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Cabinet Decision on the Bill for the Act for Partial Revision of the Trade and Investment Insurance ActAiming to support Japanese enterprises’ global business development

On February 7, 2014, the Cabinet decided to approve the Bill for the Act for Partial Revision of the Trade and Investment Insurance Act. In response, the bill is submitted to the Diet during the 186th session.

The bill aims to improve functions of trade insurance so as to reflect Japan’s current situation, including the increase in recent years of the threats of war or terrorism that Japanese enterprises that are developing oversea businesses will face in the regions, as seen in the terrorist attack against an enterprise operating in Algeria in January 2013, and varying transaction structures and fund raising measures.

1. Background to the revision

As Japanese enterprises have been expanding business overseas in recent years, the threats such as war and terrorist attacks that they may face in the regions is increasing, as seen in the terrorist attack against an enterprise operating in Algeria in January 2013. In addition, not only the structure of transactions is varying, such as an increase in transactions by Japanese enterprises’ affiliates overseas, but also the form of fund raising measures, such as loans on a local currency basis, are also becoming diverse day by day.

Against the backdrop to this situation, it is necessary to review and improve the functions of trade insurance and take measures for supporting the development of environments in which Japanese enterprises are able to expand global business in a stable manner.

2. Details of the revision

1) Countermeasures against the threats of war and terrorism

The Trade and Investment Insurance Act (hereinafter referred to as the “Act”) is to be revised to expand the trade insurance coverage to the extra cost accrued to Japanese enterprises when their plant construction projects are disrupted by war or terrorism, such as personnel cost and additional storage charges.

2) Providing support to business activities by Japanese enterprises’ overseas affiliates and other entities

The Act is to be revised to enable trade insurance to cover business transactions, such as exports and investments, by Japanese enterprises’ overseas affiliates or sales bases of Japanese products in the regions.

3) Facilitating fund raising

The Act is to be revised to enable trade insurance to cover loans (including those on a local currency basis) and bridging loans by Japanese banks’ overseas branches and entities and by Non-Japanese banks for Japanese enterprises that wish to use such funds for their projects in the regions.

4) Other sections to be revised

The Act is to be revised to make trade insurance cover fees of services performed in Japan provided by Japanese enterprises to overseas enterprises, and also to enable Nippon Export and Investment Insurance (NEXI) to assume reinsurance of specific products from domestic insurers.

Reference: Trade insurance system

The trade insurance system covers the risks that arise from Japanese enterprises’ external transactions, including exports, investment, and loans, which are not covered by private insurers.

Supporting exports

Supporting investment

Supporting fund raising

  • Supporting export business by Japanese companies
  • Indemnifying losses caused by non-payments of export credits
  • Supporting Japanese enterprises that invest in overseas countries
  • Indemnifying losses caused by business disruption of overseas enterprises in which Japanese enterprises invest, due to war and other factors
  • Supporting Japanese banks to fund projects for resource development in which Japanese enterprises take part
  • Indemnifying losses caused by borrowers who do not repay loans

Release Date

February 7, 2014

Division in Charge

Trade Insurance Division, Trade and Economic Cooperation Bureau

Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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