#1Shizuoka Prefecture Investor Presentation October 2010#2Table of Contents Shizuoka Prefecture 1 Overview of Shizuoka (1) Shizuoka's Position in Japan 4 2 Fiscal Position (1) Fiscal budget: Staying healthy 11 11 (2) Industrial Structure 5 (2) Medium fiscal Outlook 12 (3) Active Industrial location 6 (4) Creation of New Industries 7 3 Bond Issuance (5) Shizuoka has much of the best of Japan 8 (6) Economic Scale (1) Management of Prefectural Bonds. 13 9 (2) Prefectural Bond Issuance Plan 14 (7) Transportation Infrastructure 10 2#3Key takeaways about Shizuoka 1. Shizuoka has strong economic fundamentals 2. Shizuoka ensure a healthy budget 3. Shizuoka has high credit ratings. (Aa2 from Moody's and AA+ from R&I) Shizuoka Prefecture 3#41 Overview of Shizuoka Shizuoka Prefecture#51. Overview of Shizuoka Shizuoka Prefecture 1-(1) Shizuoka's Position in Japan Shizuoka Prefecture Located in Center of Japan New Tomei Expressway Mt. Fuji Shizuoka Airport Tomei Expressway Osaka 2hr Mt. Fuji Shinkansen (Bullet train) Port of Shimizu Omaezaki Port ........ 300km from Shizuoka Shizuoka is between Tokyo and Nagoya Travel time by Shinkansen Tokyo, Nagoya Osaka 1 hour 2 hour Situated in highly concentrated economic zone in Japan economic activity within a 300km radius - earns 70% of Japanese GDP Output of manufactured goods shipments and Per-capita income : No.3 among Japanese 47 local governments Population:3.8 million (Rank 10) Area: 7,780.38 km² (Rank 12) Gross Production : JPY 16.9 trillion (Rank 10) Output of manufactured goods shipments: JPY19,178 billion (Rank 3). Nagoya 1hr Tokyo 1hr ■Per-capita income: JPY3,384,000 (Rank 3) 4#61-(2) Industrial Structure 1. Overview of Shizuoka Shizuoka Prefecture Total revenue from manufactured products (2008) Other 26.0% 28.6% Transportation Equipment Production Equipment 4.6% JPY19,178 bn Rank 3 4.9% Pulp, Paper 5.0% 5.7% 8.3% IT/Telecom Equipment 6.3% 10.6% Foods Chemicals Drinks cigarette Foodstuff SUZUKI Electrical Devices YAMAHA Manufacture-driven Prefecture Total revenue from Manufactured Products based on shipments (Rank 3 in Japan) Rank 1 products Electrical Device Drinks/Cigarette/Foodstuff Pulp/Paper Rank 2 products Transportation Equipment Strong industrial foundation mainly based on Transportation Equipment Manufacturing Well-balanced industrial structure with various secotor Land of Spirit of Enterprenuership SUZUKI, YAMAHA, HONDA, which are now global brand companies, were founded in Shizuoka The founders of YAMAHA, HONDA and TOYOTA were born in Shizuoka 5#71-(3) Active Industrial location # of global companies in Shizuoka by country Germany Swizerland Netherlands Sweden France United Kingdom 3 Liechtenstein Austria 1 United States Canada 5 5 16 15 7 0 5 10 15 95 (number of companies) 1. Overview of Shizuoka Shizuoka Prefecture High level of Corporate Industrial Locations in Japan Domestic industrial locations: Area: Rank 1 in Japan (FY 2007) Rank 1 in Japan (FY 2008) Rank 5 in Japan (FY 2009) Attract global companies 44 (FY2009) 71ha (FY2009) The cumulative number of industrial location by Foreign company is the highest in Japan. (accumulated total between 1989-2008) About 170 global companies have their factories or offices in Shizuoka Germany Swizerland Netherlands France United Kingdom Liechtenstein Austria + Moeller Osram-Melco ABB schindler Unilever Tritec Cosmeroll Imerys Nikkei-Mel Univite Triumph Ecka-granules 6#81-(4) Creation of New Industries Cameras for extremely high contrast environments West Central GABA 420 CABAZO 258ec