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

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

“ 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 19th, 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

GM PSA Gr.

2008．Jan.-Mar 2008．Apr.-jun 2008．Jul.-Sep.

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

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.

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

(Unit : 10,000)

Active opening rate Monthly active job applicant

Monthly number of post

（倍）

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.

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

2-1 Transition of Construction Investment

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

2-2 Employment Effect of Public Investment

„ The employment effect of Public Investment is biggest than other types of investment

１３６person/1 billion yen

(person / billion yen)

1980 1990 2000

Private consumption Private investiment Public investment Exportcomparison of employment effect by type of investment

2-3 Influence to Housing Market

500,000 600,000 700,000 800,000 900,000 1,000,000

(yearly base alter seasonal 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 October because of cooling of housing market by Lehman shock.

2-4 Influence to Private Non-Housing Construction Investment

reflection of lack of intension to invest for buildings, factories and facilities by private enterprises.

Nominal Private (Building)

Nominal Private (Civil Work)

Real Private Company facilities Subprime Loan Problem

Lehman shock

2-5 Increase of Bankruptcy for both Market of

Construction and Real Estate.

0 50 100 150 200 250 300 350 400 450 500

07.0407.0507.0607.0707.0807.0907.1007.1107.1208.0108.0208.0308.0408.0508.0608.0708.0808.0908.1008.1108.1209.0109.02

0 100,000 200,000 300,000 400,000 500,000 600,000

Number(Constraction) Number(real estate) dept(constraction) dept(real estate)

Bankruptcy of Asabu

Tatemono Corp.

（Dept 564 billion yen）

„ Increase of bankruptcy debt means increate of major bankruptcy cases at both market of construction and real estate.

（Dept 256 billion yen）

Subprime Loan Problem

Lehman shock

debt debt

500 400 300 200 100

2-6 Influence to Construction Material Demand

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.

Subprime Loan Problem

Lehman shock

3 The Countermeasure Policy of the

Government of Japan

3-1 2 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

3-1 2nd Supplementary Budget for ’08 year Budget and ’09 year Budget (Approved)

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

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

3-1(2) Support for medium-sized and

small companies

„ Enlargement of Certification and Loan Limit

„ Supplement to Limit of Public Fund Injection to Banks

„ Tax Reduction for Investment to Promote to

3-1(3) Activation of Regional Economy.

„ Reserve Fund for Urgent Economic Affairs

„ Reduction of Expressway Toll

1 trillion yen

500 billion yen

3-2 Supplementary Budget for ’09 year Budget (Be approved shortly)

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.

‰ 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

„ For Employment

Enlargement of Vocational Training , and Support for Employment Creation

Enlargement of Limit for Purchasing Stocks of Private Enterprises by Public Finance

Development of Photovoltaic power Generation ,

School New Deal Project

3-2(3) Realization of Safer and Vital

Lives

3-2(4) Revision of Tax System

2.2 Trillions

2.4 Trillions

100 Billions

3-3 Typical Infrastructure Project

targeted by the Budget

High-standard Trunk Road and Ring Road in 3

Mega-Metropolitan Area

“Shinkan-Sen”

existing runway for Haneda International Airport

school buildings

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.