Japan Infrastructure Report Q1 2011
Business Monitor International, December 2010, Pages: 93
Business Monitor International's Japan Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's infrastructure industry.
BMI View: The long standing decline in Japan’s construction industry seems to have finally reversed in 2010, with BMI forecasting Japan’s construction industry value to grow at 1.4% year-on-year (y-o-y) compared to 2009 in real terms. However, this positive growth in construction industry value is mainly due to base effects and a mild improvement in Japan’s economic situation in 2010. Therefore, risks remain to the downside, especially in light of the limited activity seen over the first three quarters of 2010, the weak economic growth expected over the next few years and BMI’s bearish macro forecasts for the US, eurozone and China, with the latter an especially threatening contagion to Japan. Our forecast for Japan’s construction industry forecast over the medium term (2011-2015) reflects this bearish outlook, seeing only a weak annual average growth of 1.2% over the forecast period.
Key developments affecting the next quarter include:
- Japan's central government debt hit a record high of JPY904.08trn (US$10.55trn) at the end of June, up JPY21.15trn (US$247bn) from the end of March, according to finance ministry data. With new Prime Minister Naoto Kan looking to cut government spending, BMI believes it is unlikely that the government will initiate any new public works projects in the short to medium term. This would mean further limited opportunities for construction and engineering companies in Japan, as most of the country’s construction is funded by its government.
- Japan’s plans to develop its infrastructure export sector continue to gain traction. The country has signed an agreement to construct Vietnam’s second nuclear power plant, the 2000 megawatt (MW) Ninh Thuan 2 power plant, in November 2010. The country has also identified nine key projects in South East Asia to part-sponsor under public private partnership (PPP) initiatives, while the Japan Bank for International Cooperation is in talks for a US$4bn loan for a nuclear power plant in the US state of Texas, a project involving Japanese infrastructure companies Toshiba and Tokyo Electric Power Corporation.
- Japan’s renewables sector remains a potential area for growth, as the country seeks to reduce carbon emissions. Tokyo Electric Power Company (TEPCO) has announced plans to raise JPY554.98bn (US$6.67bn) in a share sale – the largest offering from a non-financial company in 2010 globally – to support extra capital investment planned as part of its 2020 Vision, a 10-year strategy that focuses on reducing carbon emissions at all stages of the company’s energy generating capacity.
Japan forms part of BMI’s developed market analysis in terms of Project Finance Ratings and Business Environment Ratings. Japan does not score well on either count. In terms of Project Finance Ratings, it takes last place with a score of 55.3 out of 100, owing predominantly to the county’s currency volatility. The country performs slightly better in Business Environment Ratings, with a score of 64.65 out of 100, coming sixth out of eight countries."
Executive Summary
SWOT Analysis
- Japan Infrastructure Industry SWOT
- Japan Infrastructure Project Finance SWOT
- Japan Economic SWOT
- Japan Political SWOT
Market Overview
- Japan
- Table: Value Of Construction Orders Received, 100mn yen
- Building Materials
Global Overview
- Asia Overview
Industry Forecast Scenario
- Table: Japan Construction And Infrastructure Industry Data
- Table: Japan Construction And Infrastructure Industry Data
- Construction And Infrastructure Forecast Scenario
- Transport Infrastructure
- Transport Infrastructure Overview
- Table: Competitiveness Of Japan's Infrastructure
Major Projects – New And Ongoing Projects
- Airports
- Ports
- Roads And Bridges
- Railways
Major Projects Table – Transport
- Table: Major Infrastructure Projects – Transport
- Energy And Utilities Infrastructure
- Energy And Utilities Infrastructure Overview
- Power Plants And Transmission Grids
- Water
Major Projects Table – Energy And Utilities
- Table: Major Infrastructure Projects – Energy & Utilities
- Business Environment
- Japan Business Environment
- Rewards
- Risks
- Regional Overview
Developed States Infrastructure Business Environment Ratings
- Table: Regional Infrastructure Business Environment Ratings
- Project Finance Ratings
- Japan Project Finance Ratings
- Design And Construction
- Commissioning And Operating
- Overall Project Finance Rating
- Regional Overview
- Project Finance Ratings: Outlook For Developed States
- Table: Design And Construction Rating
- Table: Commissioning And Operating Rating
- Table: Overall Project Finance Rating
-
Macroeconomic Outlook
- Table: Japan – Economic Activity
- Japan Long-Term Macroeconomic Forecasts
Political Outlook
- Domestic Politics
- Long-Term Political Outlook
Company Monitor
- Kajima Corporation
- J-Power
- Tokyo Electric Power Company Co. (TEPCO)
- Taisei Corporation
Global Overview
- Table: BMI's Core Views For Global Infrastructure
Methodology
- Industry Forecasts
- Construction Industry
- Data Methodology
- Construction
- Capital Investment
- Construction Sector Employment
- Infrastructure Business Environment Rating
- Table: Infrastructure Business Environment Indicators
- Project Finance Ratings
- Table: Design And Construction Phase
- Table: Commissioning And Operating Phase – Commercial Construction
- Table: Commissioning And Operating Phase – Energy And Utilities
- Table: Commissioning And Operating Phase – Transport
- Sources
- Kajima Corporation
- J-Power
- Tokyo Electric Power Company Co. (TEPCO)
- Taisei Corporation
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