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Section 2 Initiatives to capture markets

1．The emerging countries strategy

With the relative size of Japan’s market shrinking compared to the global market, the importance of

expanding into emerging economies is growing. Capturing demand in emerging economies is necessary

in order to both enable Japanese companies to tap into growing worldwide demand and channel that

wealth back into Japan and promote exports of goods and procurement of components and materials

from Japan.

Nevertheless, while there is a tendency to use the generic term “emerging economies”, the fact is

that the situations differ from one region to another in terms of such matters as their degree of

economic development, the extent of expansion into those regions by Japanese companies, and the

competitive environment with companies from other countries.

To tap into the growth of emerging economies to the greatest possible extent, it is necessary to

promote strategic initiatives based on an understanding of the situation in each emerging economy.

(1) Policies and progress in each region

Until now, market analysis has been conducted according to the classification of markets into the

following three groups based on the Japan Revitalization Strategy 2013 (decided by the Cabinet in June

2013).

(i) In China and ASEAN, Japanese companies have already established industrial clusters and supply

chains on a substantial scale, thus the government has aimed to further tap into demand there through

broader industrial expansion (“full expansion”) in consideration of the growth of consumer markets.

(ii) In Southwest Asia, the Middle East, Russia/CIS, and Latin America, Japanese companies have

lagged behind their U.S. and European counterparts in business expansion, thus the government has

been strategically focusing intensive efforts on “achieving critical mass” in a select few promising

sectors.

(iii) Regarding Africa, the number of business bases established by Japanese companies that have

expanded into the region: 657 (around 1% of business bases established by Japanese companies around

the world), has been very limited, thus the government has been cultivating an environment that allows

Africa to be positioned as a field for Japanese companies’ business expansion by creating as many

examples of success as possible.

Below, an overview of future policies and the current progress status by region will be provided.

(A) China

<Future policy>

China is the second largest economy in the world and is maintaining relatively high economic growth.

Given that China is the largest trading partner for Japan and that many Japanese companies have already

expanded into the country, it is important to further deepen the trade and investment relationship between

the two countries and improve the business environment for Japanese companies. It is also important to

support efforts to capture new markets by taking advantage of Japan’s strengths.

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Specifically, the government will improve the environment for mutually beneficial business

cooperation at the private-sector level by promoting various consultations and exchanges at the

government level, including the Japan-China-Republic of Korea (ROK) Trilateral Economic & Trade

Ministers' Meeting and the Japan-China Energy Conservation and Environment Forum.

<Progress status>

In April 2015, Prime Minister Shinzo Abe and Chinese President Xi Jinping held the Japan-China

Summit in Jakarta. In November of the same year, Prime Minister Abe and Chinese Premier Li Keqiang

held the Japan-China Summit in Seoul, the ROK, and they affirmed that the two countries would further

strengthen exchanges and cooperation in such areas as the economy. At the end of October, just before

the summit, the Japan-China-Republic ROK Trilateral Economic & Trade Ministers' Meeting was held

in Seoul for the first time in about three and a half years with the participation of Minister of Economy,

Trade and Industry Motoo Hayashi, and an agreement was reached on further promoting initiatives to

strengthen multifaceted cooperation, including the improvement of supply chain connectivity through

facilitation of distribution and customs procedures. In addition, the Ninth Japan-China Energy

Conservation and Environment Forum was held in Tokyo in November with the participation of Minister

of Economy, Trade and Industry Hayashi and State Minister of Economy, Trade and Industry Yosuke

Takagi in order to promote Japan-China cooperation in the fields of energy conservation and the

environment. At this forum, 26 new cases of Japan-China cooperation were agreed upon, bringing the

cumulative number of cases of such cooperation to 285.

(B) ASEAN

<Future policy>

In the ASEAN region, there are a variety of countries, ranging from those which face a lack of basic

infrastructure and human resources for industry to those which have made significant progress in

establishing industrial clusters but which are losing their cost advantage. In this region as a consumer

market, the middle and wealthy classes are expected to grow further in the future, so the attractiveness

of ASEAN as a whole is increasing. The government aims to strengthen the production network and

capture the ASEAN market by supporting the improvement of the business environment, infrastructure

development and economic integration, among other activities.

For example, the efforts include support for country-by-country initiatives, such as infrastructure

development and enhancement of transparency intended to improve the business and investment

environments in Indonesia, a study on the infrastructure, energy mix and the development of the

Dawei Special Economic Zone, which is necessary for achieving balanced development through a

virtuous circle of activities in urban and rural areas and promoting industry in Myanmar, and

Vietnam’s industrialization strategy which seeks to foster six strategic industries. The efforts also

include the dissemination of the concept of the quality of infrastructure throughout the whole of

ASEAN through ERIA.

Efforts to capture markets in a wide range of industries are also needed. Such efforts include the

improvement of the competitive environment through institutional development in the field of energy

conservation in ASEAN. In addition, the government aims to capture markets by promoting the

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industrial advancement of ASEAN and the improvement of the business environment in services

industries through the use of the framework of the ASEAN Economic Ministers and Minister of

Economy, Trade and Industry of Japan Consultations - Economic and Industrial Cooperation Committee

(AMEICC).

<Progress status>

In Myanmar, a joint Japan-Myanmar consortium was established in October 2013 to develop the

Thilawa Special Economic Zone, with the groundbreaking ceremony taking place the following month

and the opening ceremony held in September 2015. The public and private sectors are working

together to develop infrastructure in the surrounding area and establish a one-stop service to provide

support. In Indonesia, members of the public and private sectors in both countries have been moving

forward with the Jakarta MPA (Metropolitan Priority Area), an initiative that seeks to improve the

investment environment through measures including infrastructure development. At the Summit held

in March 2015, after the inauguration of a new government in October 2014, an agreement was

reached that the two countries will work together to improve the business and investment

environments, develop infrastructure and implement economic and industrial cooperation under a new

framework of cabinet-level dialogue involving both the public and private sectors. At the Japan-

Indonesia Summit in November 2015, the leaders of the two countries announced cooperation

concerning the development of quality infrastructure.

