Emerging Markets, Frontier Markets, Stocks

Contractors Race To Cash In On Southeast Asia’s Metro Boom

Japanese general contractors won bids for a string of subway projects in Southeast Asia in 2013 and 2014, and they are now preparing to start construction. Among the projects is Singapore’s Thomson Line, a 30km-long all-underground line that could determine whether Japan’s urban subway tunnel technology can compete in overseas markets.


By Nikkei Asian Review

Proving grounds

Japan’s contractors will also have the chance to prove themselves in new territory. Vietnam and Indonesia are developing their  first subways and have selected Japanese companies to carry out the construction.

     In Vietnam, a joint venture between Shimizu and Maeda landed about 23.2 billion yen ($191 million) contract to construct a section of metro line No. 1 in Ho Chi Minh City. The deal includes construction of two stations and two 781-meter shielded tunnels under the city’s main thoroughfare.

     In Indonesia, Shimizu, Obayashi and a local partner jointly won an order worth approximately 17 billion yen to build, as part of the country’s urban railway system in Jakarta, four underground stations and two shielded tunnels stretching 2.6km.

     Both projects are financed by yen loans from the Japanese government, which gave them an edge over local contractors in bidding for the contracts. For this reason, Singapore’s Thomson Line project could provide a more accurate measure of the competitiveness of Japan’s general contractors.

     Construction on the Thomson Line began last year on June 27. The line, which is being financed by the Singaporean government, will link business districts in the northern and southern parts of the city-state and include 22 stations. It is scheduled to be completed in 2021 and will carry an estimated 400,000 passengers a day.

     The Land Transport Authority of Singapore divided the project into 25 smaller contracts covering the building of station facilities and shielded tunnels, and invited contractors to submit bids for each.

     Japan’s Penta-Ocean Construction, which has a proven track record in Singapore, clinched three back-to-back contracts totaling about 85.7 billion yen between late 2013 and last July. Compatriots Shimizu, Taisei, Sato Kogyo and Nishimatsu Construction received orders worth between 15 billion yen and 30 billion yen from the authority.

Read more from the Nikkei Asian Review

The statements, views, and opinions expressed in this article are solely those of the author and do not necessarily represent those of EMerging Equity.

Courtesy of Nikkei Asian Review, © 2015 Nikkei Inc.

About ETFalpha

Consultant & Founder of ETFalpha ◦ Chief ETF Strategist & Co-Founder of EMerging Equity


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