Development Bank of Japan
Research Report
No. 40Survey on Planned Capital Spending
for Fiscal Years 2002 and 2003
(Conducted in February 2003)

May 2003

Economic and Industrial Research Department
Development Bank of Japan

This report was originally published in Japanese as Chosa No. 51
in March 2003.

Contents
I

Outline ............................................................................................................................................ 1

II

Summary ........................................................................................................................................ 3
1. Overall Condition..................................................................................................................... 3
2. Estimated Actual Capital Spending for FY2002...................................................................... 3
3. Planned Capital Spending for FY2003 .................................................................................... 3
4. Features of Planned Capital Spending for FY2003.................................................................. 4

III Survey Results................................................................................................................................ 7
1. Estimated Actual Capital Spending for FY2002...................................................................... 7
2. Planned Capital Spending for FY2003 .................................................................................... 9
3. Investment Motives................................................................................................................ 15
4. Trends in Land Investment, by Principal Business Sector..................................................... 16
5. Trends in Capital Spending by Foreign-affiliated Firms, by Principal Business Sector........ 18
6. Capital Spending Cash Flow Ratio, by Principal Business Sector ........................................ 19
7. Information Technology Investment, by Principal Business Sector...................................... 19

Development Bank of Japan Research Report/ No. 40iI Outline
Objectives
This survey has been conducted biannually (inFebruary and August) since FY1956 by the Development Bank of Japan to assess major trends
in the capital spending of Japanese industry.
The Scope of Capital Spending

surance and medicine. The Teito Rapid Transit
Authority has been included in the survey despite
the fact that it is classified as a (non-financial)public corporation under the System of National
Accounts (SNA).
Date of Survey
February 10, 2003
Contents of the Survey

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 the realestate industry). Accordingly, intangible fixed
assets are excluded, as are capital spending
abroad and investment in subsidiaries/affiliatedfirms (except that the “information technology
investment” account includes intangible fixed
assets, as indicated later).
Survey Methods
The survey was conducted by means of a questionnaire (sent to and completed by individual
firms).
Capital spending has been calculated basedon construction. In general, it is calculated as thesum total of tangible fixed assets, including theconstruction in progress account (without subtracting resale value, depreciation and loss).

(i) Estimated actual capital spending in
FY2002 and planned capital spending for
FY2003(ii) Details of individual construction projects in
FY2002 and FY2003(iii) Estimated revenue and expenditure in
FY2002 and FY2003(iv) Investment motives in FY2002 and FY2003(v) Trends in land investment in FY2002 andFY2003(vi) Capital spending abroad in FY2002 andFY2003(vii) Information technology investment in
FY2002 and FY2003
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.

Target Firms
This survey covers all private firms in Japan’smajor industries capitalized at ¥1 billion or more,excluding agriculture, forestry, finance and in-

Principal Business Classification
Investment Specific Classification

No. of Firms
Targeted
3,618
4,350

No. of Firms Giving
Valid Responses
2,915
3,563

Proportion of
Valid Responses
80.6%
81.9%

Development Bank of Japan Research Report/ No. 40

1pal business classification is adopted in somecases.

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 based on
the main business interest of each company,
whereas the latter classifies and totals the amountof investment for each business sector in a company’s response according to industrial sector.
Although mainly the investment-specificclassification is used for the analysis, the princiTiming of survey
August 2001
February 2002
August 2002
February 2003
August 2003

2

FY2000
Actual

FY2001
Modified plan
Estimate
ActualDevelopment Bank of Japan Research Report/ No. 40

Timing of survey and years covered
The survey is conducted twice a year, in February and in August. Since each fiscal year is surveyed five times until planned investments arematerialized, the results reveal business sentiments in detail, for example, through the extent
to which planned investments have been modified.

FY2002
Plan for next FY
Initial plan
Modified plan
Estimate
Actual

FY2003

FY2004

Plan for next FY
Initial plan
Modified plan

Plan for next FY

Capital Spending is in Weak Recovery:
Slight upturn in manufacturing, but downturn in urban infrastructure
II Summary
1.

Overall Condition

Estimated actual capital spending for all industries in FY2002 is down 3.8% overall, a second
consecutive year of decline. (All figures are
based on construction; the rate of growth or decline is based on a comparison with the previous
year’s figures.)
Planned capital spending for FY2003 indicates a third straight year of decline, down 3.0%.
2.