In addition, to capture markets in a wide range of sectors, activities under the Cool Japan initiative

in the ASEAN region have been strengthened.

(C) Southwest Asia

<Future policy>

Countries in Southwest Asia, including India, Bangladesh, Pakistan and Sri Lanka, are part of a

region with one of the greatest potentials in the world because of such factors as their population size

(the total population of these four countries is currently approximately 1.6 billion people and will expand

to around 2 billion people by 2030 according to a certain estimate), GDP growth rate, and growing

middle class, so it is very important for Japanese companies to capture markets there, including

infrastructure projects.

It is also important to strengthen economic relationships and industrial networks between Southwest

Asian countries and the Asia-Pacific region. The government aims to strengthen the connectivity within

the region by enhancing cooperation with Southwest Asia and the surrounding region through

collaboration between the Regional Comprehensive Economic Partnership (RCEP), the Delhi - Mumbai

Industrial Corridor and the Chennai-Bangalore Industrial Corridor.

<Progress status>

In India, the government of Prime Minister Narendra Modi, which was inaugurated in May 2014,

has shown an active stance on inviting foreign capital, including inviting manufacturing industries under

the “Make in India” initiative. At the Japan-India Summit that was held in September of the same year,

when Prime Minister Modi visited Japan, an agreement was reached on matters that will contribute to

further enhancement of the Japan-India economic relationship, including doubling of the amount of

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Japan’s foreign direct investments in India and the number of Japanese companies that have expanded

into India within the next five years, and Japanese companies have high expectations for such initiatives.

Furthermore, in December 2015, Prime Minister Abe visited India. An agreement was reached on

the establishment of the Japan-India Make-in-India Special Finance Facility and the provision of a

“special package” for the development of infrastructure (roads, electric power and water facilities, etc.)

around Japanese industrial zones. Regarding Japanese industrial zones, Japan and India agreed last year

on 12 candidate sites for such zones, thus the two countries will encourage Japanese companies’

investments in and business expansion into India by promoting a study on the development of

infrastructure in the surrounding areas, the improvement of the investment environment, and incentives

for investment. In addition, “Japan Plus” was established within the Government of India as an

organization dedicated to supporting Japanese companies expanding into India. The Ministry of

Economy, Trade and Industry and JETRO have dispatched personnel to Japan Plus, which provides

support to around 20 to 30 Japanese companies expanding into India each month on average and resolves

problems for companies already doing business there.

In light of the strong powers granted to state governments, the Ministry of Economy, Trade and

Industry signed memoranda of understanding with the states of Andhra Pradesh, Gujarat, Karnataka,

Rajasthan, Maharashtra and Madhya Pradesh in order to strengthen cooperation with strategic states

where Japanese companies are clustered. Through policy dialogue and other means established under

these memoranda, Japan will strengthen cooperation with the Indian states in order to further improve

the investment environment in India and encourage investment by Japanese companies through the

promotion of individual projects.

In particular, in the state of Andhra Pradesh (AP), located in southern India, the development of a

new state capital, port facilities and industrial zones has proceeded rapidly, and there is a growing

momentum to promote new industries in the state in addition to agriculture, which has traditionally been

the main industry there. Under these circumstances, the Ministry of Economy, Trade and Industry and

JETRO, together with relevant ministries, agencies and other organizations, have established the AP

Commission for the Public and Private Sectors, which exchanges information with Japanese companies.

From now on, the AP Commission for the Public and Private Sectors will be used as a platform for

exchanges of information, networking and other activities that contribute to the sharing of information

and the planning of potential projects in order to promote Japanese companies’ investment in and

expansion into the state of AP by taking advantage of knowledge, experience and technologies possessed

by Japanese companies in various projects, including the development of a new state capital, industrial

cooperation, investment promotion and infrastructure development in the state.

Bangladesh and Japan held joint public-private economic dialogue in Tokyo in April 2016. In order

to promote Japanese companies’ expansion into and business activities in Bangladesh, discussions were

held about the improvement of the business environment, industrial diversification, and human resource

and skills development. An agreement was reached on establishing three working groups (tax and

banking services, industrial diversification, and improvement of the investment environment), and it

was decided that the two countries will periodically conduct follow-up review concerning their dialogue.

Pakistan and Japan held joint public-private economic dialogue in November 2015. In the future,

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the two countries will steadily follow up on the New Frontier Action Plan (promoting investment

through the improvement of the business environment and infrastructure development, formulating an

auto industry policy, and promoting industrial technology cooperation) which was issued as a result of

the economic dialogue. Among Japanese companies which have expanded into Pakistan, the proportion

of profitable companies is relatively high compared with those which have expanded into other Asian

countries. In order to support Japanese companies in expanding or maintaining market shares, the

business environment will be improved so as to make it easier for them to conduct business activity.

Regarding Sri Lanka, the government of President Maithripala Sirisena, which was inaugurated in

2015, has changed course from the excessive dependence on China of the previous government of

President Mahinda Rajapaks, aiming to establish balanced relationships with the United States, Europe,

Japan and India, among other countries. Sri Lanka plays an important role as a distribution hub linking

East/Southeast Asia, South Asia and the Middle East/Africa and also provides good access to India.

