Development Bank of Japan
Research Report
No. 17

Survey on Planned Capital Spending
for Fiscal Years 2000 and 2001
(Conducted in February 2001)

June 2001

Economic and Industrial Research Department
Development Bank of Japan

Contents

Ⅰ Outline............................................................................................................................ 1
Ⅱ Summary ........................................................................................................................3
1. Overall Condition......................................................................................................................... 3
2. Anticipated Actual Capital Spending for FY 2000.................................................................. 3
3. Planned Capital Spending for FY 2001..................................................................................... 3
4. Features of Planned Capital Spending for FY 2001................................................................ 4
Ⅲ Survey Results ................................................................................................................7
1. Anticipated Actual Capital Spending for FY 2000.................................................................. 7
2. Planned Capital Spending for FY 2001..................................................................................... 9
3. Investment Motives ...................................................................................................................16
4. Trends in Land Investment (Classified According to Principal Business Sector) ............17
5. Trends in Capital Spending by Foreign-Affiliated Firms (Classified According to
Principal Business Sector) .........................................................................................................19
6. Information Technology Investment(Classified According to Principal Business Sector) .............................................................20

Development Bank of Japan Research Report/ No. 17iI Outline
Objectives
This survey has been conducted biannually (in February and August) since FY 1956 by
Development Bank of Japan to assess major trends in the capital spending of Japanese industry.
The Scope of Capital Spending
In this survey, capital spending refers to domestic investment in the tangible fixed assets of one’s
own corporation; they include buildings, structures and equipment (including ships, aircraft,rolling stock, tools and furnishings), as well as the purchase and development of land (excluding
the purchase of land for subdivision in the real estate industry). Accordingly, intangible fixed
assets are excluded, as are capital spending abroad and investment in subsidiaries/affiliated firms(except that “information technology investment” includes intangible fixed assets, etc. as
indicated later).
Survey Methods
The survey was conducted by means of questionnaire (sent to and completed by individual
firms).
Capital spending is calculated on a construction basis. In general, it is defined as the sum totalof tangible fixed assets including the construction in progress account (without deducting resale
value, depreciation and loss).
Target Firms
This survey covers all private firms in Japan’s major industries capitalized at ¥1 billion or more.
However, it excludes agriculture, forestry, finance and insurance, medicine, etc. In addition,
the Teito Rapid Transit Authority has been included in the survey despite the fact that it isclassified as a (non-financial) public corporation under the System of National Accounts (SNA).
Date of Survey
February 10, 2001
Contents of the Survey(i) Anticipated actual capital spending for FY 2000 and planned capital spending for FY 2001, (ii)
Details of individual construction projects in each of the above years, (iii) Anticipated revenues
and expenditures in FY 2000 and FY 2001, (iv) Investment motives in FY 2000 and FY 2001, (v)Trends in land investment in FY 2000 and FY 2001, (vi) Information technology investment in
FY2000 and FY2001.

Development Bank of Japan Research Report/ No. 17 1

Responses
The responses to the survey are shown below. This survey is the largest among similar national
surveys on the trend of capital spending in terms of the number of targeted firms andrespondents.
No. of Firms Targeted

No. of Firms Giving
Valid Responses

Proportion of Valid
Responses

3,524

3,061

86.9%

4,278

3,752

87.7%

Principle BusinessClassification
Investment SpecificClassification

On the Totals
On industrial classification
There are two types of industrial classification: principal business classification and investment
specific classification. The former classifies and totals the companies’ responses based on themain business interest of each company, while the latter classifies and totals the amount ofinvestment for each business department in a company’s response according to industrial sector.
As a rule, the principal business classification is used for analysis, and the investment specificclassification is only adopted in some specific cases.
Timing of survey and years covered
The survey is conducted twice a year, in February and in August. Since the survey is conductedfive times concerning the same fiscal year until the planned investments are materialized, theresult reveals business sentiments in minute detail, through the extent to which planned
investments have been modified for example.
Targeted FYTiming of survey
August, 1999
February, 2000
August, 2000

1998

1999

2000

ActualModified plan

Plan for next FY

Estimate
ActualInitial plan
Modified plan

Plan for next FY

Estimate
ActualInitial plan
Modified plan

February, 2001
August, 2001

2001

2002

Plan for next FY

On the number of common firms
The number of common firms for actual capital spending in FY1999 and anticipated actual
capital spending in FY2000 refers to the number of firms responding to both the previous survey(August) regarding actual capital spending in FY1999 and the current survey (February) regarding
anticipated actual capital spending in FY2000 (number of responses based on principal businessclassification). The number of common firms for anticipated actual capital spending in FY2000
and planned capital spending for FY2001 refers to the number of firms responding to the current
survey (February) regarding anticipated actual capital spending in FY2000 and planned capitalspending for FY2001.

2

Development Bank of Japan Research Report/ No. 17

Capital spending Decreased, Mainly in Non-manufacturing:
Surge in investment in information technology seems to have stopped

II Summary
1. Overall Condition
Overall anticipated actual capital spending for all industries in FY 2000 rose 7.8%, the firstincrease in four years. (All figures are on a construction basis; the rate of growth or decline iscompared with the previous year.) Looking at planned capital spending for FY 2001, investment
will turn down in both the manufacturing sector (down 0.7%) and the non-manufacturing sector(down 7.4%), meaning the resumption of decline (down 5.2%) for all industries.
2. Anticipated Actual Capital Spending for FY 2000
Looking at anticipated actual capital spending for FY 2000, investment rose for all industries (up7.8%) for the first time in four years as it increased rapidly in the manufacturing sector (up18.0%) and recovered in the non-manufacturing sector (up 3.2%).

3. Planned Capital Spending for FY 2001

Planned capital spending for FY 2001 points to a decrease in both the manufacturing sector(down 0.7%) and the non-manufacturing sector (down 7.4%). Thus, overall investment is
expected to resume its decline (down 5.2%).
In the manufacturing sector (down 0.7%), investment will turn down in electric machinery,
which accounts for over half of the capital spending in the sector. Under a restrictive mood, it
will also fall in iron and steel as well as in automobiles, due to the repercussion from a stepped-up
investment in new models. Meanwhile, capital spending will increase in chemicals, led by highvalue added products and in non-ferrous metals, led by optical cable-related products.
Although capital spending will also increase in general machinery, mainly for office andhousehold machinery, the lack of strength in investment growth will result in overall decline incapital spending.
In the non-manufacturing sector (down 7.4%), a slight increase in spending planned intelecommunications and information will be more than offset by declines in railways due to thetermination of construction and expansion projects in the Tokyo metropolitan area, in wholesale
and retail due to reaction to the accelerated establishment of new outlets prior to the promulgationof the Large-scale Retail Store Law and in real estate due to slowdown in the establishment of new
retail outlets. Decline is also expected in the electric power industry, which accounts for a majorpart of capital spending in the non-manufacturing sector. Taken as a whole, these factors point to adrop in capital spending in the sector for the coming fiscal year.
In comparison with the previous survey (August 2000), investment was revised upwards inboth the manufacturing sector (up 7.9%) and the non-manufacturing sector (up 2.8%). Thismeans an overall upward revision of 3.8%.
A comparison of each half of FY 2001 with the corresponding period in the previous year for
all industries predicts an overall increase of 5.4% in the first half of FY 2001, and a contraction of
Development Bank of Japan Research Report/ No. 17 3

