The Japanese government opened a Kyiv office for the Japan International Cooperation Agency (JICA) on Nov. 20, in a sign that new projects for the Ukrainian economy could be on the way.
The office will manage the more than $3.1 billion that Japan has already invested into Ukraine through JICA, with officials at an opening ceremony for the branch saying that the office’s creation anticipates future projects.
“This is a sign for foreign investors that it’s okay to invest in Ukraine,” said Vice Prime Minister Hennadiy Zubko, who was at the ceremony.
The opening ceremony for the office, which was held on Nov. 21, was attended by Economic Development Minister Stepan Kubiv and Bloc Petro Poroshenko Deputy Leonid Yemets, in addition to Zubko.
Japanese officials in attendance included Ambassador Shigeki Sumi, JICA Vice President Kazuhiko Koshikawa, and JICA’s new Ukraine representative Takaaki Kawano.
JICA is the Japanese state development bank, providing loans, grants, and training programs for countries around the world.
High interest, low rates
Koshikawa trumpeted the office’s opening by saying it will “contribute to strengthen the trust between Ukraine and Japan.”
JICA is looking at future projects in training Ukrainian government personnel and in investing in infrastructure around the country.
But what appeared to interest the top Ukrainian officials most was the prospect of cheap, long-term loans.
“Forming this relationship will bring new projects and investments into our economy, especially after the opening of the JICA office in Ukraine,” Kubiv said.
He added, with a grin: “We’re talking about long-term loans, which are absolutely urgent for the Ukrainian economy.”
“We’re talking about loans at 10 and 30 years at 1.5 percent, and that’s what the Ukrainian economy needs in these conditions of war.”
Out of the $3.1 billion that Japan has invested in Ukraine, around $1.69 billion has come in the form of long-term loan agreements.
Under these deals, the Japanese government has offered credit to Ukraine at extremely generous rates. The country extended a $1.1 billion loan to modernize the Bortnychi sewage plant in a bid to improve how Kyiv disposes of waste.
Ukraine has 40 years to pay off the credit, with a 10 year grace period. The loan was extended at a 0.1 percent interest rate.
Another $170 million loan – to finance the construction of Boryspil International Airport’s international passenger terminal D – was disbursed in 2005 at a 1.5 percent rate.
With a 30-year payback period, the airport started paying off the loan in 2015, and transferred Hr 733 million ($27.6 million) back to JICA over 2015 and 2016.
The new JICA office will manage these older projects and oversee new ones.
Long in the works
The new office first came up in discussions three years ago, after the 2014 EuroMaidan revolution.
“I see much similarity between the two nations. After World War Two, in 1945, Japan was devastated and its people were in despair,” said JICA Vice President Koshikawa, who came to Kyiv for the opening ceremony.
Koshikawa added that help from international lenders like the World Bank helped Japan to develop, and that this experience motivated JICA to work in Ukraine.
BPP MP Yemets travelled to Tokyo last year with a delegation, helping to move the opening of the office forward.
Koshikawa said that the office would focus on three tasks: maintaining economic stability in Ukraine, improving people’s “living environment,” and promoting good governance.
“I feel that Ukraine and Japan share a common and experience and values,” Koshikawa said.
