Australia Japan Business Co-operation Committee | Infrastructure
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Infrastructure

In 2008, the AJBCC singled out the broad field of infrastructure as an area to be explored in terms of possible business opportunities between Australia and Japan.

The driver for this was two-fold.

Australia

In the provision of new infrastructure in Australia, over many years Governments were increasingly financially stretched and had utilised a private-public partnership (PPP) way of bringing these projects to fruition earlier than otherwise would have been possible. In doing this, Australian industry and Government had developed skills in putting these projects together across a broad range of service and stakeholder providers (legal, financial, investors, construction, Government departments, engineers, architects and designers).

Japan

In Japan, the post war miracle growth period saw massive investments by the Japanese Government in infrastructure. But many of these are now coming to the end of their economic life. The requirement for renewal of these assets is expanding at a high pace. However, 20 years of Japan’s deflation and the impact on Government revenue have been profound. For some projects, a possible route was the use of public partnerships. Although Japan introduced a framework for its PFI (Public Finance Initiative) from the UK, that system has been unable to achieve anything approaching the financial scale of PPP projects commonly seen in Australia. The AJBCC considered that sharing the experiences and lessons learnt of Australia’s approach, including the framework that has been developed both by Government and the private sector, might be beneficial to generating future business cooperation in Australia, Japan as well as third countries.

From 2008, the AJBCC together with the JABCC has mounted 2 missions to Australia and 2 missions to Japan. In addition, there have been AJBCC/JABCC infrastructure promotion missions from Australia to Japan and vice versa.

In exploring ways in which Australian and Japanese companies might cooperate in this field in third countries, joint exploratory missions have been dispatched to both Indonesia and India.

Financial Implications

The touch points of infrastructure across the corporate sector are many. One specific area of interest relates to infrastructure as an investment asset class. With Australia’s long history of PPPs, so too was the development and appreciation of infrastructure as an investor asset class capable of supplying stable long-term returns. Superannuation funds in Australia have been investors in infrastructure, but the same cannot be said for Japan which is only now developing an appreciation for this asset class.

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