Corrs was a guest of the Embassy of Japan at the Second Japan-Australia Infrastructure Networking Meeting in Canberra in 2017. So, where can Japanese firms add value?
While Japan firmly retains its seat as Australia’s second-largest trading partner, the nature of Japanese investment in Australian projects continues to diversify in line with market demand. In recent years, Australia’s transport sector has enjoyed increased Japanese contributions in technology, expertise and capital. So, here are ten tips for Japanese participants seeking to maximise their opportunities and success rates in current market conditions.
Be confident Australian transport is a safe investment choice. Australia has one of the fastest growing populations in the world with a AAA credit rating, steady unemployment and historically low interest rates. By 2031, Sydney, Melbourne, Brisbane and Perth will collectively need to accommodate 5.9 million more people. It is widely agreed that there is an infrastructure deficit in Australia, as detailed in the Australian Infrastructure Plan.
Talk to potential Australian partners as early as possible before a request for tender to join a high-potential bidding consortium. Ask Austrade Japan or Australian State and Territory investment bodies for introductions. Review The Australia & New Zealand Infrastructure Pipeline for upcoming public infrastructure opportunities in road, rail, transport and other sectors.
Approach the Government with a solution to a transport problem via a Market Led Proposal (MLP) to build or finance infrastructure or provide related goods or services. Each State in Australia (and ACT and NT) now has market led / unsolicited proposal policies. An MLP must demonstrate value for money and align with or otherwise meet a government policy objective, but must not be in relation to a project which has formally commenced procurement. A critical component of an MLP is uniqueness, which can be achieved by an innovative idea or in some other way. Given Japanese companies’ rich history of transportation know-how they are well-positioned to take advantage of this opportunity.
Embrace the thinking behind PPPs; these packages are only going to get larger. Although PPPs provide long-term certainty for Japanese participants, the restrictive change mechanisms may prove challenging for management. Think about more flexible approaches to controlling the course of a project amid changing market conditions, consumer demands and developments in technology.
Propose alternative funding models for infrastructure, such as direct-user charges. Government has historically taken a conservative approach to user charging systems, which is partly a cultural issue in Australia due to some high-profile failures in the toll road sector during the Global Financial Crisis. However, due to current fiscal constraints on government, the time is right for innovative funding approaches. For Australia’s major arterial roads, it may be time for variable pricing models for:
HOT (high-occupancy toll) networks, which permit faster transport in dedicated lanes for commuters who share private vehicles;
FAST (fast and sensible toll) lanes, which apply tolls to lanes and not entire roads, in order to give infrastructure consumers the ability to choose between tolled and untolled road transport; and
Trucking lanes, which develop toll lanes restricted to use by large trucks but which carry higher tolls.
Develop governance principles that allow some degree of autonomy by Australian management in order to respond to local market conditions, without needing separate approval from Japan. Australian procurements move quickly, and the 稟議 (ringi) process may limit a Japanese company’s ability to meet a time-constrained tender timetable.
Innovate based on know-how developed through Intelligent Transport Systems. The Japanese experience in Vehicle Information and Communication Systems, Electronic Toll Collection and ITS Spot Services can be translated to reduce travel times, decrease environmental impacts and provide safe driving support in Australia. There is increasing interest in Australian ‘smart cities’ and connected transport networks. Australia will also be keenly interested in the Tokyo 2020 journey towards self-driving vehicles and public transport.
Bridge the disconnect between where Australians live and where their jobs are. Sydney, Melbourne and Brisbane have some of the longest commute times in the industrialised world. In the last 50 years Australia has focussed on roads, but the in the next 50 years it needs to focus on light and heavy rail. No one is better placed than Japan to improve Australia’s rail infrastructure.
Consult with the Australian consumer. Commuters are becoming increasingly sophisticated due to increased education, wealth and technological advancement. Be proactive about identifying and meeting the needs of infrastructure users, and be conscious about testing the community’s patience through disruption due to construction.
Encourage your Australian business partners to adapt Japanese long-term strategic project planning. Japan is uniquely long-term oriented, with corporations striving to serve stakeholders and society at large for generations to come. The Australian mindset tends to be more short-term, slowing progress in addressing infrastructure gaps, as discussed in this report on Shifting Australia’s Infrastructure Mindset.
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