Estimated Actual Capital Spending for
FY2002

Looking at estimated actual capital spending for
FY2002, the overall figure is down 3.8% as a
double-digit decrease is expected in manufacturing (down 11.4%) as well as a slight decline in
non-manufacturing (down 0.2%).
3.

Planned Capital Spending for FY2003

Planned capital spending of all industries for
FY2003 will decrease for the third consecutive
year (down 3.0%), as the expected upturn inmanufacturing (up 1.1%) will be more than offset
bythecontinuing
declineinnon-manufacturing (down 4.8%).
In the manufacturing sector (up 1.1%),
capital spending is expected to decrease in thepaper & pulp industry, as investment in
waste-paper processing passed a peak, as well as
in the food & beverage industry largely due tothe reactionary decline in spending on soft drinks.
However, upturns are expected in other industries, including electric machinery, mainly due toinvestment related to flat panel displays, iron &steel; led by large-scale blast furnace refreshment; and chemicals, thanks largely to investments in high-value added products. Overall,some slight growth in capital spending is expected in this sector, the first increase in three

years.
In the non-manufacturing sector (down
4.8%), some upward movements are expected,
including projections for such in investments inwholesale, electric power and new supermarket
outlets in retail. However, after peaking thebuilding and extension of railway lines, airport
construction and large-scale redevelopment projects in real estate are expected to see substantial
decreases. The nine major electric power companies plan to curtail investment, mainly in nuclear
fuel and power source development projects.
Capital spending will continue to decline intelecommunications with restraints on investment in wired phones. These developments will
result in a third consecutive year of decline incapital spending for non-manufacturing as awhole.
In comparison with the previous survey(August 2002), investment for FY2002 was revised downwards in both the manufacturing sector (down 4.7%) and the non-manufacturingsector (down 2.2%). Capital spending for
FY2003 was revised upwards in many manufacturing industries (up 7.6%) but was revised
downwards in non-manufacturing (down 1.3%),
resulting in almost no change overall.
Looking at the respective shares of different
motives for investing in the manufacturing sector
in FY2003, the share of “maintenance and repair” is continuing to rise in the materials
sub-sector, mainly in iron & steel and chemicals.
In the processing & assembly sub-sector, theshares of “expansion of production capacity” and“rationalization and labor saving” are growing,
mainly in electric machinery.
Planned land investment for FY2003 is considerably lower in both the manufacturing andnon-manufacturing sectors, down a massive
61.4% overall from the previous year. However,land investment tends to be subject to substantial
upward revision after the planning stage.
Revenue in FY2003 will rise only slightly(up 1.7%) for all industries, but double-digit

Development Bank of Japan Research Report/ No. 40

3growth is expected in ordinary profit (up 21.6%).
The ratio of capital spending to cash flow (netincome plus depreciation expenses) will fallfrom the previous year to very low levels in bothmanufacturing and non-manufacturing (downfrom 111.1% in FY2002 to 90.5% in FY2003 for
all industries).
Domestic capital spending by foreign-affiliated firms (119 firms with more than
one-third foreign ownership) is slated to increase
for the first time in three years, up 10.3% overall
to ¥1,074 billion, as double-digit growth is expected in manufacturing, led by transport equipment, chemicals, petroleum and electric machinery. Non-manufacturing spending will also start
to rise, as increases are expected in telecommunications & information and wholesale & retail.
Foreign-affiliated firms now account for 5.6% of
total capital spending in Japan.
Information technology investment, primarily for the improvement of operating efficiency,
is expected to increase almost across the board in
non-manufacturing (up 13.4%). In addition, investment is expected to continue to increase in
the manufacturing sector (up 2.7%), led by investment in software for production and inventory control and for the consolidation of corporate core businesses. Accordingly, the total for
all industries will rise 9.5%, showing continued
growth, which is in contrast to the decline in total capital spending.

4

Development Bank of Japan Research Report/ No. 40

4.

Features of Planned Capital Spending for
FY2003A slight increase in revenue and a double-digit
growth in ordinary profit are expected in both the
manufacturing and non-manufacturing sectors.
However, conservative capital spending plans
still prevail, and investment will not exceed cash
flow.
Capital spending is expected to accelerate in
manufacturing, as upward revisions are being
considered in the processing & assembly
sub-sector as well as in firms that are restructuring. Meanwhile, the restrained mood will continue in non-manufacturing, particularly in infrastructure-related industries where price competition is intense.
Investment related to flat panel displays,
which leads the recovery in electric machinery,
apparently has a positive impact on relatedfilm-manufacturing facilities in chemicals aswell as on ceramics & glass. Likewise, the recovery in investment in memory devices, etc. has
a positive impact on semiconductor-related industries, stimulating spending on 300mm siliconwafer-manufacturing facilities in non-ferrous
metals and on semiconductor production equipment in precision machinery. There seems to besigns of a capital spending chain reaction, beginning with electronic machinery, although at a
slower pace than in the past recovery phase.

