The water business in Japan – part 2

Yes, another post on the water market in Japan, my current interest. You can see my previous post here.

In my previous post I outlined the limited presence of foreign companies in the Japanese market and looked briefly at where I saw the opportunities.

I have been conducting a search in the Japan market, and wanted to go into a bit more detail on the situation there. Japan introduced their own competition regulation specifically targeting the water market back in April 2002. The revised Water Works Law allows for state owned water authorities (of which there are 1,928 in Japan!) to outsource operations to private operators. This has allowed Veolia to enter the Japanese market and win a number of operations contracts with recently acquired Japanese subsidiaries.

Much of Japan’s water and wastewater infrastructure was built post-war, and many tens of billions of US dollars will have to be spent  every year to maintain and replace that infrastructure. With many local governments, and the national government, in serious debt and investment in water infrastructure currently trending downwards, there seems to be a clear need for private finance in the sector. Seems to me like a perfect scenario for PPPs.

78% of Japan’s water supply comes from rather polluted surface water, and there is a need for increasingly advanced potable water treatment. Part of the reason for this may be that only 69% of the Japanese population has access to articulated sewers. 12% of households use septic tanks, and an astounding 19% have no access to sanitation.

More on the current industry picture in the next post.