The government of Japan aims to promote trade and investment between the two countries while paying

attention to Sri Lanka’s distinctive features, including the high growth rate of around 7% recorded by

the country since the end of the civil war, the geographic advantage as represented by the presence of

major hub ports such as Colombo Port, and a high-quality labor force with English proficiency. The

Japan-Sri Lanka economic policy dialogue on which an agreement was reached when Prime Minister

Ranil Wickremesinghe visited Japan in October 2015 will also be utilized.

(D) Russia/CIS

<Future policy>

The Russia/CIS region is rich in mineral and energy resources, including oil, coal, natural gas,

uranium, rare metals and rare earth. On the other hand, the infrastructure built in the former Soviet era

has been aging, so there are many projects to build new infrastructure and renew existing infrastructure.

To promote such projects, there are growing needs from Japanese companies for the improvement of

the investment environment.

As power is concentrated in the hands of presidents and senior government officials in many

countries, using an exchange of visits by important officials between Japan and the region as an

opportunity to make top-level sales pitches is important. In particular, in the Russia/Central Asia region,

the government will conduct appropriate follow-up review of projects at the Japan-Russia-Central Asia

Exchange Promotion Meeting, which will be explained later, and at the same time, it aims to develop

mutually beneficial economic relationships by using diplomatic occasions and steadily proceed with

infrastructure and other economic projects.

<Progress status>

In November 2015, Minister of Economy, Trade and Industry Motoo Hayashi held a meeting with

Minister of Economic Development Alexei Ulyukayev, and they affirmed that they would continue to

cooperate in strengthening the Japan-Russia economic relationship and agreed to extend the period of

the memorandum of understanding on cooperation concerning small and medium-size enterprises

between their ministries. In February 2016, Minister of Economy, Trade and Industry Hayashi held a

meeting with Minister of Industry and Trade Denis Manturov and signed a memorandum of

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understanding on periodically holding industrial policy dialogue at the high working level between their

ministries in order to promote cooperation in the industrial field. As for the relationship with Central

Asia, in June 2015, State Minister of Economy, Trade and Industry Daishiro Yamagiwa, accompanied

by an economic mission, visited Turkmenistan and held a meeting with President Gurbanguly

Berdymukhammedov and other officials. In addition, a business forum was held with the participation

of around 100 people from Japan and Turkmenistan. In October 2015, Prime Minister Shinzo Abe,

accompanied by an economic mission, made official visits to all five Central Asian countries

(Turkmenistan, Tajikistan, Uzbekistan, Kirgizstan and Kazakhstan), becoming the first Japanese prime

minister to do so, and held summit meetings with the presidents of those countries. In addition, in

Turkmenistan, Uzbekistan and Kazakhstan, business forums and exhibitions of Japanese technologies

were held. In order to prevent the results of the prime minister’s visit to Central Asia from being only

temporary and to further promote exchanges between Japan and the region, it was decided that the

former Japan-Russia Economic Exchange Promotion Meeting will be reorganized as the Japan-Russia-

Central Asia Exchange Promotion Meeting and that relevant ministries and agencies will conduct

appropriate follow-up review.

As for the relationship with Ukraine, in June 2015, Prime Minister Abe visited the country, becoming

the first incumbent Japanese prime minister to visit the country since its independence, and held a

meeting with President Petro Poroshenko. The two leaders affirmed that the two countries will cooperate

with each other in the introduction of highly efficient coal-powered thermal power generation

technology. In addition, in the presence of the two leaders, Japanese Ambassador to Ukraine, Shigeki

Sumi, and Vice Prime Minister and Minister of Regional Development, Building and Housing and

Communal Services, Hennadiy Zubko, signed a letter concerning a Japanese ODA loan for repairing the

Bortnychi Sewage Treatment Plant.

(E) Latin America

<Future Policy>

Latin America is an important procurement source of natural resources. Therefore, Japan aims to

capture the Latin American market under the strategy of continuing to secure the procurement of natural

resources, tap into the growing middle class and expand the infrastructure business.

The government will continue to follow up on Prime Minister Shinzo Abe’s visit to the region and

deepen cooperation in fields including business expansion into the region by Japanese companies that

contribute to the industrial diversification and human resource development in resource-rich countries

in order to strengthen its relationship with the countries and secure stable sources of energy supply.

<Progress status>

Regarding the relationship with Mexico, in February 2015, Parliamentary Vice-Minister of Economy,

Trade and Industry Yoshihiro Seki visited the country, and the Pacific Alliance Infrastructure Seminar

was held. The seminar attracted intense attention, with around 140 people in attendance, including the

undersecretary of trade at the Mexican Ministry of Economy. The Infrastructure Master Plan for the

Pacific Alliance, which was formulated in FY 2013, was presented, and Parliamentary Vice-Minister of

Economy, Trade and Industry Seki expressed hope that Japan’s public and private sectors, which possess

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a high level of technological capability, will contribute to infrastructure development in Mexico.

In Brazil, the Third Japan-Brazil Joint Committee on the Promotion of Trade, Investment and

Industrial Cooperation was held in September 2015. At the meeting, a follow-up review of Prime

Minister Abe’s visit to Brazil was conducted, and opinions were exchanged concerning the improvement

of the business environment in Brazil and industrial cooperation for the development of Japan and Brazil.

It was confirmed that it is important for this committee to continuously hold meetings. Thus holding of

interim meetings related to the committee was proposed. In February 2016, an interim meeting of the

Japan-Brazil Joint Committee on the Promotion of Trade, Investment and Industrial Cooperation was

held, and opinions were exchanged about Japan’s cooperation in the fields of smart community and

healthcare, challenges for the improvement of the business environment in Brazil through the

formulation of the AGIR (Action plan for Greater Investment Realization) and promotion of investments

in the country.

