Development Bank of Japan
Research Report
No. 47

Survey on Planned Capital Spending
for Fiscal Years 2003, 2004 and 2005
(Conducted in June 2004)

September 2004

Economic and Industrial Research Department
Development Bank of Japan

This report was originally published in Japanese as Chosa No. 68
in September 2004.

Contents
I

Summary ........................................................................................................................................ 1

II

Outline ............................................................................................................................................ 3

III Survey Results................................................................................................................................ 6
1.
2.
3.
4.
5.
6.
7.
8.

Overall Condition..................................................................................................................... 6
Characteristics of Capital Spending, by Industry................................................................... 10
Ratio of Capital Spending to Cash Flow, by Principal Business Sector................................ 14
Investment Motives ............................................................................................................... 16
Land Investment, by Principal Business Sector..................................................................... 18
Capital Spending Abroad, by Principal Business Sector ..................................................... 20
Information Technology Investment, by Principal Business Sector...................................... 22
Research & Development Expenditure, by Principal Business Sector .................................. 23
Appendix................................................................................................................................ 26
Charts ..................................................................................................................................... 29

Development Bank of Japan Research Report/ No. 47iSecond Consecutive Year of Double-Digit Increasein the Manufacturing Sector: The First in the Post-Bubble Period
Positive investment for product development and upgrading,
Slight Increase in the non-manufacturing sector

I Summary
1. Planned domestic capital spending for
FY2004 showed a second consecutive year of
double-digit increase in the manufacturing sector(the first in the post-bubble period) and a slightincrease in the non-manufacturing sector, leading to an overall increase (up 6.9%) from theprevious fiscal year.
2. In the manufacturing sector, planned capitalspending increased substantially in most industries (up 18.8% overall), including electric machinery and automobiles, which occupy large
parts. In electric machinery, positive investments
are scheduled for devices such as semiconductors and flat panel displays, reflecting an expansion in their application, mainly in digital homeelectronics and automobiles. In automobiles,
investments will show an increase at a double-digit pace in investment for the productionof new models and for new environment- andsafety-related technologies and products. These
investments will have ripple effects on their related sectors, and substantial increases areplanned in precision machinery, non-ferrous
metals, ceramics & glass, cement, and chemicals.
Spending will turn up also in petroleum, pulp &paper, and food & beverages, mainly due to implementation of environmental measures.
In the non-manufacturing sector, planned
capital spending turned up (slightly, up 1.3%)
for the first time in four years. It decreased inelectric power, where investments for projects
by independent power producers passed theirpeaks, and in telecommunications & information,
where large investments in information services
and broadcasting abated, but increased in retail,due to accelerated establishment of new outlets,
and in leasing, which benefited from positive
investments in manufacturing.

3. Planned capital spending was at a level well
below projected cash flow in both the manufacturing sector and the non-manufacturing sector
at a time of expected increases in both sales andprofits. However, the ratio of capital spending todepreciation expense hit bottom in FY2002 andshowed signs of an upturn. More than half of thefirms surveyed have indicated plans for capitalspending well in excess of their projected depreciation expense. More and more of them haveturned from an asset-reduction strategy to one ofaggressive investment, mainly in the manufacturing sector, while continuing to invest selectively with an emphasis on investment efficiency.
4. Research & development expenditure will
increase in both the manufacturing sector (up5.5%) and the non-manufacturing sector (up5.5%). Most industries in the manufacturingsector, including electric machinery and transportation machinery, which occupy large parts,
will expand both capital spending and research& development expenditure. In the manufacturing sector, capital spending abroad by both Japan based companies and their overseas subsidiaries and affiliates will rise 7.8%, expanding inmost industries.
5. One of the features of the current recovery
phase of investment is that capital spending inelectric machinery will be supported not by aspecific field but by a variety of original technologies and products that are applied in areas
ranging widely from end products to devices.
Along with these investments, automobile-related investments will also be a major
contributor to capital investment increases overall.
In other industries, many firms, benefitingfrom growth in foreign demand, mainly that ofChina, will invest to strengthen their competitiveness, mainly in new technologies and prodDevelopment Bank of Japan Research Report/ No. 47

1ucts and for environmental measures.
Looking at the motives for planned investment, three stand out: product development andupgrading, research and development, and expansion of production capacity (together accounting for about 70% of the overall planned
increase in the manufacturing sector’s capitalspending). Investment for product development
and upgrading is particularly significant; it will
be its largest since 1986.
Planned capital spending in the
non-manufacturing sector showed only a slightincrease and no strength, in contrast to that in
the manufacturing sector; however, whether theoverall investment expansion will impact it in
the future might become clear.

2

Development Bank of Japan Research Report/ No47

II

major industries capitalized at ¥1 billion or more,excluding agriculture, forestry, finance and insurance and medicine.

OutlineObjectives

Date of Survey

This survey has been conducted since FY1956
by the Development Bank of Japan to assess
major trends in the domestic capital spending ofJapanese industry.
The Scope of Capital Spending
In this survey, “capital spending” refers to domestic investment in tangible fixed assets of
one’s own corporation, such as 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 thereal estate industry). Capital spending has been
calculated based on construction and it is calculated, in general, as the sum total of tangible
fixed assets, including the construction in progress account (without subtracting resale value,depreciation and loss). Accordingly, intangible
fixed assets are excluded, as are capital spending
abroad and investment in subsidiaries/affiliatedfirms.
However, ancillary surveys on “capitalspending abroad,” “information technology investment” and “research & development expenditure” cover a wider range of investment (seenext page).
Survey Methods

June 25, 2004. Most of the responses to thequestionnaire were obtained in June.
Contents of the Survey(i)Actual capital spending in FY2003 andplanned capital spending for FY2004 andFY2005(ii) Details of individual construction projects
for each of the above years(iii) Actual revenue and expenditure in
FY2003 and estimated revenue and expenditure for FY2004(iv) Investment motives in FY2003 andFY2004(v) Land investment in FY2003, FY2004 andFY2005(vi) Capital spending abroad for FY2003 andFY2004(vii) Information technology investment in
FY2003 and FY2004(viii) Research & development expenditure in
FY2003 and FY2004
Responses
The responses to the survey are shown below. In
terms of the number of targeted firms and respondents, the survey is the largest among similar national surveys on capital spending trends.

The survey was conducted by means of questionnaire (sent to individual firms and followed
up by telephone interviews when necessary).
.
Target Firms
This survey covers all private firms in Japan’s

Principal Business Classification
Investment-specific Classification

No. of Firms
Targeted
3,663
4,352

No. of Firms Giving
Valid Responses
2,840
3,407

Proportion of
Valid Responses
77.5%
78.3%

Development Bank of Japan Research Report/ No. 47

3On the Totals
Industrial classification
There are two types of industrial classifications:principal business classification and investment-specific classification. The former classifies and totals the companies’ responses basedon the main business interest of each company,
whereas the latter classifies and totals theamount of investment for each business sector in
a company’s response according to industrial
sector.
Although the investment-specific classification is used in principle for the analysis of theamount and motives of capital spending, theprincipal business classification is adopted inother cases.
Timing of the survey and years covered
The survey is conducted twice a year. Since eachfiscal year is surveyed five times, in principle,
until planned investments are materialized, theresults reveal business sentiments in detail, forexample, through the extent to which planned
investments have been modified.

Targeted FY
2001
2002
2003
2004
2005
Timing of survey
August 2001
Modified plan
Plan for next FY
February 2002
Estimate
Initial plan
August 2002
ActualModified plan
Plan for next FY
February 2003
Estimate
Initial plan
August 2003
ActualModified plan
Plan for next FY
June 2004
ActualPlan for current FY
Plan for next FY
Note: From 2004, the survey is conducted in June and in November, and thereby, FY 2003 and 2004 are surveyed fourtimes.

About the Ancillary Surveys
A description follows of the ancillary surveys
carried out as part of the DBJ Capital Spending
Survey. The companies surveyed and survey
date are the same as for the survey on planned
capital spending.
(1) Capital Spending Abroad• Survey content: Actual capital spending
abroad in FY2003 and planned capital spending abroad in FY2004 as given in consolidated accounts (or, in the case of companies
that do not produce consolidated accounts,
capital spending by the company itself plus
those overseas subsidiaries of which it owns
at least 50% [including indirectly]).
• Definition of capital spending: In principle,
the listed value of tangible fixed assets including construction in progress (before deducting sales, losses, and depreciation).
Note: Starting this year the survey content has beenchanged (previously it asked about capitalspending by the company in question and its

4

Development Bank of Japan Research Report/ No47

overseas subsidiaries [i.e., any subsidiary ofwhich it owns at least 10% of the shares]). The
geographical classification has also been partially altered ("US" has been replaced by "North
America" and "EU" by "Europe").

(2) Information Technology Investment• Survey content: Actual IT investment in
FY2003 and planned IT investment in
FY2004 as given in non-consolidated accounts.
• Definition of IT investment: Investment designed to streamline the company's own operations and boost its productivity (computersand peripherals, installation of communication networks, software development, etc.; theexact definition follows that used by the individual company in-house and in the materials
it releases).
• Survey items: There are four survey items:"tangible fixed assets," "intangible fixed assets and investments" (software development
expenditures and the like that are listed as assets rather than expensed), "lease contracts"(the value of new leases signed, rather thanlease charges for the current fiscal year), and"other expensed items" (i.e., expensed software acquisition costs [including development
costs], plus PCs and office equipment treatedas equipment expenses, but excluding expendable supplies such as floppy disks).
(3) Research & Development Expenditure• Survey content: Actual R&D expenditure in
FY2003 and planned R&D expenditure in
FY2004 as given in non-consolidated accounts.
• Definition of R&D expenditure: All costs related to research and development including
personnel costs, cost of raw materials, depreciation expenses for fixed assets, and allocated overhead (the exact definition follows
that used by the individual company in-houseand in the materials it releases).

Development Bank of Japan Research Report/ No. 47

5III Survey Results
1. Overall Condition
Capital Spending
FY2003 (Actual)

FY2004 (Planned）

FY2005 (Planned）(2,605 firms)(2,840 firms)(1,430 firms)

GrowthGrowthGrowth

FY2002

FY2003Rate (%)

FY2003

FY2004Rate (%)

FY2004

FY2005Rate (%)

ActualActual2003/2002

ActualPlanned

2004/2003

PlannedPlanned2005/2004

Total

18,829.0

18,624.7-1.1

19,367.4

20,704.0

6.9

8,001.4

7,393.7-7.6

Manufacturing

5,359.8

5,967.6

11.3

6,223.5

7,394.5

18.8

1,485.7

1,368.5-7.9

Non-Manufacturing

13,469.2

12,657.1-6.0

13,143.9

13,309.4

1.3

6,515.8

6,025.2-7.5

Note: Monetary amounts are in billion yen.

