: Strengthening Mutual Ties for the Support of Japanese Business Activities in Latin America and the Caribbean (April 12, 2005) Website: http://www.jbic.go.jp/autocontents/english/news/2005/000039/index.htm Recent JBIC Press Release on Latin America Slide 28 27 JBIC Signs Loan Agreement and Memorandums with Brazil's Public and Private Sector Entities: Strengthening Partnerships to Further Consolidate Bilateral Economic Relations 1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed today (May 27, 2005) a loan agreement and four memorandums with Brazilian government, governmental institution and energy and natural resources companies, respectively. Governor Shinozawa and the respective representatives of the organizations signed and exchanged these documents on the occasion of the economic and trade promotion event held in Tokyo attended by President Lula da Silva of Brazil. (1) Loan Agreement An Untied Two-Step Loan to Banco National de Desenvolvimento Econmico e Social (BNDES) for Promoting Infrastructure Development and Export (2) Memorandums (a) A Memorandum on Cooperation on the Clean Development Mechanism (CDM) with the Ministry of Science and Technology (b) A Memorandum of Understanding (MOU) for Strategic Partnership as well as an MOU on the REVAP Refinery Modernization Project with Petrleo Brasileiro S.A.(Petrobras) (c) An MOU with Companhia Vale de Rio Doce (CVRD) on the Logistics Infrastructure Program Website: http://www.jbic.go.jp/autocontents/english/news/2005/000045/index.htm Recent JBIC Press Release on Latin America Slide 29 28 For more information, please contact to Website: http://www.jbic.go.jp/english/ International Finance Department III Tokyo) PHONE:81-3-5218-3060 FAX:81-3-5218-3965 Development Assistance Department IV Tokyo) PHONE:81-3-5218-3717 FAX:81-3-5218-3973 Representative Office in Bogota TEL:57-1-629-2436 FAX:57-1-629-2707 Representative Office in Buenos Aires TEL:54-11-4394-1379 FAX:54-11-4394-1763 Representative Office in Lima TEL:54-1-442-3031 FAX:51-1-440-9657 Representative Office in Mexico CityTEL:52-55-5525-67-90 FAX:52-55-5525-34-73 Representative Office in New YorkTEL:1-212-888-9500 FAX:1-212-888-9503 Representative Office in Rio de JaneiroTEL:55-21-2553-0817 FAX:55-21-2554-8798 Representative Office in Washington, D.C.TEL:1-202-785-5242 FAX:1-202-785-8484 Slide 30 29 Address by Prime Minister Junichiro Koizumi on the Latin American and Caribbean Policies - Toward a New Japan-Latin America and Caribbean Partnership (Extract) (Venue: a luncheon meeting hosted by the Governor of Sao Paulo) September 15, 2004 Reference Slide 31 30 ("A Vision for a New Japan - Latin America and Caribbean Partnership") Ladies and Gentlemen, Divided by the Pacific Ocean but facing each other, East Asia and Latin America are the most dynamically developing regions in the world. To strengthen our efforts in tapping into the "great potential" for our mutual benefit, we need to follow the two guiding principles of "Cooperation" and "Exchange. The first principle is "Cooperation." It consists of two pillars; "reactivating the economic relationship" and "addressing challenges of the international community." Reference Slide 32 31 To realize the latent potential of Japan and Latin America, the most important issue is reactivating our economic relationship. Latin America possesses the dynamism of development, a market of 530 million people, a wide expanse of land, rich natural resources, and an excellent, young workforce. On the other hand, Japan has experience in developing an economy based on democracy and the marketplace, the world's second largest economy, an abundant workforce, capital, and cutting-edge technology. Reference Slide 33 32 I am confident that if Japan and Latin America, who possess such complementary characteristics, decide to cooperate, it will lead to mutual benefits for both parties. Energy, minerals, and edible resources are indispensable to making possible the sustained growth of the world economy. Endowed with energy and rich natural resources, Latin America continues to grow in importance. To my country, which has few natural resources, securing a stable supply of resources in the mid to long term is an issue of grave importance. Reference Slide 34 33 During the 1960s and the 1970s, Japan invested heavily in various sectors of Brazil, including iron manufacturing, pulp, aluminum, and agricultural ventures, as part of a national project to develop Brazilian resources. Many Japanese enterprises moved to Brazil and contributed to the country's economic development. I also want to highlight the Initiative for the Integration of Regional Infrastructure in South America, the Plan Puebla-Panama, and other initiatives being promoted in both South and Central America in promoting the unification of Latin America. Reference Slide 35 34 Rugged mountains and lush green forests divide Latin America into large expanses. If infrastructure projects could join the region north to south and east to west, then both the promotion of regional integration and the development of the entire region would more quickly accelerate. Recognizing that the maintenance of infrastructure is an important postulate of economic and social development, my country is distributing approximately $4.6 billion of cooperation for Latin American countries in that same area. Reference Slide 36 35 In order to make the sustainable prosperity of the world community possible, we also need to strike a balance between economic development and protecting the environment. Through the Three R's--Reduce, Reuse, Recycle--I hope to build a sound material-cycle society on a global level. Global warming is also a problem of great magnitude and urgency, one that cannot be set aside, even for an instant. In December of this year, the 10th session of the Conference of the Parties to the U.N. Framework Convention on Climate Change (COP10) will be held in Buenos Aires, where Latin America's leadership will be sought and highly valued. I hope we can work together to achieve early entry into force of the Kyoto Protocol, so we can leave a better earth for the next generation. Reference