Stories to Tell : Development Finance in Action

Jamaica Energy Security and Efficiency Enhancement Project

jeseepIn fulfillment of its mission to reduce dependence on fossil fuels, the Development Bank of Jamaica launched JESEEP in conjunction with public and private partners and which was supported by the World Bank/International Bank for Reconstruction and Development from which the DBJ has established an energy line of credit to on-lend through approved financial institutions. This line of credit represents part of a larger loan of US$ 15 million borrowed from the World Bank by the Government of Jamaica through the Ministry of Mining and Energy to support the National Energy Policy.

This energy policy, which was crafted by the Ministry of Mining and Energy covering 2009-2030, enables Jamaican businesses and industries to access energy and allows them to become competitive on the international market. For individuals and households, this meant having the energy they need to manage their daily lives in this modern economy. The policy thus advanced a modern, efficient, diversified and environmentally-sustainable energy sector.

 

Fiji Development Bank’s Money Smart

Fiji_Koro High SchoolTo fulfill its mission to enhance the quality of life in the country and to pursue its belief that financial literacy is the cornerstone in helping young people become enterprising and responsible adults when it comes to managing their personal and/or business finances, the Fiji Development Bank (FDB) has launched Money Smart™, a compulsory subject under the Commercial Studies syllabus in Fiji secondary schools.

FDB signed a Memorandum of Understanding with the Ministry of Education to continue the financial literacy program for third-year students as well as the inclusion of a new program, Invest Smart, for fourth-year students in 2011.

The programme which was implemented in 162 secondary schools in Fiji developed student skills in financial literacy and financial management at very young age to build on good saving habits.

Since the start of the program in 2007, FDB has already spent close to $170,000 on resources which include student work and resource books, teacher workshops, and money boxes for Money Smart™. For 2011, the Bank will invest a further $61,900 for Money Smart™ and Invest Smart.

 

Water Project Developer

JFC Photo1JFC Photo2In the 21st century that may well be called the “Century of Water”, population growth and economic growth in emerging economies have aggravated water shortages and pollution in many parts of the world. As there is increasing worldwide interest in water problems, water business is expanding in the world. Given these developments, Japanese firms, which have advanced technologies in water treatment and desalination, are expected to expand overseas water business. However, while Japanese firms have advanced technologies for individual components of the water treatment process, the overall management of water projects, including their operation and maintenance remains a challenge to them.

In August 2009, JBIC signed an MOU for global collaboration on water business with Hyflux Ltd., a Singaporean company. The objective of the MOU is to explore the possibility of cooperation on water business between JBIC and Hyflux Ltd. in the Asia Pacific, the Middle East, and North Africa. Specifically, the MOU sets forth that both parties exchange information and opinions on water projects in which Japanese firms are involved as equipment exporters or investors and for which JBIC can consider possible financing. Hyflux Ltd founded in 1989 as a trading company selling water treatment systems, is today engaged in a wide range of water business internationally, including research on water treatment membranes and the construction and operation of water treatment plants. JBIC has strengthened its support for Japanese firms conducting water business overseas under FACE and the LIFE initiative. JBIC will promote Japanese firm’s participation in the entire water value-chain through closer cooperative ties with Hyflux Ltd.

In December 2009, JBIC also signed an MOU with Kitakyushu city for cooperation on climate change mitigation and water infrastructure development. The MOU set out that both parties share information and views on utilizing the experience, know-how and technologies that Japanese firms possess on environment and climate change issues and water infrastructure through the “Centre for Low-carbon Society in Asia” that was to be established by Kitakyushu city to develop human resources equipped with expertise, conduct research and share and disseminate information and knowledge.

JBIC will support the overseas development of water business by Japanese firms through strengthening partnerships with domestic and foreign companies and organizations involved in measures to address climate change and water business in the world.

 

Development Bank of the Philippines

    Connecting islands

roroThe Philippines, as an archipelago of 7,100 islands, needs a systematic way of connecting its main islands via sea lanes for the efficient transport of passengers and cargoes.