Capital Spending
FY2002 Estimated (2,801 firms)
FY2001
Actual

FY2002Estimated

FY2003 Planned (2,915 firms)

Growth Rate(%)

FY2002Estimated

FY2003
Planned

2002/2001

Growth Rate(%)
2003/2002

Total

20,148.3

19,377.7-3.8

19,869.7

19,271.0-3.0

Excluding Electric Power

16,883.9

16,404.1-2.8

16,896.0

16,387.5-3.0

M anufacturing

6,520.2

5,778.0-11.4

5,874.2

5,941.2

1.1

Non-M anufacturing

13,628.1

13,599.8-0.2

13,995.5

13,329.7-4.8

Excluding Electric Power

10,363.8

10,626.1

2.5

11,021.8

10,446.3-5.2

Electric Power3,264.4

2,973.7-8.9

2,973.7

2,883.4-3.0

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 FY(Estimated) (Planned)

Development Bank of Japan Research Report/ No. 40

5Capital Spending by Industry
Capital Spending

Growth Rate (%)

FY2001

FY2002

FY2002

FY2003

ActualEstimated

Estimated

Planned

(2,801 firms)

2002/2001 2003/2002(2,915 firms)

Component Rate (%)
FY2002

FY2003

Estimated

Planned(2,915 firms)

Total

20,148.3

19,377.7

19,869.7

19,271.0

-3.8

-3.0

100.0

100.0

Excluding Electric Power

16,883.9

16,404.1

16,896.0

Manufacturing

6,520.2

5,778.0

5,874.2

16,387.5

-2.8

-3.0

85.0

85.0

5,941.2

-11.4

1.1

29.6

30.8

Food and Beverages

440.6

421.0

Textiles

72.2

70.4

438.5

410.3

-4.5

-6.4

2.2

2.1

70.9

66.7

-2.5

-5.9

0.4

0.3

Paper and Pulp

254.5

Chemicals

876.0

203.5

209.8

178.8

-20.1

-14.7

1.1

0.9

734.2

752.7

767.5

-16.2

2.0

3.8

4.0

Organic Chemicals
Pharmaceuticals

421.3

322.4

333.4

345.9

-23.5

3.8

1.7

1.8

169.8

160.2

161.7

139.2

-5.7

-13.9

0.8

0.7

Petroleum

116.0

165.5

165.5

155.0

42.6

-6.3

0.8

0.8

Cement, Ceramics and Glass

171.3

133.5

141.6

138.6

-22.1

-2.1

0.7

0.7

Iron and Steel

419.9

347.4

349.7

386.9

-17.3

10.6

1.8

2.0

Ordinary Steel

346.2

271.0

272.7

311.2

-21.7

14.1

1.4

1.6

Non-Ferrous Metals

345.1

195.5

195.5

197.3

-43.3

0.9

1.0

1.0

General Machinery

410.3

370.8

370.8

370.1

-9.6

-0.2

1.9

1.9

Electric Machinery

1,599.7

1,316.3

1,332.6

1,404.9

-17.7

5.4

6.7

7.3

Electric Devices, etc.

1,081.8

869.1

873.5

939.8

-19.7

7.6

4.4

4.9

Precision Machinery

137.6

103.1

106.6

108.7

-25.1

1.9

0.5

0.6

Transportation

1,257.6

1,334.8

1,349.2

1,350.6

6.1

0.1

6.8

7.0

Automobiles

1,207.9

1,278.4

1,283.2

1,289.8

5.8

0.5

6.5

6.7

419.3

382.1

390.9

405.9

-8.9

3.8

2.0

2.1

Other Manufacturing
Non-Manufacturing

13,628.1

13,599.8

13,995.5

13,329.7

-0.2

-4.8

70.4

69.2

Excluding Electric Power

10,363.8

10,626.1

11,021.8

10,446.3

2.5

-5.2

55.5

54.2

Construction

145.3

158.4

166.1

119.8

9.0

-27.8

0.8

0.6

Wholesale and Retail1,097.8

1,139.6

1,159.0

1,155.9

3.8

-0.3

5.8

6.0

Retail

848.2

937.4

955.0

993.0

10.5

4.0

4.8

5.2

Real Estate

875.2

986.8

990.8

855.4

12.8

-13.7

5.0

4.4

Transportation

1,599.9

2,022.3

2,022.8

1,638.4

26.4

-19.0

10.2

8.5

Railways

1,011.9

1,370.5

1,370.5

1,070.7

35.4

-21.9

6.9

5.6

45.5

32.0

32.0

19.3

-29.7

-39.9

0.2

0.1

Marine Transport
Airlines

193.3

160.9

161.4

191.8

-16.7

18.8

0.8

1.0

Warehousing, etc.

