Japan still beating China in Southeast Asia infrastructure race

Bloomberg

China may steal all the headlines when it comes to its infrastructure push across Southeast Asia, but data from BMI Research shows Japan is still well ahead in funding projects in the region.

As Japan’s population ages, the government and companies are searching for new markets overseas. Japan dominates infrastructure investment in the Philippines and Vietnam, which are among the world’s fastest-growing economies. But China is ramping up competition with a sweeping push in nations along the route of President Xi Jinping’s signature Belt and Road initiative.

“While Japanese companies and government agencies have had a long head start, Chinese companies have key advantages that could see them overtaking Japan in specific sectors,” wrote Christian Zhang, an infrastructure analyst at BMI Research in Singapore, in an email this week. He cited financing of coal-fired power plants, as multinational banks and development agencies increasingly restrict lending for coal projects.

Asia’s two biggest economies are jostling to expand influence in the region, one of the world’s brightest economic spots and home to half a billion people. Governments from glitzy Singapore to communist Vietnam are building airports, tollways and mass rapid transit to attract investment and create jobs.

Increasingly, infrastructure is among the region’s main growth engines. Indonesia boasts a pipeline of over 250 projects, while the Philippines plans to spend $180 billion on rails, roads and airports. Singapore is doubling the size of its mass transit system.

To reduce strain on government budgets countries are turning to their richer neighbors, who are only too willing to strike deals.

Japan’s infrastructure investment since the 2000s — both completed and ongoing — totaled about $230 billion, while that of China reached about $155 billion, according to BMI.