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International relations

Japan expands cheap infrastructure loans to third country projects

New strategy designed for joint deals with China overseas

A construction site in Jakarta. More projects in developing countries will become eligible for low-rate loans under a policy hammered out by Japan. (Photo by Keiichiro Asahara)

TOKYO -- Japan drafted a plan to offer greater assistance for infrastructure development overseas ahead of a key summit with China next week, as it prepares to pursue joint projects with Beijing in third countries.

Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping are expected to discuss cooperating on infrastructure investment in other countries when they meet on Oct. 26. In light of this, a Japanese government council on Wednesday drafted a basic strategy to promote infrastructure exports.

Under the new strategy, the Japanese government will extend low-rate yen loans even to projects abroad in which Japanese companies have a relatively small stake. In addition, Japanese businesses will provide a certain portion of materials for projects undertaken by consortia led by overseas companies.

The government-owned Japan Bank for International Cooperation and Nippon Export and Investment Insurance are also expected to offer more favorable financing terms for projects supplying liquefied natural gas to third countries.

"There's plenty of room to expand and fortify our efforts to tie up with partners in projects carried out in third countries," Chief Cabinet Secretary Yoshihide Suga said at the meeting.

Suga pointed out that Japan has to pay close attention to potential problems with the projects. For example, an emerging economy or a company based in such countries may have weaker compliance regimes. Japan plans to demand transparency when pursuing infrastructure cooperation, including with China.

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