Japan Infrastructure Report

Japan's post-Tohoku reconstruction efforts would have to wait until 2012 continues to play out. Robust increase in construction orders since the crisis has from now on to translate into better construction activity within the country. Although private investment could decline due to the potential of a Chinese hard landing, we are maintaining our forecasts for Japan's construction sector, with real increase expected to reach 4.1% and 1.8% in 2012 and 2013 respectively. Over the long-term, we see some opportunities for infrastructure development in Japan (particularly in power and railway infrastructure sub-sectors) but remain unconvinced that the country has the financing capabilities or the political will to sustain these increase levels.

Key developments include:

• Sentiment towards nuclear generation has changed. In November 2011, the Japanese government restarted its first nuclear power plant reactor since the Fukushima Daiichi plant was shut down in March 2011, reports abs-cbnnews.com. Power was restored to the Genkai nuclear facility in the south of the country, in a move the government hopes will placate sceptics of atomic energy in the wake of March 2011's incident at Fukushima. Prior to the national shutdown, Japan was dependent upon nuclear power for-third of its total electricity.
• In November 2011, Japanese mobile operator Softbank undertook the construction of three experimental solar power plants in the northern island of Hokkaido. The 100 kilowatt (KW) test plant became operational in mid-December 2011 and is equipped with solar panels produced by local and international manufacturers such as Kyocera and Canadian Solar.
• In February 2012, Japanese electricity utility Kansai Electric Power Company announced that it will postpone the launch of its 12MW Awaji wind power plant, reports reuters.com. The facility was scheduled to open at the end of March 2012, but will now commence commercial operations in February 2013, following a delay in the plant's construction. We believe that this is due to the withdrawal of direct subsidies provided by the government for renewable energy projects in 2010, with the subsidy programme to be restored with an incentive payment programme. The preferential tariffs have from now on to be decided, but are scheduled to be introduced in July 2012.