Growth in Capital Spending
％

30

Total
Manufacturing
Non-Manufacturing

20
10
0
-10
-20
-30
86

87

88

89

90

91

92

93

94

95

96

97

98

99 2000 2001 2002 2003 2004
（Planned）

Note:

Actual data for August until FY2002.

Note: Comparison with the previous survey (revision rate) had been analyzed so far, but it is notincluded this time, due to the change in date of survey.

6

Development Bank of Japan Research Report/ No47

FY

(1) Actual Capital Spending for FY2003
Actual capital spending for FY2003 recovered to
draw almost even with that of the previous fiscal
year (down 1.1%, all figures are based on construction). It decreased for the third consecutive
year in the non-manufacturing sector (down
6.0%) but increased for the first time in three
years in the manufacturing sector (up 11.3%).
Actual capital spending grew in many manufacturing industries, led by that for electric machinery, but decreased in all non-manufacturing industries other than services, wholesale & retail,and gas.
(2) Planned Capital Spending for FY2004
Planned domestic capital spending for FY2004
showed a second consecutive year of double-digit increase in the manufacturing sector for
the first time in the post-bubble period and aslight increase in the non-manufacturing sector,
leading to an overall increase (up 6.9%).
Manufacturing Sector
In the manufacturing sector, planned capitalspending increased substantially in most industries (up 18.8% overall), including electric machinery and automobiles, which occupy large
parts. In electric machinery, positive investments
are scheduled for devices such as semiconductors and flat panel displays, reflecting an expansion in their application, mainly in digital homeelectronics and automobiles. In automobiles,
investments for the production of new models
and for new environment- and safety-related
technologies and products will show an increaseat a double-digit pace. These investments will
have ripple effects on their related sectors, andsubstantial increases in investments are plannedin precision machinery, non-ferrous metals, ceramics & glass, cement, and chemicals. Increases in each industry will be contributed toalso by recycling-related investment in ceramics& glass, cement, and non-ferrous metals; bytargeting construction of product chains in petrochemicals (investment for diversification of
raw materials and strengthening of intermediatematerial businesses); and by investment for
production increases in general machinery.
Spending will turn up also in pulp & paper, petroleum, and food & beverages, mainly due to

implementation of environmental measures.
Non-Manufacturing Sector
In the non-manufacturing sector, planned capitalspending turned up (slightly, up 1.3%) for the
first time in four years. It decreased in electric
power, where investments for projects by independent power producers passed their peaks, intelecommunications & information, where large
investments in information services and broadcasting abated, and in real estate, which saw thecompletion of large-scale urban development
projects, but increased in retail, due to accelerated establishment of new outlets, in leasing,which benefited from positive investments in
manufacturing, and in transportation, which was
led by an expansion in logistics- and airport-related investment.
Profits and Ratio of Capital Spending to Cash
Flow
Projected revenues for FY2004 indicated a riseof 2.0%, which means a slight recovery from theprevious year, when revenue stood almost unchanged from a year earlier. Profits are slated toincreaseinbothmanufacturing
andnon-manufacturing. Profits for all industries willrecord a healthy increase of 8.6%, although thisrepresents a slowdown from the 15.2% rise in
the previous year.
The ratio of capital spending to cash flow(net income plus depreciation expense) will be
substantially lower than 100%—according toplanned investment for FY2004, 61.8% in the
manufacturing sector and 81.4% in the
non-manufacturing sector. However, the ratio of
capital spending to depreciation expense in the
manufacturing sector hit bottom in FY2002 andshowed signs of an upturn, and that for FY2004
will record the third highest level (116.5%) in
the last ten years. In non-manufacturing sector,
the size of negative growth in the ratio will narrow. The ratio of firms that plan capital spending
at a level well above projected depreciation expense will rise. More and more firms began
turning from an asset-reduction strategy to oneof aggressive investment, mainly in the manufacturing sector, while continuing to invest selectively with an emphasis on investment efficiency.

Development Bank of Japan Research Report/ No. 47

7Investment Motives
Looking at planned investment for FY2004 in
the manufacturing sector, three motives standout. Product development and upgrading andresearch and development will be the reasons forincreases in many industries, including the electric machinery and transportation machineryindustries, with the former reaching its highest
level since the investment motive categories
were revised in 1986. The third, expansion of
production capacity, although decreasing inoverall share, will increase in absolute amount.
These three combined will account for about
70% of the capital spending increase in the
manufacturing sector.
Land Investment
Planned land investment for FY2004 was substantially lower in both the manufacturing andnon-manufacturing sectors, down a massive
52.2% from the previous year. The ratio of land
investment to capital spending will be at a low
level (2.1%). However, land investment tends tobe subject to upward revision after the planningstage.
(3) Ancillary Surveys for FY2004
Capital Spending Abroad
Capital spending abroad (on a consolidated-basis) in FY2004 is slated to increase
7.3% overall. In the manufacturing sector, which
accounts for more than 80% of the total capitalspending abroad, such investment will rise
7.8%—in most industries, both domestic andoverseas capital spending will expand.
As for the manufacturing sector’s investment
by region, in North America and Europe it will
decrease, but in Asia and other areas there will
be double-digit increases. Growth in investment
will be particularly high in China. The overseas
capital spending ratio (capital spending abroad
divided by domestic capital spending) will decline from 52.3% in FY2003 to 48.3% in
FY2004, because growth in domestic capitalspending will be higher.
Information Technology Investment
Looking at planned information technology in-

8

Development Bank of Japan Research Report/ No47

vestment for FY2004 (on the user side), an overall increase (up 15.2%) is expected for the firsttime in three years—up 11.2% in manufacturing
and up 18.2% in non-manufacturing. Planned
information technology investment showedsteady growth for the second consecutive year in
the manufacturing sector, and in the
non-manufacturing sector, where a broad range
of industries showed increases, it rose at a double-digit (percent) pace.
Research & Development Expenditure
Planned research & development expenditure for
FY2004 was up from a year earlier in both the
manufacturing sector (up 5.5%) and thenon-manufacturing sector (up 5.5%). In the
manufacturing sector, most industries, including
electric machinery (digital equipment and electronic-devices) and transportation machinery(environment- and safety-related technologies),
which occupy large parts, will expand both capital spending and research & development expenditure.
(4) Highlights of This Survey (as regards
Planned Capital Spending for FY2004)
One of the features of the current recovery phaseof investment is that capital spending in electricmachinery will be supported not by a specificfield but by original technologies and productsthat are applied in areas ranging widely fromend products to devices. Along with these investments, automobile-related investments will
also be a major contributor to recovery in overall
capital investment.
In other industries many firms will benefit
from growth in foreign demand, mainly that ofChina, and invest to strengthen their businessfoundations, mainly in new technologies andproducts and for environmental measures.
Looking at the motives for planned investment, three stand out: product development andupgrading, research and development, and expansion of production capacity (together accounting for about 70% of the planned increasein the manufacturing sector’s capital spending).
Investment for product development and upgrading is particularly significant; it will be its
largest since 1986.
Plannedcapitalspending
inthenon-manufacturing sector showed only a slightincrease and no strength, in contrast to that in
the manufacturing sector; however, whether theoverall investment expansion will impact it in
the future might become clear.
(5) Planned Capital Spending for FY2005

Planned capital spending for FY2005 shows an
overall decline of 7.6%, although uncertainty
surrounding many investment projects remains
in both the manufacturing (down 7.9%) andnon-manufacturing sectors (down 7.5%) as
fewer firms responded to the questions regarding
their plans for the year.

Development Bank of Japan Research Report/ No. 47

92. Characteristics of Capital Spending, by Industry[FY2003]

Change on previous year in FY2003

Figures indicate[FY2004]

Figures indicate

Change on previous year in FY2004

Share in FY2002 spending

Decrease-30-20

Increase
-10

0

10

Share (%)

Manufacturing

1030

Decrease
40

50 Change on−1.8
0.3 Pulp & Paper−9.1
1.0
Petroleum
−11.1
0.8

Chemicals
5.3 Cement, Ceramics & Glass
4.3
8.3
0.8 Iron & Steel
Non-Ferrous
20.2
Metals
1.7
12.9
1.0
GeneralMachinery

Electric Machinery
34.8
6.4

11.3
28.5
20

Automobiles
1.2
6.0

4.6
1.8
Precision Machinery
29.5
0.5

-40

-30

Increase
-10

0

18.8
32.1

50

Pulp & Paper

1.6
0.9

24.3
1.7

Change onpreviousyear (%)

Petroleum

64.5
0.7

Non-Ferrous Metals

Cement, Ceramics& Glass

15.2
1.1

33.6
0.9

General Machinery

23.4
2.1

Electric
Machinery

18.6
8.7

20

Precision
Machinery

70.1
0.7
Other Transport Equipment

10.4
0.4

30
Construction

Other Manufacturing

−7.6
0.8

12.4
2.0
Wholesale & Retail

4.1
5.7

Real Estate
−5.5
4.0

40
Transportation
−9.3
10.5

Transportation
2.3
9.8

50

50

Non-Manufacturing

Electric
Power

−18.7
13.8
60

Gas
5.0
1.3

−6.0
71.5

1.3
67.9

Telecommunications& Information

70

Electric Power
−4.3
11.1
60
Gas
0.1
1.3

70

Telecommunications &Information
−2.2
13.3

−3.8
14.2

80

80

Leasing−2.3
20.3

Leasing
6.8
20.2

90

90

Other Non-Manufacturing

10

40

Food &
Beverages

14.3
4.5

Iron & Steel
−2.4
2.0

10

30

Chemicals

20.7
6.1

40

100
-50

20

Automobiles

14.4
1.8
Wholesale & Retail
9.8
4.8

−8.8
4.4

10

Textiles−9.5
0.4

Other Transport Equipment
23.8
0.3

Real Estate

Non-Manufacturing

-20

Other
Manufacturing

Construction
−7.2
0.8

30

-50
0

previousyear (%)

Food &
TextilesBeverages

−11.2
1.9

20

Share (%)

