Private Sector Development

While a wide range of factors, including macroeconomic stability, infrastructure development, and improved basic education, constitute important elements of private-sector development, JICA focuses on the following fields: (1) developing policies and institutions for improving the business environment; (2) promoting trade and investment; (3) improving the competitiveness of local companies; and (4) promoting local economies and industries.

1. Developing Policies and Institutions for Improving the Business Environment

JICA assists with policy and institutional development so that developing countries will be able to achieve an environment conducive to the activities of private companies and realize the development of industries that serve as an engine for development.

(1) Industrial Promotion Policy

Industrial promotion policy is a principal pillar for national development in developing countries. JICA's assistance in drawing up industrial policies focuses on various aspects — promoting trade and investment, improving the competitiveness of local companies, or promoting local economies and industries — depending on the situation in the partner country.

In fiscal 2014, JICA continued supporting the industrial policy planning process of Ethiopia by holding industrial policy dialogue with the prime minister and other decision-makers. It also dispatched experts to Timor-Leste to assist in drafting industrial policy documents and to Cambodia to assist in developing a basic framework for an SME promotion policy. In Myanmar, JICA also provided training for government administrators in charge of industrial promotion to bolster policy implementation structures.

(2) Developing Business Laws and Institutions

JICA assists with the development and operational improvement of legislative and institutional infrastructure for business activities, including economic laws such as the enterprise law and the competition law, intellectual property systems, standards and conformity assessment systems (standardization, certification, and measurement standards), tax administration, and financial systems.

For example, JICA has sent experts to Indonesia, Viet Nam, and Myanmar for assisting in building the systems for protecting intellectual property rights such as patents and trademarks.

2. Promoting Trade and Investment

The field of trade and investment focuses on benefitting from economic globalization.

(1) Promoting Investment

In direct investment in 2014, 55.5% of investment went to emerging and developing countries; thus, developing countries are becoming even more attractive as an investment destination for foreign companies. There are moves on the part of developing countries to take advantage of foreign direct investment (FDI) as an engine for economic growth and to promote domestic industries by developing supply chains in cooperation with foreign companies.

To attract FDI, developing countries need to address two challenges: (1) "improvement of the investment environment" by, for example, streamlining investment procedures and removing barriers to investment; and (2) "enhancement of investment promotion functions," including active dissemination of investment opportunities information. JICA dispatches investment promotion advisors mainly to Asian and African countries to help them address these challenges.

In recent years, the development of special economic zones and industrial parks in developing countries is drawing attention. Such zones and parks are designed to offer an attractive investment environment — intensively built infrastructure, preferential treatment, and accessible services — so that foreign companies will use them as a foothold for their operations in these countries. In fiscal 2014, JICA launched assistance to support capacity development for the Thilawa Special Economic Zone (SEZ) Management Committee in Myanmar as well as the formulation of SEZ development plans and capacity development for the implementing agency in Bangladesh.

In India and other countries, JICA is also engaged in improving the investment environment under its development policy loan program, which is aimed at reforming and improving the policies and institutions of developing countries' governments.

(2) Promoting Trade

Imports and exports of emerging and developing countries account for 40.3% in export value and 39.6% in import value of total global trade in 2013. It is obvious that trade plays an important role in economic development in developing countries.

For furthering trade, it is essential to simplify and facilitate trade-related procedures, including customs, as well as to improve access to foreign markets by companies in developing countries.

JICA provided support for facilitating trade procedures by modernizing customs in Viet Nam and Myanmar. It also supported functional improvement of the Directorate General for National Export Development, Ministry of Trade in Indonesia. In fiscal 2014, JICA launched a project in Ethiopia aimed at promoting the branding of local products to differentiate them from competing products.

3. Improving the Competitiveness of Local Companies

JICA is engaged in strengthening support services for companies and developing industrial human resources to improve the competitiveness of local companies, especially SMEs, which account for the predominant proportion, that support economic growth in developing countries.

