Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​​

I AGREE
Rating Action:

Moody's changes Papua New Guinea's rating outlook to negative from stable; affirms B2 rating

23 Mar 2018

Singapore, March 23, 2018 -- Moody's Investors Service ("Moody's") has changed the outlook on the Government of Papua New Guinea's issuer rating to negative from stable and affirmed the B2 rating.

The decision to change the outlook to negative reflects elevated government liquidity risks stemming from high gross borrowing requirements and limited funding sources, reflected in growing reliance on short-dated, high interest rate domestic securities for funding. Liquidity constraints put downward pressure on Papua New Guinea's (PNG) fiscal strength, despite ongoing fiscal reforms aimed at supporting government revenue in the medium term. As they persist, liquidity constraints raise refinancing risks.

Moody's decision to affirm the B2 rating balances pressures on external liquidity that will remain as PNG is still clearing a backlog of foreign exchange orders, against prospects for high GDP growth in the medium term as investment in PNG's natural resources wealth is realised.

The local-currency bond and deposit ceilings are unchanged at Ba2. The foreign currency bond ceiling is unchanged at B1 and the foreign currency deposit ceiling is unchanged at B3. In addition, the short-term foreign-currency bond and deposit ceilings are "Not Prime.''

RATINGS RATIONALE

RATIONALE FOR THE NEGATIVE OUTLOOK

LIQUIDITY CONSTRAINTS WEIGH ON FISCAL STRENGTH AND RAISE REFINANCING RISKS

Moody's expect the PNG government's gross borrowing requirements to remain large, around 16%-17% of GDP in the next few years. The confluence of rising government debt, albeit from low levels, a large share of shorter-dated and high interest rate domestic maturities and increasing reliance on external commercial debt will continue to weaken debt affordability and weigh on overall fiscal strength. In turn, persistent liquidity constraints raise refinancing risks.

Until recently, the country's large superannuation funds and banks contributed to a reliable source of financing. Since 2013, sizeable fiscal deficits have strained the domestic financial system's ability to absorb government borrowing. Prospects for further domestic financing are constrained as some banks are reaching internal limits for holding government securities.

Deteriorating government liquidity is manifesting in higher local interest rates, which feeds into weaker debt affordability. Moody's expect interest payments to absorb 15.1% of government revenues in 2018, higher than many similarly-rated sovereigns, and up sharply from recent years.

To the extent that domestic investors are still willing and able to purchase government securities, demand is shifting to shorter maturities, which raises refinancing risks. Treasury bills with maturities of less than one year account for around 39% of all government debt in 2017, up from 32.4% in 2012 and 15.6% in 2007. Bank of Papua New Guinea, the central bank, is absorbing a greater share of government bonds to help offset weakening domestic investor appetite.

In the near term, the government aims to address its financing constraints by increasing its reliance on external market debt. This underscores the challenges the government faces in obtaining funding from domestic sources.

Rising external debt will leave the debt burden and debt servicing costs more vulnerable to a potential local currency depreciation. Moreover, external commercial loans typically face higher interest rates than concessional loans, which will further contribute to rising debt servicing costs.

Pressure on external debt servicing costs in the next couple of years is partly offset by the still sizeable proportion of the government's debt stock that is based on concessional terms. But external debt repayments will rise from 2020 as repayments on commercial external loans come due.

In the absence of new external funding and given constraints on domestic sources of financing, the government has in the past curbed expenditure. However, scope to reduce expenditure further, from around 18% of GDP in 2017, may be limited. In the near term, liquidity pressure may lead to a further build-up of arrears.

Longer term, fiscal reforms and technical support from international financial institutions will enhance the conduct of fiscal policy. In particular, the development of a new 2018-2022 Medium-Term Revenue and Fiscal Strategy, provides new fiscal anchors that if successfully adhered to, could allow the government to rebuild fiscal buffers that can help mitigate the impact of potential future negative shocks.

But very low scores on institutional framework imply policy implementation and effectiveness will continue to be challenging.

Moody's expect government debt to rise to around 34% of GDP by 2019, up from about 32% in 2017, which although remaining in line with the government's new medium-term debt limit of between 30% to 35% of GDP, provides limited fiscal flexibility in the near term in the event of a significant negative economic shock. Reflecting Moody's current assumptions about the fiscal costs of reconstruction and lost revenue in the aftermath of the earthquake, the forecast for government debt in 2019 was revised up by 1 percentage point of GDP.

RATIONALE FOR THE RATING AFFIRMATION

PNG's government liquidity risk is embedded in the B2 rating. The rating is also underpinned by credit challenges on PNG's external position and credit strengths related to prospects of high GDP growth as investment taps an increasing share of the country's large natural resources.

EXTERNAL LIQUIDITY RISKS REMAIN AS FOREIGN EXCHANGE BACKLOG IS STILL BEING CLEARED

PNG is still clearing a foreign exchange backlog and the central bank has imposed various restrictions on foreign exchange dealings, which denote higher external liquidity pressures than captured by headline metrics.