In March 2015, Minister of Economy, Trade and Industry Yoichi Miyazawa held a meeting with

Vice-President Ricardo Cabrisas Ruiz the Council of Ministers of Cuba, and exchanged opinions with

him concerning the promotion of investment from Japan, the revision of trade insurance and the

development of the two countries’ future relationship based on the revision of the Foreign Exchange and

Foreign Trade Act.

In September 2015, Prime Minister Abe made an official visit to Jamaica, becoming the first

Japanese prime minister to do so, and held a summit meeting with Prime Minister Portia Simpson Miller

for the third time and for the third consecutive year. It was confirmed that the two countries will develop

the Japan-Jamaica partnership and strengthen and promote cooperation in line with the three pillars of

Japan’s policy towards CARICOM, which was announced at the 2015 Japan-CARICOM Summit

Meeting. The three pillars are: (i) cooperation towards sustainable development including overcoming

vulnerabilities particular to small island states; (ii) deepening and expanding bonds founded on

exchanges and friendship; and (iii) cooperation in addressing challenges of the international community.

In addition, Prime Minister Abe announced plans to provide technical cooperation in the fields of energy

conservation and disaster management, support electric power projects in which Japanese companies

are investing and develop human resources necessary for the management of electric power related to

such projects.

(F) Middle East

<Future policy>

The Middle East is a region essential to stable energy supply for Japan. Therefore, Japan aims to

cultivate markets and strengthen economic relationships with the region by participating in industrial

diversification and huge infrastructure projects there.

Specifically, the government will continue efforts to secure stable supply of energy through the LNG

Producer-Consumer Conference, which was mentioned earlier, and other means. The government will

also use an exchange of visits by important officials between Japan and the Middle East countries as an

opportunity to further develop the economic relationship with the region through such means as export

of infrastructure by Japanese companies

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<Progress status>

Japan conducted frequent exchanges with Middle East countries as well in order to strengthen

economic relationships. Regarding Iran, following the final agreement reached in July 2015 between

EU3+3 (the U.K., France, Germany, the U.S., China and Russia) and Iran on the Iranian nuclear issue,

State Minister of Economy, Trade and Industry Daishiro Yamagiwa, together with a delegation of

Japanese companies, visited Iran in order to strengthen the economic relationship with the country. In

January 2016, upon the arrival of the “implementation day” of the final agreement on the Iranian nuclear

issue, Japan eased the series of measures that it had until then imposed, in accordance with resolutions

adopted by the U.N. Security Council. Furthermore, in February 2016, Minister of Economic Affairs

and Finance of Islamic Republic of Iran visited Japan and signed the Japan-Iran Investment Agreement.

He also signed a memorandum of Cooperation concerning financing facility with Minister of Economy,

Trade and Industry Motoo Hayashi. As for the relationship with Turkey, following a visit to Japan by

President Recep Tayyip Erdoğan in October 2015, Prime Minister Shinzo Abe visited Istanbul and held

the Japan-Turkey Summit in November ahead of the G20 Summit. In addition, the Japan-Turkey

Business Forum (cosponsored by JETRO and the Foreign Economic Relations Board (DEIK)) was held,

and JETRO signed a memorandum of understanding on strengthening relationship with Turkish

economic organizations. In October 2015, State Minister of Economy, Trade and Industry Yosuke Takagi

visited Turkey to attend the G20 Energy Ministers Meeting and the G20 Trade Ministers Meeting, and

he also held a meeting with Minister of Economic Affairs of Turkey Nihau Zeybekci. In December 2015,

Minister of Economy, Trade and Industry Motoo Hayashi used his visit to Kenya (to attend the WTO

Ministerial Conference) as an opportunity to hold a meeting with newly appointed Minister of Economic

Affairs Mustafa Elitas to exchange opinions about strengthening the investment and trade relationship

and lobbied for Japanese companies’ further participation in infrastructure projects in Turkey. Regarding

Israel, negotiations about a Japan-Israel investment treaty were started in May 2015 and a substantive

agreement was reached in December of the same year. Moreover, based on the exchange of visits by

important officials between Japan and Israel since 2014, the Ministry of Economy, Trade and Industry

held the first Japan-Israel Economic Dialogue with the Israeli Ministry of Economy in July 2015. At the

Dialogue, opinions were exchanged about a broad range of fields, including policies for promoting

investment and trade between the two countries, cooperation in research and development (R&D) and

cyber security and policies concerning venture businesses. In addition, JETRO opened a Japanese booth

at CyberTech 2016 (in Tel Aviv), which was held in January 2016, providing participating Japanese

companies with many business matching opportunities, and the Japanese participation in the trade fair

was reported by various media. Regarding the Palestine, in February 2016, President Mahmoud Abbas

visited Japan in February 2016, and the Palestine Business Forum (co-sponsored by JETRO, JICA and

the Palestine Authority) was held with the participation of Minister of National Economy Abeer Odeh,

who accompanied President Abbas on his visit to Japan. At the forum, the overview of the business

environment in the Palestine, the ICT industry, which has achieved remarkable development in recent

years, and the Jericho Agricultural Industrial Park, which is supported by JICA, was introduced to

Japanese private companies. As for the relationship with Egypt, in February 2016, President Abdel-

Fattah El-Sisi visited Japan and held the Japan-Egypt Summit, at which a joint statement concerning

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cooperation for the leap towards a new stage in bilateral relations was issued. On March 2, at the 10th

Joint Conference of Egypt-Japan Business & Investment Seminar, 15 memorandums of understanding

(MOUs) in such areas as electricity, energy and the Suez Canal area development were concluded, and

a signing ceremony for a document concerning cooperation was held.

