Abstract
The global downturn continued to negatively affect Japan over the quarter with
infrastructure projects in
decline. BMI forecasts negative growth for the
construction industry in Japan over 2009 with a
substantial -11.2% drop in
real growth y-o-y. The industry is expected to show decline throughout
2010,
with growth reaching only 1.9% by 2013.
Construction on the
Daidogawa Dam in Otsu, a small village in Japan, was halted by the
country’s
transport ministry in April. The ministry said the freeze
was necessary in order to consider propositions
by the governors of Shiga,
Kyoto, Osaka and Mie prefectures, who in February and March submitted
requests to stop the construction. There was increased collaboration between
Japan and Russia in the
energy sector with both a hydropower plant and a
wind farm in eastern Russia announced in May. The
projects will see
collaboration between Japan’s Mitsui and J-Power and Russia’s
state-owned RusHydro
Japan maintains the top spot in BMI' s Infrastructure
Business Environment, with an overall score of 71.6.
This is largely
thanks to top scores for its investment climate and regulatory environment, as
well as the
great expertise of the domestic infrastructure majors, which
are among the global leaders in the industry.
Japan scored rather worse
for its Project Finance, ranking just seventh in its region. This was due to a
low
rating in inputs for Japan, which dragged its overall score down. This
was exacerbated by deflationary
pressures that resulted in an increase in
the cost of debt,
Japan' s government launched a record fiscal stimulus of
JPY15.4trn (US$154bn) in Q2. The package was
the third initiated by Prime
Minister Taro Aso since he took office last September, and took the
cumulative total to JPY25trn (US$250bn), representing 5.5% of the country' s
GDP. The fiscal stimulus
plan does not contain any specific provisions for
infrastructure projects, or at least none have been
announced as such. For
this reason, Japan' s industry value forecasts remain under pressure and
the
country’s infrastructure market score has declined from the
previous 72.5 to 57.5.
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