Japan will loan Malaysia RM1.6 billion to help develop the nation's information technology (IT) sector, Japan Bank for International Cooperation (JBIC) said in Tokyo today.

"The proceeds of the loan will be used, via government-owned Malaysia Venture Capital Management Bhd, to provide financing for computer software and other IT-related companies in Malaysia as they undertake projects to develop and introduce IT-related systems," JBIC said.

"This loan will help foster the IT industry where the (Malaysian) government has placed weight as one of the key elements in the country's economic growth, thus contributing to its economic development," JBIC said.

The bank also hopes the loan would improve the business environment for Japanese firms operating in Malaysia through boosting growth in the IT sector.

The loan is part of the Japan's initiative to address the international digital divide - an information and economical gap between people who are computer-literate and those who are not.

The loan is co-financed with seven private financial institutions, with JBIC providing a guarantee for the portion financed by them. (AFP)