No. 105: Water business in Japan and the world (24) (October 24, 2011)

Future prospects of the Japanese water business

Japanese companies enjoy high technological excellence in such elementary technologies as membrane filtration and reverse osmosis membrane necessary to transform murky water and seawater for drinking water. The elementary technologies developed by Japanese companies are used in the water service projects worldwide. Nonetheless, few Japanese companies are involved in the management of water business. The following three approaches are recommendable to facilitate their involvement in the water business abroad: (1) investing in existing water business operators, (2) becoming a trustee company based on the concession method, and (3) participating in renovation projects of water facilities.

Japanese water business operators started to branch out into foreign countries lately with the initiative of big trading companies, but they are mostly not experienced enough to participate in the existing projects abroad on a concession basis. The same is true of local governments. That is why both private operators and local governments have few opportunities to get involved in water business abroad. Therefore, they are required to develop the ability to make a proposal for rationalization and streamlining from a viewpoint of a private company to a target country, while promoting the cooperation between the public and private sectors.

There are various problems inside Japan. Facing the huge demand for renovation of the existing facilities, water service operators have to pave the way for the joint management of the water business on a public and private partnership. And the central government is required to modify the legal system by facilitating the cross-sectional cooperation among government agencies. As described so far, the government initiative is vital to increase the competitive edge of Japanese companies. Otherwise, it is hardly possible for them to be entrusted with an integrated project that includes management and operation of the whole business in the global water market. (To be continued)