13.2% in the second half.
Looking at the respective shares of different investment motives for manufacturing, increase
can be observed in “product development and upgrading” and “research and development.” forthe materials industry and in “expansion of production capacity” for the processing and assembly
industry including electric machinery and transport equipment. In the non-manufacturing sector,
the share of “maintenance” is slated to increase to the detriment of “expansion of production
capacity,” which still accounts for some 60% of capital spending.
Land investment shows a substantial drop of 39.7% from the previous year, with doublefigure reductions planned in both the manufacturing and non-manufacturing sectors. Land
investment represents 3.4% of the planned capital spending.
The ratio of capital spending to cash flow (net profit/loss plus depreciation expenses) will fallin both the manufacturing sector and the non-manufacturing sector, because of a larger numberof firms that project improvements in their profit picture.
The domestic capital spending of foreign-affiliated firms (firms with over one-third foreign
ownership; 144 respondents) shows a growth of 3.8% to ¥1,120.9 billion thanks to increased
contributions from manufacturing industries such as electric machinery, transport equipment andpetroleum. Foreign-affiliated firms now account for 4.6% of total capital spending in Japan.
Looking at information technology investment on the user side, mainly for improving theefficiency of corporate businesses, substantial increase is expected in both the manufacturingsector (up 16.4% among common firms for FY2000 and 2001) and the non-manufacturing sector(up 10.5%). Accordingly, the total for all industries will rise further by 12.2%, while total capitalspending is expected to make a downturn (down 8.9%). The tone remains strong for IT
investment as firms seek to improve competitiveness through system integration in line with theirreorganization and through system renewal for business efficiency.
4. Features of Planned Capital Spending for FY 2001
Following a significant increase in the previous year, IT investment is expected to peak out on
the supply side including electric machinery, while it will experience a reactionary drop in the
non-manufacturing sector. All in all, capital spending is slated to turn downward, mainly due tothe slump in non-manufacturing.
The previous survey (August 2000) indicated that IT investment had substantial influence
over a wide range of industries through chain reaction. Although it will continue to increase inindustries related to digital technology (consumer electronics, and office and household
machinery) or optical cables (non-ferrous metals), the deterioration of market environment for
personal computers and general-use memories will result in a decline in IT investment in theelectric machinery industry, a heavy investor in information technology, mainly for electronicparts. Thus, the tone will become increasingly restrictive for related products such as
semiconductor-production devices (precision machinery) and glass for liquid crystal display(cement ceramics and glass). Capital spending in telecommunications and information is expected
to slow down but will remain at a substantial level thanks to increased demand for, andinvestments in, next-generation cellular phones.
In the non-manufacturing sector, restrictive mood lingers on in the heavy-spending electric
power industry. In addition, the retail industry will experience reaction from the stepped-up
establishment of outlets, and large-scale projects will be completed in industries such as railways
and services. The result is an unprecedented drop in non-manufacturing capital spending for a
February survey.
In the final analysis, capital spending is waiting for a new leading industry to emerge.

4

Development Bank of Japan Research Report/ No. 17

Trends in Capital Spending for FY 2000 and FY 2001
FY 2000 Survey (Estimate)(2,918 common firms)
FY 1999
FY 2000
Growth rate
(Actual)(Estimate)
2000/99
230,224
248,106
7.8(191,356)(208,545)(9.0)
71,39584,24118.0
158,829
163,866
3.2(119,961)(124,305)(3.6)(38,868)(39,561)
(1.8)

Total
(except Electric Power)
Manufacturing
Non-Manufacturing(except Electric Power)(Electric Power)(Units: 100 million yen, %)FY 2001 Survey (Planned)(3,061 common firms)
FY 2000
FY 2001
Growth rate
(Estimate)(Planned)
2001/2000
254,918
241,778-5.2(215,356)(202,953)(-5.8)
85,45384,893-0.7
169,465
156,885-7.4(129,904)(118,060)(-9.1)(39,561)(38,825)(-1.9)

Growth of Capital Spending, FY 1986-FY 2001％
30
All industries
全産業

20

Manufacturing
製造業
Non-manufacturing
非製造業

10
0
▲
− 10
▲
− 20
▲
− 30
86

86

87

88

89

90

91

92

93

94

95

96

97

98

99

2000 2001 FY(Estimate) (Planned)

Development Bank of Japan Research Report/ No. 17 5

Capital Spending by Industry for Fiscal Years 2000-2001(Units: 100 million yen, %)Capital Spending (hundred million yen)
FY1999FY2000 FY2000
FY2001(Actual) (Estimate) (Estimate) (Planned)(2,918 firms)(3,061 firms)
Total
except Electric Power230,224(191,356)

248,106
254,918 241,778(208,545) (215,356) (202,953)

Manufacturing
Food and Beverages
TextilesPaper and Pulp
Chemicals
Organic Chemicals
Pharmaceuticals
Petroleum
Cement, Ceramics and Glass
Iron and Steel
Ordinary Steel
Non-Ferrous Metals
General Machinery
Electric Machinery
Electronic Parts, etc.
Precision MachineryTransport Equipment
Automobiles
Other Manufacturing

71,395
5,725
806
1,729
9,170
(4,097)(1,922)
1,479
1,721
4,966
(4,207)
1,905
4,514
19,370(12,816)
1,078
13,657(12,835)
5,278

84,241
5,521
742
2,261
10,448(4,552)(2,369)
1,108
2,439
4,186
(3,515)
3,135
4,999
27,673(20,544)
1,658
14,340(13,632)
5,733

Non-Manufacturingexcept Electric Power
Construction
Wholesale and Retail
RetailReal EstateTransport
RailwaysMarine Transport
Airlines
Warehousing, etc.
Electric Power and City Gas
Electric PowerGas
Telecom. and Information
LeasingServices
Other Non-Manufacturing

158,829(119,961)
1,952
12,279(9,535)
9,663
18,449(12,567)(688)(2,175)(1,808)42,073(38,868)(3,205)30,722
38,631
4,696
364

Growth Rate (%)
2000/99

Component Rate (%)
FY2000 FY2001
2001/2000 (Estimate) (Planned)(3,061 firms)

7.8
(9.0)

-5.2
(-5.8)

100.0(84.5)

100.0(83.9)

84,893
5,407
777
2,432
11,183(4,931)(2,491)
1,308
2,465
3,678
(3,068)3,668
5,287
27,550(20,307)
1,458
14,203(13,415)
5,477

18.0
-3.6
-7.8
30.8
13.9
(11.1)(23.3)
-25.1
41.7
-15.7
(-16.5)
64.6
10.7
42.9
(60.3)
53.8
5.0
(6.2)
8.6

-0.7
-3.1
4.7
7.4
5.6
(6.0)
(5.1)
18.1
-1.1
-12.2
(-12.7)
15.9
4.7
-3.1
(-3.2)-14.3-1.4(-2.0)
-4.7

33.5
2.2
0.3
0.9
4.2
(1.8)
(0.9)
0.4
1.0
1.6
(1.4)
1.2
2.0
11.1
(8.2)
0.7
5.6
(5.4)
2.3

35.1
2.2
0.3
1.0
4.6
(2.0)
(1.0)
0.5
1.0
1.5
(1.3)
1.5
2.2
11.4
(8.4)
0.6
5.9
(5.5)
2.3

163,866
169,465 156,885(124,305) (129,904) (118,060)
1,831
1,831
1,576
12,931
13,233
9,088(10,542) (10,809)(7,273)
9,852
10,077
7,140
19,382
19,652
16,136(14,541) (14,645) (10,459)
(381)
(480)
(339)
(1,284)(1,284)(875)(1,845)(1,875)(3,130)43,23043,26442,036(39,561) (39,561) (38,825)(3,669)(3,703)(3,212)32,02036,36436,64939,47939,66440,865
4,837
5,076
2,970
304
304
425

3.2
(3.6)
-6.2
5.3
(10.6)
2.0
5.1(15.7)(-44.6)(-41.0)
(2.1)
2.8
(1.8)
(14.5)
4.2
2.2
3.0
-16.7

-7.4
(-9.1)-13.9-31.3(-32.7)-29.1-17.9(-28.6)(-29.4)(-31.8)(66.9)-2.8(-1.9)(-13.3)
0.8
3.0
-41.5
39.9

66.5
(51.0)
0.7
5.2
(4.2)
4.0
7.7
(5.7)
(0.2)
(0.5)
(0.7)
17.0
(15.5)
(1.5)
14.3
15.6
2.0
0.1

64.9
(48.8)
0.7
3.8
(3.0)
3.0
6.7
(4.3)
(0.1)
(0.4)
(1.3)
17.4
(16.1)
(1.3)
15.2
16.9
1.2
0.2

85,453
5,577
742
2,265
10,592(4,652)(2,371)
1,108
2,492
4,190
(3,517)
3,166
5,049
28,423(20,983)
1,700
14,402(13,686)
5,747

Note: Other Manufacturing Industries includes Publishing and Printing, Rubber, Metal Products and Others.
Other Non-Manufacturing Industries includes Fishing, Mining and Others.

