A government-backed highway operating company is going to be established in Japan aiming for motorization infrastructure making in Vietnam and in India. According to Nikkei (18th Nov 2010), Japanese renowned economic news paper, three national highway operating companies, namely East Nippon Expressway, Central Nippon Expressway and West Nippon Expressway, all of which are originally one Japanese government-owned highway company privatized in 2005, will make a toll road business company focusing on emerging countries somewhere in 2011. Total revenue of these companies amounts to US$26 billion (2008).

In the background of this activity, there is a new policy of Japanese government named “Packaged Infrastructure Export” which intends to unite infrastructure business activities of Japanese large companies that are usually selling separately, sometimes competing each other, and policy based supports from governmental export promoting entities as well as public financing arms.

Overseas infrastructure investment is rather a weak point of Corporate Japan for a long time, though it has exported numerous cars of Toyota, Nissan and Honda, and millions of electronics products from Sony and Panasonic. Large engineering companies such as JGC or Toyo Engineering, however, have been actively receiving large-scale plant construction orders from Fortune global 500 companies and foreign governments. Also each of Japanese major construction companies such as Taisei has a long list of completed large construction projects in foreign countries. For example, Taisei is constructing underwater tunnel of Palm Islands of UAE and Bosphorus tunnel of Turkey. But from infrastructure investment point of view, they are rather partial orders of whole projects, or on-demand basis business. So, as a whole business model of Corporate Japan, these independent activities of Japanese companies are not so profitable and lacking long-term return earning intention. Relevant players and factors should be integrated as a governmental strategy.

Words of “Packaged Infrastructure Export” are in fact Japanese-English, but readers might understand the meaning after knowing above-mentioned situation of Japanese companies.

In Vietnam, one of rapid growing countries in East Asia, more than twenty plans of highway construction are underway, according to Nikkei. Total length of these plans amounts to 5,873km, and about a half of the whole is to be completed by 2020. The new Japanese highway operating company aims to get this opportunity.

The original government owned highway company, mother of East Nippon Expressway, Central Nippon Expressway and West Nippon Expressway, had a long history of toll road business of more than US$20 billion annual revenue. Since Japan is narrowly shaped island country, long distance national highway construction needs refined know-how of making series of small tunnels and overhead road. Such experience will contribute to Vietnam’s motorization as well as India’s.

Backed by financing framework of governmental project financing arm Japan Bank for International Cooperation (JBIC), the new company will start engagements with governments soon.

Originally posted on Infrastructure Investment Journal authored by Daisuke Imaizumi, CEO of InfraCommons.