Out-Law News 1 min. read

$2.4bn Japan fund for ASEAN smart cities

Japan's government is planning to provide ¥250 billion ($2.4bn) in funding to Japanese companies to develop smart city projects in Southeast Asia.

The fund will include ¥50bn ($483.5 million) from Japan Oversea Infrastructure Investment Corporation for Transport & Urban Development (JOIN) and ¥200bn ($1.9bn) from Japan Bank for International Cooperation (JBIC).

Japan's government will encourage Japanese companies to join the projects in 26 cities in 10 member countries of the Association of Southeast Asian Nations (ASEAN). The cities include Hanoi, Ho Chi Minh, Jakarta, Bangkok, Singapore and Kuala Lumpur. Interested companies will be invited to the project by end of this year and qualified projects will be selected by spring 2021. The companies will have a role in outlining how technology could improve the way city infrastructure is managed and operated in the selected cities.

JOIN is considering measures to allow Japanese companies to form joint ventures with local companies. JBIC will extend the credit line to environmental programmes including those for cutting greenhouse gas emissions, increasing the use of renewable energy and preventing air and water pollution.

The fund is designed to stimulate Japanese companies’ competitiveness in smart city projects in the region.

Infrastructure expert James Harris of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: "We have seen a lot of interest around smart cities in the past two to three years or so, long before the Covid-19 pandemic, but with changes this year across South East Asia in the way business has traditionally been done, it is likely we will see a lot more smart city type developments. Sustainability and ESG initiatives are also pushing markets into new areas and it unsurprising to see Japanese entities at the forefront."

In October, Japan's prime minister Yoshihide Suga said Japan would aim for carbon-neutrality by 2050. In May, the National Diet in Japan – the country's law making body – passed the Digital Procedure Law for accelerating digitalisation of administrative procedures of governments that is expected to serve as a basis for promoting smart cities. In October 2019, Japan's government set up Smart City Institute Japan to market services related to smart cities overseas.

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