6

Development Bank of Japan Research Report/ No. 17

III Survey Results
1. Anticipated Actual Capital Spending for FY 2000
OutlineOverall anticipated actual capital spending for FY 2000 increased for the first time in four years(up 7.8%) as investment turned up in both the manufacturing and non-manufacturing sectors.
In the manufacturing sector (up 18.0%), capital spending declined in food and beverages, andiron and steel due to the termination of large-scale investment projects. It also dropped inpetroleum under a heavily restrictive mood. However, spending increased substantially in electricmachinery, led by capacity investment in electronic parts such as semiconductors and liquid
crystals, which was accompanied by parallel increases in related industries including precision
machinery, non-ferrous metals and cement, ceramics and glass. Moreover, investment turned up
in automobiles mainly in new models as well as in chemicals, led by pharmaceuticals and otherchemicals. This broad-based growth has resulted in the first increase in three years for the whole
manufacturing sector.
In the non-manufacturing sector (up 3.2%), the increase in spending was led bytelecommunications and information, mainly due to a growing demand for cellular phones andinvestment in their next generation models. Capital spending also increased in railways due to theprogress of construction and extension projects in the Tokyo metropolitan area as well as inwholesale and retail due mainly to the establishment of new outlets in time for the promulgationof the Large-scale Retail Store Law and investment in information technology. Coupled withincreased spending in leasing and other industries, anticipated actual capital spending in the nonmanufacturing sector increased for the first time in four years.
Trends by Industrial Sub-sector
The trends in anticipated actual capital spending for FY 1999, classified according to industrial
sub-sector, are as follows. Numbers in curly brackets {} show the percentage of total capitalspending accounted for by each sub-sector.

Materials (up 14.4%) {9.4%}
Total capital spending in the materials sub-sector increased for the first time in three years
despite continued decline in iron and steel, and textiles, as double-digit growth was recorded inchemicals, which represents a large portion of materials sub-sector spending, and as investment
turned to significant increase in non-ferrous metals and cement, ceramics and glass, boosted by
IT-related capacity investment, as well as in paper and pulp.
In the iron and steel industry, capital spending continued to decline as large-scale investment
projects launched in the previous fiscal year have been terminated. Continued decline ininvestment was also observed in textiles.
In the chemical industry, double-digit increase was recorded in organic chemicals thanks toinvestments in high value added products and the construction of pharmaceutical plants. Capitalspending turned to significant growth in non-ferrous metals led by investment in optical cables
and semiconductor wafers including 300mm type. A similar movement can be observed in
cement, ceramics and glass, due to capacity investment in glass for liquid crystal display andceramic products. A significant increase was also recorded in paper and pulp, largely due to theintroduction of new machines accompanying the reconstruction of production systems forcorrugating medium and whiteboard.
Development Bank of Japan Research Report/ No. 17 7

Processing and Assembly (up 20.8%) {24.2%}
Spending in the processing and assembly sub-sector increased substantially for the first time inthree years due to a rapid increase in electric machinery and precision machinery and to an
upturn in automobiles and general machinery, despite an increase in food and beverages.
In electric machinery, spending increased substantially in electronic parts, which account for
more than half of the investment in this industry, led by capacity investment in semiconductors,
liquid crystals, etc. Spending also increased rapidly in electronic devices, mainly in computers andtelecommunication/digital products. As regards precision machinery, investment doubled insemiconductor-production devices, mainly in 300mm wafers, and grew substantially in clocks andother measuring instruments, thus resulting in the first substantial increase in three years.
In spite of continued restrictive mood in general, spending in automobiles recorded the firstincrease in three years, led by investment in new models and business restructuring. In generalmachinery, spending was controlled on boilers and motors, but double-digit increase wasrecorded for office and household machinery led by new products, and capacity investment
continued to increase in general machinery parts due to tight market conditions, thus resulting in
the first increase in three years.
Energy (up 1.7%) {17.9%}
The energy sector recorded the first increase in capital spending in seven years.
Despite an underlying tone of curbs on investment, capital spending in the electric powerindustry increased as nuclear and other power source development works made headway. In thegas industry as well, investment increased for the first time in five years as LNG-related projects
were in full swing. In contrast, capital spending declined for the eighth consecutive year inpetroleum with the termination of investment projects for lowering benzene content in gasoline.
Non-Manufacturing, excluding Energy (up 3.4%) {48.6%}
Despite cutback on spending in the construction industry, total spending in non-manufacturing
excluding energy rose for the first time in four years, reflecting growth in telecommunications
and information, transport, leasing, wholesale and retail, real estate and services.
In construction, continued control on investment resulted in a decline for the eighthconsecutive year.
Capital spending turned up in telecommunications and information thanks to increased
demand for cellular phones and investments in their new models, as well as in wholesale andretail due to the establishment of new outlets in time for the promulgation of the Large-scale
Retail Stores Law. The transport industry experienced the first increase in investment in four
years with the progress of construction and extension projects in the Tokyo metropolitan area,
while spending increased for the first time in three years in real estate as large-scale projects madeheadway in the metropolitan area. Increase in spending continued in leasing and services, theformer due to asset purchasing and substitution of owned plant and equipment with leasing, andthe latter due to the construction of a large theme park in the waterfront area.

8

Development Bank of Japan Research Report/ No. 17

Trends in Capital Spending by Industrial Sub-sector
Growth Rate (%)
FY1997 FY1998 FY1999 FY2000

Share (%)
FY2001 FY1997 FY1998 FY1999 FY2000

FY2001

Materials
Paper and Pulp
Chemicals
Iron and Steel

3.6
(4.8)
(14.5)(-12.0)-12.8(-33.8)(-10.2)
(0.3)

-21.5
(-29.4)(-22.4)(-14.0)14.4(30.8)(13.9)(-15.7)

3.2
(7.4)
(5.6)
(-12.2)

10.0
(1.3)
(4.3)
(2.0)

9.7
(1.0)
(4.3)
(2.2)

8.5
(0.7)
(3.9)
(2.0)

9.2
(0.9)
(4.2)
(1.6)

10.0
(1.0)
(4.6)
(1.5)

Processing and Assembly
Food and Beverages
Electric Machinery
Automobiles

7.3(13.5)(-1.1)(17.0)-12.1(-12.1)(-21.9)(-4.2)-12.2(-2.7)(-0.0)(-18.6)

20.8(-3.6)(42.9)(6.2)-2.5(-3.1)(-3.1)(-2.0)

21.7
(2.2)
(8.0)
(5.6)

21.0
(2.2)
(7.2)
(5.9)

20.8
(2.4)
(8.2)
(5.3)

23.9
(2.2)
(11.1)
(5.4)

24.6
(2.2)
(11.4)(5.5)

EnergyPetroleum
Electric Power-9.4(-32.2)(-7.9)-9.2(-32.5)(-8.0)-7.4(-32.3)(-5.6)

1.7(-25.1)(1.8)-2.0(18.1)(-1.9)

17.8(1.1)(15.3)

17.6(0.8)(15.4)

18.0(0.6)(16.0)

17.5(0.4)(15.5)

18.0(0.5)(16.1)

Non-Manufacturing
excluding Energy
Construction
Wholesale and Retail
Real EstateTransport
Telecom and Information
LeasingServices-2.8(-10.5)(-7.0)(2.0)(-10.2)(-6.1)(5.1)(-5.3)-4.8(-16.6)(-1.7)(-19.2)(-8.8)(3.7)(-6.5)(-7.1)-4.5(-35.0)(-8.5)(-19.2)(-2.7)(-12.5)(7.6)(38.9)

3.4(-6.2)
(5.3)
(2.0)
(5.1)
(4.2)
(2.2)
(3.0)

-9.1
(-13.9)(-31.3)(-29.1)(-17.9)(0.8)(3.0)(-41.5)