GABA GEORGIA GABA Chocolate, Coffee with GABA 1. Overview of Shizuoka Shizuoka Prefecture East Artificial breathing aid Increasing High-valued added industries <West: Photon Valley > ■Optical/electric technology-related company aggregation project - Develop the base technologies to grow next-generation industry, especially focusing on optical technology. → Production of Photomultipliers : No.1 in Japan <Central: Foods Science Hills > Food/pharmaceuticals/chemical product companies aggregation project Fusion between "Food" and "Drugs". <East: Pharma Valley > → Innovative functional food Advanced health industry aggregation project at the foot of Mt. Fuji - Development of medical device by cooperation among medicine, nursing science and engineering → Production of Drug and Medical Devices: No.1 in Japan <Support of entry into growing industries > - Diversion of transport-equipment related technology into environmental field - Development of robot market in welfare field - Entry promotion of SME into aerospace field 7#91-(5) Shizuoka has much of the best of Japan 1. Overview of Shizuoka Shizuoka Prefecture Electric piano We have much of "The Best of Japan!" Nature Mt. Fuji Highest Mt in Japan Motorcycle Small Motorcyle No.1 by export value Piano No.1 by shipments Industrial Plastic model No.1 by shipments Woodworking machine No.1 by shipments 38 other industrial products No.1 by shipments Plastic model Tourism Japanese Inns 21 agricultural products (Green tea, Green house melon etc) No.1 No.1 by production Agriculture Fisheries 20 fishery products Sports Japanese Inn Professional football players in J-League No.1 by catch No.1 8#10Luxemburg Ireland Denmark Sweden 1-(6) Economic Scale Per-capita GDP of Shizuoka is the same level as Germany Per-Capita GDP = USD 39,000 Rank 3 in Japan (among 47 Japanese local governments) 106,875 59,853 Netherlands Finland 56,936 Per Capita GDP of Shizuoka and other-OECD companies (Unit: USD) 49,541 47,509 46,493 46,452 45,904 44,570 United States United Kingdom 43,280 Austria Canada Belgium France Germany Shizuoka Italy 43,152 42,023 40,400 39,082 35,613 34,304 32,108 27,687 Japan Spain Greece Portugal Czech Slovakia 21,041 16,857 13,913 13,763 11,153 Hungary Porland 9 1. Overview of Shizuoka Shizuoka Prefecture#111-(7) Transportation Infrastructure Transportation Infrastructure for connecting to the World Mt. Fuji Shizuoka Airport - To Seoul 2hr (2 flights per day) To Shanghai 2hr 30min (4 flights per week) Port of Shimizu - International container terminal Regular container routes 23 (Europe, North America, South East Asia etc) Europe Zurich (via Shinchitose) O International flight (Charter flight) Zurich, Hong Kong, Macao, Taipei, Bangkok Bangkok O Domestic flights 6 major domestic airports : In service : In terms Seoul Beijing Shanghai 1. Overview of Shizuoka Shizuoka Prefecture Mt. Fuji Shizuoka Airport I DELAM LINES FDA Taipei Port of Shimizu Macao Hong Kong Singapore 10#122 Fiscal Position Shizuoka Prefecture#132-(1) Fiscal Budget: Staying healthy 2. Fiscal Position Shizuoka Prefecture Budget comparison between 1998 and 2010 Beginning of Category FY2010 (bn) Beginning of FY1998 (bn) Change (%) General Account 1,127 1,351 A16.6 Mandatory Exp 637 601 6.0 Investment Exp 171 402 A57.5 Special Account (13) 409 121 338.0 Enterprise Account (4) 56 84 A33.3 Total 1,592 1,556 2.3 Reduction in general administrative staffs # of Staffs As of April 2010 As of April 1997 Change 5,942 7,264 Δ 1,322 Budget for general account to JPY1.1 trillion Size of general account: Rank 11 13 special accounts, 4 enterprise account Mandatory Expenses remained high, and Investment Expenses restrained. Efforts to Keep its health Cutting Investment Expense by less than half of its in FY1998 with the efficient administrative process Reducing 1,322 staff in this decade as the result of improved productivity Focusing on "One Reform per person movement" to have each staff member tackle an improvement in their daily work efficiency. 