Bloomberg News

Japan Trainmakers Get India, Indonesia Edge From Advisor

July 29, 2012

Japan Trainmakers Get India, Indonesia Contest Edge

East Japan Railway Co. Shinkansen bullet-train " Hayabusa." Photographer: Junko Kimura/Bloomberg

Japan International Consultants for Transportation Co. is working on feasibility studies for high- speed trains in India, Indonesia and Vietnam as it tries to help Japanese rail companies boost sales overseas.

The projects include separate lines from the Indian city of Chennai to Hyderabad and Ernakulam, said Masanori Tanaka, president of JIC, which is owned by East Japan Railway Co. (9020) and other Japanese train operators. The Indonesian track would link Jakarta and Bandung, he said in a July 27 interview in Tokyo.

The advisor bases its studies on Japanese technologies and this bolsters Japanese companies’ odds of winning contracts for any lines that are subsequently built, Tanaka said. The company was designed to replicate the success of Paris-based consultant Systra in bolstering French train exports as Japanese suppliers try to offset slowing domestic demand.

“There’s a higher chance when the plan is based on a Japanese system,” Tanaka said. Still, it’s “not certain” Japanese companies will win orders as the ultimate decision is made by the customer following a tender, he said.

JIC is working on 18 rail projects in total, including overseeing construction of lines in Jakarta, Cairo, China, Istanbul and Ho Chi Minh City, Tanaka said. The company is aiming for sales of about 1 billion yen ($13 million) in its first fiscal year, which started in April, he said.

Rail v. Roads

The company is focusing on Asian markets as economic growth, urbanization and rising road congestion are spurring interest in trains, he said.

“Developing countries are at a stage where they are deciding whether big cities should become car societies or train societies,” he said. “We’re getting in on the planning stages.”

India is studying a total of six high-speed lines, including the two that JIC is assisting with, he said. Vietnam is reassessing plans for high-speed rail after a 1,550-kilometer (963 miles) line from Hanoi to Ho Chi Minh City was rejected by lawmakers in 2010.

Separately, Tokyo-based Hitachi Ltd. (6501) and partner John Laing won a 4.5 billion pound ($7 billion) train order from the U.K. last week. A Nippon Sharyo Ltd. (7102) venture won an order for about 300 trains from Taiwan in 2011.

The total global market for rail equipment may increase 2.4 percent a year to 160.5 billion euros ($200 billion) by 2016, from an average of 136 billion euros annually between 2007 and 2009, according to the Association of the European Rail Industry.

Systra, part-owned by rail operators Societe Nationale des Chemins de Fer Francais and Regie Autonome des Transports Parisiens, had sales of 416 million euros in 2011. The company was formed in 1957.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.


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