50.5
(1.3)
(4.4)
(4.6)
(7.2)
(14.5)(17.3)
(1.2)

51.6
(1.2)
(4.8)
(4.3)
(7.0)
(16.4)(16.5)
(1.3)

52.7
(0.8)
(5.2)
(4.0)
(7.6)
(15.4)(17.6)
(2.1)

49.5
(0.7)
(5.2)
(4.0)
(7.7)
(14.3)(15.6)
(2.0)

47.4
(0.7)
(3.8)
(3.0)
(6.7)
(15.2)(16.9)(1.2)

All Industries
excluding Electric Power-1.5(-0.2)-8.0(-8.0)-8.4(-8.9)

7.8
(9.0)

-5.2
(-5.8)

100.0(84.7)

100.0(84.6)

100.0(84.0)

100.0(84.5)

100.0(83.9)

Manufacturing
Non-Manufacturing
excluding Electric Power

4.1
-4.0
(-2.8)-13.0-5.6(-4.9)-15.5-5.0(-4.8)

18.0
3.2
(3.6)

-0.7
-7.4
(-9.1)

32.8
67.2(51.9)

31.6
68.4(53.0)

29.9
70.1(54.1)

33.5
66.5(51.0)

35.1
64.9(48.8)

Note 1: Materials: textiles; paper and pulp; chemicals; cement, ceramics and glass; iron and steel; non-ferrous metals
Processing and assembly: food and beverages; general machinery; electric machinery; precision machinery; transport
equipment; other manufacturing.
Energy: petroleum; electric power; gas; coal, crude oil and natural gas
Note 2: Share % for FY 2000 and FY 2001 are based upon 3,061 companies that responded to the survey for both years

2. Planned Capital Spending for FY 2001
OutlineFor FY 2001, capital spending is expected to turn down in both the manufacturing (down 0.7%)
and non-manufacturing (down 7.4%) sectors, resulting in the resumption of decline in allindustries (down 5.2%).
In the manufacturing sector (down 0.7%), spending will turn down in electronic parts, which
account for more than half of investment in electric machinery. Under a restrictive mood,spending will also decline in iron and steel as well as in automobiles, as investments in newmodels will be completed. On the other hand, investment is expected to grow in chemicals,
mainly for high value added products, as well as in non-ferrous metals, mainly for optical cables.
Although investment will also grow in general machinery led by office and household machinery,
capital spending in the manufacturing sector is expected to decline as a whole with no industry toensure sustained growth.

Development Bank of Japan Research Report/ No. 17 9

In the non-manufacturing sector (down 7.4%), slight growth of spending expected intelecommunications and information will be offset by decreases in railways, wholesale and retailand real estate, due respectively to the completion of construction and extension projects in theTokyo metropolitan area, reaction to the stepped-up establishment of outlets in time for the
promulgation of the Large-scale Retail Stores Law and slowdown in the establishment of new
retail outlets. Investment will also decline in the heavy-spending electric power industry. On
balance, capital spending is expected to drop in the non-manufacturing sector as a whole.
Trends by Industrial Sub-sector
The trends in planned capital spending for FY 2001, classified according to industrial sub-sector,
are as follows. Numbers in curly brackets {} show the percentage of total planned capitalspending accounted for by each sub-sector.

Materials (up 3.2%) {10.0%}
Spending in the materials sub-sector will increase for the second consecutive year led bycontinued growth in chemicals, non-ferrous metals and paper and pulp, although investment willcontinue to decline in iron and steel, and turn to a slight decrease in cement, ceramics and glass.
Capital spending in the iron and steel industry will continue to decline under a heavily
restrictive mood in general, despite investment for replacement planned by some blast furnacesteel manufacturers. In cement, ceramics and glass, capacity investment in IT-related products
such as glass for liquid crystal display will be largely offset by the termination of projects
launched in the previous year. As the curb on spending is expected to continue in cement, thesubstantial increase recorded by the industry in the previous year will turn to slight decline.
In the chemical industry, capital spending will increase in organic chemicals mainly for highvalue added products as well as in pharmaceuticals and other chemicals due to the constructionof new plants, resulting in an overall increase for the second straight year. Double-digit increase
will continue in non-ferrous metals as continued expansion of investment is expected in opticalcables and semiconductor wafers (including 300mm wafers). The paper and pulp industry will
also experience increased spending for the second consecutive year thanks to capacity investment
mainly in special paper, although general curb on investment will still be in effect.
Processing and Assembly (down 2 .5%) {24.6%}
Capital spending in the processing and assembly sub-sector is expected to turn down despite
continued growth in general machinery, as investment will turn to negative growth in electricmachinery, precision machinery and automobiles and will continue to slide in general machinery.
In the electrical machinery industry, changing market conditions will result in a downturn inspending on electronic parts (including semiconductors and liquid crystals), which account for
more than half of spending in the industry. Capital spending is expected to decline for the wholeindustry, as investment will decrease in electric machines and electronic devices due to thecompletion of large projects. In precision machinery, spending will turn to substantial decline, as
investment in semiconductor-production devices will experience a huge drop with the peaking
out of investment related to 300mm wafers. Likewise, capital spending is expected to turn downin automobiles, as spending will be curtailed on parts and bodies with the completion of
investments for new models, and investment in four-wheeled vehicles will continue to drop
under a restrictive mood, despite some projects related to business restructuring. Also, someinvestments accompanying the reconstruction of production systems will not be strong enoughto stop the continued slide in capital spending in food and beverages.

10 Development Bank of Japan Research Report/ No. 17

In contrast, investment will continue to increase in general machinery, led by office andhousehold machinery.

Energy (down 2.0%) {18.0%}
The energy sub-sector is expected to show decline in capital spending.
In the electric power industry, spending is expected to decline, as investment will be reducedin the distribution department under the continuing restrictive tone. The gas industry will
experience a downturn in capital spending with the peaking out of investment in city gas
production and supply equipment. Meanwhile, the petroleum industry envisages the first increasein capital spending in nine years, with investment for the consolidation of distribution facilities
and the desulphurization of light oil.
Non-Manufacturing, excluding Energy (down 9.1%) {47.4%}
Looking at the non-manufacturing sector excluding energy, increased spending in leasing andtelecommunications and information will be more than offset by decreases in wholesale and retail,transport, real estate, services and construction, resulting in an overall downturn.
Increase in demand is expected in leasing, while the high level of investment in cellular
phones will continue and investment in information systems and head offices are expected in thetelecommunications and information. Capital spending will continue to grow in those two
industries.
Capital spending will turn down in wholesale and retail due to reaction to the stepped-up
establishment of outlets in time for the promulgation of the Large-scale Retail Stores Law.
Investment will turn to substantial decline in transport as well, with the completion of major
projects on the construction and extension of lines in the Tokyo metropolitan area. Spending will
also turn down in real estate due to slowed establishment of new retail outlets. In services, it willturn to sharp drop as investment in a large theme park in the waterfront area has reached its
pinnacles. Capital spending in construction will decline for the ninth consecutive year with
continued restriction on investment.
Trends and Features of Planned Capital Spending for FY 2001 by Industry
Trends and features of capital spending for main industries are shown below. The figures inparentheses ( ) indicate the rate of growth in capital spending for the industry in question (FY
2000→ FY 2001). The figures in curly brackets {} show each industry’s share of planned
spending for FY 2001 as a percentage of the total value for all industries.

Materials
Chemicals: (13.9% → 5.6%) {4.6%}
For organic chemicals, which accounts for the majority of the chemical industry, spending will
increase thanks to investment in high value added products. For pharmaceuticals and otherchemicals, spending will rise mainly due to plant construction. Coupled with the increase planned
in inorganic chemicals, capital spending in the industry as a whole is expected to rise for thesecond consecutive year.
Iron and Steel: (-15.7% → -12.2%) {1.5%}
Despite investment in facility replacement by some blast furnace steel makers, the industry will
once again see an overall decline in total spending as restrictive tone continues.

