TOKYO: Major Japanese firms plan to increase domestic capital spending by 13.9 percent from a year earlier in fiscal 2015 ending next March, according to the latest survey by the Development Bank of Japan.
The fourth straight year of increase is led by manufacturers with brisk earnings partly thanks to the yen’s weakening. In particular, greater spending is eyed for developing new and higher-functioning products in growth fields such as materials and parts for fuel-efficient vehicles, smartphones and aircraft, the government-affiliate lending institution said in the latest survey report.
According to the survey, manufacturers plan to boost their capital expenditures by 24.2 percent, close to the actual increase of 24.7 percent in fiscal 1988, when the economic “bubble” was swelling in Japan.
Capital investment is projected to surge 61.3 percent in the electric machinery sector, the first increase in five years, amid strong demand for semiconductors and displays for smartphones and in-car devices. Projects to newly set up data centers for cloud services also contributed to the growth. The auto industry plans to spend 25.7 percent more on facilities and equipment.
As for reasons for beefing up capital investment, new product development and product sophistication were cited by 16.4 percent of the manufacturers surveyed and research and development by 9.6 percent. These figures are larger than the 16.2 percent and 8.2 percent, respectively, actually recorded for fiscal 2014. Forward-looking spending has gained strength, the bank said.
Meanwhile, major nonmanufacturers plan to expand capital expenditures by 8.7 percent, chiefly in order to reinforce logistics systems and commercial facilities at a time when a growing number of foreigners are coming to Japan.
In fiscal 2014, total capital spending rose 6.3 percent from the year before compared to the initial plan of a 15.1 percent rise, the bank said. The June survey covered 3,207 firms with capital of ¥1 billion ($8 million)or more. Of those, 2,203 gave valid responses.
