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Japanese government has difficulties finding suppliers for construction projects

Japanese government organizations face increasing difficulty finding construction companies willing to engage in tendering procedures for their construction projects. For example, in December 2014 demolition of the Old Olympic Stadium in Tokyo had to be postponed for six months due to irregularities. [1] At the regional level, shortages of labor in the construction sector and high prices of building materials due to the high demand created by reconstruction efforts in the areas hit by the 2011 earthquake and tsunami, there are more frequent instances where tender procedures produce no results. 

A recent example is the "New Toyama Prefectural Museum of Modern Art" to be constructed in Toyama City.  The prefectural government published a WTO call for tender at the beginning of December 2014 with deadline for January 22. During this period, no bidders came forward and the prefecture has currently stopped the procedure and cancelled related calls for installation of air-conditioning and electrical wiring systems. The government is currently investigating the reasons for the no-show of bidders and is expected to adjust the estimate price of the project, which was ¥5.2 billion (approx. €39 million) and the construction-period. Also the adjusted tender will have to be approved by the Prefectural Assembly again, causing further delays. [2]

Participation of foreign construction companies in government tendering in Japan is almost non-existent. A complex and opaque web of procedures and regulations and, in addition, difficulty to obtain visa's for foreign labor, has lead foreign companies to shy away from engaging in projects in Japan. The sector also has continuing difficulties to rid itself from suspicions of collusion and price-fixing. 

 

[1]  Jiji Press (Japanese online edition)  解体半年遅れ、異例の事態=不明瞭な入札、疑惑浮上—「聖地」国立 競技場に影 December 27, 2014 (In Japanese)

[2] Kensetsu News, 応札ゼロで入札中止/新富山県立近代美術館 January 26, 2015 (In Japanese)

Published: October 2017

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