In addition, there were active exchanges concerning cooperation in a broad range of fields based on

cooperation concerning energy. In May 2015, Minister of Economy, Trade and Industry Yoichi

Miyazawa held a meeting with visiting Saudi Arabian Minister of Economy and Planning Adel M.

Fakieh and they confirmed that the two countries’ economic relationship will be strengthened. In January

2016, State Minister of Economy, Trade and Industry Yosuke Takagi visited Saudi Arabia and held

meetings with major cabinet members. In their meetings, they confirmed that Japan and Saudi Arabia

will make efforts to further develop their economic relationship. As for the relationship with Qatar,

opinions were exchanged with the aim of further strengthening the economic relationship through stable

supply of natural gas to Japan and other means on such occasions as the LNG Producer-Consumer

Conference 2015 and the Japan-Qatar Joint Economic Committee, which were held during a visit to

Japan by Minister of Energy and Industry Mohammed Bin Saleh Al-Sada in September 2015. In April

2015, Japan obtained rights to onshore oil fields in the UAE (Abu Dhabi) through a series of lobbying

efforts made in consultations held during visits to the country by Minister of Economy, Trade and

Industry Yoichi Miyazawa in January 2015 and by State Minister of Economy, Trade and Industry

Yosuke Takagi in February of the same year, for example. In September 2015, Minister of Economy

Saeed Al Mansouri visited Japan and held a meeting with Minister of Economy, Trade and Industry

Yoichi Miyazawa, which provided a valuable opportunity to lobby for Japanese companies’ further

participation in infrastructure projects. In November 2015 and January 2016, State Minister of Economy,

Trade and Industry Yosuke Takagi visited the UAE and attended the world’s largest trade fairs, such as

the ADIPEC (Abu Dhabi International Petroleum Exhibition and Conference) and the World Future

Energy Summit (WFES). In his meetings with senior government officials, it was confirmed that Japan

and Abu Dhabi will further promote cooperation in a broad range of fields, including energy. In May

2015, State Minister of Economy, Trade and Industry Daishiro Yamagiwa visited Kuwait and signed a

memorandum of understanding with Kuwaiti Minister of Electricity and Water Ahmed Khaled Al-Jassar

on cooperation in the fields of electric power and water. In November of the same year, State Minister

of Economy, Trade and Industry Yosuke Takagi visited Kuwait and held meetings with Minister of State

for Housing Affairs and Acting Minister of Public Works Yasser Hassan Abul and Undersecretary of the

Ministry of Electricity and Water Mohammad Haji Ali Bushehri, which provided a valuable opportunity

to lobby for Japanese companies’ further participation in infrastructure projects.

(G) Africa

<Future policy>

Africa is not only rich in natural resources but is also recording remarkable growth in terms of

population size and GDP. Thus, it is an emerging market with high potential. Therefore, Japan aims to

capture robust demand for infrastructure projects and develop new markets for consumer goods and

other products.

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Specifically, making the most of TICAD VI, which is scheduled to be held in August 2016, Japan

will promote investment in and trade with Africa through public relations activity to demonstrate

Japanese products and technologies and discussions with various countries in the Plenary Session. The

public and private sectors will work together to develop markets, offering support for companies eager

to exhibit at international trade fairs and promote investment treaties aimed at improving the investment

environment, in order to create as many examples of success as possible. Furthermore, to deal with risk

in a manner that addresses the security situation and risk management, the government will further

strengthen collaboration with diplomatic missions overseas and hold seminars on safety measures.

In addition, the government will consider providing human resource development support and

financial cooperation to resource-rich countries as necessary.

When expanding into Africa, it is essential to take flexible actions, such as cooperating with African

companies with existing commercial networks, establishing locally suited methods of sales, product

development and business management, and forming partnerships with companies from third-party

countries: including Europe and India, that have already expanded into the region in accordance with

the circumstances, while also looking at the situation in the region.

<Progress status>

Regarding the doubling of the number of JETRO offices in Africa (from five to ten) over the next

five years, which was among the measures aimed at contributing to Africa’s ongoing development as a

trustworthy business partner that Japan announced at TICAD V in June 2013, new offices in Morocco

and Ethiopia have been opened so far.

In March 2016, the second Africa Investment Promotion Forum was held through JETRO. Leaders

of investment promotion organizations from eight African countries (Cote d’Ivoire, Egypt, Ethiopia,

Kenya, Morocco, Nigeria, South Africa and Tanzania) were invited to this forum and meetings intended

to deepen cooperation with the investment promotion organizations from the invited eight countries

were held. In addition, the leaders of the investment promotion organizations visited Japanese

companies.

To ensure stable supply of resources and secure participation in resource- and infrastructure-related

projects, the second Japan-Africa Ministerial Meeting for Resources Development was held in May

2015 with a view to further strengthening relationships with resource-rich countries in Africa.

For the details of the current status and future potential of the African market, see Part II, Chapter 4,

Section 1, which analyzes those matters.

(2) Measures to support companies

This section sets out the progress that has been made in implementing measures to support

companies and future policy in this area.

(A) Enhancing top-level sales pitches and systems for inter-ministerial collaboration

Table III-2-2-1 shows the top-level sales pitches undertaken by the prime minister and Cabinet

members since the inauguration of the Abe administration

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Table III-2-2-1 Top-level sales pitches by the Prime Minister and Cabinet members (as of Feb.

2016)

* Underlining indicates accompanying by missions.

