1. October 24, 2003 Yasuo Izumi The World Bank
Factoring in Japan
October 24, Yasuo Izumi The World Bank

2. Factoring - Development
First Factoring Companies were Created in mid-1970s
Rapid Growth in 1990s during the Full Deregulation Introduced in 1993 for Financial Sector
New Entrants from Non-Banking Sector (NBFIs, Insurance, Mfg Companies, etc)

3. Factoring - Recent Trend
Source FCI Annual Report 2002

4. Factoring - Key Players
Banking Groups – 4 Major Groups (as FCI Members)
Insurance Company Groups
NBFIs – Leasing Companies etc.
Large Manufacturing / Distribution Groups
Independent Financial Boutiques

5. Factoring - Infrastructure
Credit Information System – Yes
Functioning Payment System – Yes
Efficient IT System – Yes, but more…
Legal Framework – Yes
Conducive Taxation – Yes !!
FX Licensing – No need
Credit Insurance – Yes

6. Key Feature – Fin Sec 1
Downsizing / NPL Issues (1990s -) - Strong Need for Asset Mobilization
Deregulated Financial Sector - Active to New Financial Instruments
Finance Resource is Abundant - New “Intermediaries”

7. Key Feature – Fin Sec 2
“Bills Discounted” - Popular Working Capital Funding
Collateral Arrangement - Always “The Issue” for SMEs, Start-ups

8. Key Feature – Enterprises
Unattractive “Bills Discounted” Loan - Promissory Note Stamp Duty - Administration of Prom. Notes - With Recourse Funding
Seeking a Better SCM on IT - from Procurement, Manufacturing to Distribution & Sales AND Financial Mgt

9. Key Feature – LEs/SMEs
Double Layer: LEs Dominant Position - Large Enterprises (0.3%) vs. SMEs (99.7%) of over 3 million Companies
Strong Drive for LEs to Use Factoring with SME Suppliers and Distributors - Outsource Procurement & Sales Mgt (time saving / credit mgt / fin cost …)

10. Key Feature – SMEs
Many Financial Schemes offered to SMEs - Factoring is an Option but Attractive
Traditional Working Capital Funding
Account Receivables Securitization
Credit Insurance for SMEs

11. Factoring – New Waves
As a Part of SCM System - Procurement to Sales Management AND Financial Management
Insurance Scheme with “Factoring” - Insurance Companies & Factoring Companies
E-Factoring - with Strong IT Infrastructure

12. Yasuo Izumi Sector Manager Private and Financial Sector Development Europe and Central Asia The World Bank tel: Personal Website: