Asian News - Japan: Govt offers trade insurance for infrastructure and other projects in Asia
Source: Asia Insurance Review | May 2016
The Japanese government has begun offering trade insurance for infrastructure and other projects sponsored by regional governments and public companies in Asia.
Nippon Export and Investment Insurance, or NEXI, will fully cover project costs made unrecoverable by wars or natural disasters. The entity backed by the Ministry of Economy, Trade and Industry has until now only insured projects funded by a central government or carrying its guarantee.
But it decided to expand coverage in response to an increase in projects sponsored by Indian states or utility companies in emerging nations that are being carried out without central-government guarantees, reported The Nikkei.
NEXI will consider whether to insure projects on a case-by-case basis, on the condition that the country has a framework in which tax revenues collected by the central government are passed on to regional governments and that it has a well-developed civil law system.
The Japan Bank for International Cooperation will provide financing for high-risk endeavours, including regional government projects, through a special account created exclusively for that purpose.
Insurance through NEXI reduces the risk that a project will be unable to repay its debts, making it safer for large banks to extend long-term funding. General traders, manufacturers and other Japanese enterprises will thus have an easier time participating in infrastructure projects, such as power plants, in line with government economic growth strategies.