242.4

343.8

343.8

237.7

41.8

-30.9

1.7

1.2

Electric Power and City Gas

3,531.4

3,245.5

3,249.4

3,155.5

-8.1

-2.9

16.4

16.4

Electric Power3,264.4

2,973.7

2,973.7

2,883.4

-8.9

-3.0

15.0

15.0

City Gas

267.0

271.9

275.7

272.0

1.8

-1.3

1.4

1.4

Telecom. and Information

2,773.9

2,596.1

2,615.1

2,496.2

-6.4

-4.5

13.2

13.0

Leasing

3,214.5

3,165.0

3,505.4

3,641.8

-1.5

3.9

17.6

18.9

Services

349.8

238.5

239.5

225.6

-31.8

-5.8

1.2

1.2

Other Non-Manufacturing

40.5

47.5

47.5

41.2

17.2

-13.3

0.2

0.2

Notes:

6

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

Development Bank of Japan Research Report/ No. 40

III Survey Results
1.

Estimated Actual Capital Spending for
FY2002OutlineOverall actual capital spending for FY2002 is
estimated to have declined (down 3.8%) for thesecond consecutive year with a double-digit drop
in manufacturing (down 11.4%) and a slight reduction in non-manufacturing (down 0.2%).
In the manufacturing sector (down 11.4%),
spending is estimated to have increased in automobiles, driven by investment in new models
and business consolidation, as well as in petroleum, thanks largely to spending on environmental protection and the expansion ofself-service filling stations. Cutbacks are expected to be seen, however, in many other industries including electric machinery, particularly ininvestment related to semiconductors, as well as
non-ferrous metals, chemicals, iron & steel, paper & pulp, and cement, ceramics & glass,largely due to the completion of projects in theprevious year.
In the non-manufacturing sector (down
0.2%), spending is estimated to have increased intransportation, due to the building of new railway lines and extensions and continued airport
construction; in real estate, as large-scale redevelopment projects accelerated in the Tokyo
metropolitan area, as well as in retail largely due
to new supermarket outlets. Meanwhile, decreases are expected in electric power largely
due to the reduction of investment in thermal,
power plants; in telecommunications and information, due to restraints on investment in theexisting businesses of mobile and wired phones;
as well as in services, following the completionof a large amusement park.
Trends, by Industrial Sub-sector
The trends in estimated actual capital spending
for FY2002, classified by industrial sub-sector,
are as follows. (Numbers in curly brackets { }show the percentage of total capital spending
accounted for by each sub-sector.)

Materials (down 21.3%) {8.7%}
Total capital spending in the materials industries
as a whole is estimated to have declined by morethan 20% from the previous year due to a respite
in large-scale projects, including refurbishment,
and reduced spending on information technology.
Non-ferrous metals is expected to have experienced a spending decline of over 40% due tosubstantial reduction in optical parts and fiber.
Spending in chemicals is expected to have declined for the first time in three years, as substantial cuts are expected in the heavily-weighted
organic chemicals following a lull in large-scale
investment projects. Spending has turned to adouble-digit decline in iron & steel as well as inpaper & pulp, due respectively to a respite inlarge-scale refurbishment projects mainly in blast
furnaces, and to the reaction to investment inspecial paper and projects, related to the rebuilding of production systems in the previous year.
Spending is expected to have declined for thesecond straight year in cement, ceramics & glass,as controls on investment in cement continue andas IT-related projects are being withheld.
Spending is also expected to have begun fallingin textiles.
Processing & Assembly (down 7.9%) {20.1%}
In spite of an increase for the second consecutive
year in automobiles, capital spending in theprocessing & assembly sub-sector is expected torecord a second consecutive year of decline, as
spending in electric machinery and precision
machinery will decline due to controls on investment related to information equipment, including semiconductors. Investment is also expected to decline from the previous year in otherindustries such as general machinery and food &beverages.
The automobile industry is estimated tohave experienced a second consecutive year ofincrease in spending, with contributions frominvestment in new models of four-wheeled vehicles and in business consolidation, among others.
Spending in electric machinery is expected tohave recorded a double-digit decline for two
years in a row despite increased spending on flat
panel displays, as controls are still in effect particularly on investment related to semiconductors.
Development Bank of Japan Research Report/ No. 40