The Development Bank of the Philippines (DBP) saw this need and developed the roll-on , roll-off (Ro-Ro) program, not only to help in the efficient way of transporting passengers and cargoes but also in transporting basic commodities to far-flung islands.

The Asian Maritime Transport Corporation (AMTC) has benefited from the financing of Ro-Ro vessels provided by the DBP through its “Sustainable Logistics Development Program” (SLPD), an investment financing facility for a comprehensive and integrated transportation system as well as for related infrastructure and support services.

“The Ro-Ro has provided many benefits to small businessmen, such as the elimination of double handling in loading and unloading of goods; elimination of damage and pilferage of goods; and reduction of unnecessary port congestion since goods are no longer stockpiled in the ports” says Mr. Raul Rodriguez, AMTC president. He also added that transport of goods via the Ro-Ro has led to the reduction of inventory and intermediation cost, resulting to faster travel of goods from farms to markets.

 


Oman Development Bank SAOC

    Dreamweaver


oman dev saco
Said Nasser al Mouini, a young Omani whose dream was to convert waste into cash, wanted to set up a recycling plant where discarded carton boxes could be transformed into paper again.

He knocked on the doors of Oman Development Bank SAOC (ODB) which readily lent him a loan of 237,000 Omani rials (US$ 615,583) as part of the project cost. Said’s Al Mouini Paper Factory has been operating successfully since 2000.*

These and other woven dreams have made ODB a model for successfully channeling government funding to the private sector and small-scale industries.

With a capital of R.O. 20 million
(US$ 52 million), the state-owned bank witnessed a new phase in 2006 when it specialized in financing small and medium enterprises in all development sectors under one umbrella. ODB offered soft loans and interest rates not exceeding 3% while providing interest-free loans up to R.O. 5,000 to small investors and craftsmen.

A Royal Decree in 2006 raised the bank’s capital and lending ceiling to a maximum of R.O. one million per loan.

Through financing various development sectors, ODB significantly contributed to the development of the economic and industrial sectors in the Sultanate of Oman, especially SMEs which are widespread in various regions. In the farm, fisheries and animal resources sectors alone, ODB has bankrolled projects to the tune of RO 78 million (US$202 million) in a span of three decades (1977-2007).

 

Small Industries Development Bank of India

    Blazing trails

blazing trailsIndia has attracted global attention for its rapid growth, but the millions of micro, small and medium enterprises (MSMEs) that comprise the backbone of its economy are still not immune to the economic contagion.

India’s MSMEs sector employs more than 60 million people – the second largest employer next to agriculture. This sector contributes 8% of the country’s GDP, 45% of the manufactured output, and 40% of its exports.

Through MSMEs, India kept in check its rural-urban migration by providing villagers and people living in isolated areas with sustainable sources of local employment.

When the global economic crisis reached Indian shores in 2008, MSMEs were the first to be deprived of funding, hurting their viability and threatening their existence.

Until Small Industries Development Bank of India (SIDBI) came into the scene. One of its major roles is to motivate banks and financial institutions to lend more to MSMEs by providing them refinance and direct finance.

In 2009, SIDBI turned its attention to reviving up the distressed or nonperforming assets in the MSME sector. SIDBI took the lead in promoting the country’s first MSME-focused asset reconstruction company called India SME Asset Reconstruction Company (ISARC) to relieve the banking system of the burden of distressed assets, enabling them to focus on their core function of financing and development of new business opportunities so as to further strengthen the economy.

Now on its 20th year since its inception in 1990, SIDBI, through its financial, promotional and developmental support, has benefited more than 24 million beneficiaries in the MSME sector.

 

Credit Guarantee Corporation Malaysia Berhad

    SME lifesaver

SME Devt Bank of ThailandAs Malaysia’s sole provider of guarantee schemes and ancillary services, Credit Guarantee Corporation Malaysia Berhad (CGC) plays an important part in helping small and medium enterprises with too little or no collateral access loans from financial institutions at reasonable cost. This was manifested during the global economic crisis, which affected Malaysia’s economy and hampered the flow of funds to SMEs.