-40

Manufacturing-50
0Share in FY2003 spending

−16.6
0.3
-40

-30

-20

-10

Services
1.3
1.5

Services
15.9
1.2
0

10

20

30

40

50

100
-50

-40

-30

-20

-10

0

10

20

30

All Industries Average

All Industries Average−1.1 %

6.9 %Development Bank of Japan Research Report/ No. 47

Other NonManufacturing
27.0
0.2
40
50

[FY2005]

Figures indicate

Change on previous year in FY2005
Share in FY2004 spending

Decrease

−7.9
18.6

-40

-30

-20

Increase
-10

0

−20.2
0.8

10

0.5 General Machinery
−10.7

−18.7
0.1
Automobiles
−10.0
2.8

Wholesale & Retail

−11.4

0.6

40

50

Real Estate

Change onpreviousyear (%)

Other Transport Equipment
−32.6
0.3
Other Manufacturing
−14.7
1.3

Construction

−29.1

30

14.2
1.0
Electric Machinery
3.2
4.6

Precision Machinery 0.9

2020

Non-Ferrous Metals

Iron & Steel
−6.3
2.1

Cement, Ceramics & Glass

−34.9

10

TextilesPulp & Paper
Chemicals−24.4−3.0 −7.3
0.2
0.5
2.1

Food & Beverages

Petroleum
−33.8
1.3

Share (%)

Manufacturing

-50
0

5.1

−16.7
3.3

30
Transportation

−31.2
11.2

Non-Manufacturing

40

Electric Power

−5.4
23.1

50

60
Gas
−1.0
2.7

−7.5
81.4

Telecommunications &Information

−3.8
7.5

70

80
Leasing
2.8
26.5
90

Services
−41.2
1.3
100
-50

-40

-30

Other Non-Manufacturing
17.2
0.2
-20

-10

0

10

20

30

40

50

All Industries Average−7.6 %Development Bank of Japan Research Report/ No. 47

11Trends in Capital Spending for FY2004,
by Industry
Trends in capital spending in main industries aredescribed below. The figures in parentheses ( )indicate changes in the rate of growth in capitalspending for each industry between FY2003 andFY2004. The figures to the right show the percentage of total planned spending for FY2004
accounted for by the industry in question.
Manufacturing
Food & Beverages(-11.2%→24.3%) 2.0%
The beverages sector, which accounts for a large
share of spending, will invest in new and expanded production lines as well as in streamlining efficiency. There will also be a major increase in spending on distribution. Spending on
BSE measures will take off in the fodder sector,
with many companies in other fields also boosting investment. The upshot: a substantial upturnin spending in the industry as a whole.
Pulp & Paper(-9.1%→1.6%) 0.8%
There will be continued investment in
power-generating boilers fueled by biomass andused plastic, along with increased spending onother environmental measures and on rationalizing operations. This will result in a slight upturnin spending.
Chemicals(5.3%→14.3%) 4.8%
Pharmaceuticals will experience a downturn withthe abatement of investment in overhauling production systems and constructing facilities for
producing new drugs. Conversely, the petrochemicals sector will boost spending on construction of product chains (e.g., diversifying raw
materials, enhancing facilities for monomer
products and other intermediate materials); investment in electronic materials, including components for mobile phones and flat panel displays, will likewise gather further steam. The
industry as a whole will thus see a double-digit
increase.

12

Development Bank of Japan Research Report/ No. 47

Petroleum(-11.1%→64.5%) 1.1%
There will be a substantial upswing as spending
on desulfurization (sulfur content of below 10ppm) at refineries rises ahead of further tightening of environmental regulations.
Cement, Ceramics & Glass(8.3%→33.6%) 1.1%
In cement, investment will rise due to increased
spending on recycling and the like. There will
also be a wave of investment in substrate glassfor flat panel displays, for which there is brisk
demand in the digital home electronics market,
in ceramic components for automobiles, and inresidential appliances and fixtures for rebuilding.
The cement, ceramics & glass sector will thus
experience a substantial overall increase.
Iron & Steel(20.2%→-2.4%) 1.8%
Despite some spending on expanding production
capacity, investment will drop slightly now thatmajor overhauls of blast furnaces are past theirpeak.
Non-Ferrous Metals(12.9%→15.2%) 1.2%
Although the industry continues to rein in
spending on optical parts and fiber, there will bean ongoing surge in investment in boosting production of 300 mm silicon wafers. There will
also be spending on electronic materials andautomobile components, as well as on recycling.
The upshot will be an overall increase for thesecond year in a row.
General Machinery(4.6%→23.4%) 2.4%
Spending on office equipment will rise thanks toexpansion of research facilities and production
plants. There will also be increased investment inelectrical machinery, in machine tools and roller
bearings, for which demand is brisk in the automobile sector, and construction equipment, forwhich there is heavy demand overseas. Investment will thus rise substantially overall.

Electric Machinery(34.8%→18.6%) 9.6%
The electronic devices sector remains the driving
force behind spending. For example, in the semiconductor field, investment will continue on 300
mm water fabs as their applications expand insuch areas as mobile phones, digital home electronics, and automobiles. Likewise, there will be
brisk spending on flat panel displays. What withinvestment in developing R&D hubs and overhauling operations as well, the industry as awhole will experience a double-digit increase forthe second year in a row.
Precision Machinery(29.5%→70.1%) 1.1%
Spending on new products and research and development facilities will rise in the semiconductor manufacturing equipment field. Investment inbolstering digital camera production will also
remain brisk. There will thus be a substantial risefor the second year in a row.
Automobiles(1.2%→20.7%) 6.9%
Buoy along by high profits, car manufacturers
will expand investment in new models and inoverhauling their production lines. Parts manufacturers likewise have far more ambitious
spending plans than last year's, especially in theareas of work on new products and streamlining
production efficiency. Overall, efforts to commercialize new technologies in the environmental and safety fields are picking up steam,which will result in the fourth consecutive yearof increased spending.
Non-Manufacturing
Construction(-7.2%→-7.6%) 0.7%
The industry will experience a decline as generalcontractors continue to curb capital spending,which can also be expected to dip in reaction to
the acquisition of assets last year.
Wholesale & Retail(9.8%→4.1%) 5.5%
Despite investment in distribution centers andother commercial facilities, the wholesale sector
will experience a downturn in reaction to thebuilding of new company headquarters and soforth last year. The retail sector will experience
the third year of increases in a row as supermarkets continue to boost spending on new stores;
certain department stores and home centers arealso planning to invest in opening or remodelinglocations. The wholesale & retail sector as awhole will likewise experience its third year ofincreases in a row.
Real Estate(-8.8%→-5.5%) 3.6%
The decline will continue as major spending
abates, despite construction of new commercial
facilities and projected redevelopment projects in
the Tokyo metropolitan area.
Transportation(-9.3%→2.3%) 9.3%
Railways will experience an ongoing decline asconstruction work on new train lines in the Tokyo metropolitan area eases up. Conversely,
there will be a substantial rise in spending on
airport facilities; spending will also increase in
the distribution field. The transportation sector asa whole will therefore see an upswing in capitalspending.
Electric Power(-18.7%→4.3%) 9.9%
The industry will experience its eleventh straightyear of decline as major spending by IPPs (Independent Power Producers) eases up and workabates on expanding thermal power sources bygeneral electricity utilities.
Gas(5.0%→0.1%) 1.3%
The heat supply sector will experience a steep
decline in reaction to last year's investment inoverhauling operations, but this will be offset by
an increase in spending on commercial facilities
in the city gas sector. Capital spending will thus
remain level overall.

Development Bank of Japan Research Report/ No. 47

13

Telecommunications & Information(-3.8%→-2.2%) 12.2%
Telecommunications will witness an upswing
with continued brisk spending on thethird-generation mobile phone and on expanding
the optical fiber network, despite a decline ininvestment in the second-generation mobile
phone and fixed-line phone operations. Information services and broadcasting will experience a
decline now that spending on terrestrial digital
broadcasting in the three big broadcast markets ispast its peak. On balance, telecommunications &information as a whole will experience its fourthconsecutive year of decline.
Leasing(-2.3%→6.8%) 20.2%
Capital spending will recover to increase for the
first time in three years.
Services(15.9%→1.3%) 1.4%
There will be a slight upswing fueled by spending on recycling waste, despite a dip in reaction
to last year's wave of investment in the amusement sector.
3. Ratio of Capital Spending to Cash Flow,by Principal Business Sector
Projected FY2004 revenues for all industries are
up 2.0%, which represents a slight recovery fromlast year, when revenue stood almost unchanged.
Both the manufacturing and non-manufacturingsectors are forecasting increased sales and profits.
Profits for all industries will record a healthy
increase of 8.6%, although this represents a
slowdown from the 15.4% rise of last year. Return on Sales stand at 4.9% for all industries(5.4% for manufacturing and 4.3% for
non-manufacturing), a rise of 0.3 percentage
point.
The ratio of capital spending to cash flow(net income plus depreciation expense) will, according to planned investment for FY2004, standat 61.8% in the manufacturing sector and 81.4%
in the non-manufacturing sector, both substantially lower than 100%. On the other hand, theratio of capital spending to depreciation expense
as projected for the manufacturing sector stands
at 116.5%, its third highest level in the last ten
years; the figure has been climbing since hitting
bottom in FY2002 both in the projected and finalized numbers. In the non-manufacturing sector, too, the ratio displays a less sizable decline
than before. In actual fact, the percentage ofcompanies stating that their capital spending will
exceed their depreciation expense rose in both
FY2003 and FY2004; in the manufacturing sector in particular, over 50% of companies plan toengage in capital spending at a level above theirdepreciation expense in FY2004.
Thus more and more firms, particularly inthe manufacturing sector, are turning from anasset-reduction strategy to one of aggressive investment, even as they maintain their basic
stance of cutting back on interest-bearing debt
and investing selectively with an emphasis on
investment efficiency.

Ratio of Capital Spending to Cash Flow
Revenue Growth(1,857(2,140firms)
firms)
FY2003
FY2004
ActualPlannedCapital Spending/
Cash Flow

Capital Spending/Depreciation Expenses

FY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
Planned

Total

0.3

2.0

15.4

8.6

74.4

72.9

105.3

111.1

Manufacturing

1.8

2.2

20.2

8.1

55.7

61.8

98.9

116.5

Non-Manufacturing

-1.1

1.8

10.4

9.2

88.6

81.4

108.6

108.1

Notes:

14

Income (ordinary)
Growth

1. Figures are given as percentages.
2. Capital Spending/Cash Flow=[capital spending/(net income+depreciation expenses)]*100.

