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Japanese construction companies announce decline in overseas orders

10:53 | 15/06/2021

(Construction) - Japanese construction contractors announced their values of overseas orders for the fiscal year 2020 ending March 31, 2021, which shows disappointing results due to the global pandemic.

japanese construction companies announce decline in overseas orders
Project in Hong Kong received by Japanese contractor.

The slump in private-sector investment forced many projects to be  postponed or suspended, and the values of orders received fell sharply compared to the previous fiscal year. In the current fiscal year, many companies are expecting an increase due to expectations that the pandemic will be under control.

The Overseas Construction Association of Japan reported that overseas construction orders received by its 51 member companies in fiscal 2020 fell 46.0% from the previous year to 1,113.6 billion yen, a sharp drop from the 2 trillion yen mark in fiscal 2019. The economic downturn put a sharp brake on orders from local companies, and Official Development Assistance (ODA) projects also failed to progress.

While overseas business is showing signs of improvement, one of the concerns is the political situation in Myanmar. Since the civilian government took over in 2011, ODA projects related to infrastructure and private sector development by Japanese companies have been promoted, and general contractors have advanced into the country.

Kajima, Taisei, Sumitomo Mitsui Construction and others, which are undertaking ODA projects and private-sector projects, have temporarily suspended construction and sent expatriate workers home. The Japanese government plans to complete the ongoing construction, but there is no prospect of resumption. Depending on the political situation, there is a possibility that the project will be cancelled. An official of one of the general contractors who has worked in the country said, "We cannot foresee the future and have no choice but to watch the situation closely. We will need to review our mid- to long-term strategy." 

Although there are country risks to be considered, overseas business is one of the growth strategies for Japanese construction industry as the domestic market shrinks. The general contractors who have set their sights on expansion say, "We will actively consider capital tie-ups with local companies so that we can reduce risks and achieve results in a short period of time." (2021/06/09)

The Daily Engineering and Construction News of Japan

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