CGC was incorporated as a limited company under the Malaysian Companies Act 1965 on July 5, 1972. Its current shareholders are Bank Negara Malaysia (Central Bank of Malaysia), which holds a nearly 80% stake, and commercial banks.

2009 saw CGC stepping up its operations to provide fresh capital and much-needed liquidity to Malaysian SMEs.

It administered a RM2-billion SME Assistance Guarantee Scheme to ensure that SMEs remain viable and have continuous access to financing during the difficult times. CGC also provided SMEs with restructuring and re-scheduling options to address their financial constraints in loan repayments.

It also forged partnerships with other financial institutions to help SMEs have continuous access to credit lines, and shorter processes and turnaround time for speedier disbursement of funds.CGC also developed new and competitively priced products to suit changing market needs.

CGC also created an Islamic Fund for contract financing and introduced a green technology financing scheme as part of its efforts on financing sustainable development.

 

Development Bank of Japan, Inc.

    To the rescue

omanWhen Japan slipped into a deep recession in late 2008 after seven years of steady growth, many analysts thought it would take at least a decade for the world’s second-largest economy to recover.

As it took its worst beating from the global economic crisis, many export-dependent firms and state-owned enterprises started to seek protection from the Japanese government. This bolstered the role of the Development Bank of Japan, Inc. (DBJ), where the Japanese government has a 100% stake.

DBJ extends medium- to long-term loans to large- and mid-size businesses. Under the emergency program it launched in December 2009, the Bank provided up to 1 trillion yen in low-interest long-term loans to help cash-strapped firms tide over the global crisis. The program was a key element in the economic stimulus measures of the Japan government.

A surge in emergency lending that threatened to hurt DBJ’s financial soundness, however, forced the government to seek a tenfold increase in its capital.

On October 1, 2008, DBJ became a joint stock company, taking a first step on the road to privatization after its 57-year history as a policy-based finance institution that had contributed to the economic and social development of Japan.

“With our rebirth as a private-sector company, we have formulated a new corporate philosophy with the goal of ‘applying financial expertise to design the future.’,” says Minoru Murofushi, DBJ President.

 

Development Bank of the Philippines

    Greening the countryside

State-owned Development Bank of the Philippines (DBP) takes the color green in its corporate logo seriously.

DBP used an initial funding of Php50 million (more than USD 1 million) from the KfW of Germany to reforest denuded areas, create livelihood opportunities, and spur economic activity in the Philippine countryside.

Under its DBP Forest Program, the bank extends seed capital to buy plant seedlings and defray administrative and maintenance costs. Farmers and fishermen in beneficiary communities take care of planting and cultivation, site preparation, and other forest activities. Partner agencies lend the technical expertise, monitor, and oversee project implementation. DBP’s big borrowers also become donors and partners as front-end fees from their loans partly bankroll the program..

Barely a year since its inception in April 2005, the program already covers more than 4,000 hectares of land in 17 projects in nine provinces. These areas are planted with a variety of high-value fruit trees, forest wood, and other tree species. Its forest project in Quezon province is also being eyed for ethanol production. In Bukidnon province in Mindanao island, 829 families are benefiting from DBP’s partnership with a private firm on a community-based rubber plantation.

DBP won the Environmental Development category in the 2006 ADFIAP Awards for its innovative and multi-sectoral approach to the DBP Forest Program. The bank is leading the way, not only towards nation building, but also towards nation greening.

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SME Bank Malaysia

    Saving a ‘dying’ industry

When you think of Malaysia, you think of batik—a traditional tapestry rich with color and embued with a long history of fine craftsmanship. But the industry of batik making has become moribund as traditions fade and financing dries up.

To revitalize the batik and craft industries, the Malaysian government, through the Ministry of Entrepreneur and Cooperation Development, and the SME Bank tied up for a program called Batik and Craft Entrepreneur Program (BCEP). The goal is to provide batik and craft makers comprehensive assistance through flexible financing schemes, capacity building, and advisory services. NGOs have teamed up with the Malaysian Craft Development Board to help market and promote the products locally and abroad.

