JBIC should promote efforts by developing countries to help themselves and stick to complementing market mechanisms and private businesses.

　In a new post-Cold War international economic order, private enterprises are the leading players. The government should leave whatever it can to the private sector and devote itself to complementing and reinforcing market mechanisms with as little intervention as possible. With the new round of the WTO to get under way soon, this trend will grow even stronger.

　In the past, JEXIM and the OECF contributed greatly to the globalization of Japanese companies and to the economic development of developing countries. However, they did not always give serious thought to maintaining compatibility with the new international economic order. With the establishment of JBIC, the new organization should properly position its activities in the global order and make clear that they would distort the conditions for free competition.

　In the past, some of the measures JEXIM took to support Japanese companies were criticized by the financial community as "suppressing the private sector." JBIC's activities should be limited to areas that only governmental organizations can engage in. They should never profit specific companies or distort the competitive environment between Japanese and foreign companies in foreign markets. If JBIC fails to follow that rule, it could become a target of criticism in the WTO and other international forums for supporting only Japanese companies, and accused of applying industrial policies outside its domain.

　The international trend of development assistance to developing countries is also beginning to move in a different direction from the one Japan has been moving toward. At the Group of Eight summit in Cologne in June, the leaders agreed to cut accumulated debts. However, interest is gradually waning among advanced countries, most notably the United States, for extending government-initiated aid to developing countries. From a humanitarian viewpoint, there is a trend to reduce aid in the form of grants.

　By contrast, Japan has traditionally attached importance to the mid- and long-term development of developing countries and, in addition to grants, extended loans to virtually support the activities of private businesses. In countries undergoing industrialization, it can be said that loans, rather than grants, provide a more effective incentive for them to help themselves. Also, to avoid criticism that Japan is helping Japanese companies, the government has been expanding "untied" loans with no strings attached.

　Japan maintains that unless it supports economic activities closely related to private business, it will not make a fundamentally positive contribution to the goals of development. It should openly assert itself in the international arena. For the same reason, Japan also needs to make a clear distinction between government and private activities.

　Furthermore, the newly formed bank should make the effort to set proper concessionality to meet individual cases. For each case it should properly determine the interest rate on loans and repayment terms. In particular, for project-based assistance, it is not enough to simply take into consideration such factors as the income level and stage of development of the recipient country, as has been the case in the past. It should carefully study each project in the market environment. Only when the project has a low earning rate but benefits the economy of the recipient country as a whole, it should make up for the loss by providing a long-term, low-interest loans.

　There is no reason for Japan not to expect JBIC operations to meet Japan's "national interests" and benefit Japanese companies, either directly or indirectly. It is indispensable for Japan, however, to make its position known in the international economic order and to show clear accountability for its actions.