TOKYO -- Japanese and Russian state-backed lenders will create a fund to jointly invest in Moscow's priority development projects, part of efforts to promote better business and diplomatic ties.
The Japan Bank for International Cooperation and the Russian Direct Investment Fund, or RDIF, will each contribute roughly half to the 100 billion yen ($902 million) fund, slated for launch in 2017. Most of that amount will go toward projects in such fields as medicine, urban development and upgrades to manufacturing facilities.
The lenders have begun sharing information to come up with projects Japanese companies would agree to invest in. Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin affirmed progress on eight economic cooperation efforts during talks Saturday in Lima, Peru. JBIC aims to sign about 10 more memorandums when Putin visits Tokyo in December for a summit.
JBIC also will form a venture with Russia's Far East Investment and Export Agency and the Far East and Baikal Region Development Fund to encourage investment in a special economic zone in that area. The institution will serve as a go-between for Russian and Japanese businesses and work with Russian authorities to secure permits. The zone offers benefits such as lower corporate tax rates and simplified administrative processes, with Japanese companies seeing it as a possible hub for Asian exports.
The lender is also in final talks with Russian state natural gas producer Gazprom to build a pipeline for the fuel to Japan. Gazprom has shown strong interest in the project, and is screening potential Japanese partners as part of feasibility studies.
JBIC also will extend a new line of credit to Sberbank, Russia's largest bank, worth around 30 billion yen.
Tokyo aims to use greater economic cooperation to aid negotiations with Russia over disputed islands off Hokkaido. But Moscow is putting economic matters first, and remains leery of moving too quickly on territorial talks. Japan also must be careful not to step on international toes when dealing with the RDIF, which is subject to sanctions from the U.S. and European nations.