ASEAN upgrades offer US$293-bil. chance

The plan covers 717 projects, including the construction of roads, bridges, seaports, airports, industrial complexes and power stations, to be completed by 2020.

By providing Japanese firms with many opportunities to win work contracts overseas, the plan is in line with the Japanese government's new growth strategy.

Three regions have been identified as focus points for the infrastructure projects, and are referred to under the plan as the Mekong Basin Integral Development; the Brunei, Indonesia, Malaysia and the Philippines East Asian Growth Area (BIMP-EAGA); and the Indonesia-Malaysia-Thailand (IMT) Growth Triangle.

The envisioned projects include building a highway across the Indochinese Peninsula, constructing new ports and improving existing ones in Vietnam and Myanmar that will be arterially connected to the highway, and upgrading the Indian port of Chennai.

The plan is expected to be officially approved in October, and a framework for funding and execution is to be drawn up by the end of December.

The plan was drafted mainly by the Economic Research Institute for ASEAN and East Asia, a research institute headquartered in Jakarta that was set up under the leadership of the Japanese government in 2008.

It is estimated that the plan will increase the collective gross domestic product of nations involved by 55 percent, and stimulate economies across Asia.

The Japanese government will offer financial support to domestic companies participating in the plan, via official development assistance funds and loans extended by the Japan Bank for International Cooperation.

Domestic firms smell opportunity

Lobbying by Japanese companies to win contracts for infrastructure projects under the plan is already under way.

In June, Mitsubishi Heavy Industries, Ltd. and Hitachi, Ltd. formed a partnership to strengthen their overseas railroad construction operations. Gaku Suzuki, vice president and executive officer of Hitachi, said the company hoped to participate in as many projects as possible.

IHI Corp. set up a subsidiary in Vietnam in November 2009 to serve as a base for bridge construction work in Asian nations.

Sumitomo Corp. has built two industrial complexes in Vietnam that are already operating.

However, Japanese firms face fierce competition from companies in South Korea, China and the West, and the recent appreciation of the yen will impact on profits made overseas.

Sources close to general contractor firms said the huge differences in the work cultures of other nations will also present challenges for Japanese firms.

“The government's strong support will be indispensable,” an executive at a general contractor said.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email