11#142. Fiscal Position 2-(2) Medium-term Fiscal Outlook Retain our healthy financials Meets the standards for fiscal health established by Japanese government (4 indicators are provided for in law in order to manage local government financials) we are confident of maintaining current healthy position Indicators Real deficit ratio Shizuoka Prefecture Midium-term Fiscal Outlook Standards FY2009 FY2010 Early warning FY2012 FY2014 lim it Reconstruction limit (surplus) (surplus) (surplus) (surplus) 3.75% 5.00% Consolidated real deficit ratio (surplus) (surplus) (surplus) (surplus) 8.75% 25.00% Real debt payment ratio 13.1% 14.2% 15.0% 15.0% 25.0% 35.0% Future burden ratio 262.6% 282.5% 293.9% 311.0% 400% * Shizuoka has a surplus in all accounts, Not Available for real deficit ratio and consolidated real deficit ratio 12#15"Diamond-Fuji" seen from the lakeside of Tanukiko#163 Bond Issuance Shizuoka Prefecture#173-(1) Management of Prefectural Bonds. 3. Bond Issuance Appropriate Sinking Fund * Accumulation rule for Sinking fund - - No shortage of Sinking fund Shizuoka Prefecture No borrowing from Sinking fund to date Accumulation of 3.7% (1/27th) of total prefectural bond issuance after 3 years deferral period (Lump-sum payment at maturity) Moody's Aa2 /stable ■Issuer Ratings - - Shizuoka has high credit rating by 2 rating agencies Comments by Moody's (as of December 2009) - Small debt burden Solid administrative and fiscal management - Strong local economic base Rating and Investment Information, Inc AA+/Stable Comments by R&I (as of December 2009) - As one of the best "Manufacturing prefecture", manufacturing industries drive the local economy - Prefectural administration for keeping healthy finance 13#183-(2) Prefectural Bond Issuance Plan FY2010 public bond issuance plan Publicly issued bonds JPY 300 billion, Others JPY 75 billion. Total issuance JPY 375 billion (including refinancing bonds) 3. Bond Issuance Plan to issue JPY 205 billion after October in FY2010. The breakdown is; Individual issuance JPY 100 billion, Joint issuance JPY 40 billion, and Others JPY 65 billion Shizuoka Prefecture FY 2010 Public bond issuance plan Yearly issuance volume for Shizuoka's public bond (JPY billion ) (JPY billion) Apr. to Sep. Oct. to Mar. Total 300 5-year 30 20 50 Issuances Individual Publicly Issued Bonds 250 10-year 80 50 130 20-year 10 10 20 200 30-year 20 20 Subtotal 120 100 220 150 Joint Issuances 40 40 80 100 Subtotal 160 140 300 Bonds Underwritten 10 65 75 50 by Banks, etc. Total 170 205 375 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ■Joint 5year 10year 20year ■ 30year 14#19Mt. Fuji to be a World Heritage site!! We are aiming for an early realization of designating Mt. Fuji as a World Heritage site Shizuoka Prefecture#20Thank you Shizuoka Prefecture URL http://www.pref.shizuoka.jp/a_foreign/english/index.html Email: [email protected] Phone: +81-54-221-2034 On 4313 Fax: +81-54-221-2750 Address: Fiscal Policy Office, General Affairs Div., Shizuoka Prefecture 9-6 Otemachi, Aoi-ku, Shizuoka-City, Shizuoka Pref. 420-8601