Development Bank of Japan Research Report/ No. 17 11

Non-Ferrous Metals: (64.6% → 15.9%) {1.5%}
Thanks to increased investment related to optical cables and semiconductor wafers including
300mm wafers, the industry will record an increase in capital spending for the second consecutive
year.
Paper and Pulp: (30.8% → 7.4%) {1.0%}
Despite continued checks on spending, investment in the industry will rise for the second
consecutive year due to the introduction of new machines for some products, such as special
paper.
Cement, Ceramics and Glass: (41.7% → -1.1%) {1.0%}
In addition to continued spending restriction in cement, some investment projects launched in
the previous year will be terminated in glass and others, resulting in an overall decline.
Textiles: (-7.8% → 4.7%){ 0.3%}
Largely due to capacity investment in non-woven fabrics, the industry will experience the firstincrease in capital spending in four years.

Processing and AssemblyElectric Machinery: (42.9% → -3.1%){11.4%}
For electronic parts (including semiconductors and liquid crystals), which account for the
majority of the electric machinery industry, spending will turn downward in the context ofchanging market conditions despite continued large-scale investment projects that accompany
business restructuring. Spending will also turn down in electronic and electric devices with thetermination of large investment projects. Thus, overall spending is expected to decline.
Automobiles: (6.2% → -2.0%) {5.5%}
For four-wheel vehicles, capital spending will decline due to continued restriction, despite someinvestments as part of business restructuring program. For parts/bodies, spending will also drop,
as investments in new models will be completed. As a result, overall capital spending will turndownward in this industry.
Food and Beverages: (-3.6% → -3.1%) {2.2%}
Although spending will increase in flour milling, sugar manufacture and edible oils due toinvestments accompanying the reconstruction of production systems, this will be more thanoffset by cutbacks on spending in processed meat and dairy products, beer and other alcoholic
beverages and other foodstuffs, resulting in continued decline overall.
General Machinery: (10.7% → 4.7%) {2.2%}
Although restriction will continue for boilers and motors and a downturn is expected for generalmachinery parts as capacity buildup peaks out, continued double-digit growth is expected for
office and household machinery mainly in response to new products. Moreover, spending willcontinue to increase in metal processing machinery and industrial machinery, led by investment
for rationalization. Thus, capital spending is expected to increase for the general machineryindustry as a whole.

12 Development Bank of Japan Research Report/ No. 17

Precision Machinery: (53.8% → -14.3%) {0.6%}
Decline in spending will continue for medical instruments. In addition, it will turn down for
semiconductor-production devices with the peaking out of investments related to 300mm wafers,
as well as for clocks and other measuring equipment due to the termination of investment
projects started in the previous year. On balance, capital spending in the industry is expected toturn down as a whole.

EnergyElectric Power: (1.8% → -1.9%) {16.1%}
In the context of continued restrictive tone, the nine electric power companies plan to reduce
their capital spending by cutting back on investment in the distribution department. Spending
will also decline in the rest of the electric power industry with the completion of power source
development projects.
Gas: (14.5% → -13.3%) {1.3%}
For city gas, spending will decline as investments in production and supply facilities have peakedout. Spending will also turn to substantial drop for LNG suppliers with the completion of major
investment projects. Added to the planned cutback on spending for heat supplies, capitalspending in the gas industry will turn down as a whole.
Petroleum: (-25.1% → 18.1%) {0.5%}
In addition to increases in spending on distribution facilities related to consolidation, investments
at refineries in environmental measures such as light oil desulphurization will result in the firstincrease in capital spending in nine years.

Non-Manufacturing Industries, excluding Energy
Leasing: ( 2.2% → 3.0%) {16.9%}
Capital spending in leasing is expected to increase as a result of growing demand for leasing inasset replacement as well as for the leasing of information equipment.
Telecommunications and Information: (4.2% → 0.8%) {15.2%}
For telecommunications, which is the mainstay of this industry, spending will only decline slightly
as reduction in fixed phones and satellite communication will be largely offset by rising demandfor cellular phones and investments in their next generation models. Although broadcasting will
cut back on spending, substantial increase in investment is expected in information services,
mainly for information systems and head offices. On balance, capital spending in the industry will
increase for the second consecutive year.
Railways: (15.7% → -28.6%) {4.3%}
Substantial drop in capital spending is planned due to the completion of construction andextension projects in the Tokyo metropolitan area.
Wholesale and Retail: (5.3% → -31.3%) {3.8%}
In wholesale, spending will be cut for the third straight year despite investments related to head
offices and redevelopment. In retail, department stores will continue to cut back on spending,focusing investments on the expansion and renewal of existing stores. As for supermarkets andDevelopment Bank of Japan Research Report/ No. 17 13

specialized stores, a substantial drop in spending is expected in reaction to the stepped-up
establishment in time for the promulgation of the Large-scale Retail Stores Law in the previous
year, coupled with checks on investment amidst uncertainties regarding the actual administrationof the said law and the response of competitors, as well as reduction in scale of new outlets toavoid the application of the law. Thus, the industry will experience a sharp drop in capitalspending as a whole.
Real Estate: (2.0% → -29.1%) {3.0%}
A substantial drop is expected for retail-affiliates as the establishment of new outlets slows down.
Investment in redevelopment projects, etc. will be terminated in the Tokyo metropolitan area.
For railway-affiliates, investment will be terminated for the acquisition of existing assets and forthe construction of new buildings. Overall capital spending in the industry will be reduced as aresult.
Services: (3.0% → -41.5%) {1.2%}
Capital spending will turn to substantial decline as the construction of a theme park in thewaterfront area has reached its peak.
Warehousing and Transportation: (2.1% → 66.9%) {1.3%}
Capital spending will increase sharply as airport construction progresses in full swing.
Construction: (-6.2% → -13.9%) {0.7%}
In construction, there will be reduced investment for the ninth straight year, with thecontinuation of overall restraints on investment, as future business conditions remain uncertain.
Airlines: (-41.0%→ -31.8%) {0.4%}
Despite increase in spending for spare parts and capacity investment related to systems, etc.,
capital spending as a whole will decline for the second straight year, as the introduction of new
airplanes will be restrained, particularly in major companies.
Marine Transport: (-44.6% → -29.4%) {0.1%}
Investment will continue to decline as the construction of LNG transport ships for Qatar has
been completed.

14 Development Bank of Japan Research Report/ No. 17

Characteristics of Capital Spending by Industry

Decrease

30

50 Change on

40

previous year
Paper & pulp (%)

-25.1
0.6

Non-ferrous metals

Non-ferrous

64.6
0.8
General machinery
10.7
Electrical machinery
2.0
42.9
8.4
Precision machinery

-15.7
2.2

20

53.8
0.5

Automobiles

6.2
5.6

Other transport equipment

30

-13.8
0.4

-0.7
33.5

10

20

Non-manufacturing
3.2
69.0

40

Electric power

1.8
16.9
Gas

14.5
1.4
70

Telecommunications &information technology

9.9
0.3

Wholesale &retaile

-31.3
5.2

Real
estateMarinetransport

Railways

50 Airline
-31.8
0.5

-7.4
66.5

Warehousing &transportation

-28.6
5.7

-29.4
0.2

2.1
0.8

9.9
0.5

Other transport
equipment

‑29.1
4.0

Warehousing &transportation
Other transportation

previous year
(%)

-3.1
11.1

Precisionmachinery

-13.9
0.7

15.7
5.5

60

Iron & steel

Construction

Railways

-41.0
0.9

-1.1
1.0

-4.7
2.3

2.0
4.2

Airline

50 Change on

4.7
Paper & pulp
0.3
7.4
Chemicals
0.9
5.6
Petroleum
4.2
18.1
Non-ferrous
0.4
metals15.9
General
1.2
machinery
4.7
2.0

Automobiles
Other
-2.0
5.4
30 manufacturingNon-manufacturing

50

40

-14.3
0.7

Real estate

-44.6
0.3

30

TextilesElectricalmachinery

5.3
5.3

Marine transport

20

-12.2
1.6

Wholesale & retail

40

10

Cement, ceramis & glass

8.6
2.3

-6.2
0.8

0

-3.1
2.2

Other manufacturing

Construction

share in FY 2000 spending

Increase-50 -40 -30 -20 -10
0 Food & beverages

Share (%)

