Japan government set to invest in key port operator

Japan government set to invest in key port operator

Japan’s government is now making final preparations to acquire a significant equity stake in the company operating the ports of Yokohama and Kawasaki in Kanagawa Prefecture to help buoy its international competitiveness.

The company was set up in mid-January by the municipal government of Yokohama in Kanagawa Prefecture, west of Tokyo, to operate the two ports in an integrated manner. The company is an outgrowth of a government initiative begun in 2010 to designate “strategic international container ports” and provide them more government resources.

The new company will seek to make the operations of the two ports’ container terminals more efficient and boost their sagging international competitiveness. The English name of the company has not been released, but it translates as Yokohama-Kawasaki International Port Corp.

Earlier this month, Japan’s Transport Minister Keiichi Ishii designated Yokohama-Kawasaki International Port as “the port management company at the Ports of Keihin,” paving the way for the national government to acquire an equity stake in the company.

The national government’s investment would significantly strengthen Yokohama-Kawasaki International Port’s financial base, allowing the company to jack up its capital investment.

The national government is expected to soon decide, possibly at the end of this month, how much to invest in the port operator, with the possibility it becomes the top shareholder. After a similar company was established for the ports of Kobe and Osaka, the national government eventually became its top shareholder with a 34.2 percent share.

In addition to this national funding, Yokohama and Kawasaki are eligible to receive state subsidies.

Yokohama-Kawasaki International Port was initially established as a wholly owned subsidiary of the Yokohama government with a total of 450 million yen ($3.9 million) in capital and capital reserves. That figure is expected to more than double to $1 billion yen as the private sector and various levels of government invest in the new company.

The company was set up after more than two years of trilateral talks on establishing a joint venture to operate the Port of Tokyo, the Port of Yokohama and the Port of Kawasaki failed, apparently because of Tokyo’s unease over the role of the national government in daily port operations.

Contact Hisane Masaki at yiu45535@nifty.com.