Japan Development Bank opens Los Angeles office.

Long-term, low interest loans available to exporters

A Japanese government bank this month set up a liaison office in Los Angeles to offer long-term, low-interest loans to American exporters and venture firms, creating a face-to-face opportunity in L.A. for those anxious to crack the Japanese market.

The Japan Development Bank opened a two-man post in downtown L.A. on Figueroa Street and it began last week to field questions from the eager and the cautious. A coming-out event put on by the bank Nov. 13, featuring vice presidents from two American companies that previously won loans, attracted representatives from about 70 local firms.

"All foreign companies are eligible," said L.A. office Chief Representative Hiroyuki Kokado. High-technology, however, has the brightest prospects. "High-tech companies have a special interest for us," said Kokado, noting that most loans to U.S. companies in the recent past have gone to technology outfits in the Silicon Valley. No aid has yet gone to an L.A.-area firm, he said.

Last year, the JDB loaned $180 million to U.S. enterprises.

The Japan Development Bank, founded in 1951, traditionally funded Japanese enterprises with easy-term loans to rebuild Japan after the war. But in the 1980s, prodded by Washington's criticism of the U.S.-Japan trade imbalance, JDB has vowed to aid American exporters and joint-ventures seeking to establish in Japan.

"There's bound to be interest," said L. Fargo Wells, director of the Export Small Business Development Center in L.A. "You might be able to find better financing there at lower cost."

Currently, the JDB's "most-preferential" rate (a government prime rate) is approximately 6.1 percent per year, said Kokado's assistant, Toshiaki Komatsu. Loans up to 25 years would be available, lent primarily in yen, although dollar-loans are possible, said Komatsu.

The men, both career employees of the $72 billion-in-assets bank, are stationed in L.A. on a three-year tour. They moved here this summer and leased 1,500 square feet on the 44th floor of brand-new Sanwa Bank Plaza, owned by Mitsui Fudosan  (U.S.A.) Inc.

"In dollars, 6.1 percent is a darn good rate. Below market," said Wells. He added, however, that JDB's depth of commitment "may be serious, or it could be a showcase," echoing skepticism voiced by a few observers in L.A.'s trade community last week. The Japanese government was pushed to make such loans, and a few similar government and private efforts have fallen short of their public pronouncements.

Officials from a different Japanese government bank, the Japanese Export-Import Bank, have told several U.S. agencies they were interested in funding similar programs here. "Our impression," said one American government official who met with them but asked not to be named, "is that most of what has been offered so far is window dressing."

Its counterpart in Washington, the U.S. Export-Import Bank, admittedly funds no imports into the United States. Such import promotion is rather rare among governments worldwide.

This year the JDB allocated $12 billion, or 5 percent of its loan funds, to foreign companies. The program, called "Adjustment of Industrial Structure/Internationalization of Japan," aimed to appease the U.S. and other governments that are angry with Japan's ballooning trade surpluses. Last year, $11 billion was earmarked, but about $346 million was actually loaned to foreign companies, $180 million in the United States.

"I think $180 million is not very much money, but it's better than nothing," noted international-trade attorney Susan Liebeler. "Any new source of financing in Los Angeles is a welcome development, particularly in a recession," said Liebeler, of Irell & Manella in downtown L.A.

One past recipient was LSI Logic. Chief Financial Officer Patrick S. Jones said his company received "between $25 million and $45 million" to build two chip-fabrication plants in the city of Tsukuba. LSI's total investment in Japan is $240 million. Jones said his plea was strengthened by picking Kawasaki Steel as a venture partner, because the Japanese government is especially looking to revitalize its older industries, like steel.

"Kawasaki was absolutely looking to get into our industry. They wanted diversification," said Jones. About 60 percent of LSI Logic's manufacturing capacity is Japan-based now.

Jones said he borrowed yen, and that after the relationship clicked, six months elapsed before the money was offered.

As for the L.A. office of JDB, "I wouldn't discourage anybody to find what it's about," said Senior Loan Officer Jim Newton of the California Export Finance Office. "But what we've seen so far isn't altogether encouraging," he said, referring to Japanese government feelers sent out to his office concerning joint efforts. The California Export Finance Office gives loan guarantees to exporters based in the state.

JDB fields only four other liaison offices outside Japan -- London, Frankfurt, New York and Washington, D.C. The L.A. office is the first to open that is devoted exclusively to seeking American ventures, said Kokado.

American projects financed by JDB include plants to make chemicals, high-technology, medical devices, toiletry products, pharmaceuticals, specialty glass and spray nozzles.