Japan's Official Development Assistance White Paper 2012
Section 2 Overseas Expansion of SMEs and ODA for Developing Countries
Amidst the rapid economic development of emerging and developing countries that has come with recent globalization and the reduction of Japan's domestic demand for products and services due to its aging population and lower birthrate, finding ways to incorporate the economic growth of emerging and developing countries in Japan for the survival of Japanese small and medium enterprises (SMEs) has become an important issue. Working in coordination with the Ministry of Economy, Trade and Industry (METI), which acts as the secretariat of the Conference on Supporting SMEs in Overseas Business, the Ministry of Foreign Affairs (MOFA) and JICA also began new efforts in FY 2012 that will contribute to both assisting developing countries and stimulating the Japanese economy. Specifically, while working in close coordination with METI, the Small and Medium Enterprise Agency, and the Japan External Trade Organization (JETRO), ODA is used to help resolve development issues in developing countries and help Japanese SMEs expand overseas. Although Japanese SMEs have exceptional products and technologies, they are in need of information and know-how pertaining to overseas operations. Similar to the collaboration with local governments that possess a high level of technology and know-how that was introduced in Section 5 of Chapter 1, SMEs are also supported by ODA. By setting up new aid schemes and using existing schemes as described below, ODA can thus simultaneously strengthen bilateral relationships while fostering economic diplomacy.
1. Project Type Grant Aid and Non-Project Type Grant Aid in Collaboration with SMEs
For Project Type Grant Aid, it is possible to use the technology and products of SMEs for the improvement of facilities, etc. For example, in the area of renewable energy, a rural electrification project is being planned using small hydropower plants, for which Japanese SMEs possess outstanding technology. JICA is currently conducting a Preparatory Survey for the project.
The "SMEs Non-Project Grant Aid" was started in FY 2012 to provide the products of Japanese SMEs based on requests from developing countries. The scheme is based on the results of preliminary surveys regarding the needs in developing countries, and aims to provide Grant Aid for the purchase of items that are manufactured by Japanese SMEs and useful in the socio-economic development of these recipient countries.
2. Commissioned Survey Projects Pertaining to Matching Assistance for Developing Countries with Overseas Expansion of SMEs
A new project for commissioned surveys began in FY 2012. This project consists of (i) Surveys of Needs, (ii) Feasibility Studies, and (iii) Dissemination Projects for Governments of Developing Countries.
(i) A Survey of Needs is conducted to comprehensively understand the needs in using the products and technologies of SMEs for resolving development issues. Development consultants, etc. will be commissioned for the studies that are needed for the formation of a development assistance project.
(ii) Feasibility Studies and (iii) Dissemination Projects for Governments of Developing Countries are based on proposals from SMEs, etc. With the intent of developing an ODA project, discussions will be held with the governmental agencies of developing countries, upon which the products and technologies of Japanese SMEs will be utilized and/or the technical guidance will be provided (Dissemination Projects include surveys of needs, introductions, demonstrations, and proving suitability for products and technologies in the partner country). Subsequently, support will be provided for proposing projects that will contribute to growth in developing countries. Furthermore, these Feasibility Studies and Dissemination Projects for Governments of Developing Countries will continue to be implemented while making adjustments to the system based on the experience acquired in FY 2012.
For each of the categories, 3~4 times more applications than the planned number of selections were received by the deadline (the end of July 2012). After undergoing a rigorous screening by a review committee including external experts, 8 Surveys of Needs, 32 Feasibility Studies, and 10 Dissemination Project for Governments of Developing Countries were chosen. There were many proposals received for projects in Asia including Viet Nam, the Philippines, and India in the areas of the environment/energy/waste processing, vocational training/industrial development, and water purification/treatment. In the future, ODA will continue to be used in formulating high-quality projects that contribute to the overseas expansion of SMEs.
3. Assistance through Technical Cooperation
When Japanese SMEs expand their operations overseas, securing and developing human resources is an important issue. Therefore, technical cooperation and the dispatch of volunteers (Japan Overseas Cooperation Volunteers (JOCV) and Senior Volunteers (SV)) arranged through JICA is used so that personnel from SMEs can experience international cooperation activities in developing countries. Additionally, the acceptance of technical trainees and the dispatch of experts in collaboration with superior human resources and technology from SMEs will be enhanced. It was also decided that from FY 2012, a private sector partnership volunteer system will be newly implemented utilizing JOCV and SV schemes as a way of developing human resources with a global outlook to work at SMEs. It is easier for people from SMEs to participate in this system compared to normal volunteer programs since prior arrangements are made with the SMEs regarding their requested country of dispatch, type of work, desired length of stay, scheduling, etc.
METI has also started new efforts on an overseas internship program for dispatching young Japanese to developing countries. Additionally, in an effort to develop human resources in the relevant sector of the partner country, which is necessary for SMEs to expand their operations overseas, METI is providing assistance by transferring production management technology through programs for accepting human resources at management level and dispatching experts for the development of the management personnel that are needed at operational bases in these partner countries. METI also holds seminars to promote the superior technology of Japanese SMEs, as well as encourages interaction between partner-country companies and domestic SMEs.
4. Examples of Collaboration
JICA heard the voices of farmers in Hokkaido who wanted to globally expand their sales route for Japanese-made agricultural machinery, but were lacking in personal connections and information about other countries that could help them expand their business. Meanwhile, JICA received word from government officials and farmers in Ukraine who wanted to learn about better agricultural technology for the purpose of economic growth through agricultural development. Using ODA, JICA then invited government officials and farmers from Ukraine to Japan and conducted a training program on quality control techniques for wheat. Through this training, the Ukrainian side was able to learn about Japanese agricultural techniques, while at the same time, Japanese farmers and agricultural machinery manufacturers succeeded at forming personal networking connections.
The "Feasibility Study for a Water Purification Project using Solar Power" is one of the commissioned Feasibility Study projects that were selected for supporting overseas expansion for SMEs using ODA. In rural areas of Kenya, where the electrical power infrastructure needed for purifying water is undeveloped, and where the use of piped water is not widespread, a study is conducted for a project that introduces and promotes the use of small distributed-type solar powered water purification systems. By supplying safe water with this system, sanitation improvement in Kenya and contribution to the expansion of Japanese SMEs in water-related businesses is expected.