7Capital spending in precision machinery is also
expected to have decreased, by more than 20%,
largely due to reduced investment in semiconductor equipment. In the general machinery industry, the continued slump in spending in industrial machinery is resulting in a decline forthe second consecutive year. Active investment
in soft drinks notwithstanding, the food & beverage industry is expected to have seen a continued decline in capital spending due to cutbacks
on investment in beer & other alcoholic beverages and processed meat & dairy products.
Energy (down 6.3%) {17.4%}
The energy sub-sector is expected to have recorded a decrease in capital spending for the
ninth consecutive year.
Spending in electric power is expected tohave decreased for the ninth year running as thenine major electric power companies scaled
down their investment amidst the decline inpower demand and as investment in wholesale
power supply has slackened. In the gas industry,
spending is expected to have risen for the firsttime in seven years, led by investment in LNG
bases in city gas as well as in new facilities forheat supply. Meanwhile, spending in petroleum
is expected to have risen for the second consecutive year thanks to investment in environmental
protection including the desulfurization of lightoil, and an increase in self-service filling stations.

8

Development Bank of Japan Research Report/ No. 40

Non-Manufacturing, excluding Energy(up 2.5%) {53.9%}
Despite decreases in telecommunications & information, services and leasing, total capitalspending in non-manufacturing excluding energy
is slated to have risen due to increases in transportation (railways in particular), real estate,wholesale & retail and construction.
Capital spending in telecommunications &information is expected to have declined for thesecond year running despite investment in new
premises and digitalization in broadcasting, as
spending was controlled on existing businessesof mobile and fixed communications. Services is
expected to have seen a second consecutive yearof substantial decline as a large amusement parkin the Tokyo metropolitan area has been completed. Spending in leasing is expected to havefallen for the first time in four years as decreases
are expected almost across the board including in
information equipment.
Meanwhile, spending is expected to haveincreased substantially in transportation thanks tothe construction of new railway lines and extensions and investment related to the Shinkansenbullet trains, as well as airport construction. Realestate is expected to have experienced a double-digit increase as large redevelopment projects got into full swing in the Tokyo metropolitan area. In wholesale & retail, the fourth consecutive decline in wholesale is expected to havebeen more than offset by investment in new supermarket outlets and DIY stores, resulting in an
upturn in capital spending. Spending in construction is estimated to have risen due to acquisitionsof assets, including business offices.

Capital Spending, by Industry
Growth Rate (%)
Materialsa

Share (%)