Development Bank of Japan Research Report/ No. 47

Trend of Ratio of Capital Spending to Cash Flow in June (August) Survey
Projected ratio for current fiscal year

Actual ratio in previous fiscal year

FY

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004

Survey Month

Total

Aug. 1991
Aug. 1992
Aug. 1993
Aug. 1994
Aug. 1995
Aug. 1996
Aug. 1997
Aug. 1998
Aug. 1999
Aug. 2000
Aug. 2001
Aug. 2002
Aug. 2003
Jun. 2004

129.0
128.1
115.6
118.0
114.1
112.4
107.9
104.0
91.6
96.4
90.8
83.6
75.8
72.9

Manufacturing
102.5
101.3
90.5
80.8
78.7
79.1
78.6
76.8
60.6
67.3
75.3
61.6
60.2
61.8

NonManufacturing
151.6
152.4
131.4
144.2
138.3
139.4
130.1
129.8
116.6
120.7
100.2
99.1
86.4
81.4

Survey Month

Total

Aug. 1992
Aug. 1993
Aug. 1994
Aug. 1995
Aug. 1996
Aug. 1997
Aug. 1998
Aug. 1999
Aug. 2000
Aug. 2001
Aug. 2002
Aug. 2003
Jun. 2004

131.9
130.9
128.5
120.7
111.1
114.4
114.7
123.9
111.1
111.5
116.6
90.5
74.4

Manufacturing
112.8
105.7
90.4
79.9
77.8
80.4
84.4
95.3
77.1
84.0
126.7
68.8
55.7

NonManufacturing
150.3
148.5
155.1
147.7
138.8
139.7
145.3
145.0
138.1
128.6
112.3
104.0
88.6

Trend of Ratio of Capital Spending to Depreciation Expense in June (August) Survey
Projected ratio for current fiscal year

Actual ratio in previous fiscal year

FY

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004

Survey Month

Total

Aug. 1991
Aug. 1992
Aug. 1993
Aug. 1994
Aug. 1995
Aug. 1996
Aug. 1997
Aug. 1998
Aug. 1999
Aug. 2000
Aug. 2001
Aug. 2002
Aug. 2003
Jun. 2004

178.7
168.9
142.2
143.4
141.3
145.2
140.2
132.2
113.6
124.0
118.6
113.3
109.0
111.1

Manufacturing
158.7
144.6
120.7
106.9
109.3
119.0
120.5
109.9
80.8
94.6
107.3
94.7
102.4
116.5

NonManufacturing
192.7
188.1
154.1
165.8
159.5
161.6
151.5
149.1
136.9
144.8
124.6
123.9
112.4
108.1

Survey Month

Total

Aug. 1992
Aug. 1993
Aug. 1994
Aug. 1995
Aug. 1996
Aug. 1997
Aug. 1998
Aug. 1999
Aug. 2000
Aug. 2001
Aug. 2002
Aug. 2003
Jun. 2004

184.1
164.3
149.2
138.9
139.0
141.3
137.4
125.8
117.5
124.6
109.0
101.1
105.3

Manufacturing
170.9
140.1
110.7
100.1
113.7
116.1
118.9
105.0
85.7
101.3
96.8
86.9
98.9

NonManufacturing
191.0
179.7
173.9
161.2
155.1
155.9
151.3
139.1
140.6
137.5
116.1
108.4
108.6

Percentage of Companies with Capital Spending Exceeding Depreciation Expense
Projected percentage for current fiscal year

Actual ratio in previous fiscal year

FY

2002
2003
2004

Notes:

Survey Month

Total

Aug. 2003
Jun. 2004

38.2
44.3

Manu
facturing
39.3
52.1

NonManufacturing
37.4
38.4

Survey Month

Total

Aug.2003
Jun. 2004

34.1
36.8

Manufacturing
28.5
35.7

NonManufacturing
38.0
37.7

1. Figures are given as percentages.
2. Shaded figures represent results of the present survey.

Development Bank of Japan Research Report/ No. 47

15their share will remain roughly unchanged.

4. Investment Motives(1) Investment Motives in FY2004
We turn now to investment motives in FY2004(based on figures for the 2,382 firms that replied
for both FY2003 and FY2004). In all industries,
level of spending will rise in all categories; "product development and upgrading," "research anddevelopment," and "maintenance and repair" will
display particularly dramatic increases and thereby
claim a larger percentage share. In the manufacturing sector, "product development and upgrading"and "research and development" show the largest
increase in share; in the non-manufacturing sector,"maintenance and repair" do so.
In the manufacturing sector, investment willrise in all categories, but only "product development and upgrading" and "research and development" will gain share; all other categories will
experience a decline. "Product development andupgrading" will reach its highest percentage level
since the list of choices was revised in FY1986.
In the non-manufacturing sector, investment
will decline in the categories of "expansion of
production capacity," "others," and "rationalization and labor saving." "Expansion of production
capacity" and "rationalization and labor saving"
will also decline in their percentage share; conversely, "maintenance and repair" will rise. In allother categories, level of spending will rise, but(2) Investment Motives in the Manufacturing
Sector: Materials versus Processing &Assembly
Consider the respective shares of different investment motives in the manufacturing sector in
FY2004. Investment designed to directly boost
sales account for a roughly 50% share -- "expansion of production capacity" (28.3%) and "productdevelopment and upgrading" (19.3%). Plans earmark a further 10.5% for "research and development," which is designed to boost future profitability; that figure is up 45.2% over last year, thelargest increase recorded. Although "expansion of
production capacity" will have a lower share thanin FY2003, the level of spending in that category
will rise. Together, these three categories will account for some 70% of the increase in spending in
the manufacturing sector.
Next we examine investment motives in the
manufacturing sector as subdivided into materials versus processing & assembly. In the materials subsector, "maintenance and repair" and "expansion of production capacity" rank top in termsof share; in the processing & assembly sector,"expansion of production capacity" and "productdevelopment and upgrading" rank top.

Investment Motives
Total

Manufacturing(2,382 firms)

Non-Manufacturing
Processing &Assembly

Materials

FY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
PlannedFY2003
Actual

FY2004
Planned

Expansion of Production
Capacity

38.4

36.5

29.3

28.3

25.6

27.8

30.8

28.7

42.7

41.1

Product Development andUpgrading

8.1

9.3

17.8

19.3

9.0

8.6

22.4

24.3

3.5

3.6

Rationalization and Labor
Saving

6.9

7.1

12.7

12.1

15.3

16.0

11.6

10.8

4.2

4.2

Research and Development

3.5

4.6

8.7

10.5

6.8

7.4

9.9

12.4

1.1

1.2

Maintenance andRepairs

18.0

18.7

18.1

17.3

30.8

28.5

12.1

12.1

17.9

19.6

Others

25.1

23.9

13.4

12.5

12.6

11.8

13.2

11.8

30.6

30.3

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Note:

Figures are given as percentages.

16

Development Bank of Japan Research Report/ No. 47

Materials
In FY2004 "expansion of production capacity"
will gain share compared to FY2003, a rise primarily due to chemicals, cement, ceramics &glass, and iron & steel; conversely, "maintenanceand repair" will decline. In the case of chemicals
and iron & steel, it seems that firms are installing
production capacity in order to cater to strong
demand as overseas demand surges, most notably in China.

Processing & Assembly
In the processing & assembly subsector, "productdevelopment and upgrading" and "research anddevelopment" will both see an increase in sharefrom FY2003 to 2004 in virtually all industries,
including transportation machinery and electricmachinery.
"Expansion of production capacity," which
made a large gain in share between FY2002 and2003, is expected to lose share in FY2004, since
spending will rise in monetary terms, but the increase is slight in relative terms.

Long-term Trend of Investment Motives
FY Materials
24.9

1995
1996

8.3

27.0

1998
20.3

21.1

7.1
28.7

2001

27.2

2003
Actual
2004
Planned

19.4

7.7

2000

2002

6.4

27.1

25.6
27.8

7.8

18.5

14.6

23.6

6.9

8.6

15.3
17.7

29.2

15.9

6.8

16.0

15.0

23.9

6.7
15.3

12.8

23.0

7.1

17.8
9.0

Expansion of Production
Capacity

15.1

26.9

19.3
18.6

17.3

18.7

7.2

6.8

11.5

18.4
7.5

7.7

23.5

5.6

18.9

7.1

24.5

33.3

1997

1999

24.1

7.2

30.8
7.4

Product
Rationalization
Research
Development
and Labor
andand Upgrading
SavingDevelopment

12.6

28.5

11.8

Maintenance and Repair

OthersFY Processing & Assembly
1995

32.8

18.0

1996

27.5

1997

28.8

1998

27.8

21.0

1999

28.4

20.5

2000
2001
2002

25.6

2003
Actual
2004
Planned

21.3
22.0

12.7

13.4

12.3

10.9

13.3

10.3

21.7

13.8
22.4

28.7

24.3

Expansion of Production
Capacity

Product Development
and Upgrading

10.2
11.7

12.7
10.8
10.4

10.4

12.9

13.5

11.3

14.3

11.6

9.9

10.8

12.4

11.4
16.3

9.1

12.7

12.1

10.0

12.6

12.7

24.3

10.0

12.8

17.0

22.3
30.8

11.9

15.0

33.4
27.3

15.1

13.6

12.1
12.1

Rationaliza- Research and Maintenance
Development
and Repair
tion andLabor Saving

13.2
11.8

Others

Notes: 1. Figures are given as percentages.
2. Materials: Textiles, Pulp & Paper, Chemicals, Cement, Ceramics & Glass, Iron & Steel, Non-Ferrous metals.
3. Processing & Assembly: Food & Beverages, General Machinery, Electric Machinery, Precision Machinery, Other
Transport Equipment, Other Manufacturing.
Development Bank of Japan Research Report/ No. 47

17

5.

FY2003 and FY2004) is down 52.2%, since investment by the real estate industry in the Tokyo
metropolitan area is now past its peak, plus thetransportation industry is cutting back investment
for railways. Land investment accounts for 2.1%of total planned capital spending for FY2004.
Note however that figures on land investment
tend to be revised upward as spending moves
from the planning stage to implementation (previous year's survey [planned] -- survey for thecurrent year [planned] -- next year's survey [actual]).

