Grace of the nature has satisfied Japanese people with drinkable water so many years. Until early 1990s, most Japanese didn’t know water was the item to buy for drinking. From every faucet in every house, fresh water flew out directly to fill a glass when in a hot season. Every Japanese believed the water coming from the tap is drinkable. So, visiting other country, after arriving at hotel, when they came to know the water from the tap wasn’t drinkable, they were really astonished. This was an old story, however. Present people in Japan frequently buy bottled water and they are never astonished to know the tap water isn’t drinkable at hotel abroad.

In all region across Japan, water supply and waste water treatment are operated by municipalities. There is no case of privatization or Public-private partnership so far, except for some small towns. So, operation of water supply and waste water treatment haven’t been seen as “business” or “industry”.

It is just one or two years since Japanese business person has become to know that French company named Veolia is operating huge water business of more than $10 billion revenue and there existed broad ocean of water business in foreign countries.

In Japan, Metropolis of Tokyo is the largest municipality in terms of the size of water supply that serves for 12.6 million people and provides 4,300,000m³ pot water a day. Currently, the metropolitan city is deploying high-quality water purification technology all over the service area, and to appeal the quality of the processed water, they are selling purified water, which will finally go to the tap, in 500 ml plastic bottle for $1.

The water service division of Tokyo is in a phased plan of studying water business know-how to be deployed in foreign market. They started hearings from relevant Japanese companies about water business and study tour in Asian countries to grasp the actual needs. Since Tokyo is a municipality whose commercial business is prohibited by law, it is planning to use its funded operating and maintenance company Tokyo Waterworks Service for the future water business abroad.

As an operating company of water and waste water, Tokyo has some potentials with its long history of experience and attained high quality of the service. But considering the fact that current water business is conducted in a form of PPP and it naturally presumes risk-taker of long term at the private side, Tokyo is a little bit hard to take such a role, because it is still a public entity. Therefore, making a structure of water business in foreign countries to which Tokyo is comfortably involved with experienced partners would be the key.

Japan has several good players of water business abroad especially in trading house sector. As I wrote before, Marubeni is expanding the business eagerly and other trading houses are following. Tokyo has good tutors for its future business.

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