Since BCEP was introduced, SME Bank has already financed more than 44 batik and craft enterprises.

The program helped raise the standard of living in the countryside, promote the use of indigenous resources and create jobs among entrepreneurs from small towns and rural areas. Homegrown technology has also created as batik makers now use computer-aided design and production.

The successful program of SME Bank and the Malaysian government won the SME Development category in the 2006 ADFIAP Awards.

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Development Bank of Turkey

    Starting them young

In the province of Kirikkale in Turkey, young people only had two places to go to find work: in the farm or in government offices. Even if the province has the infrastructure to support economic development, its people still go elsewhere to seek opportunities.

The Development Bank of Turkey (DBT) thought it best to invest on young people to jumpstart the province’s economic engine. By developing young entrepreneurs, DBT knew it will help to reduce unemployment in the province and succeed in luring local investment.

The bank organized a quarterly entrepreneurship seminar, a project contest and evaluation seminars for the province. Around 360 people acquired knowledge and training on the areas of marketing, feasibility management, legal regulations, and information technology. DBT experts contributed to planning, organizing the seminars, and holding lectures.

Some of the fruits reaped from these activities include: a website for entrepreneurs of the province, municipal implementation of winning projects on recycling waste paper, employment of about 70 students, and the publication of six books about the seminar program.

For its success in this undertaking, DBT won the Local Economic Development category in the 2006 ADFIAP Awards. Its efforts bear proof that development banks have a crucial role to play in shaping the economic destiny of their nations.

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Planters Development Bank

    Spirit at work

In a business driven by the relentless pursuit of the bottom line, is there room left for spirituality?

At Planters Development Bank, there is. One just has to look at its workforce, its regular office gatherings, and the spirit of employee volunteerism that now pervade the bank’s corporate culture.

Called WHAM for ‘Whole Heart and Mind’, the culture formation program embodies Plantersbank’s “commitment and passion to give its all, whole heart and mind, in the attainment of its vision and mission and in making the bank’s values alive in the workplace.”

The program has made Plantersbank’s staff more loving and sensitive to the needs of others. Bank staff are actively engaged in various volunteerism programs, including donations to scholarship programs, the Boys Town, public hospitals, and the Philippine National Red Cross. The harmonious relationship between labor and management has also led to several peaceful negotiations on collective bargaining agreements. Even the bank’s main clientele, the SMEs, are benefiting from the program through improved customer care service.

The program has already won several international accolades, including the 2004 International Spirit at Work Award given in Switzerland in 2004; and the Asian Banking Award for Outstanding Human Resource Program in 2006. It was also one of the Outstanding Development Projects in the 2006 ADFIAP Awards in the category Human Resource Development.

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Industrial Development Bank of India

    Power Deal

When Enron Corp. skid into financial troubles in 2001, not only did this threaten to sink the multinational power firm’s business in the US, it also affected the power sector of several countries.

This included India, which has just then opened its power sector to 100% private ownership to meet increase local demand. Among the early beneficiaries of the liberalized policy was Dabhol Power Project (DPP), which involved a 2,184-MW combined cycle gas-based power plant and natural gas facilities.

India financial institutions (IFIs) led by the Industrial Development Bank of India (IDBI) bankrolled 70% of the USD2.9-billion project in the form of senior debt/guarantee assistance. A host of international banks and export credit agencies also became leaders.

When Enron filed for bankruptcy in the US, DPP was among those engulfed in commercial disputes. Stakeholders took legal actions to protect their claims. Several attempts at finding a common had also failed.

With government support, the IFIs developed a comprehensive restructuring plan for DPP.

This involved an unprecedented move to set up a Financial Purpose Vehicle that would buy out the debt of foreign lenders.

In less than a year, the DPP restructuring deal was completed successfully. A new company took over DPP’s assets, with equity support and ‘acquisition funding’ from Indian financial institutions.

Recognizing its uniqueness and success, the DPP restructuring was cited by ASIAMONEY as “The Best India Deal of 2005.” It was also chosen as one of the Outstanding Development Projects in the 2006 ADFIAP Awards in the Infrastructure Development category.

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