Infrastructure in the context of finance crisis. Experiences from ACECC member countries.

Transcription

1 Report from Japan Infrastructure in the context of finance crisis. Experiences from ACECC member countries. At the International Round Table Meeting at Hanoi City, Vietnam on April 19 th, 2009 Yukihiko Sumiyoshi, Dr.Eng. JSCE Representative to ACECC President, Central Consultant Inc.

2 Report from Japan Infrastructure in the context of finance crisis. Experiences from ACECC member countries. 1.The Influence to Japanese Economy by the Subprime Loan Problem 2.Tne Influence to Construction and Real Estate Industries 3.The Countermeasure Policy of the Government of Japan 4.Conclusion

3 1. The Influence to Japanese Economy by the Subprime Loan Problem 1-1 Influence to the Japanese Financial System 1-2 Influence to Exporting Enterprises and GDP Development 1-3 Increase of Unemployed 1-4 The Policy Expected to the Recovery of Japanese Economy

4 1-1 Influence to the Japanese Financial System Total Amount and Ratio of Bad Loans of Banks of Japan Total Amount of Bad Loans for whole Banks (Unit : Trillion Yen) Ratio of Bad Loans by Banks type (unit : %) Local Bank Bank Total Main Bank The Japanese financial system was recovered and strengthened from the situation damaged in so called Lost 10 years of Japanese economy -1990~2000. Therefore influence by the subprime loan problem and Lehman bros. shock to the Japanese financial system is found not so serious.

5 1-2(1) Influence to Exporting Enterprises Monthly rate of number of sold vehicles by countries Quarterly rate of number of sold vehicles by Maker Subprime Loan Problem Lehman shock Lehman shock Russia Brasil China Nissan Japan India EU VW Gr. Honda Renault Toyota Hyundai Fiat Gr. PSA Gr. GM U.S.A. Ford Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct Jan.-Mar Apr.-jun Jul.-Sep. Sudden decrease of demand for industrial good (vehicle, electric product, machinery etc.) happened in global base.

6 1-2(2) Influence to Exporting Enterprises Transition of rate of exchange Lehman shock Subprime Loan Problem (Unit : yen/us doller) Average for 5 weeks Average for 25 weeks Japanese Yen value increased against to other countries currency alter subprime loan problem and Lehman bros. shock.

7 1-2(3) Influence to Exporting Enterprises Amount of Sales and Profits by year : Toyota Motors Corp. Amount of Sales (unit : Trillion Yen) Amount of Sales Amount of Profit Amount of Profit (unit : Trillion Yen) ( 予測 ) The performance of Japanese exporting enterprises became sharp decline because of sudden fall of global demand and value up of Japanese currency.

8 1-2(4) Influence to GDP Development. Transition of Rate of Real GDP Development Lehman shock Japan U.S.A. EU Subprime Loan Problem Japanese economy which is mainly relying upon her exportation is getting bigger damages than U.S.A. and EU countries.

9 1-3 Increase of Unemployed Number of Active Job applicant and post Status of Job Applicant, Post and Active Opening Rate on 1997~2009 (Unit : 10,000) Active opening rate 年の求人 求職者の推移 Monthly active job applicant Monthly number of post Lehman shock '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '08 Jan. '08 Feb. '08 Mar. '08 Apr. '08 May. '08 Jun. '08 Jul. '08 Aug. '08 Sep. '08 Oct. '08 Nov. '08 Dec. '09 Jan. ( 倍 ) Active Opening rate In Japan unemployed are increasing just after Lehman Bros. shock and active opening rate on beginning of 2009 is approaching to the level on 2002 which was the worst level in Lost 10 years of Japanese economy

10 1-4 The Policy Expected to the Recovery of Japanese Economy Recovery and development of global economy is considered to be necessary rather long terms. Therefore the urgent policy to stimulate the recovery of Japanese economy is expected to plan and implement early as possible in the issues shown below. Enlargement of Domestic Demand Increase of Employment Development of Regional Economy

11 2.Tne Influence to Construction and Real Estate Industries by the Subprime Loan Problem 2-1 Transition of Construction Investment 2-2 Employment Effect of Public Investment 2-3 Influence to Housing Market 2-4 Influence to Private Non-Housing Construction Investment 2-5 Increase of Bankruptcy 2-6 Influence to Construction Material Demand

12 2-1 Transition of Construction Investment Amount of Investment (unit : Trillion Yen) Private Investment Governmental Investment Number of Labor Force (unit : 10,000 Workers) Construction Investment 49.4 trillion yen ( 41.2% for peak) Governmental Investment 16.6 trillion yen ( 52.8% for peak) Number of Labor Force 537 ten thousand workes ( 21.6% for peak) Construction industry is supporting the development of regional economy and employment as one of the trunk industry of Japan, but is recently facing the decrease of construction investment, especially big decrease of governmental investment.

13 2-2 Employment Effect of Public Investment comparison of employment effect by type of investment (person / billion yen) person/1 billion yen Private consumption Private investiment Public investment Export The employment effect of Public Investment is biggest than other types of investment

14 2-3 Influence to Housing Market Number of house built (unit : house) 1,400,000 1,300,000 1,200,000 1,100,000 1,000, , , , , ,000 (yearly base alter seasonal adjustment) Lehman shock '01 '02 '03 '04 '05 '06 '07 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月 1 月 The fall of number of house built on 2007 was a result of the revision of Japanese Building Code. The number of house built increased from the beginning on 2008, but is decreasing after October because of cooling of housing market by Lehman shock.