Share (%)

20

30.8
Chemicals 0.8
13.9
Cement, ceramis & glass
41.7
4.0
0.7

-7.8
0.3

Petroleum

Manufacturing

10

Textiles

-3.6
2.5

18.0
31.0

Increase0change on previous year in FY 2001

Figuresi di[FY 2001]

share in FY 1999 spending

Manufacturing

Decrease-50 -40 -30 -20 -10
0 Food & beverages

10change on previous year in FY2000

Figuresi di[FY 2000]

66.9
0.7

Other
transportation

-2.6
0.5
Electric power

-1.9
15.5

60
Gas

-13.3
1.5
70

Telecommunications &information technology

4.2
13.3

0.8
14.3

80

80

Leasing

Leasing

2.2
16.8

90

3.0
15.6

90
Services

Other nonmanufacturing
-16.7
0.2

100
-50 -40 -30 -20 -10Services
3.0
2.0

0

10

20

30

Other nonmanufacturing

-41.5
2.0

40

50

39.9
0.1

100
-50 -40 -30 -20 -10

0All industries

All industries

7.8 %-5.2 %

10

20

30

40

50

Development Bank of Japan Research Report/ No. 17 15

3.

Investment Motives

Investment Motives in the Manufacturing and Non-Manufacturing Sectors for FY 2001
Looking at the respective shares of each category of investment motive for the manufacturingsector in FY 2001, one finds increases in “expansion of production capacity” and “research anddevelopment” as well as decreases in “maintenance,” “product development and upgrading” and“rationalization and labor saving.”
In the non-manufacturing sector, “expansion of production capacity” still holds a large shareof around 60%, but the share has declined mainly in railways and retail. Meanwhile, an increase
can be observed in the share of “maintenance.”
Investment Motives in the Manufacturing Sector for the “Materials” and “Processing andAssembly” Sub-sectors
We now look at the respective shares of each category of investment motive within the
manufacturing sector, comparing the materials sub-sector and the processing and assembly subsector. For the materials sub-sector, the motives “maintenance” and “rationalization and laborsaving” are traditionally at high levels, whereas the processing and assembly sub-sector ischaracterized by the importance of “product development and upgrading” as investment motive.
The characteristics of investment motives for the materials sub-sector in FY 2001 are:i) Increased share of “product development and upgrading” (8.6% → 11.3%) in all industries
except paper and pulp, including chemicals and non-ferrous metals.
ii) Increased share of “research and development” (7.5% → 9.1%) in all industries including
chemicals (mainly pharmaceuticals) and non-ferrous metals (related to electronic materials,
optical fiber, etc.).
On the other hand, the processing and assembly sub-sector is characterized by increased shareof “expansion of production capacity (38.3% → 41.6%) led by electric machinery. Active
capacity investment can be observed in electronic parts in particular, mainly for the constructionof new plants. Thus, the shares of other investment motives are on the decline.
Shift in Investment Motives within the Manufacturing Sector
We now look at the change in the percentage share of each category of investment motive for the
manufacturing sector. The share of “expansion of production capacity” is on the rise, mainly due
to plant construction and capacity investment in electronic parts, which tend to require large
sums of investment.
For “product development and upgrading”, the share increases in the materials sub-sector
including non-ferrous metals but declines in the processing and assembly sub-sector including
automobiles and electric machinery, resulting in a slight overall decline from 15.0% to 14.6%.
The share of “rationalization and labor saving” is down slightly from 12.5% to 12.3% withdeclines recorded in iron and steel, automobiles and cement, ceramics and glass among others.
For “research and development,” the share increases from 8.4% to 8.8% in the whole
manufacturing sector, led by the materials sub-sector including non-ferrous metals (non-ferrous
metal refining, wire) and pharmaceuticals.
The share of “maintenance” as a spending incentive shows a decline from 18.5% to 17.1%,
due to a sharp drop in iron and steel.

16 Development Bank of Japan Research Report/ No. 17

Investment Motives(Unit: %)Total

Manufacturing

Non-Manufacturing

FY2000FY2001

FY2000FY2001

Processing andAssembly
FY2000FY2001

FY2000FY2001

Estimate Planned Estimate

PlannedEstimate

PlannedEstimate

PlannedEstimate

Planned(1,943 firms)
FY2000FY2001

Materials

Expansion of Production
Capacity

56.1

54.4

33.9

36.4

25.3

26.4

38.3

41.6

62.8

60.7

Product Development
and upgrading

6.7

7.2

15.0

14.6

8.6

11.3

18.4

16.6

4.2

4.6

Rationalization andLabor Saving

5.2

5.6

12.5

12.3

17.5

17.4

10.3

9.8

3.0

3.3

Research and Development

2.7

3.2

8.4

8.8

7.5

9.1

9.0

8.9

1.0

1.2

Maintenance

15.7

16.6

18.5

17.1

28.3

25.2

13.4

12.8

14.9

16.5

Others

13.5

13.0

11.8

10.8

12.9

10.6

10.6

10.2

14.0

13.8

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

4. Trends in Land Investment (Classified According to Principal Business Sector)
Anticipated Actual Land Investment for FY 2000
Anticipated actual land investment for FY 2000 (based on figures for the 1,774 firms that gave
responses regarding both FY 1999 and FY 2000) was down 23.9% compared with the previous
year, the fourth consecutive annual decline. Apart from investment for new airport sites intransport and the acquisition of land related to redevelopment in the Tokyo metropolitan area inreal estate, land investment declined sharply from the previous year despite some movements
accompanying business restructuring. Thus, the share of land investment in total capital spending
dropped to 5.5% (3.3% for manufacturing and 6.2% for non-manufacturing).
Planned Land Investment for FY 2001
Planned land investment for FY 2001 (based on figures for the 2,069 firms that gave responses
regarding both FY 2000 and FY 2001) is down 39.7% despite continued investment for new
airport sites in transport and the acquisition of land related to the restructuring of distribution
facilities in petroleum, as more factors remain undecided than in the plan for FY 2000. (Landinvestment accounts for 3.4% of all investment planned for FY 2000.)
It should be noted that there is a tendency for large upward revisions in land investment
between the planning stage and actual implementation.

Development Bank of Japan Research Report/ No. 17 17

Trends in Land Investment for FY 2000 and FY 2001 (Classified According to Principal
Business Sector)
FY1999FY2000(¥100 million)(¥100 million)(1,774 firms)

Growth Rate (%)
2000/99

FY2000FY2001
Growth Rate (%)(¥100 million) (¥100 million)(2,069 firms)
2001/2000

All industries
Total Investment

119,066

127,861

Investment except Land

7.4

138,681

128,158-7.6

109,873

120,864

10.0

131,432

123,784-5.8

Investment in Land

9,194

6,997

-23.9

7,250

4,373

-39.7

(Share of Land %)

(7.7)

(5.5)

(5.2)

(3.4)

Total Investment

27,88331,075

11.4

37,88738,897

2.7

Investment except Land

25,511

30,04517.8

36,69538,613

5.2

Investment in Land

2,372

1,030

-56.6

1,192

283

-76.2

(Share of Land %)

(8.5)

(3.3)

(3.1)

(0.7)

Total Investment

91,18396,786

6.1

100,794

89,261

Investment except Land84,36290,8197.7

94,737

85,171-10.1

Investment in Land

6,822

5,967

-12.5

6,057

4,090

-32.5

(Share of Land %)

(7.5)

(6.2)

(6.0)

(4.6)

Manufacturing

Non-Manufacturing

Growth Rate of Investment in Land
Total of All Industries
(FY)
93

94

95

96

97

98

99

2000

2001

(％) 30
20

18.1

10
0
-10
-20
-30
-40
-50

-11.1

-14.8
-18.0

-16.5
-24.5
-31.9
-36.3

-22.7
-28.8

-4.3

-6.5

-23.9

-26.2
-31.6

-41.6

-47.6
-56.7

-60
-70

-34.3

-40.7

-41.6

-53.6
-58.3

Actual (Survey in February of the Following Year)
Planned (Survey in February of the Same Year)
Planned (Survey in February of the Previous Year)