Land Investment, by Principal
Business Sector(1) Actual Land Investment for FY2003
Actual land investment for FY2003 (based on
figures for the 1,766 firms that replied for both
FY2002 and FY2003) was down 13.2% compared with the previous year, the seventh consecutive annual decline. The manufacturing sector recorded a substantial decline of 20.6%, mostnotably in transportation machinery and food &beverages. The non-manufacturing sector recorded a drop of 11.4% as the transport industry
completed investment in land for airport construction, while telecommunications & information also experienced a considerable decline;
there were however increases in electric powerand services. Land investment's percentage of
total capital spending has been in steady decline
and now stands at 4.6% (2.9% in manufacturing,
5.3% in non-manufacturing).

(3) Planned Land Investment for FY2005
Planned land investment for FY2005 (based on
figures for the 1,271 firms that replied for both
FY2004 and FY2005) is down 38.8%, though
there are even more uncertainties than in the caseof planned investment for FY2004. Land investment accounts for 1.4% of total planned
capital spending for FY2005.

(2) Planned Land Investment for FY2004
Planned land investment for FY2004 (based on
figures for the 2,275 firms that replied for bothLong-term Trend of Land Investment by Timing of Survey
All industries
94

95

96

97

98

99

(FY)

2000 2001 2002 2003 2004 2005

30
20

18.1

10
0
-10

-16.5

-11.6

-30

-30.5

-40

-38.2
-39.9

-40.7
-47.5

-41.0
-47.9

-42.5

-29.2

-32.0

-34.3
-36.8

-33.9

-31.5

-33.8

-38.8
-39.2
-52.2

-54.6

-55.8

-54.6
-56.8

-66.6

-70
-80

Actual (next fiscal year survey)
Planned (current fiscal year survey)
Planned (previous fiscal year survey)

18

-13.2

-21.3

(%)

-60

-9.4

-14.8

-20

-50

-4.1

-4.3

-11.1

Development Bank of Japan Research Report/ No. 47

Trends in Land Investment, by Principal Business Sector
Investment Amount
FY2002

FY2003GrowthRate (%)
2003/2002

Investment Amount
FY2003(1,766 firms)
Total Investment
Investment excluding Land

−2.7

13,508.1

14,282.4

5.7

6,515.1

6,013.1

10,865.2−2.1

12,883.2

13,983.9

8.5

6,372.8

5,925.9

−7.0

604.1

524.2

−13.2

624.9

298.6

−52.2

142.4

87.2

−38.8

5.2

4.6

4.6

2.1

2.2

1.4

−7.7

3,159.1

3,350.0

6.0

4,161.9

4,991.8

19.9

1,375.6

1,272.5−7.5

3,038.3

3,254.1

7.1

4,030.6

4,923.7

22.2

1,350.8

1,253.9

−7.2

120.8

95.9

−20.6

131.4

68.1

−48.2

24.9

18.7

−25.0

3.8

2.9

3.2

1.4

1.8

1.5

Share of Land (%)
Investment excluding Land

FY2005(1,271 firms)

11,389.4

Investment in Land
Non-Manufacturing

FY2004GrowthRate (%)
2005/2004

11,095.7

Share of Land (%)
Investment excluding Land(2,275 firms)

Investment Amount

11,699.9

Investment in Land
Manufacturing

FY2004GrowthRate (%)
2004/2003

8,540.8

8,039.3−5.9

9,346.1

9,290.6−0.6

5,139.5

4,740.5−7.8

8,057.4

7,611.1−5.5

8,852.7

9,060.2

2.3

5,022.0

4,672.0

−7.0

483.3

428.3

−11.4

493.5

230.5

−53.3

117.5

68.5

−41.7

5.7

5.3

5.3

2.5

2.3

1.4

Investment in Land
Share of Land (%)

Note: Monetary amounts are in billion yen.

Long-term Trend in Ratio of Land Investment to Total Capital Spending
FY

Timing of Survey

Total

Manufacturing

Non-Manufacturing

1994

Aug. 1995

6.4

6.0

6.6

1995

Aug. 1996

5.5

4.6

6.0

1996

Aug. 1997

5.9

4.4

6.7

1997

Aug. 1998

5.8

5.4

6.0

1998

Aug. 1999

8.5

5.3

9.9

1999

Aug. 2000

6.3

5.9

6.5

2000

Aug. 2001

5.8

3.5

6.9

2001

Aug. 2002

6.4

4.7

7.0

2002

Aug. 2003

5.9

4.1

6.6

2003（Actual）

Jun. 2004

4.6

2.9

5.3

2004（Planned）

Jun. 2004

2.1

1.4

2.5

2005（Planned）

Jun. 2004

1.4

1.5

1.4

Notes: 1. Figures are given as percentages.
2. Figures for FY2003 are for those firms that replied for both FY2002 and FY2003 (actual).
3. Figures for FY2004 are for those firms that replied for both FY2003 and FY2004 (planned).
4. Figures for FY2005 are for those firms that replied for both FY2004 and FY2005 (planned).

Development Bank of Japan Research Report/ No. 47

19whose investment in North American real estate
has eased off.
In regional terms, a decline of 4.5% is projected for North America, where local plants inthe transportation machinery industry are comingon line; likewise, a decline of 2.4% is projected
for Europe, where the chemical industry's investment in expansion of production capacity iseasing off. Conversely, investment is slated torise by 11.5% in Asia, where the transportation
machinery industry is investing in expansion of
production capacity, and by 47.4% in other regions, where the transportation industry is investing in shipbuilding.
The overseas capital spending ratio (capitalspending abroad / domestic capital spending) for
manufacturing firms that invest overseas will
decline from 52.3% in FY2003 to 48.3% in
FY2004, since the increase in domestic capitalspending (16.8%) will be greater than that incapital spending abroad (7.8%).

6. Capital Spending Abroad, by Principal
Business Sector
Capital spending abroad by all industries willrise 7.3% from ¥1,823.4 billion in FY2003 to¥1,956.6 billion in FY2004 (based on figures forthe 1,559 firms that replied for both FY2003 andFY2004).
The manufacturing sector accounts for 86.5%
of planned capital spending abroad in FY2004. Its
spending will increase 7.8%, fueled by investment
in expanding production capacity and constructing
new plants; that includes in Asia (by other manufacturing industries and the transportation machinery industry) and in North America (by othermanufacturing industries and the electric machinery industry). Capital spending abroad in the
non-manufacturing sector will rise 4.3% due toaggressive investment by the transportation industry in shipbuilding; this is despite declines in theelectric power industry, whose series oflarge-scale development projects in Asia has run
its course, and the real estate industry,
Capital Spending Abroad
RegionCapital Spend- Manufacturing
ing Abroad
Non-Manufacturing
North America
EuropeAsia
China
Others(1,559 firms) Total

FY2003
1,570.2
253.3
671.5
227.9
749.2
154.7
174.8
1,823.4

AmountShare (%)
86.1
13.9
36.8
12.5
41.1
8.5
9.6
100.0

FY2004
1,692.6
264.0
641.2
222.5
835.3
212.3
257.6
1,956.6

Share (%)
86.5
13.5
32.8
11.4
42.7
10.9
13.2
100.0

Change (%)
2004/2003
7.8
4.3
−4.5
−2.4
11.5
37.2
47.4
7.3

Notes: 1. Monetary amounts are in billion yen.
2. In the case of companies that produce consolidated financial statements, capital spending abroad is as given on
their consolidated basis; in the case of companies that do not produce consolidated financial statements, capitalspending abroad represents capital spending by the company itself plus those overseas subsidiaries of which it
owns at least 50% (including indirectly).
3. The figure for capital spending in China represents the total amount of investment by those companies that statedthat they would invest in Asia, plus provided a breakdown of that investment by country (into China and the restof Asia).

20

Development Bank of Japan Research Report/ No. 47

Overseas Capital Spending Ratio in the Manufacturing Sector, by Sub-sector
Overseas Capital Spending Ratio (%)
Materials
Processing & Assembly
Capital Spending Abroad
Materials
Processing & Assembly
Domestic Capital Spending
Materials
Processing & Assembly
Number of Manufacturers Responding
Timing of Survey

FY2003 (Actual)
52.3
27.6
64.3
Amount
1,570.2
232.4
1,307.2
3,002.9841.6
2,034.5

FY2004 (Planned)
48.3
27.7
58.1
Amount
1,692.6
248.5
1,418.4
3,506.1
896.8
2,439.4
643 firms
Jun. 2004

Difference
−4.0
0.1
−6.2
Change (%)
7.8
6.9
8.5
16.8
6.6
19.9

Notes: 1. Monetary amounts are in billion yen.
2. Overseas Capital Spending Ratio = (capital spending overseas / domestic capital spending) * 100.
3. Materials: Textiles, Pulp & Paper, Chemicals, Cement, Ceramics & Glass, Iron & Steel, Non-Ferrous Metals.
4. Processing & Assembly: Food & Beverages, General Machinery, Electric Machinery, Precision Machinery,Transport Equipment, Other Manufacturing.

Growth in Capital Spending Overseas (FY2004/2003)

Growth Rate of Domestic Capital Spending andCapital Spending Overseas in Manufacturing Industry
40%
Iron & Steel

30%

20%

Non-Ferrous Metals
General Machinery
Manufacturing

10%

Chemicals

0%Electric
MachineryTransport
Equipment

-10%

-20%
-20%

-10%

0%

10%

Growth in Domestic Capital Spending

20%

30%

(FY2004/2003)

Note: For the purpose of this graph, the three industries with the highest overseas capital spending ratio in FY2004 havebeen chosen from both the materials subsector and the processing & assembly subsector.

Development Bank of Japan Research Report/ No. 47

21

7.

replied for both FY2003 and FY2004) will takean upturn in the non-manufacturing sector, witha rise of 18.6%, and continue to climb in the
manufacturing sector as well, with a rise of
11.2%. That translates into an overall increase of
15.2%, which is higher than the increase in total
capital spending, as well as being the first rise inthree years. In the manufacturing sector, investment will rise in such industries as electric machinery and transport equipment as systems arebrought in to manage supply chains and bolster
product development capacity. In the
non-manufacturing sector, investment will rise insuch industries as electric power & gas, wholesale & retail, and transportation as existing systems are integrated and new in-store information
systems are installed with the goal of cutting operating costs and boosting sales.

