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The Promotion of Infrastructure Projects in Asia

Message of the Japanese Business Community for the East Asia Summit

October 19, 2010
Nippon Keidanren

The achievement of stable economic growth by Asian countries is of great importance, since they are expected to act as drivers of the development of the world economy. From this point of view, the development of backbone and urban infrastructure, currently bottlenecks to growth, is a pressing issue to be addressed.

In undertaking infrastructure development, the Japanese business community will be using public-private partnership (PPP) schemes and various types of international-cooperation schemes to actively provide the world's most advanced technologies and know-how in such fields as energy-saving and low-carbon technology. Through these efforts, we will contribute to the achievement of environmentally harmonious and sustainable economic growth in Asian countries.

Specifically, within the Comprehensive Asia Development Plan which the ASEAN Secretariat is currently formulating and promoting jointly with the Economic Research Institute for ASEAN and East Asia (ERIA) and the Asian Development Bank, Japan will be undertaking development in terms of both hard and soft infrastructure in fields in which it excels. (Please see the Reference below.)

Infrastructure development does, of course, require massive amounts of funds. In order to meet this financial demand, Japan's ODA and other official flows (OOF) can be used for the development of basic infrastructure, while the private sector will be called upon to invest in and operate infrastructure that is projected to be profitable.

Accordingly, in order to enable the Japanese business community to exert itself to the maximum extent in contributing towards infrastructural development, we expect that Asian countries, on their part, extend profound cooperation and give consideration with regard to the issues set out below.

1. Consistent Policy Management and Development of Legal Systems

Since infrastructure development requires considerable time to accomplish, consistent policy implementation should be ensured after the project has been initiated. Retroactive application of new laws and orders should be prohibited.

In addition, it is desirable to see the enhancement or development of domestic laws relevant to the implementation of PPP schemes and those related to environmental and product-quality standards, land expropriation etc. Also approval and licensing procedures should be made faster and transparent. Such steps will enhance the investment environment in Asian countries and lead to an increase in investment opportunities.

2. Implementation of Environmental Measures

We hope that study will be given to the introduction of measures such as energy-saving laws and "eco-point" consumer incentive schemes that have been effective in recent years in promoting energy-saving, reducing CO2 emissions, and stimulating consumption.

3. Development of Bilateral Offset Mechanisms Relating to Greenhouse-Gas Reduction

Also important is the creation of bilateral offset mechanisms. The reduction of greenhouse gases in Asian countries through the use of Japanese low-carbon technologies (e.g. technology transfers in high-efficiency coal-fired power generation) should be counted as Japan's contribution. By diversifying financing methods in the recipient nations, these mechanisms will be of mutual benefit to both those recipient nations and Japan. Accordingly, we hope that the study of these mechanisms jointly with Japan will be accelerated.

4. Promotion of International Standardization

In order to ensure more efficient infrastructure development and management and to enhance connectivity within the Asian region, it is essential to foster standardization of the related systems and in such areas as technical standards and certification. Together with other countries, for example in such forums as ERIA, study should be made to expedite the introduction of standardization within Asia in fields such as environmental regulation, energy efficiency, and low-carbon systems.

5. Building of Fair and Highly Transparent Tendering Systems

The implementation of infrastructure projects should be premised fully on factors such as the nature of the national economy, the medium and long-term cost effectiveness, and the addressing of global issues. To ensure these, fair and highly transparent international tendering systems need to be built.

The Japanese business community will take concrete action to achieve the goals set out above, doing so through forums for government-private sector dialogue (e.g. Business Environment Committees established pursuant to economic partnership agreements, the Vietnam-Japan Joint Initiative etc.).

Reference: Examples of Fields in Which Japan Contributes

  1. Backbone and urban infrastructure projects in the fields of distribution (roads, ports and harbors, airports, high-speed railways, urban transit), water and sewer systems, regional development
  2. Projects that can take advantage of Japan's leading-edge energy-saving and low-carbon technologies, e.g. nuclear power generation, high-efficiency coal-fired power generation, geothermal power generation, solar power generation
  3. Projects that help enhance the living standards and living environment of an expanding middle class, such as comprehensive regional development, the building of smart communities, urban development that considers factors such as functionality and aesthetics, recycling operations (e.g. for consumer appliances, cars), the supply of eco-housing
  4. Projects that take advantage of Japanese IT technologies e.g. e-government, remote medicine, communications for disaster prevention
  5. Disaster-prevention and environment-related projects using state-of-the-art Japanese technologies, e.g. Earth observation satellites
  6. Projects that contribute to natural resource development, energy security, and the stability of food supplies (including cold chains)
  7. Projects to develop institutional infrastructure, such as domestic laws and regulations, approval and licensing systems, customs procedures, and the development of human resources to participate in infrastructure projects

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