Tokyo to aid Japan Inc.'s emerging-market infrastructure push
TOKYO -- Under a new program, Japan's government will extend grant aid to help pay for Japanese companies' infrastructure development projects in emerging markets, giving them a leg up on South Korean and Chinese rivals.
Sometime this fiscal year, the government will select the projects eligible for the subsidies, targeting those in which a Japanese company will be involved in the operation of the infrastructure after building it.
Candidates may include projects to build power or water infrastructure. In the latter case, a Japanese company and local government may each pay for part of a water treatment facility, while the Japanese government would cover the cost of distribution pipes.
Japanese companies are known for the longevity and reliability of the infrastructure they build, but also have a reputation for high up-front costs. This has caused Japanese companies to lose out to lower-cost proposals from Chinese and South Korean players.
In May of last year, the Japanese government set a target of raising infrastructure systems orders from overseas to 30 trillion yen ($290 billion) by 2020. The sum stood at just over 9 trillion yen that year. In addition to the new aid program, the government is working to improve policies that facilitate orders in other ways, including by shortening the approval process for yen-denominated loans.
Japan spends around $10 billion on official development assistance. The country ranked first globally in terms of those expenditures in the 1990s, but has fallen to fourth or fifth place more recently. As grant aid is limited to 10-20% of ODA, the government seeks to utilize it efficiently to boost Japanese infrastructure development abroad.