18 Development Bank of Japan Research Report/ No. 17

-39.7

-11.4

5. Trends in Capital Spending by Foreign-Affiliated Firms (Classified According to
Principal Business Sector)
144 firms out of 3,061 that responded to both FY2000 and 2001 surveys are classified as foreignaffiliated firms (firms with over one-third foreign ownership). Their capital spending accounts for
4.6% of the total (FY2001).
Anticipated actual spending by foreign-affiliated firms in FY2000 shows a substantial increaseof 43.9% over the previous year. In the manufacturing sector, spending grew significantly (up44.6%) with increases recorded in the heavy-spending electric machinery industry, as well as intransport equipment and chemicals. A significant increase was also recorded in the nonmanufacturing sector, with contribution from large-scale investment projects in services andincreased spending in wholesale and retail among others.
Planned capital spending by foreign-affiliated firms for FY2001 shows a continued increase of
3.8% overall, as investment in manufacturing is expected to rise further (up 17.3%), led byelectric machinery, transport equipment and petroleum. However, the growth will be slowed due
to a double-digit drop expected in non-manufacturing (down 11.2%) resulting from thetermination of major investment projects.
Capital Spending by Foreign Affiliated Firms (Classified According to Principal Business
Sector)(Units: 100 million yen, %)Capital Spending
FY99(Actual)

FY2000(Estimate)(127 firms)
Total

4,917

7,075

Growth rate (%)

FY2000(Estimate)

FY2001(Planned)

2000/99

2001/2000(144 firms)
10,892

11,20943.9

Share (%)

3.8

FY2001(144
firms)(of AllFirms)

100.0

4.6

Manufacturing

3,751

5,424

5,672

6,656

44.6

17.3

59.4

7.7

Non-Manufacturing

1,167

1,651

5,129

4,554

41.5

-11.2

40.6

2.9

Materials

958

1,352

1,496

1,544

41.2

3.2

13.8

6.1

Processing and Assembly

2,550

3,908

3,912

4,614

53.2

17.9

41.2

7.8

EnergyNon-Manufacturing excluding
Energy

243

165

264

498

-32.1

88.4

4.4

1.2

1,167

1,651

5,129

4,554

41.5

-11.2

40.6

4.0

By sub-sector

Note: foreign-affiliated firms are firms with over one-third foreign ownership

Development Bank of Japan Research Report/ No. 17 19

6. Information Technology Investment (Classified According to Principal Business
Sector)Following the previous survey (August 2000), a second questionnaire survey was conducted oninvestment in information technology, with effective responses from 1,525 firms (effective
response rate: 49.8%). For the purpose of this survey, IT investment refers to the capitalspending deemed as such by the respondent firms. In concrete terms, the questions are related tofour investment items aimed at improving the business efficiency and productivity of the firms:“tangible fixed assets,” “intangible fixed assets and investments” (software development andother costs credited to assets rather than accounted for as costs), “leasing contracts” (the amountof newly concluded leasing contracts and not that of leasing charges for the fiscal year) and“other expenses” (PCs and other office equipment accounted for as costs).
IT investment in FY 2000 (as regards common firms for FY 1999 and FY 2000) increased
14.7% for all industries (from ¥783.9 billion in FY 1999 to ¥899.2 billion in FY 2000), withdouble-digit growth recorded in both the manufacturing (up 22.7%) and non-manufacturing (up10.6%) sectors. Thus, growth in IT investment is estimated to have far exceeded the growth intotal capital spending (7.4%). By industry, major contribution in the manufacturing sector comesfrom four-wheeled vehicles, as the sophistication of design functions has been in progress. Major
contributors in the non-manufacturing sector include the heavy-spending electric power industry
as well as the retail industry, with increased investment, such as in multimedia terminals and items
related to POS at convenience stores.
As compared with the previous survey, IT investment for FY 2000 was revised downward in
non-manufacturing (down 2.4%), especially in energy, but it was revised upward in
manufacturing (up 4.8%). On balance, the level of overall IT investment stays almost unchanged
from the previous survey (up 0.1%). By component, intangible fixed assets has the largest sharein IT investment (31.4%), followed by tangible fixed assets (28.3%), leasing (26.4%) and others(13.9%). Among intangible fixed assets, investment is concentrated on software development forsystem construction related to accounting and other business management and, to a lesser degree,
on system development for production management, physical distribution, etc. As regards
tangible fixed assets and leasing, the introduction of LAN and the replacement of hostcomputers are actively sought in a wide range of industries, while the retail industry invests
actively in e-commerce including multi-media terminals.
IT investment for FY 2001 (as regards common firms for FY 2000 and FY 2001) is expectedslow but will maintain double-digit growth (up 12.2%) with increase planned in bothmanufacturing (up 16.4%) and non-manufacturing (up 10.5%), whereas overall capital spending
is expected to turn downward (down 8.9%). By industry, electric power will continue its
substantial contribution. Other major contributors include petroleum (system integration as partof business restructuring) and airlines (investment in system updating). As a result, IT investment
is expected to increase its share in total capital spending.

20 Development Bank of Japan Research Report/ No. 17

Overview of IT Investment (Estimate for FY 2000)

Industrial sector
All industries
ManufacturingNon-manufacturing
Materials
Processing
and assembly
Subsector Energy
Other nonmanufacturing(Units: 100 million yen, %)Amount of IT
Change inChange ininvestment
ITcapital(1,500 firms)
investment
spending
2000/99
2000/99
FY 99
FY 2000
actualestimated (1,500 firms) (1,500 firms)
7,839
8,992
14.7
7.4
2,675
3,281
22.7
20.2
5,164
5,711
10.6
3.8
755
876
16.1
20.3

Share of
IT investment
FY 99
actual
100.0
34.1
65.9
9.6

IT investment/
capital spending

FY 2000
FY 99
FY 2000
estimate estimated estimate
100.0
7.3
7.8
36.5
11.6
11.8
63.5
6.1
6.5
9.7
8.7
8.4

1,816

2,225

22.5

22.9

23.2

24.7

13.6

13.5

1,641

2,011

22.6

1.4

20.9

22.4

4.7

5.7

3,627

3,880

7.0

5.1

46.3

43.2

7.2

7.4

Revision and Composition of IT Investment (FY 2000)
IT investment(1,456 firms)
Industrial sector(Unit: %)Composition of IT investment(current survey)
Revision of
IT investment Tangible Intangible(1,456 firms) fixed
fixed
Leasing Others Total
assetsassets
0.1
31.4
26.4
13.9
28.3
100.0
4.8
35.9
30.7
16.5
16.9
100.0
-2.4
28.8
23.9
12.5
34.8
100.0

Previous
surveyCurrent
surveyAll industries

8,857

8,863

ManufacturingNon-manufacturing

3,065
5,792

3,211
5,651

832
2,134

845
2,187

1.6
2.5

19.6
16.6

38.2
32.8

27.0
33.7

15.2
16.9

100.0
100.0

2,079
3,811

2,010
3,820

-3.3
0.2

28.6
36.8

18.8
35.6

29.7
20.3

22.9
7.2

100.0
100.0

Materials
Processing and assembly

Subsector Energy
Other non-manufacturing

IT Investment by Component(Estimated FY 2000 Figures)
Definition of IT Investment
Others13.9%

Tangible fixed
assets28.3%

Intangile fixed
assets31.4%
Leasing
contracts
26.4%

For the purpose of this survey, IT investment
refers to the capital spending deemed as suchby the respondent firms, and covers thefollowing four items:(i) Tangible fixed assets,(ii) Intangible fixed assets and investments(software development and other costs
credited to assets rather than accounted
for as costs)(iii) Leasing contracts (the amount of newly
concluded leasing contracts and not thatof leasing charges for the fiscal year), and(iv) Other expenses (PCs and other officeequipment accounted for as costs).

