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Japan Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8211 Description BMI has revised its forecasts for Japan’s infrastructure sector on the back of new data. As a result, theshort-term picture for the sector is slightly worse than previously expected, with overall year-on-year (yo-y) growth of -12.21% predicted for 2009. This decline is expected to continue into 2010 with the sectoronly recovering in 2011 with 3.5% y-o-y growth. This is despite a record government stimulus ofJPY15.4trn (US$154bn) that takes the cumulative total to JPY25trn (US$250bn), representing 5.5% ofthe country's GDP.Liquefied Natural Gas (LNG) projects have dominated Japanese infrastructure developments in recentmonths but this is mainly because of a substantial slow down in other projects. Many Japaneseinfrastructure firms have been involved in projects in nearby Asian states given the difficulty in winningcontracts at home. The government announced plans in August to set up a pan-Asian infrastructure fundto invest US$1.06bn in transport and other infrastructure projects, in which Japanese companies wouldparticipate. Japanese refiner Nippon Oil announced plans in July to build an LNG terminal in Kushiro City.Meanwhile, Japanese energy company Inpex started construction of its Naoetsu LNG-receiving terminalin Joetsu City. The construction of the terminal will cost JPY100bn (US$1.04bn) and will involvebuilding two 180,000 kilolitre storage tanks, a vaporiser and a berth, among other facilities. Japan has been placed in a difficult position by the recent global downturn. Despite receiving an overallscore of 71.6 in BMI’s business environment ratings, placing it first in the Asia pacific region, it is letdown by sector growth. This indicates a real problem for the country, as although it has an excellentregulatory environment and skilled workforce, there is little potential for high growth and this is likely tolead to further stagnation. Japan’s problems extend to its Project Finance ratings, where it has fallen toseventh place in the Asia Pacific region. This is a result of low rating inputs for Japan caused bydeflationary pressures increasing the cost of debt. After the groundbreaking general elections of August 30 it is likely that the next few months will beimportant in determining how quickly the Japanese infrastructure sector returns to growth. TheDemocratic Party of Japan (DPJ) became the first party in over 50 years to beat the incumbent LiberalDemocratic Party (LDP). While there is overwhelming public support for the new parliament it still facessome stiff challenges. Most notably young and inexperienced DPJ ministers may encounter difficultieswith the famously bureaucratic infrastructure sector and political friction from LDP stalwarts along withthe existing economic problems. Table of Contents
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