Information Technology Investment, byPrincipal Business Sector(1) Actual IT Investment in FY2003
Investment in information technology in FY2003(based on figures for the 1,523 firms that replied
for both FY2002 and FY2003) declined 5.7% in
all industries. Although in the manufacturingsector it increased 8.5% over the previous year, arate higher than that for capital spending as awhole, it experienced a downturn of 15.4% in the
non-manufacturing sector. In the manufacturingsector, investment in information technology
declined in chemicals and textiles but increasedin electric machinery, iron & steel, and generalmachinery. In the non-manufacturing sector, investment declined in such industries as wholesale & retail and transportation.
(2) Planned IT investment for FY2004
In FY2004, investment in information technology (based on figures for the 1,816 firms that
Overview of IT Investment (FY2003, Actual)
Amount of IT Investment

Change in IT
Investment

FY2002
Actual

FY2003
Actual(%)
2003/2002

Change inCapitalSpending(%)
2003/2002

Total

969.0

913.5

−5.7

Manufacturing

392.5

425.8

Non-manufacturing

576.5

487.7

(1,523 firms)

Share of IT Investment(%)

IT Investment/
Capital Spending(%)

FY2002
Actual

FY2003
Actual

FY2002
Actual

FY2003
Actual

−2.3

100.0

100.0

10.6

10.2

8.5

7.5

40.5

46.6

17.9

18.1

−15.4

−5.4

59.5

53.4

8.3

7.4

Overview of IT Investment (FY2004, Planned)
Amount of IT Investment

Change in IT
Investment

FY2003
Actual

FY2004
Planned(%)
2004/2003

Total

996.3

1147.5

15.2

Manufacturing

459.6

511.1

11.2

Non-manufacturing

536.7

636.4

18.6

-0.2

(1,816 firms)

Change inCapitalSpending(%)
2004/2003

Share of IT Investment(%)
FY2003
Actual

FY2004
Planned

4.2

100.0

17.2

46.1
53.9

IT Investment/
Capital Spending(%)
FY2003
Actual

FY2004
Planned

100.0

9.3

10.2

44.5

16.8

15.9

55.5

6.7

8.0

Notes: 1. Monetary amounts are in billion yen.
2. IT investment represents spending recognized as such by the responding firms.
3. Change in capital spending in this chart only covers those firms that gave responses regarding IT investment.

22

Development Bank of Japan Research Report/ No. 47

Breakdown of IT Investment

Breakdown of IT Investment(FY2003, Actual)

Breakdown of IT Investment(FY2004, Planned)

T angible Fixed
Assets19.8%

Other
Expenses
22.2%

Lease
Contracts
18.7%

Intangible
Fixed Assets
39.3%

Other
Expenses
20.2%

T angible
Fixed Assets
25.9%

Intangible
Fixed Assets
37.7%

Lease
Contracts
16.3%

Notes: 1. This breakdown is based on figures for the 1,816 firms that replied for both FY2003 and FY2004.
2. Lease contracts: Value of new contracts for the relevant fiscal year.
3. Other expenses: Software acquisition expenses, etc., to be charged off.

Growth Rate of IT Investment
20

Trend of IT Investment by the Timing ofSurvey

(%)

(%)
25

15

20

10

15

5
10

0
5

-5

Total

-10

0
01/8

M anufacturing
-15

02/2

02/8

03/2

03/8

04/6

-5

Non-M anufacturing
-10

-20
01

02

03

04

FY

8. Research & Development Expenditure, byPrincipal Business Sector(1) Actual R&D Expenditure in FY2003
Expenditures on research & development (basedon figures for the 1,571 firms that replied forboth FY2002 and FY2003) rose 3.3% over theprevious year. The manufacturing sector, which
accounted for over 90% of the total, chalked up
an increase of 4.4%, with electric machinery (up5.8%), transport equipment (up 6.4%), and general machinery (up 3.4%) leading the way. Conversely, R&D spending remained virtually unchanged (up 0.2%) in the chemicals industry,
which includes pharmaceuticals with its many

01

02

03

04

R&D-oriented firms. Spending in the
non-manufacturing sector, which accounted forless than 10% of the total, declined 7.7%; indeed,
it fell across the board, most notably in telecommunications & information, where it was
down 11.2%.
(2) Planned R&D expenditure for FY2004
In FY2004, expenditures on research & development (based on figures for the 1,911 firms that
replied for both FY2003 and FY2004) will continue to climb with an increase of 5.5%. In the
manufacturing sector, spending will rise in virtually all industries for an overall increase of 5.5%.
This increase will to a large extent be fueled by

Development Bank of Japan Research Report/ No. 47

23

electric machinery (up 6.4%) as development
work accelerates on flat panel display devices
and digital equipment; general machinery (up10.1%); precision machinery (up 12.4%) as thatindustry develops more advanced semiconductor
manufacturing equipment; and transport equipment (up 2.6%), which industry continues tospend on safety measures and development ofenvironmentally sound technology. Large
spending increases are also slated in chemicals(up 5.2%), where the pharmaceuticals sector isstrengthening the new drug development pipeline
and advanced technology is being harnessed todevelop high-function materials; and in food &beverages (up 7.0%), where industry plans R&D
on biotechnology-derived pharmaceuticals. In
the non-manufacturing sector, expenditures on
R&D will take a 5.5% upturn, led by electric
power and gas (up 7.5%).

Overview of R&D Expenditure (FY2003, Actual)

FY2002
Actual

FY2003
ActualChange in
R&D
Expenditure(%)
2003/2002

Total

5,991.0

6,187.1

3.3

Manufacturing

5,443.6

5,681.6

4.4

10.1

Non-Manufacturing

547.5

505.5

−7.7

−5.9

R&D Expenditure(1,571 firms)

Share of R&D
Expenditure(%)
FY2002
FY2003
ActualActualChange inCapitalSpending(%)
2003/2002
−0.7

100.0

R&D/Capital Spending(%)
FY2002
Actual

FY20003
Actual

100.0

53.5

55.6

90.9

91.8

150.2

142.3

9.1

8.2

7.2

7.1

Notes: 1. Monetary amounts are in billion yen.
2. A total of 652 firms indicated R&D spending of zero for both FY2002 and 2003.

Overview of R&D Expenditure (FY2004, Planned)
Share of R&D
Expenditure(%)
FY2003
FY2004
ActualPlannedFY2003
Actual

FY2004
PlannedChangein R&D
Expenditure(%)
2004/2003

Total

5,611.8

5,919.1

5.5

6.8

100.0

Manufacturing

5,321.3

5,612.7

5.5

20.5

Non-manufacturing

290.5

306.4

5.5

−1.0

R&D Expenditure(1,911 firms)

Change inCapitalSpending(%)
2004/2003

FY2003
Actual

FY20004
Planned

100.0

51.4

50.8

94.8

94.8

134.3

117.6

5.2

5.2

4.2

4.4

Notes: 1. Monetary amounts are in billion yen.
2. A total of 898 firms indicated R&D spending of zero for both FY2003 and 2004.

Ratio of R&D Expenditure to Sales,
for Firms Responding for Both FY2003 and FY2004

Manufacturing

24

Numberof
Firms

FY2003
Actual

FY2004
Planned

780

5.1

5.2

R&D Expenditure/Sales (%)

Development Bank of Japan Research Report/ No. 47

R&D/Capital Spending(%)

Growth in Capital Spending and R&D Expenditure (FY2003-2004, Manufacturing)

R&D Expenditure / Domestic Capital
Spending (FY2004, Manufacturing)billion yen

Growth Rate of R&D Expenditure

%

1600

20%

R&D Expenditure (a)Domestic Capital Spending (b)(a) / (b)

200
180
160

15%

1200
Precision
Machinery

140

Cement, Ceramics & Glass
General Machinery

120

10%
P etroleum

Food & Beverages

800

100

Manufacturing

Iron & Steel80

Electric Machinery

5%

Chemicals

60

Other Manufacturing

P ulp & P aper

Transport
Non-Ferrous Metals

Textiles400

Equipment

40

0%
20

Development Bank of Japan Research Report/ No. 47

Other Manufacturing

Precision MachineryTransport Equipment

Electric Machinery

General Machinery

Non-Ferrous Metals

Iron & Steel40%

Petroleum30%

Growth Rate of Capital Spending

Cement, Ceramics & Glass

20%

Chemicals

10%

Pulp & Paper

0%

Textiles-10%0
Food & Beverages

0

-5%

25

Appendix
Actual Capital Spending in FY2003(1) Overview
In FY2003, actual capital spending recovered to
become almost level overall, with only a slightdecline of 1.1%. While spending dropped for thethird year in a row in the non-manufacturingsector, with a decline of 6.0%, it rose for the firsttime in three years in the manufacturing sector,
jumping 11.3%.
In the manufacturing sector, capital spending by the electric machinery climbed considerably, driven by growing demand for digital homeelectronics; related industries (non-ferrous metals, cement, ceramics & glass, precision machinery) likewise recorded increases. Although manyindustries ratcheted up their capital spending,including automobiles (with investment in newmodels and restructuring of production and saleshubs) and iron & steel (with large-scale replacement to blast furnaces), electric machinery accounted for much of the rise.
In the non-manufacturing sector, capitalspending fell in many industries with the exception of wholesale & retail, where an increase in
spending was fueled by the opening of new service and supermarket outlets. Electric power andtelecommunications & information recorded
lower capital spending due to investment cutbacks; transportation and real estate did so as
spending on large-scale projects eased off.
(2) Trends in Capital Spending for FY2003,
by Industry
Trends in capital spending in main industries aredescribed below. The figures in parentheses ( )indicate the rate of growth in capital spending forthe industry in question in FY2002 and FY2003.
The figure to the right shows the percentage of
total actual spending for FY2003 accounted forby that industry.
Manufacturing
Food & Beverages(-14.6%→-11.2%) 1.7%
Despite increased investment in BSE measuresin the fodder sector, overall capital spending fell
for the sixth year in a row. This was because in26