(1) Strengthening Support Services for Companies

From the point of view of heightening the competitiveness of companies, assistance could be provided addressing management resources within companies: labor, technology, capital, and information. Because assistance in these areas, which is aimed mainly at SMEs, tends to be provided through intermediary public/private support organizations, much of JICA's assistance targets improving the functions of these support organizations.

In fiscal 2014, JICA helped with the development of SME support systems in many countries. For example, it assisted both in strengthening SME support networks in Thailand and in introducing an SME mentor system in three Balkan states — Serbia, Bosnia and Herzegovina, and Montenegro. In Indonesia and the Philippines, JICA's support for groups of enterprises/producers, such as industrial clusters, contributed to capacity development, improved coordination, and better performance.

JICA is also spreading the use of Kaizen methodologies for quality and productivity improvement, one of the areas of Japan's greatest competency. In consideration of TICAD V, this effort has been strengthened especially in Africa. JICA provided cooperation for private sector development in Ethiopia, Ghana, Tanzania and Zambia in 2014, pursuing further mutual collaboration in this field.

(2) Developing Industrial Human Resources

Assistance for developing industrial human resources focuses on measures to boost the competitiveness of companies utilizing Japan's know-how in this area. JICA cooperates with government institutions, educational institutions, and other entities in various countries that provide such support for human resources development. The goal of the cooperation is to enable companies to acquire and improve the know-how necessary for business activities, such as business and production management and manufacturing technology.

The results of this type of cooperation can mutually benefit both the developing country and Japan. It contributes to the development of the manufacturing industry in the developing country and to the business activities of Japanese companies operating locally. For example, JICA shares Japanese manufacturing techniques with India and assists in nurturing potential leaders who will play a central role in achieving sustainable development of the manufacturing industry. As visionary leaders, they are expected to play a leading role in developing Indian industries and serve as business partners for Japanese companies who understand Japanese ways of thinking. This will likely help expand business between the two countries.

Particularly notable in this field are the Japan Centers for Human Resources Development (Japan Centers). JICA is establishing Japan Centers in Cambodia, Laos, Myanmar, Viet Nam, Mongolia, Kazakhstan, the Kyrgyz Republic, Uzbekistan, and Ukraine as focal points for its efforts in nurturing industrial human resources in developing countries. Through the Business Training Programs that form the core of their operations, the Japan Centers nurture human resources that are specialized in Japanese-style management and production management methods. In recent years, alumni reunions actively work on creating networks among the local industrial workforce. Utilizing the know-how and networks built up over the many years of the Business Training Programs, JICA is also providing support and cooperation to Japanese companies doing business in these local markets.

4. Promoting Local Economies and Industries

As the economies of developing countries grow, regional disparities have become a major issue in an increasing number of developing countries. In order to spread the benefits of economic growth widely to local residents, JICA supports industrial development benefitting local areas by effectively utilizing the special characteristics and resources of local areas.

In many countries, including Malawi, the Kyrgyz Republic, Colombia, and Kenya, for example, JICA helps create a system whereby small enterprises that produce processed agricultural products and handicrafts and their associations can expand their business on their own. Specifically, JICA assists in developing a mechanism for providing guidance and advice on various issues such as basic business knowledge (accounting, etc.), exploration and utilization of local resources, improvement of quality and productivity, food sanitation, packaging/design, and marketing/sales promotion. This effort contributes to creating attractive products.

JICA cooperates in the tourism field in countries, such as Mozambique and Bosnia and Herzegovina, by providing assistance for coordinated efforts and collaboration by the public and private sectors. JICA cooperates with advertising and promotions for targeted tourists and with developing tourism products that make use of the special characteristics of local resources and thus benefit the region. Tourism projects in Jordan and Ethiopia emphasize the concept of preserving, displaying and utilizing the tourism resources including local nature, culture and ways of life, in a sustainable and unified manner with local people. To materialize this concept, JICA is supporting capacity development of public and private stakeholders and strengthening of collaboration among those stakeholders.