Asia not yet out of the woods

by Ed Weiss

Regional infrastructure development in Asia remains in the doldrums due to lack of finance.

Despite this Japan has announced a multi-billion dollar development plan which includes several bullet train extensions. However, little of this work is expected to be available to overseas companies.

Japanese heavy engineering companies are obtaining plant orders, mainly in energy-related fields. One such is Toyo Engineering which has received a Yen4bn (£23m) power-plant order from National Petrochemical of Thailand. And an alliance of JGC, Kellogg Brown & Root of the US, and Chiyoda is bidding for Yen200bn (£1.16bn) worth of contracts for liquified natural gas projects in Malaysia.

Another consequence of the economic crisis is that national companies with severe debt problems are selling assets. A 22% stake in the Bangkok Transit System, the city’s new Skytrain overhead rail system, is being sold to pay off Tanayong’s debts. Another 20% of BTS is scheduled to be auctioned by Credit Suisse First Boston on December 7, two days after Skytrain’s official launch.

The Skytrain is the only one of three planned mass transit systems for the country to have survived the recession. Hong Kong-based Hopewell Group poured several hundred million dollars into its abandoned elevated road-rail project, while a new subway system is now expected to take at least a decade to complete.

Japanese investment in China has risen. Bridgestone has obtained management rights over a Chinese tyre maker and plans to begin local production, while Komatsu will start producing large power shovels, aiming for annual production of 2,000 units later next year.

Honda began producing the Accord in Guangzhou in March, using the factory Peugeot-Citroen left when it pulled out. Despite a 300,000 yuan ($36,240) per car price, this year’s production has been pre-sold.

Another Japanese carmaker, Suzuki, has planted roots in India. Although 10 carmakers from Japan, the US and South Korea have begun producing cars in India in the last three years, Suzuki’s unit has maintained an 80% market share. Based near New Delhi with annual production capacity of 500,000 cars it is among the world’s largest car factories.