Backers of bringing Olympics to Tokyo play up the economic benefits

At stake in bid — ¥3 trillion

by Kazuaki Nagata

Second Of Two Parts

Tokyo will learn early Sunday whether the International Olympics Committee vote in Buenos Aires results in the capital becoming the host of the 2020 Summer Games. Winning the nod to hold the prestigious global sporting event is cause for celebration, especially when considering the economic rewards.

“As a measure to stimulate Japan’s economy, I think it will bring positive effects, including boosting individual consumption,” Finance Minister Taro Aso told a news conference Aug. 21.

The Tokyo Metropolitan Government estimates that hosting the 2020 Games will produce economic effects worth about ¥3 trillion from Hokkaido to Okinawa.

The outcome of the IOC vote Saturday should be known by 5 a.m. Sunday in Japan.

The recession-weary public appears to have high hopes for holding the extravaganza in the already crowded capital. An online survey by Lifemedia Inc., a Tokyo-based marketing and research firm, says more than 70 percent of 672 respondents who support the bid list the games’ economic effects as a reason for hosting them.

The anonymous survey was conducted a few months ago on 1,200 people — 100 males and females from each generation, ranging in age from their teens to their 60s.

The metropolitan government said its ¥3 trillion estimate is actually conservative because it only accounts for spending directly related to holding the Olympics.

One example is new stadiums, which would not be made without a 2020 Tokyo Olympics.

Reinforcement for infrastructure like roads and railways isn’t included because that would be carried out regardless of the bid.

“If we include that kind of investment, the number will be too big to figure out the real impact of the Olympics,” said Kenichi Kimura, director of the Tokyo 2020 bid promotion division.

This means the effect is likely to be bigger if incidental spending is taken into account.

The games will impact several fields, most notably construction and tourism, due to the need for new facilities to handle the athletic events as well as the influx of domestic and international visitors.

The services industry will get the biggest boost, of about ¥650 billion, according to Tokyo’s estimate, followed by construction, with ¥470 billion.

Of the ¥470 billion, ¥355 billion would come from fees for building and renovating stadiums and other facilities, which number about 14, including the athletes’ village.

Other than stadiums, there will be more business opportunities for contractors as the pressure of being the host generates more projects. Many, such as reinforcing infrastructure against quakes and improving the capital’s “landscape,” are expected to accelerate to take advantage of the spending bonanza.

“They get a sort of deadline, so I think the speed will increase,” said Kunitaka Sunami, an executive fellow at Tokyo-based Research Institute of Construction and Economy.

Acting as a drag on the bid is the government’s inability to control the Fukushima crisis, which caused tourism to plunge for months after the meltdowns. While overseas visitors have been bouncing back, the hundreds of tons of radioactive water flowing into the Pacific each day, helped along by years of government inaction, is painting a disastrous environmental picture of Japan that could compromise Tokyo’s bid.

Overseas visitors dropped to 6.2 million after the nuclear crisis started in 2011, from 8.6 million in 2010, but returned to 8.3 million in 2012.

And visitor numbers have jumped this year thanks to the weakened yen.

“It is hard to estimate how many international visitors will come, but there are people who wouldn’t come if it weren’t for the Olympics,” so the number of inbound visitors will climb during the Olympics year, said Masataka Ota, a senior consultant at Japan Tourism Marketing Co.

Ota said hosting the games will give a boost to the MICE (meeting, incentive, convention, exhibition) campaign, which is aimed at drawing more international events to Japan.

For instance, sponsors of the Olympics will host special tours to watch the events and bring in international visitors. Then the IOC and international sports associations will host meetings in Japan, augmented by an increase in sports-related trade shows.

To take into account the limited number of seats available for the games, the idea of using large stadiums for mass viewing has been aired to give those without tickets a chance to enjoy the events as well.

Given all the different ways to make money, Ota said the tourism industry should make the best of any opportunity that arises.

Some are meanwhile hoping the Olympics will boost domestic consumption, which has been held back by chronic deflation, stagnant wages and expectations that the 5 percent sales tax will be hiked to 8 percent next April, and then to 10 percent in October 2015.

The 1964 Tokyo Olympics led to a boom in TV sales because people wanted to watch the games at home. With the market now bloated by more competitive South Korean and Chinese TV sets following a national replacement wave set off by the shift to digital broadcasting, the battered electronics industry is hoping another Olympics will again boost sales of a money-losing product that has triggered major restructuring at its once mighty gadget makers.

This time, the industry is plotting a sales campaign based on “4K” or “8K” broadcasting that promises to offer images with a resolution four to eight times higher than current high-definition TVs can offer. Once these technologies get off the ground, it will lead to development of more innovative TVs linked to the Internet.

If these technological changes occur, the Olympics could create an incentive to buy new TVs, a spokesman at Japan Electronics and Information Technologies Association said.

But Eiji Mori, a digital products analyst at Tokyo-based market research firm BCN Inc., said the Olympics alone won’t be enough to spur a significant level of demand. A sales binge will depend on other factors, such as progress on 4K or 8K broadcasting and affordable prices for related products, he said.

“I don’t think we should simply assume that the games will boost demand,” he said.

  • Japanish

    This isn’t 1964 any more, I’m afraid. Olympics don’t produce profits any more: They cost the host countries a fortune. Too many hands have to be greased. This Olympics will push Japan into yet deeper debt. However, the country is finished in the long run, so this Olympics could at least be the last hurrah of a dying nation.