Infrastructure exports: Japan faces a turning point
TOKYO — China recently closed a deal with Indonesia to build a high-speed railway on the main island of Java. For Indonesia’s government, which is not on the hook for even a rupiah, it’s a pretty sweet deal.
Japan was also bidding for the project, and its defeat suggests that it might want to rethink its strategy of using infrastructure exports as an engine of economic growth. Getting involved in overseas infrastructure projects has always been a high-stakes game. A lot of up-front money is required, and the payoff can be decades away. But these projects have also held a lot of promise. Emerging countries must build ports, railways, roads, power plants and more if they are to sustain economic growth. The companies that make the materials for these economic conduits stand to make a lot of money. Where that money comes from has always been a big hurdle. In countries like Indonesia, governments have limited funds at their disposal. This is one reason Jakarta took up China on its offer; the deal allows Indonesia to put its money into other pieces of infrastructure. Public coffers are not the only source for infrastructure funding. More and more, private businesses are getting involved in building the big pieces of our civilization that we all rely on, then hanging around as operators, collecting tolls and fees from users to recoup their investments and make some money. Gordon Wu is considered a pioneer of this model. The Hong Kong business tycoon is the leader of Hopewell Holdings, one of the metropolis’s largest builders of roads, tunnels and bridges. In the early 1990s, Wu pumped money into constructing power plants and highways in China and Southeast Asia.