Source: METI

All possible means – from top-level sales pitches by Prime Minister Shinzo Abe and Cabinet

members to interaction at the private sector level – have been employed in a nationwide effort uniting

the public and private sectors, with the aim of enhancing the environment for overseas expansion by

Japanese companies, in order to secure resources and win contracts for infrastructure projects. For

example, regarding Central Asia, Prime Minister Abe made official visits to all five Central Asian

countries (Turkmenistan, Tajikistan, Uzbekistan, Kirgizstan and Kazakhstan) in October 2015,

becoming the first Japanese prime minister to do so, and a total of 87 documents, including those

concerning the public and private sectors, were signed. As a result, his visits to the region have

contributed to Japanese companies’ cooperation and participation in projects to make effective use of

the rich reserves of natural resources there. In the case of Cambodia and Laos, results were achieved

during a visit there in April 2014 by the minister of economy, trade and industry, including agreements

on promoting cooperation in the establishment of emergency and critical care centers using Japanese

medical technology (Cambodia and Laos) and the development of an oil mining area (Cambodia) and

the development of a hydroelectric power plant (Laos).

It is vital to continue to identify potential by utilizing all possible policy tools, including top-level

sales pitches, dispatch of missions, conclusion and revision of investment treaties and tax conventions,

and provision of ODA, risk finance and technical cooperation.

(B) Conclusion and revision of investment treaties, tax conventions and social security treaties

The government is promoting the conclusion of investment treaties in order to ensure a business

environment conducive to stable operations by Japanese companies that have expanded overseas, in

addition to safeguarding the assets in which Japanese companies have invested and abolishing barriers

to expansion in those markets and repatriation of funds to Japan. Amid an increase in protectionist

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measures that discriminate against foreign capital: especially in emerging economies, the government

has completed a series of negotiations with Southeast Asian countries concerning investment treaties

and is now engaged primarily in negotiations with countries in the Middle East and Africa.

In FY2015, Japan signed investment treaties with Oman in June and with Iran and Ukraine in

February. Among treaties now under negotiation are those with Qatar, the United Arab Emirates, Ghana,

Morocco and Tanzania (as of April 1, 2016). In addition, negotiations are also being conducted

concerning investment chapters related to EPAs/FTAs, including RCEP and the Japan-China-ROK FTA.

As the number of investment-related treaties concluded by Japan (investment treaties and investment

chapters contained in EPAs/FTAs) is smaller than the numbers of treaties concluded by other major

countries such as the United States, European countries, China and the ROK, it is necessary to further

accelerate negotiations concerning investment-related treaties in consideration of the needs of Japanese

companies and the circumstances of the counterpart countries.

Moreover, it is hoped that concluding new tax conventions and revising existing ones to adjust the

scope of taxable income on both sides will not only ensure the legal stability of the taxation of companies

operating overseas but also contribute to facilitating the repatriation of income earned overseas by

Japanese companies to Japan.

In FY2015, the tax conventions with Qatar entered into force in December, and tax conventions were

signed with Germany and India in December and with Chile in January 2016. It will be vital to expedite

initiatives for upgrading and expanding the network of tax-related conventions that assist in supporting

the overseas expansion of companies, taking into consideration the overall perspective in terms of the

needs of Japanese industry and appropriate means of securing Japan’s right of taxation.

Since its first social security treaty, concluded with Germany, entered into force in 2000, Japan put

into force social security treaties with 15 countries and signed such treaties with four other countries

by April 2016. In addition, Japan has gradually held intergovernmental negotiations and preliminary

consultations with several countries (Figure III-2-1-2).

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Figure III-2-2-2 Conclusion of social security agreements (as of April 2016)

Source: Overview of Social Security Agreements, Ministry of Health, Labour and Welfare website

(C) Expansion of public finance programs

In November 2015, as a follow-up to the "Partnership for Quality Infrastructure, the government

announced a plan to implement a dramatic expansion and enhancement of public finance, including

speeding up the procedures for Japanese ODA Loans; improving the Japanese ODA Loan and Private-

Sector Investment Finance, including measures such as establishing new loan programs; strengthening

cooperation with the Asian Development Bank; expanding the supply of risk money by JBIC; and

enhancing the functions of Nippon Export and Investment Insurance (NEXI). For the details, see 2.

“Exports of infrastructure systems,” (1) “Expansion of supply of risk money” in this section.

In addition, in order to manage the trade insurance system more efficiently and effectively, the Act

to Partially Revise the Trade Insurance and Investment Act and the Act on Special Accounts was enacted

on July 10, 2015 (scheduled to enter into force on April 1, 2017) in order to provide for a transition of

the status of NEXI, which is responsible for screening and underwriting concerning trade insurance,

from an independent administrative agency to a special corporation wholly owned by the government.

(D) Deepening technical cooperation

A market-oriented approach and efforts to resolve the challenges faced by emerging economies are

required, as these will be the key to building win-win relationships with such economies. Therefore, in

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addition to supporting human resource development as it had already been doing, the government

provided support for Japanese companies cooperating with local universities, research institutions,

NGOs and companies in developing products and services that resolve local social challenges.

Furthermore, the government formed communities of local people that were familiar with and friendly

toward Japan by using online tools, including social network sites (SNS), and by holding business

competition events in order to establish a network of people familiar with and friendly toward Japan,

including former foreign students in Japan and former trainees of the Overseas Human Resources and

Industry Development Association (HIDA).

In addition to dispatching Japanese personnel as overseas interns, the government started to accept

interns from abroad in order to support Japanese companies’ development of new businesses in

developing countries.

2．Export of infrastructure systems

As described above, it will be necessary in the future to further develop demand in growth regions,

including Africa, India and ASEAN, while taking into consideration changes in the economic situation,

such as the slowdown of China’s economic growth. In particular, in these emerging markets, as demand

for infrastructure is expected to grow huge in line with rapid economic growth and urbanization, it is

important for the public and private sectors to work together to promote exports of quality infrastructure,

an area of strength for Japan. In this section, an overview of future initiatives to capture demand for

infrastructure in growth regions will be provided.

