The FINANCIAL — Japan's Bank of Tokyo-Mitsubishi UFJ and the Asian Development Bank (ADB) have signed an agreement under the ADB's Trade Finance Facilitation Program (TFFP) designed to foster international trading activities with developing Asian nations.
"Under the TFFP's Partial Credit Guarantee (PCG) product, the two sides signed a "Confirming Bank Agreement" that will have the parties share risk on letters of credit and other trade financing instruments issued by selected financial institutions in the region. Under the TFFP, implemented in 2004, ADB works with banks to support regional and intraregional trade in its developing member countries by providing funding for pre- and post-shipment finance as well as guarantees for trade transactions." ADB reports.
Obtaining trade financing can be particularly tough in smaller and developing nations, where such financing systems are less developed, and for small- and mid-sized companies which often lose out to larger firms when seeking trade support. Moreover, the current credit crunch has made trade financing harder to come by everywhere in the world.
"Trade is a crucial element in economic development and providing increased access to trade financing will allow exporters and importers in underserved parts of the region to expand their trading activities," said Philip Erquiaga, Director General, of ADB's Private Sector Operations Department. "Bank of Tokyo-Mitsubishi UFJ has now become one of our major partners in supporting that."
Akihiko Tomaru, General Manager of the International Business Division of Bank of Tokyo- Mitsubishi UFJ said, "We are delighted to enter into this strong partnership with the ADB. This strong partnership will enhance our ability to increase support to not only Japanese but also other major international clients doing business in developing countries in Asia."
The TFFP grew exponentially in 2008 and ADB continues to seek strong growth in the program particularly at this time when trade – a cushion against recession in much of the world – requires increased levels of financial support.
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.
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