Development Bank of Japan Research Report/ No. 17 21

Overview of IT Investment (Plan for FY 2001)
Industrial sector
All industries
ManufacturingNon-manufacturing
Materials
Processing
and assembly
Subsector Energy
Other nonmanufacturing(Units: 100 million yen, %)Change inChange inAmount of IT
IT
capitalinvestment
investment
spending(1,525 firms)
2001/00
2001/00
FY 2000
FY 2001
estimateplanned (1,525 firms) (1,525 firms)
6,427
7,213
12.2
-8.9
1,877
2,186
16.4
-0.1
4,550
5,027
10.5
-11.4
525
612
16.5
2.8

Share of
IT investment
FY 2000
estimate
100.0
29.2
70.8
8.2

All industries(99/2000 growth)
Excl. leasing
ManufacturingNon-manufacturing
Materials
Processing
Sub- and assembly
sector Energy
Other nonmanufacturing

FY 2001 FY 2000 FY 2001
plannedestimate planned
100.0
7.6
9.3
30.3
10.0
11.7
69.7
6.9
8.6
8.5
7.7
8.8

1,170

1,329

13.6

-5.6

18.2

18.4

10.7

12.8

1,578

1,857

17.7

-1.3

24.6

25.7

6.5

7.7

3,154

3,415

8.3

-16.0

49.1

47.3

7.4

9.6

Comparison between IT Investment and Capital Spending(Common firms for FY 1999 and FY 2000)
Industrial sector(1,500 firms)

IT investment/
capital spending

Tangible fixed
assets in IT
investment(Tangible fixed
assets + leasing)in IT investment

Capital spending

FY99
actual
1,913

FY99
actual
4,060
4,052
1,215
2,845
327
861

FY2000estimate
4,892(20.5%)
4,880
1,564
3,329
415
1,111

FY99
actual107,185

1,909
373
1,541
111
240

FY2000estimate
2,504(30.9%)
2,498
533
1,972
166
352

95,111
23,054
84,131
8,671
13,385

FY2000estimate
115,077(7.4%)
101,779
27,72287,356
10,43016,457

335
1,228

575
1,412

871
2,001

1,173
2,194

34,97550,15435,461
52,729(Units: 100 million yen, %)(Tangible fixed
Tangible fixed
assets +assets/capitalleasing)/capitalspending
spending
FY99
FY2000 FY99 FY2000
actualestimate actual estimate
1.8
2.2
3.8
4.3
2.0
1.6
1.8
1.3
1.8

2.5
1.9
2.3
1.6
2.1

4.3
5.3
3.4
3.8
6.4

4.8
5.6
3.8
4.0
6.8

1.0
2.4

1.6
2.7

2.5
4.0

3.3
4.2

Comparison between IT Investment and Capital Spending(Common firms for FY 2000 and FY 2001)
Industrial sector(1,525 firms)
All industries(2000/01 growth)
Excl. leasing
ManufacturingNon-manufacturing
Materials
Processing
Sub- and assembly
sector Energy
Other nonmanufacturing

Tangible fixed
assets in IT
investment
FY2000 FY2001
estimate planned
1,969
2,467
(25.3%)
1,965
2,454
302
386
1,667
2,082
82
114
203
251
506
1,179

733
1,369

(Tangible fixed
assets + leasing) in
IT investment
FY2000estimate
4,178
4,170
986
3,192
242
704

FY2001planned4,750(13.7%)
4,712
1,108
3,642
299
773

1,042
2,190

1,277
2,401

22 Development Bank of Japan Research Report/ No. 17(Units: 100 million yen, %)(Tangible fixed
Tangible fixed
assets +Capital spending
assets/capitalleasing)/capitalspending
spending
FY2000 FY2001 FY2000 FY2001 FY2000 FY2001
estimate planned estimate planned estimate planned
84,754
77,204
2.3
3.2
4.9
6.2
(-8.9%)
72,76064,654
2.7
3.8
5.7
7.3
18,716
18,690
1.6
2.1
5.3
5.9
66,03758,514
2.5
3.6
4.8
6.2
6,778
6,968
1.2
1.6
3.6
4.3
10,98010,369
1.8
2.4
6.4
7.5
24,45842,53824,14235,725

2.1
2.8

3.0
3.8

4.3
5.1

5.3
6.7

List of Back Numbers (Including JDB Research Report)
No. 17 Survey on Planned Capital Spending for Fiscal Years 2000 and 2001

(This issue)

No. 16 Revitalization of Middle-aged and Elderly Workers in Japan’s Labor Markets: Requiring the
Expansion of the Vocational Training Functions, March 2001
No. 15 Risk-Averting Portfolio Trends of Japanese Households, March 2001
No. 14 Consumption Demand Trends and the Structure of Supply: Focus on Retail Industry Supply
Behavior, March 2001
No. 13 Recent Trends in the Japanese Economy: Weakness of Current Economic Recovery and Its
Background, March 2001
No. 12 Empirical Reassessment of Japanese Corporate Investment Behavior: Features and Changes sincethe 1980s, Based on Micro-level Panel Data, March 2001
No. 11 Survey on Planned Capital Spending for Fiscal Year 1999, 2000 and 2001, October 2000
No. 10 Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on EnterpriseData, September 2000
No. 9

Recent Trends in the Japanese Economy: Information Technology and the Economy, September
2000

No. 8

Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries,
June 2000

No. 7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, May 2000

No. 6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology andMarket for Underground Remediation, May 2000

No. 5

Recent Trends in the Japanese Economy: The 1990s in Retrospect, March 2000

No. 4

Destabilized Consumption and the Post-bubble Consumer Environment, February 2000

No. 3

The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations,the Debt Burden and Other Structural Factors, January 2000

No. 2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No. 1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other
Asian Countries, November 1999

JDB Research Report
No. 96 Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August
1999
No. 95 Efforts to Protect the Natural Environment in the United States and Germany: Environmental
Mitigation and Biotope Conservation, July 1999
No. 94 Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999
No. 93 Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO
sector through comparison with Germany, June 1999
No. 92 The Impact of Demographic Changes on Consumption and Savings, March 1999
No. 91 Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March
1999
No. 90 Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999

No. 89 Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between
Japan and the U.S., December 1998
No. 88 Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998
No. 87 Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998
No. 86 Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998
No. 85 Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998
No. 84 R&D Stock and Trade Structure in Japan, August 1998
No. 83 Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998
No. 82 The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public
Acceptance is Essential, May 1998
No. 81 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997 and1998 Conducted in August 1997, March 1998
No. 80 Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998
No. 79 Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January
1998
No. 78 Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series andEnvironmental Cost, January 1998
No. 77 Current Conditions and Issues of Computerization in the Health Care Industry: For theConstruction of a Health Care Information Network, January 1998
No. 76 Household Consumption and Saving in Japan, December 1997
No. 75 The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to
Support Diverse Consumer Choices, November 1997
No. 74 Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on
International Trade, October 1997
No. 73 The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on the
Effects on Productivity and Employment, October 1997
No. 72 An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997
No. 71 Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of
Economic Recovery, August 1997
No. 70 Corporate Fundraising: An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm
Date from Japan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March 1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulation of
the Electric Power Industry in Japan and Implication of Experiences in the United States,

December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key,
October 1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of theCurrent Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the
United States and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY 1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and 1996
Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996
No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995 and1996 Conducted in August 1995, October 1995
No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October 1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October
1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY 1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part2, July
1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery
Industry, June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and 1995
Conducted in March 1995, June 1995
No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March 1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private Level,
May 1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994 and1995 Conducted in August 1994, November 1994
No. 40 Selected Summaries of Research Reports Published in FY 1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and 1994
Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration,
December 1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993

No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993 and1994 Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and 1993
Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992 and1993 Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and 1992
Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992
No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s, February
1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991 and1992 Conducted in August 1991, September 1991
No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and 1991
Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990 and1991 Conducted in August1990, September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment andTechnology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and 1990
Conducted in February 1990, March 1990
No. 18 Petrochemicals In Japan, The US, and Korea an Assessment of Economic Efficiency, February
1990
No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989 and1990 Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly
Industrializing Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years
1988 and 1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988 and1989 Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and ASEANCountries, June 1988

No. 9Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987