PNG's large current-account surpluses since 2014, averaging around 20% of GDP, overstate the actual increase in foreign-exchange inflows. This is largely because petroleum companies -- as part of the financing arrangements of the PNG LNG project, the country's first liquefied natural gas (LNG) project -- keep their export earnings from liquefied natural gas in offshore accounts to meet overseas liabilities. Abstracting from LNG-related dollar inflows since these do not contribute to the accumulation of foreign reserves, the current account position is weaker than reported, albeit still robust overall.

The bulk of PNG's foreign reserve inflows traditionally stem from gold, copper, agriculture and crude oil exports. Tourism also contributes to foreign exchange inflows. In the near term, we expect increasing foreign-exchange inflows from higher commodity prices and stronger non-mining exports to continue to help clear import payments and cross-border debt servicing. But these inflows will prevent the backlog of import payments from building rather than eliminate it.

Faster clearance of the foreign exchange backlog would add pressure to reserve adequacy. Conversely, slow clearance would continue to impede PNG's ability to import goods and services and weigh on business operations.

IMPLEMENTATION OF LARGE RESOURCE PROJECTS COULD BOLSTER GROWTH POTENTIAL, AND OVER TIME, EASE LIQUIDITY CONSTRAINTS

PNG's longer-term growth is supported by potential investment aimed at tapping some of the country's natural resources wealth. Realising that potential, if accompanied by greater government revenue, is key to increasing the debt carrying capacity of the sovereign and relieving both domestic and external liquidity constraints.

The potential development of large-scale resource projects such as the Papua LNG project, expansion to the existing PNG LNG project, the Wafi Golpu gold, copper and silver mine and Frieda River gold and copper mine could boost investment, employment and incomes in the 2020s. For context, between 2009 and 2014, construction of the PNG LNG project helped double nominal GDP to $23 billion from about $11.5 billion and boosted GDP per capita to more than $3,400 on a purchasing-power parity basis from around $2,700.

The successful implementation of the PNG LNG project demonstrates operational efficiencies, profitability and a relatively low cost structure, features which enhance PNG's competitive advantage in extractive industries, even against the backdrop of structurally lower commodity prices.

The re-election of Peter O'Neill as prime minister for a second five-year term in 2017 enhances prospects for of the continuation of policies encouraging resource investments. Notwithstanding this, ongoing fiscal negotiations between the government and major energy companies could inhibit progress of these developments. Such an outcome carries a high credit risk impact, in Moody's view, as a delay or shelving of investment plans would weigh on GDP growth prospects and pressure already-tight government and external finances.

In the nearer term, reflecting some assumptions about the impact of the earthquake, Moody's has revised its real GDP growth forecast to 0.5% in 2018, from 3% previously.

Beside the impact of the earthquake, which will hurt mine and gas production in the near term, and in the absence of an acceleration in development of mining and energy projects, non-mining industries will support real GDP growth. The construction of hotels and conference facilities ahead of the Asia-Pacific Economic Cooperation summit in 2018 and the boost from the weaker kina to tourism and retail will support growth. However, fiscal tightening, high inflation and a shortage of foreign currency will continue to weigh on growth. Moody's expects reconstruction and an easing in supply bottlenecks to add to GDP growth in coming years.

WHAT COULD CHANGE THE RATING UP

The negative outlook signals that an upgrade is unlikely.

Moody's could change the outlook to stable on evidence of lower refinancing risks, which could result from the government refinancing a significant portion of its short-term domestic debt at longer maturities.

An increase in non-debt-creating external inflows that lead to a material build-up in foreign currency reserves and strengthen reserve adequacy and boost domestic economic output would also support the credit profile.

Enhancements to potential growth through the development of large projects, such as via significant additions to LNG and gold production beyond what is currently assumed, should they allow for the government to increase its revenue generation capacity, could also lead to a stabilisation of the rating outlook.

WHAT COULD CHANGE THE RATING DOWN

A rating downgrade could result from increasing reliance on short-term domestic market funding at high local currency interest rates to fund fiscal deficits. This would substantially raise refinancing risks and result in higher government funding costs and debt than currently assumed.

A worsening of foreign currency shortages or further decline in the stock of foreign currency reserves would heighten risks to external debt servicing and place downward pressure on the rating.

In general, should a deterioration in government and external liquidity result in a substantial worsening of GDP growth prospects and in turn government revenue, that would ultimately weigh on the sustainability of public finances and the rating.

GDP per capita (PPP basis, US$): 3,725 (2016 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 2% (2016 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 6.6% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -4.6% (2016 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: 23.9% (2016 Actual) (also known as External Balance)

External debt/GDP: 91% (2016 Actual)

Level of economic development: Low level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 21 March 2018, a rating committee was called to discuss the rating of the Papua New Guinea, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutional strength/ framework, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has materially decreased. The issuer has become increasingly susceptible to event risks.

The principal methodology used in this rating was Sovereign Bond Ratings published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Matthew Circosta
Analyst
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.