15 2-4 Influence to Private Non-Housing Construction Investment Anticipated % (Quarterly, rate of one year before) Subprime Loan Problem Nominal Private (Building) Total of Nominal Private Non-Housing Real Private Company facilities Lehman shock Nominal Private (Civil Work) Private Non-Housing Construction Investment is sharply decreasing after the end of 2008 in reflection of lack of intension to invest for buildings, factories and facilities by private enterprises.

16 2-5 Increase of Bankruptcy for both Market of Construction and Real Estate. Bankruptcy of Asabu Subprime Loan Problem Bankruptcy of Urban Corp. (Dept 256 billion yen) ,000 Tatemono Corp. Lehman shock (Dept 564 billion 450 yen) 500, Number of Bankruptcy companies ( 件 ) Number(Constraction) Number(real estate) dept(constraction) debt dept(real debt estate) 400, , , ,000 Increase of bankruptcy debt means increate of major bankruptcy cases at both market of construction and real estate. 0 Total Amount of Debt(billion yen)

17 2-6 Influence to Construction Material Demand 120% 100% Subprime Loan Problem Lehman shock 80% 60% 40% 20% 0% Cement Ready Mixed Concrete Wood Steel Asphalt Demand of main construction materials continues to decrease in reflection of fall of construction investment. Steel which kept rather stable level of demand by strong demand of overseas is showing sharp decline after Lehman Bbros. Shock.

18 3. The Countermeasure Policy of the Government of Japan nd Supplementary Budget for 08 year Budget and 09 year Budget (Approved) 3-2 Supplementary Budget for 09 year Budget (Be approved shortly) 3-3 Typical Infrastructure Project targeted by the Budget

19 3-1 2nd Supplementary Budget for 08 year Budget and 09 year Budget (Approved) In view of situation of the Japanese economy after the Lehman Bros. shock, Japanese government planned the Second Supplementary Budget for 08 year Budge and 09 year Budget. Two Budgets passed through the Diet on January and March, 2009 respectively. Major items of the policy for the recovery of the Japanese economy in two Budgets are as follows. 3-1(1) Support for people s lives 3-1(2) Support for medium-sized and small companies 3-1(3) Activation of regional economy

20 3-1(1) Support for people's lives Fixed Amount Special Benefits for personel (12,000 yen/person, Youth and Senior 20,000 yen/person) Labor Insurance Adoption for Irregular Workers Tax Reduction for Housing Loan Tax Reduction for Purchasing Eco-Car 2 trillion yen 170 billion yen 340 billion yen 210 billion yen

21 3-1(2) Support for medium-sized and small companies Enlargement of Certification and Loan Limit 30 trillion yen Supplement to Limit of Public Fund Injection to Banks 10 trillion yen Tax Reduction for Investment to Promote to Save-Energy Facilities 190 billion yen Tax Rate Decrease for Medium-Sized and Small Companies 240 billion yen

22 3-1(3) Activation of Regional Economy. Reserve Fund for Urgent Economic Affairs Reduction of Expressway Toll 1 trillion yen 500 billion yen

23 3-2 Supplementary Budget for 09 year Budget (Be approved shortly) Japanese Government decided the frame of Supplementary Budget for 2009 Year Budget as a countermeasure for economic risk of Japan today. The Budget will be proposed at the Diet for approval end of April. The frame of the Budget are as follows Financial Expenditure 15.4 Trillion yen (about 2.7% of GDP) Total Investment 56.8 Trillion yen Creation of new employment max.2 million jobs for 3 yeas Comprehensive policy inducing employment, environment, welfare, energy, tax system and infrastructure

24 3-2(1) Urgent Countermeasure For Employment Enlargement of Vocational Training, and Support for Employment Creation 2.5 Trillions For Financial Risk Enlargement of Limit for Purchasing Stocks of Private Enterprises by Public Finance 41.8 Trillions 3-2(2) Development Strategy For Environment, Energy Development of Photovoltaic power Generation, School New Deal Project 2.2 Trillions For Medical, Care, Children 2.8 Trillions For Infrastructure Development, Agriculture and Fishery 3.8 Trillions

25 3-2(3) Realization of Safer and Vital Lives For Social Security, Consumers affairs For Support for Regional Government 3-2(4) Revision of Tax System 2.2 Trillions 2.4 Trillions Tax Reduction for Gift Tax 100 Billions

26 3-3 Typical Infrastructure Project targeted by the Budget Construction of sections of missing links for Highstandard Trunk Road and Ring Road in 3 Mega- Metropolitan Area Construction of new sections of High-Speed Railway Shinkan-Sen Reinforcement of capacity of Super-Core Ports Construction of new runway and enlargement of existing runway for Haneda International Airport Promotion of earthquake-proof reconstruction for school buildings Wide introduction of photovoltaic power generation

27 4. Conclusion The influence of subprime loan problem and Lehman Bros. shock to the Japanese economy is still progressing and it is not found the bottom. As the recovery of Japanese economy with the revival of global economy is considered to take longer time, most important actions at present are the development of domestic demand, revival of employment and enlargement of regional economy. To target for these actions, strong implementation of public works and enlargement of public investment are most important and the countermeasure policy of Japanese Government looks like to steer for this direction. In Japan, regeneration of development of infrastructure is expected to come to a chance after long time of struggling.