Development Bank of Japan Research Report/ No. 47

vestment in beverage production dropped in reaction to earlier major investments, and firms
continued to curtail investment in manufacture ofdairy products.
Pulp & Paper(-19.7%→-9.1%) 0.9%
Investment increased in power-generating boilers
fueled by biomass and used plastic. Nonetheless,capital spending declined for the second year in a
row as investment in paper pulping facilities
peaked.
Chemicals(-19.1→5.3%) 4.5%
In pharmaceuticals, investment took an upswing
as the industry built new labs to boost drug development and overhauled its domestic production network. Despite a lull in major investments,
in the petrochemical sector spending picked up
on electronic materials for mobile phones andflat panel displays. Overall spending thus turned
upward.
Petroleum(32.3%→-11.1%) 0.7%
The industry experienced the first decline inthree years as it eased off investment in desulfurizing diesel oil at refineries and curtailed
spending on distribution facilities.
Cement, Ceramics & Glass(-31.7%→8.3%) 0.9%
Spending on developing larger glass substrates
for liquid crystal displays, as well as on recyclingin the cement sector, resulted in an upturn.
Iron & Steel(-20.9%→20.2%) 2.1%
Backed by rising demand from Asia, there was asubstantial increase due to spending on boosting
capacity as well as a series of major replacement
to blast furnaces.
Non-Ferrous Metals(-44.6%→12.9%) 1.1%
Although spending on optical parts and fiber remained subdued, overall there was an upsurge
thanks to investment in increased production of

300 mm silicon wafer fabs and a boost in smelting capacity.
General Machinery(-18.7%→4.6%) 2.0%
While curbs continued on spending on boilers,
there was increased investment in office equipment, including photocopiers, as well as in roller
bearings and other automobile components.
Overall, therefore, the industry saw its first increase in two years.
Electric Machinery(-20.9%→34.8%) 8.7%
Growing demand for digital home electronics
fueled spending on flat panel displays -- both
LCDs and PDPs-- along with aggressive investment in the semiconductor field, including system LSI and flash memory. Spending thus rose
for the first time in three years.
Precision Machinery(-20.2%→29.5%) 0.7%
Spending rose for the first time in three years,
driven by an increase in digital camera production capacity and investment in semiconductor
manufacturing equipment.
Automobiles(1.2%→1.2%) 6.1%
Spending on components fell due to a respite inmajor investment by certain manufacturers.
Nonetheless, overall spending rose, albeit
slightly, for three consecutive years as carmakers
spent briskly on developing new environmentallysound models and overhauling their productionlines; investment in bolstering the domestic sales
network also helped.
Non-Manufacturing
Construction(6.0%→-7.2%) 0.8%
Capital spending dropped for the first time in
two years as general contractors and the civilengineering sector curtailed investment.
Wholesale & Retail(2.8%→9.8%) 5.4%
The wholesale sector recorded its first increase infive years as firms built new headquarters anddistribution centers. In the retail sector, too,spending rose for the second year in a row as a
growing number of new supermarkets and otherretail outlets opened. This resulted in the second
consecutive year of capital spending increases in
the wholesale & retail industry overall.
Real Estate(-0.6%→-8.8%) 4.0%
A lull in major redevelopment projects in theTokyo metropolitan area resulted in decreased
spending.
Transportation(15.8%→-9.3%) 9.6%
Investment in the distribution business rose withconstruction of new distribution centers and upgrading of rolling stock, but work on new train
lines eased up, and there was a steep decline in
airport investment. On balance, therefore,
spending went down.
Electric Power(-19.7%→-18.7%) 11.4%
With the ongoing liberalization of the electricity
market, the nine major electric power companies
substantially cut spending on distribution facilities and upgrade projects. Investment in nuclear
energy also dipped. This resulted in the second
consecutive year of double-digit declines in theindustry as a whole.
Gas(-9.6%→5.0%) 1.4%
While capital spending declined in the city gas
sector as companies continued to tighten theirbelts, it rose considerably in the heat supply sector due to restructuring of operations and power
plant construction. On balance, then, the industry
recorded its first increase in eight years.
Telecommunications & Information(-14.2%→-3.8%) 13.8%
In the telecommunications sector, companies
spent briskly on third-generation (3G) mobile
phones and expanding optical fiber networks,
although they curtailed investment on fixed-line
phone operations. In information services andbroadcasting, investment declined in reaction to
Development Bank of Japan Research Report/ No. 47

27the previous year's flurry of new headquarters
construction, of despite increased spending onterrestrial digital broadcasting. The result was thethird consecutive year of decline in the telecommunications & information industry as awhole.
Leasing(-4.4%→-2.3%) 20.1%
Despite steady investment in industrial machin-

28

Development Bank of Japan Research Report/ No. 47

ery and transportation equipment, capital spending fell for the second year in a row because of aslump in spending on IT equipment.
Services(-31.6%→15.9%) 1.4%
Capital spending rose thanks to investment in
waste recycling facilities and the amusement
parks.

Charts
Capital Spending by Industry
Capital Spending

Growth Rate (%)

Component Rate (%)

FY2003

FY2004

FY2004

FY2005

FY2003

FY2004

ActualPlannedPlannedPlanned 2003/2002 2004/2003 2005/2004

ActualPlanned

(2,840 firms)(1,430 firms)(2,840 firms)

Total

19367.4

20704.08001.47393.7

-1.1

6.9

-7.6

100.0

100.0

Manufacturing6223.57394.51485.71368.5

11.3

18.8

-7.9

32.1

35.7

Food and Beverages

329.0

408.8

65.0

51.8

-11.2

24.3

-20.2

1.7

2.0

Textiles

68.6

62.0

14.3

10.8

-1.8

-9.5

-24.4

0.4

0.3

Pulp and Paper

170.8

173.6

43.0

39.9

-9.1

1.6

-7.3

0.9

0.8

Chemicals

869.1

993.3

164.4

159.4

5.3

14.3

-3.0

4.5

4.8

Petroleum

138.0

227.1

103.8

68.7

-11.1

64.5

-33.8

0.7

1.1

Cement, Ceramics and Glass

173.4

231.7

41.6

27.1

8.3

33.6

-34.9

0.9

1.1

Iron and Steel

389.6

380.3

166.6

156.1

20.2

-2.4

-6.3

2.0

1.8

Non-Ferrous Metals

209.4

241.2

81.2

92.7

12.9

15.2

14.2

1.1

1.2

General Machinery

404.1

498.6

69.5

62.0

4.6

23.4

-10.7

2.1

2.4

Electric Machinery

1683.4

1996.8

370.3

382.0

34.8

18.6

3.2

8.7

9.6

Electric Devices, etc.

1236.61467.7

258.3

269.8

45.9

18.7

4.5

6.4

7.1

Precision Machinery

128.1

217.8

11.8

9.6

29.5

70.1

-18.7

0.7

1.1

Transportation

1264.61518.7

249.9

219.3

2.5

20.1

-12.3

6.5

7.3

Automobiles

1184.61430.4

225.4

202.8

1.2

20.7

-10.0

6.1

6.9

Other Manufacturing

395.6

444.7

104.4

89.0

14.4

12.4

-14.7

2.0

2.1

13143.913309.4

6515.86025.2

-6.0

1.3

-7.5

67.9

64.3

Construction

151.2

139.7

49.3

35.0

-7.2

-7.6

-29.1

0.8

0.7

Wholesale and Retail1095.61140.7

409.4

363.0

9.8

4.1

-11.4

5.7

5.5

Retail

907.3

964.6

307.6

281.0

9.7

6.3

-8.6

4.7

4.7

Real Estate

780.8

737.5

266.6

222.1

-8.8

-5.5

-16.7

4.0

3.6

Transportation

1889.01931.7

894.9

616.0

-9.3

2.3

-31.2

9.8

9.3

Electric Power and City Gas

2401.52309.62062.91960.4

-16.6

-3.8

-5.0

12.4

11.2

Electric Power2142.32050.11845.21744.8

-18.7

-4.3

-5.4

11.1

9.9

City Gas

259.2

259.6

217.7

215.6

5.0

0.1

-1.0

1.3

1.3

Telecom. and Information

2578.42521.9

597.1

574.5

-3.8

-2.2

-3.8

13.3

12.2

Leasing

3918.14183.62120.32179.6

-2.3

6.8

2.8

20.2

20.2

Services

286.1

289.8

103.2

60.7

15.9

1.3

-41.2

1.5

1.4

Other Non-Manufacturing

43.2

54.9

12.0

14.1

-16.6

27.0

17.2

0.2

0.3

Non-Manufacturing

Notes: 1. Other Manufacturing includes publishing and printing, rubber, metal products and others.
2. Other Non-Manufacturing includes fishing, mining and others.
3. Monetary amounts are in billion yen.

Development Bank of Japan Research Report/ No. 47

29

Long-term Trend of Capital Spending, by Timing of Survey
Total
Year
Surveyed

Manufacturing

Non-Manufacturing

August February August Estimate Actual August February August Estimate Actual August February August Estimate Actual
of
of
of
for
for
of
of
of
for
for
of
of
of
for
for
Previous Current Current February August Previous Current Current February August Previous Current Current February August
Yr.
Yr.
Yr.
Yr.
Yr.
Yr.
Yr.
Yr.
Yr.

