Japan’s overseas lending arm JICA back in business

A government panel has given its approval to the proposal to allow the Japan International Cooperation Agency (JICA) to make investments and provide loans to developing countries again, reversing a 2001 decision to strip JICA of such power, officials said in Tokyo on Wednesday.

The Overseas Economic Cooperation Council, spearheaded by Japanese Prime Minister Taro Aso, gave its nod to the proposal to facilitate infrastructure and resources development in developing countries by funnelling assistance via JICA to Japanese companies that engage in business in such nations. The Aso government will incorporate the decision into a package of key policy guidelines it will draw up and announce in late June, officials said.

More specifically, the government envisions having JICA invest in overseas projects to build water purification plants with the involvement of Japanese companies, and also to help Japanese firms secure concessions in foreign coal mines, they said.

JICA earlier used to provide loans and investments for projects that had a high risk factor, but after the Japanese government witnessed a string of cases where JICA incurred losses, it was stripped of the powers to provide credit and make such investments, as part of a programme to reform government-backed corporations.

The finance ministry, the foreign ministry, the economy, trade and industry ministry and others will devise a mechanism to keep JICA from incurring large losses by analysing past cases of its investment and loan blunders.