(1) Expansion of supply of risk money

First, in order to meet immense demand for infrastructure in emerging countries, a vast amount of

funds is necessary. Therefore, in May 2015, Prime Minister Shinzo Abe announced the "Partnership for

Quality Infrastructure and set forth the goal of realizing sufficient infrastructure investments in both

quality and quantity by cooperating with the Asian Development Bank: whose functions have been

enhanced, to provide a total of approximately 110 billion dollars over five years,and by using this as a

catalyst for the mobilization of private-sector funds and knowhow. In addition, in November of the same

year, as a follow-up to the Partnership for Quality Infrastructure, Prime Minister Abe expressed his

readiness to further promote investment in quality infrastructure by announcing a dramatic enhancement

of the program. Described below are major enhancement measures.

<Measures to further enhance the "Partnership for Quality Infrastructure (November 2015)>

(A) Expansion of the amount of assistance and speedup of procedures

In order to make assistance from JICA more attractive, the government decided to implement 12

items of improvements concerning the Japanese ODA Loan and overseas loan and investment programs,

including the following measures.

(a) Speedup of governmental procedures for the Japanese ODA Loan program

The government decided to shorten the period of governmental procedures required for the Japanese

ODA Loans program, which is usually around three years to around one and a half years at a minimum

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for important projects and to around two years at a minimum for other projects.

(b) Establishment of new loan programs

In order to enhance the convenience of Japanese ODA Loans, the dollar-denominated ODA Loan

and High-spec Loan programs were established. In addition, the Japanese ODA Loans for

business/management rights program, pilot/test-marketing projects and special contingency reserves

were introduced. With respect to overseas investments and loans, co-finance with private financial

institutions was made possible, and the interpretation of the requirement of “no-precedent policy” was

reviewed. At the same time, it was decided that in principle, the appraisal process should be started

within one month from the application from private companies, etc and that the standard period for

JBIC to respond to inquiries on projects should be two weeks.

(c) Exceptional exemption of local governments and public corporations from the government guarantee

requirement

In providing Japanese ODA Loans directly to local governments and public corporations (sub-

sovereign entities) of developing countries, the government decided to exempt the government

guarantee requirement as an exception on a case-by-case basis at a ministerial conference if various

conditions, including economic stability of recipient countries and sufficient commitment by recipient

governments, are met.

(B) Collaboration with the ADB

A new trust fund will be established under the ADB through JICA’s investment, and it will invest

in and finance private quality infrastructure projects through measures such as public-private

partnership (PPP), aiming for investments and loans totaling up to 1.5 billion dollars over the next five

years. Regarding public infrastructure development, JICA, in collaboration with the ADB, will support

long-term assistance plans and provide technical cooperation and loans for sovereign projects. JICA

and ADB will aim to co-finance 10 billion dollars over the next five years.

(C) Measures to increase the supply of funding for projects with relatively high risk profiles

through JBIC, etc.

In order to further support Japanese companies’ overseas expansion concerning infrastructure

projects using private funds and know-how, the government has made it possible for JBIC to more

actively take risks by adding the Specially Designated Operations to JBIC’s operations. Through the

Specially Designated Operations, JBIC will make investments in and provide loans to overseas

infrastructure projects which have a sufficient level of expected return but which involve high risks.

JBIC will also introduce long-term borrowing from local financial institutions as a means to obtain local

currency so that it can expand the Local Currency Loans that are in high demand for use in infrastructure

projects in developing countries. In addition, JBIC will introduce new assistance tools for overseas

infrastructure projects (e.g. two-step loans to banks involved in overseas infrastructure projects,

acquisition of bonds (project bonds), and Islamic finance).

Concerning Nippon Export and Investment Insurance (NEXI), in light of the growing scale and

lengthening duration and the high risks involved in overseas infrastructure projects, the government

decided to implement eight items of improvement in response to the diverse needs from countries

introducing infrastructure and requests from companies. The improvements include the significant

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extension of the investment insurance period (from the current 15 years to 30 years), the establishment

of dollar-denominated trade and investment insurance, active involvement in projects related to local

governments and public corporations (sub-sovereign entities) which are not covered by government

guarantees (establishment of an insurance program for sub-sovereign entities), and the provision of

100% coverage of country risks (countries risks including wars and acts of terrorism).

In addition, in order to contribute to meeting the growing global demand for infrastructure in regions

outside Asia as well by exporting Japan’s quality infrastructure, Prime Minister Abe announced the

Expanded Partnership for Quality Infrastructure” initiative in May 2016. At the G7 Ise-Shima Summit,

the Prime Minister also expressed Japan’s intention to make further contributions to the development of

quality infrastructure through this initiative. The main contents of the initiative are as described below.

The government will promptly implement individual measures under the initiative.

<Expanded Partnership for Quality Infrastructure” initiative (May 2016)

(A) Increased supply of financial resources towards infrastructure projects across the world

Responding to the immense global demand for infrastructure development, Japan aims to provide

financing of approximately 200 billion dollars to infrastructure projects as broadly defined: including

resource and energy projects, over the next five years, in order to address the deceleration of the global

economy due to low natural resource prices and to reduce future risk of price surges for natural

resources.

(B) Further improvement of measures for promotion of quality infrastructure investment

(a) Further acceleration of Japan’s assistance

The government will shorten the time required between the initiation of feasibility studies (F/S)

and the commencement of construction work (although the required period varies from project to

project depending on the project size, content, etc., it is five years for many projects) to one and a half

years at a minimum through i) early implementation of preparatory surveys in important projects, ii)

acceleration of groundbreaking and partial business opening by fast-tracking detailed designs (D/D)

for some parts of projects, iii) capacity building of consultants, and iv) introduction of lump-sum

contracts which may generate incentives to speed up the procedure as well as acceleration of

consultant work through active utilization of the design-build system and other measures.

