“Infrastructure in the context of finance crisis. Experiences from ACECC member countries.” Report from Japan 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. 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 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 1-1 Influence to the Japanese Financial System  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. Total Amount and Ratio of Bad Loans of Banks of Japan Ratio of Bad Loans by Banks type (unit : %) Total Amount of Bad Loans for whole Banks (Unit : Trillion Yen) Local Bank Bank Total Main Bank 1-2(1) Influence to Exporting Enterprises  Sudden decrease of demand for industrial good (vehicle, electric product, machinery etc.) happened in global base. Monthly rate of number of sold vehicles by countries Quarterly rate of number of sold vehicles by Maker Japan China Russia U.S.A. EU India Brasil 2007 Jul. Sep.Aug. Oct. Dec.Nov. 2008 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Renault Ford Nissan VW Gr. Honda Toyota Hyundai Fiat Gr. GM PSA Gr. 2008．Jan Mar. 2008．Apr jun. 2008．Jul Sep. Subprime Loan Problem Lehman shock Lehman shock 1-2(2) Influence to Exporting Enterprises  Japanese Yen value increased against to other countries currency alter subprime loan problem and Lehman bros. shock. Average for 5 weeks Average for 25 weeks Transition of rate of exchange ‘07 ‘08 ‘09 Subprime Loan Problem Lehman shock (Unit : yen/us doller) 1-2(3) Influence to Exporting Enterprises  The performance of Japanese exporting enterprises became sharp decline because of sudden fall of global demand and value up of Japanese currency. Amount of Sales and Profits by year : Toyota Motors Corp. Amount of Profit (unit : Trillion Yen) （予測） Amount of Sales (unit : Trillion Yen) Amount of Sales Amount of Profit 1-2(4) Influence to GDP Development.  Japanese economy which is mainly relying upon her exportation is getting bigger damages than U.S.A. and EU countries. Transition of Rate of Real GDP Development Japan U.S.A. EU ‘05 ‘06 ‘07 ‘08 Subprime Loan Problem Lehman shock 1-3 Increase of Unemployed  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 2008・2009年の求人・求職者の推移 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 '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. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 (Unit : 10,000) Active opening rate Monthly active job applicant Monthly number of post （倍） Number of Active Job applicant and post Active Opening rate Status of Job Applicant, Post and Active Opening Rate on 1997~2009 Lehman shock 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 [...]... 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 % (Quarterly, rate of one year before) 2-4 Influence to Private Non-Housing Construction Investment → Anticipated Subprime Loan Problem Lehman shock Total of Nominal Private Non-Housing Nominal Private (Civil... one of the trunk industry of Japan, but is recently facing the decrease of construction investment , especially big decrease of governmental investment 2-2 Employment Effect of Public Investment comparison of employment effect by type of investment (person / billion yen) １３６person/1 billion yen 1980 1990 2000 Private consumption Private investiment Public investment Export The employment effect of. .. Revision of Tax System Tax Reduction for Gift Tax 100 Billions 3-3 Typical Infrastructure Project targeted by the Budget Construction of sections of missing links for Highstandard Trunk Road and Ring Road in 3 MegaMetropolitan 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...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 Amount of Investment (unit : Trillion Yen) 2-1 Transition of Construction... Private Company facilities Nominal Private (Building) 2006 2007 2008 2009 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 2-5 Increase of Bankruptcy for both Market of Construction and Real Estate Subprime Loan Problem Bankruptcy of Asabu 500 Tatemono Corp... of existing runway for Haneda International Airport Promotion of earthquake-proof reconstruction for school buildings Wide introduction of photovoltaic power generation 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... 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... 02 01 00 99 98 97 0% 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 3 The Countermeasure Policy of the Government of Japan 3-1 2nd Supplementary Budget for ’08 year Budget and ’09 year Budget (Approved)... Public Investment is biggest than other types of investment 2-3 Influence to Housing Market ‘08 Number of house built (unit : house) 1,400,000 (yearly base alter seasonal adjustment) 1,300,000 Lehman shock 1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 500,000 '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 ‘08 The fall of number of house built on 2007 was a result of the revision... Typical Infrastructure Project targeted by the Budget 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 . Representative to ACECC President, Central Consultant Inc. Report from Japan Infrastructure in the context of finance crisis. Experiences from ACECC member countries. ” 1 .The Influence to Japanese. Infrastructure in the context of finance crisis. Experiences from ACECC member countries. ” Report from Japan At the International Round Table Meeting at Hanoi City, Vietnam on. adjustment)  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