Action 59. Private Sector-led Investment in Transportation Infrastructure Independent from Public Financing!

Much of Japan’s road infrastructure, including the Tokyo Expressway, was constructed between 1955 and 1964, the year of the Tokyo Olympics. This infrastructure is now aging rapidly. If the only funding available to update this aging infrastructure is public funding, the nation’s finances will collapse. It is necessary to make a conceptual shift from “social infrastructure subsidized by taxes” to “transportation infrastructure independent of public financing.”

1. Fully Privatize Expressway Companies with the Aim that they Eventually be Listed!
In Europe and the United States, under the concession method toll roads have increasingly been shifted to the private sector. The concession method is a method for delegating long-term facility management rights to private interests without transferring the underlying property rights. Japanese expressways may appear to be privatized but actually the government is the shareholder and private businesses do not have any rights in terms of management decision-making. They also do not have rights in making decisions on tolls or the construction of new roads and new interchanges.
Road management firms should be fully privatized and given rights to set tolls and make decisions on the construction of new roads and interchanges, with the aim that they eventually become listed companies. This will encourage road companies to promote business activities that will generate maximum profits for “users = the public,” including investment in facilities and toll-setting designed to improve user satisfaction, prevent traffic congestion, and increase users. These efforts will help fund maintenance and upgrades, needs for which are expected to increase in the future, without depending on public financing.
2. Establish a Linear Shinkansen Network without Depending on Public Financing!
A linear motor car (or maglev train) is expected to connect Tokyo and Osaka, which are 440 kilometers apart, with a journey of one hour. The entire construction costs are to be covered by the Central Japan Railway Company (JR Tokai). The reason why it is considered possible to invest a total of around 10 trillion yen in facilities on a stand-alone basis is that cost effects that meet the investment can be expected. With regard to projected Shinkansen lines whose construction has not been started and those that are partially unapproved, mergers between railway companies with unprofitable departments and those with high profitability should be considered, in view of the shrinking national fiscal space. For example, a merger between the unprofitable Hokkaido Railway Company (JR Hokkaido) and the profitable East Japan Railway Company (JR East) and one between the unprofitable Shikoku Railway Company (JR Shikoku) and the profitable West Japan Railway Company (JR West) should be considered. In this way, the improvement and maintenance of the Shinkansen should be covered by private funds alone. The establishment and maintenance of railway infrastructure on a self-sustaining basis should be realized as soon as possible.
3. Actively Develop Next-Generation Vehicle Infrastructure, such as for ITS, Autonomous Vehicles, and Hydrogen Stations, to Create New Markets!
Google aims to commercialize its self-driving technology in 2017. If Google captures the artificial intelligence market and thereby comes to control global de facto standards, the automobile industry, which is Japan’s most profitable, will be downgraded to the level of manufacturing of mere “containers,” as was the Japanese personal computer industry. Toyota is planning to launch a hydrogen fuel-cell car that can go 650 kilometers on a single charge. However, without widespread refueling station infrastructure, it will be difficult to popularize the use of hydrogen-fueled cars. When needs to update road infrastructure become serious, the government should seize the opportunity to actively promote the construction and improvement of next-generation infrastructure, such as intelligent transport systems (ITS) and hydrogen refueling stations, as national projects ahead of other countries around the world.
4. Fully Privatize Fixed-Route Bus Companies!
Local fixed-route buses have been regarded as a typical example of a declining industry. There are, however, many examples of successful companies, such as Industrial Growth Platform, Inc. (IGPI), which has increased its performance through acquisitions, and Eagle Bus in Saitama. The main factor common to their success is management reform. It is possible even for the fixed-route bus industry to turn a profit and maintain the right to transport local residents, depending on how management practices are reformed. Reforming efforts include the streamlining of bus stop locations and bus schedules based on surveys of local needs and the introduction of on-demand bus services. The means and right of transportation of local residents in an aging society should be secured not by financing with tax money but by management reform through privatization.