(b) Encouragement of investments and loans by private companies

The government will implement the following measures: flexible operation and review of overseas

investment and loan programs; consideration of the possibility of euro-denominated investment and

loans; expansion of the functions of trade insurance provided by NEXI (expansion of the coverage of

country risks in overseas investment insurance and export insurance to 100% (upper ceiling), etc.);

relaxation of the criteria for investment by and management of JOIN and JICT, flexible application of

the rule of priority redemption to private banks in JBIC’s co-financing projects.

(c) Others

The government will implement the following measures: assistance for geothermal power

development in developing countries, F/S and other support for large-scale infrastructure projects,

improvement of the system and operation of Japan’s grant aid, further enhancement of assistance for

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human resources development

(C) Strengthening the institutional capacity of and ensuring the financial foundation of relevant

organizations, including JICA, JBIC, NEXI, and JOGMEC

(2) Strategic human resource development, and involvement in projects from the upstream stage

Even if Japan enhances the attractiveness of its financing assistance, it will be difficult to capture

infrastructure business if quality infrastructure – an area of Japan’s strength – which is of high quality

in terms of economic rationality as seen from the viewpoint of lifecycle costs, safety, resilience and

environmental and social considerations, for example, fails to be appropriately evaluated because

countries introducing infrastructure place emphasis only on the initial cost at the time of procurement.

Therefore, the government, in cooperation with industry, will develop an environment that enables

quality infrastructure to be appropriately evaluated by strategically developing human resources through

such measures as inviting top government officials from countries which are particularly important

infrastructure markets or by training middle-ranking officials in charge of planning and evaluation in

such countries.

In order to survive intense international competition to win infrastructure contracts, approaching

governments of infrastructure-introducing countries before the formulation of projects is effective.

Therefore, the government will increase the chance for Japanese companies to win contracts by

demonstrating Japan’s technological superiority and reliability from the upstream stage through support

for the formulation of master plans and feasibility study (F/S) as well as policy dialogue.

(3) International standardization of quality infrastructure

In order to lay the foundation for widespread diffusion of quality infrastructure in emerging countries

and other infrastructure-introducing countries, the government is striving for international

standardization of such infrastructure in addition to making approaches to individual countries.

For example, at the G7 Ise-Shima Summit, which was held in May with Japan as its chair, the G7

countries adopted the G7 Ise-Shima Principles for Promoting Quality Infrastructure Investment in light

of the frequent references so far made to the importance of quality infrastructure that will lead to

inclusive growth of developing countries under various international frameworks, including G7, G20

and APEC. The principles are (i) ensuring effective governance, reliable operation and economic

efficiency in view of life-cycle costs as well as safety and resilience against natural disasters, terrorism

and cyber-attack risks, (ii) ensuring job creation, capacity building and transfer of expertise and know-

how for local communities, (iii) addressing social and environmental impacts, (iv) ensuring alignment

with economic and development strategies including the aspect of climate change and the environment

at the national and regional levels, and (v) enhancing effective resource mobilization including

through PPP. In the future, the government will encourage countries outside the G7 and multilateral

development banks (MDBs) to make infrastructure investments that are in line with these principles.

At APEC, legal systems related to infrastructure development investments in individual economies

will be reviewed from the viewpoint of the quality of infrastructure, and a program to provide capacity

building assistance in accordance with the needs for such assistance identified through the review will

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be established and implemented from this year based on a Japanese proposal. APEC is also formulating

evaluation benchmarks and guidelines for the methods of measurement that are intended to ensure the

quality of power generation facilities under Japan’s initiative with the aim of diffusing quality electric

power infrastructure in the Asia-Pacific region, an area where electric power demand is expected to

grow significantly in the medium to long term. The guidelines will be prepared by the end of the current

fiscal year, and capacity building assistance intended to diffuse them will be implemented. In addition,

a study on the formulation of an international standard based on the guidelines will be conducted.

(4) Strengthening the competitiveness of Japanese companies undertaking exports of

infrastructure

If Japanese companies are to win more contracts for infrastructure projects amid the intensifying

competition for such contracts, as exemplified by European companies’ growing market share in Asia

and the rise of emerging-market players, they need to strengthen their price competitiveness and increase

their manufacturing and designing capacities sufficiently to meet the immense demand and to adapt to

infrastructure-introducing countries’ policies that give preferential treatment to or encourage the use of

domestically manufactured products. Local production in infrastructure-introducing countries is an

effective measure to do so.

Therefore, the Ministry of Economy, Trade and Industry is devoting efforts to strengthening

relationships with infrastructure-introducing countries through intergovernmental dialogue and other

means and improving the business environment, among other activities. For example, in India, where

strong powers are granted to state governments, the Ministry is strengthening relationships not only with

the central government but also with state governments by signing memoranda of understanding on

cooperation with strategic states and engaging in policy dialogues. In addition, the Ministry is

encouraging Japanese companies to expand into India by developing Japanese industrial zones and

improving the business environment through Japan Plus, which was established within the government

of India (see Section 2.1. “Emerging markets strategy”).

Furthermore, the government will support Japanese companies’ fund-raising for local production

and sales through public finance programs. The government will also support training of core local

personnel engaging in such work as procurement, designing, manufacturing, operation, maintenance

and management at Japanese companies’ local business bases through acceptance of trainees and

dispatch of experts, because developing and securing human resources is a critical challenge at such

bases.

It is essential for Japanese companies to strengthen their competitiveness while making use of these

measures, thus the public and private sectors will continue to work together to promote these measures.