NEW YORK—Japan is the most energy-efficient country in the world, using nearly half the energy consumption per GDP of the United States and nearly one-eighth less than India and China, said Shuhei Abe, portfolio manager of the Select SPARX Japan Funds.
As the world turns to energy alternatives to oil, “entire social infrastructures will have to change, and arbitrage of our technology over the next five to 10 years will turn Japan into the gateway to Asia,” Abe said.
Energy technologies Japan excels at include photovoltaic solar panels, hybrid/electric vehicles, wind power, highly efficient water heaters and batteries, Abe said. In addition, Prime Minister Yukio Hatoyama, who as president of the Democratic Party of Japan defeated the long-governing Liberal Democratic Party in last year's election, has proposed spending $1.9 trillion over the next decade to reduce carbon dioxide gas emissions 25% from 1990 levels.
“This spending would create huge demand for Japanese companies that are focused on energy-saving technologies,” Abe said.
Furthermore, businesses and government in Japan, weary of the past two decades of recessions and stagnant growth, are adopting more competitive models, including joint ventures with Chinese companies, hiring outside CEOs who are not Japanese nationals, downsizing and restructuring.
“In the ‘New Japan,’ slow-growth companies will become high-growth, delivering profits of 10% to 50%,” Abe said. “Japanese companies are taking more aggressive strategies for growth. They are telling me they are starting to make major decisions; otherwise, they will be dead with the country. They think this is it. They cannot wait any longer.”
Along these lines, the Hatoyama cabinet acknowledges the nation’s debt, 460% of GDP, warrants a “reallocation of the wealth and how they can spend government money. Corporate tax is unevenly higher than the rest of the world, and the 5% consumption tax is unevenly lower. That is one of the reasons no one sells Japanese government bonds,” Abe said.
Asset management firms looking to enter or reenter the Japanese market might find now a particularly auspicious time to form joint ventures, Abe added.