Japan companies look to bid for projects abroad

 

The participating nations are expected to settle on common rules for bidding for orders placed by central governments for infrastructure projects such as railway and road construction. Opening up bidding to companies in other nations is likely to be mandatory when a government buys products or orders a public works project worth over a certain amount.

The new rules would apply to nations including Malaysia and Vietnam, and would galvanize the Japanese government’s strategy to increase infrastructure exports.

Japan, the United States and the 10 other nations participating in the TPP negotiations plan to settle this issue during talks among chief negotiators that began Friday on the Hawaiian island of Maui.

The TPP talks have made progress on establishing rules that would widen the opportunities for overseas companies to seek and receive orders in government procurement markets, such as those placed for public works projects.

Of the 12 nations, Japan, the United States, Canada and Singapore are parties to the World Trade Organization’s Agreement on Government Procurement, under which they open up orders for goods and public works projects valued above a certain amount to international bidding. 

This has opened the door for overseas companies to receive these orders. For Japanese central government construction projects, the threshold at which the bidding must be opened to international tenders is US$600 million (Bt20.9 billion).

The remaining eight TPP nations, including Australia and Mexico, are members of the WTO, but have not joined the Agreement on Government Procurement. Japan, the United States and other nations have been calling for these eight nations to accept procurement rules in line with the WTO agreement.

According to sources well-informed about the TPP negotiations, the eight nations have fundamentally agreed to accept this plan. The countries are ironing out the threshold at which international bidding would have to be invited, which is likely to be at the same level as the WTO agreement. 

It is expected overseas tenders would need to be considered for construction-related projects ordered by the central governments of Malaysia, Vietnam and other nations when they are worth $1 billion or more.

Japan already has bilateral agreements on government procurement with Mexico and some other countries among the eight nations, under which Japanese companies can take part in bidding. 

However, rules have yet to be established with countries such as Malaysia and Vietnam, so the ultimate decision on whether a foreign company can join a bid is left up to each nation’s government. 

If the TPP makes seeking international bids obligatory, it would likely open up the market for infrastructure projects in several developing nations and increase opportunities for Japanese companies to take part in them.

Annual infrastructure investment demand in Asia has been estimated at $800 billion (about Y100 trillion). China led the recent establishment of the Asian Infrastructure Investment Bank as it seeks to tap into this market. 

To counter this move, the Japanese government wants to increase business opportunities for Japanese firms through the TPP negotiations.