1973

2.1

14.8

25.9

20.6

18.6

-6.8

14.7

33.4

26.2

25.7

8.9

14.9

18.3

15.0

11.5

1974

0.6

18.3

23.4

15.3

12.0

-6.9

27.4

35.1

26.6

22.9

7.0

9.7

10.3

2.7

-0.3

1975

21.6

9.7

5.5

-4.9

-10.3

12.9

3.8

0.3

-10.0

-16.1

30.4

17.5

12.9

2.2

-2.3

1976

14.0

9.9

16.3

12.2

5.9

8.5

-2.1

6.4

1.9

-3.5

19.1

24.5

27.7

24.0

16.4

1977

-1.5

2.1

5.7

0.8

-3.4

-11.1

-6.9

-3.1

-8.2

-11.2

7.0

10.7

14.1

9.5

4.0

1978

10.3

7.3

15.1

15.2

10.1

-0.9

-6.9

0.0

-2.2

-4.4

17.6

19.3

27.5

28.6

21.8

1979

-2.6

0.3

13.0

12.8

9.3

-6.1

4.5

19.1

21.9

18.9

-1.0

-2.2

9.1

7.0

3.3

1980

0.7

13.1

23.5

23.9

20.6

-16.0

5.2

23.3

25.8

24.8

7.8

18.8

23.7

22.6

17.5

1981

5.8

9.9

12.3

12.0

8.8

-8.2

6.7

14.5

13.0

10.4

13.2

11.1

7.5

1982

10.0

11.2

10.2

8.4

2.8

-1.8

7.2

10.3

6.6

3.8

16.3

14.5

10.1

9.9

2.0

1983

5.5

1.8

1.8

2.7

-2.1

-6.7

-5.3

-1.5

-2.6

-8.6

13.3

7.9

4.6

7.2

3.4

1984

0.7

2.6

10.5

11.3

7.6

-10.2

2.7

17.1

20.3

17.1

7.1

2.6

5.6

4.2

0.2

1985

-2.6

5.3

10.6

9.2

7.6

-9.6

5.1

12.6

9.7

8.6

0.9

5.6

9.1

8.8

6.9

1986

0.2

1.6

5.4

3.1

3.1

-9.1

-4.1

-3.6

-7.1

-9.3

5.0

5.7

12.0

10.3

12.1

1987

-0.7

0.1

3.5

6.0

4.4

-10.6

-5.6

-2.2

-0.2

-3.9

2.1

4.0

7.0

9.7

9.3

1988

-2.6

6.7

15.7

18.8

15.9

-7.1

9.3

25.3

27.5

24.7

-1.4

5.2

10.8

13.0

10.7

1989

-0.7

6.4

17.5

17.4

13.9

-4.0

9.4

26.3

26.7

22.3

0.9

4.4

11.8

11.5

8.5

1990

-1.8

8.6

17.0

16.2

14.9

-7.9

10.1

23.6

22.8

20.8

1.4

7.6

12.5

11.9

11.0

1991

0.6

4.4

10.7

8.9

8.2

-7.1

1.7

7.9

5.2

5.3

3.7

6.1

12.8

11.5

10.4

1992

0.3

-0.8

-0.9

-4.7

-7.4

-2.8

-6.4

-10.5

-15.5

-17.9

1.4

3.2

6.0

2.7

- 0.0

1993

-1.5

-5.6

-4.6

-8.4

-11.4

-11.9

-12.9

-13.1

-19.0

-23.7

2.0

-1.6

0.3

-2.3

-4.5

1994

-3.3

-5.6

-2.4

-4.7

-8.0

-14.7

-9.0

-4.0

-7.1

-10.7

-0.1

-4.0

-1.6

-3.7

-6.8

1995

-1.4

0.3

6.1

5.7

2.3

-4.3

3.8

13.5

13.9

10.6

-0.7

-1.3

3.0

2.4

-1.2

1996

-3.1

0.7

9.1

8.5

6.0

-13.6

-0.6

8.8

7.0

4.8

-1.2

1.3

9.2

9.2

6.5

1997

-7.5

-1.3

4.5

2.8

-1.5

-11.1

-1.0

8.9

7.5

4.1

-6.8

-1.5

2.5

0.7

-4.0

1998

-7.5

-4.0

-1.8

-3.5

-8.0

-11.7

-6.7

-4.7

-8.5

-13.0

-6.8

-2.7

-0.3

-1.1

-5.6

1999

-4.6

-5.3

-3.7

-3.4

-8.4

-13.6

-10.1

-10.1

-11.8

-15.5

-3.1

-3.2

-0.7

0.8

-5.0

2000

-5.0

0.2

7.6

7.8

4.1

-10.9

0.3

15.2

18.0

12.5

-4.0

0.2

4.4

3.2

0.4

2001

-8.6

-5.2

0.6

-6.6

-9.3

-3.5

-0.7

6.2

-7.0

-9.7

-9.6

-7.4

-2.0

-6.3

-9.2

2002

1.4

-2.7

-0.6

-3.8

-10.3

-9.2

-8.2

-5.6

-11.4

-16.2

3.4

0.0

1.7

-0.2

-7.5

2003

-5.1

-3.0

4.9

−

-1.1

-3.9

1.1

16.2

−

11.3

-5.3

-4.8

0.2

−

-6.0

2004

-6.1

−

6.9

-11.0

−

18.8

-5.1

−

1.3

2005

-7.6

-7.9

Notes: 1. Figures are given as percentages.
2. Shaded figures represent results of the present survey.

30

Development Bank of Japan Research Report/ No. 47-7.5

Total
（％）
15

10
6.9

6.0

5

4.9

4.1
2.3

FY2003

0
92/8

93/8

94/8

95/8

FY2004

96/8

97/8

▲1.5
98/8
99/8

00/8

01/8

02/8

03/8
▲3.0

▲ 5

▲ 10

▲6.1
▲7.6
FY2005

▲5.1

▲7.4
▲8.0

▲8.0
▲11.4

04/6
▲1.1

▲9.3

▲10.3

03

04

▲ 15
93

94

95

96

97

98

99

00

01

02

05

Manufacturing
（％）
30
18.8

20
16.2
12.5

10.6

10

FY2003
4.8

4.1

1.1

0
92/8

93/8

94/8

▲ 10

95/8

96/8

97/8

98/8

99/8

00/8

01/8

▲13.0

▲15.5

00

01

▲10.7

▲ 20

11.3
FY2004

02/8
03/8
04/6
▲3.9
▲7.9
▲11.0
▲9.7
FY2005
▲16.2

▲23.7
▲ 30
93

94

95

96

97

98

99

02

03

04

05

Non-Manufacturing
（％）
15

10
6.5
5
FY2004
0.2
0.4

0
92/8

93/8

▲ 5

94/8

95/8

96/8
▲1.2

97/8

98/8
▲4.0

▲4.5
▲6.8

99/8

▲5.6

00/8

01/8

02/8
FY2003▲5.3 ▲4.8

▲5.0

▲ 10

▲9.2

1.3

03/8

04/6
▲6.0

▲5.1
▲7.5 ▲7.5
FY2005

▲ 15
93

94

95

96

97

98

99

00

01

02

03

04

05

Notes: 1. The charts are based on data in the left page.
2. Each fiscal year is surveyed five times until planned investments are materialized (see page 4 for details). Typically, planned capital spending is revised upwards from the initial survey (in August of the previous year) to thethird survey (in August of the current year), followed by downward revisions toward the publication of actual figures (the fifth survey, in August of the following year). Thus, capital spending in most cases is represented by areversed V-shaped line on the charts, peaking in August of the current year.

Development Bank of Japan Research Report/ No. 47

31

List of Back Numbers (Including JDB Research Report)
No. 47 Survey on Planned Capital Spending for Fiscal Years 2003, 2004 and 2004 (Conducted in June
2004) (this issue)
No. 46 Recent Trends in the Japanese Economy: Impact of Rising International Commodity Prices on
Corporate Input/Output Behavior, September 2004
No. 45 How Life Cycle Assessment (LCA) Can Enhance the Fight against Global Warming, August
2004
No. 44 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Japanese Economy
with Special Focus on the Flow of Funds and Finance, March 2004
No. 43 Survey on Planned Capital Spending for Fiscal Years 2002, 2003 and 2004 (Conducted in August 2003), November 2003
No. 42 Promoting Corporate Measures to Combat Global Warming: An Analysis of Innovative Activities in the Field, September 2003
No. 41 Prospects and Challenges for End-of-Life Vehicle Recycling, May 2003
No. 40 Survey on Planned Capital Spending for Fiscal Years 2002 and 2003 (Conducted in February2003), May 2003
No. 39 China’s Economic Development and the Role of Foreign-Funded Enterprises, May 2003
No. 38 Decline in Productivity in Japan and Disparities Between Firms in the 1990s: An Empirical Approach Based on Data Envelopment Analysis, March 2003
No. 37 Trends in Socially Responsible Investment: Corporate Social Responsibility in a New Phase,
March 2003
No. 36 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Sustainability of theJapanese Economy, February 2003
No. 35 Concerns for the Future and Generational Consumption Behavior, February 2003
No. 34 Prospects and Challenges Surrounding Japan’s Electrical Equipment Industry: General Electrical
Equipment Manufacturers’ Restructuring of Operations and Future Prospects, November 2002
No. 33 Survey on Planned Capital Spending for Fiscal Years 2001, 2002 and 2003 (this issue)
No. 32 Behavior Trends of Japanese Banks toward the Corporate Sector and Their Impact on the Economy, October 2002
No. 31 Microstructure of Investment and Employment Dynamics: Stylized Facts of Factor Adjustment
Based on Listed Company Data, October 2002
No. 30 Recent Trends in the Japanese Economy: Globalization and the Japanese Economy, August 2002
No. 29 Corporate Financing Trends in Recent Years: Fund Shortages and Repayment Burden, August
2002
No. 28 Urban Renewal and Resource Recycling: For the Creation of a Resource Recycling Society, July
2002
No. 27 Labor’s Share and the Adjustment of Wages and Employment, June 2002
No. 26 Survey on Planned Capital Spending for Fiscal Years 2001 and 2002, May 2002
No. 25 Environmental Information Policy and Utilization of Information Technology: Toward a Shift inEnvironmental Policy Paradigm, March 2002
No. 24 The Changing Structure of Trade in Japan and Its Impact: With the Focus on Trade in Information Technology (IT) Goods, March 2002
No. 23 Microstructure of Persistent ROA Decline in the Japanese Corporate Sector: Inter-company
Disparties and Investment Strategies, March 2002

No. 22 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation and Prospects
of Evolution, February 2002
No. 21 Survey on Planned Capital Spending for Fiscal Years 2000, 2001 and 2002, December 2001
No. 20 Current Situation and Challenges for Cable Television in the Broadband Era, October 2001
No. 19 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation, August 2001
No. 18 Introduction of a Home Appliance Recycling System: Effects & Prospects: Progress towards
Utilisation of Recycling Infrastructure, June 2001
No. 17 Survey on Planned Capital Spending for Fiscal Years 2000 and 2001, June 2001
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
since the 1980s, based on Micro-level Panel Data, March 2001
No. 11 Survey on Planned Capital Spending for Fiscal Years 1999, 2000 and 2001, October 2000
No. 10 Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on Enterprise Data, 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, June 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
and 1998 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 the Construction 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 and1997 Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and1997 Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm
Data 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: Deregulationof 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
the Current 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 FY1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and1996 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
and 1996 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 FY1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part 2,
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 and1995 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
and 1995 Conducted in August 1994 , November 1994
No. 40 Selected Summaries of Research Reports Published in FY1993, 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 and1994 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
and 1994 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 and1993 Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992
and 1993 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 and1992 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
and 1992 Conducted in August 1991, September 1991
No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and1991 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
and 1991 Conducted in August 1990, September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment
and Technology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and1990 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
and 1990 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
and 1989 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
ASEAN Countries, June 1988
No. 9

Trends 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