FY1999FY2000FY2001

FY2002

FY2003

FY1999FY2000FY2001

FY2002

-21.5

10.0

7.1

-21.3

0.9

8.5

9.1

10.7

8.7

FY20039.0

Paper & Pulp

-29.4

24.2

15.1

-20.1

-14.7

0.7

0.9

1.2

1.1

0.9

Chemicals

-22.4

10.1

8.1

-16.2

2.0

3.9

4.1

4.8

3.8

4.0

-17.3

10.6

2.0

1.6

1.9

1.8

2.0
21.0

Iron & Steel

-14.0

-21.1

7.5

Processing & Assemblyb

-12.2

15.1

-17.5

-7.9

1.5

20.8

23.0

20.3

20.1

Food & Beverages

-2.7

-3.2

-6.5

-4.5

-6.4

2.4

2.2

2.1

2.2

2.1

Electric Machinery

-0.0

38.7

-34.4

-17.7

5.4

8.2

10.8

7.8

6.7

7.3

Automobiles

-18.6

-3.2

1.1

5.8

0.5

5.3

5.0

5.5

6.5

6.7
17.3

Energyc

-7.4

-9.9

-8.9

-6.3

-3.3

18.0

15.7

16.6

17.4

Petroleum

-32.3

-36.8

34.7

42.6

-6.3

0.6

0.4

0.5

0.8

0.8

Electric Power

-5.6

-9.5

-9.8

-8.9

-3.0

16.0

14.0

14.7

15.0

15.0

Non-Manufacturing
excluding Energyd

-4.5

3.7

-8.9

2.5

-5.2

52.7

52.2

52.4

53.9

52.7

Construction

-35.0

-5.4

-0.1

9.0

-27.8

0.8

0.7

0.7

0.8

0.6

Wholesale & Retail

-8.5

6.6

-19.6

3.8

-0.3

5.2

5.6

5.1

5.8

6.0

Real Estate

-19.2

17.7

-20.5

12.8

-13.7

4.0

4.8

4.0

5.0

4.4

Transportation

-2.7

-5.0

-7.1

26.4

-19.0

7.6

7.0

7.4

10.2

8.5

Telecom.& Information

-12.5

2.1

-10.8

-6.4

-4.5

15.4

15.7

15.8

13.2

13.0

Leasing

7.6

5.4

2.8

-1.5

3.9

17.6

16.2

17.7

17.6

18.9

Services

38.9

3.7

-35.5

-31.8

-5.8

2.1

2.1

1.6

1.2

1.2

All Industries

-8.4

4.1

-9.3

-3.8

-3.0

100.0

100.0

100.0

100.0

100.00Excluding Electric Power

-8.9

6.8

-9.3

-2.8

-3.0

84.0

86.0

85.3

85.0

85.0

Manufacturing

-15.5

12.5

-9.7

-11.4

1.1

29.9

32.5

31.6

29.6

30.8

Non-Manufacturing

-5.0

0.4

-9.2

-0.2

-4.8

70.1

67.5

68.4

70.4

69.2

Excluding Electric Power

-4.8

3.5

-9.0

2.5

-5.2

54.1

53.6

53.7

55.5

54.2

Note: FY2002 and FY2003 share (%) figures are based on 2,915 companies that responded to the survey in both years.
aMaterials: textiles; paper & pulp; chemicals; cement, ceramics & glass; iron & steel; non-ferrous metalsb
Processing & assembly: food & beverages; general machinery; electric machinery; precision machinery; transportation;other manufacturingcEnergy: petroleum; electric power; city gas and coal; crude oil & natural gas
dNon-Manufacturing, excluding energy: non-manufacturing industries excluding those industries mentioned in ‘Energy’
above

2.

Planned Capital Spending for FY2003

OutlinePlanned capital spending for all industries in
FY2003 will decrease for the third consecutive
year (down 3.0%), turning to a slight increase in
the manufacturing sector (up 1.1%) but continuing to decline in the non-manufacturing sector(down 4.8%).
In the manufacturing sector (up 1.1%),
capital spending is expected to decrease in paper& pulp as capacity investment in waste paper
processing passed a peak. Spending cuts are alsoplanned in food & beverages due to a decline insoft drinks in reaction to the substantial investment in the previous year. However, total capitalspending in the sector will rise slightly for the
first time in three years as increases are expected
in other industries. Spending in electric machinery will turn up thanks largely to investment related to flat panel displays. An increase is expected in iron & steel, as large replacement projects will make strong headway. Spending will
also rise in chemicals, mainly on flat panel displays related materials.
In the non-manufacturing sector (downDevelopment Bank of Japan Research Report/ No. 40

94.8%), the effects of some favorable factors suchas projected investment in wholesale electric
power supply and new supermarket outlets inretail will be overwhelmed by decreases in otherareas. Substantial cutbacks are planned in transportation and real estate, as large-scale projects
for railway construction and extension, airport
construction and redevelopment all passed apeak. The nine major power companies plan to
cut spending on nuclear fuel and power source
development. Spending in telecommunications
will continue to decline mainly due to controls
on investment in wired phones. Overall, capitalspending in the non-manufacturing sector will
decline for the third straight year.
Trends by Industrial Sub-sector
The trends in planned capital spending for
FY2003, classified by industrial sub-sector, areas follows. (Numbers in curly brackets { } show
the percentage of total planned capital spending
accounted for by each sub-sector.)
Materials (up 0.9%) {9.0%}
Planned capital spending in the materials
sub-sector will begin to increase slightly despite
continued declines expected in paper & pulp andcement, ceramics & glass, as investment will
begin to increase in the heavily-weighted
chemical industry. Spending in iron & steel andnon-ferrous metals is also planned to increase
from the previous year.
Capital spending will start to rise in chemicals thanks to investment in high-value added
products including materials for flat panel displays, as well as in non-ferrous metals, driven by
investment related to 300mm wafers, despite restrained spending in optical parts and fiber.
On the other hand, spending will decline
from the previous year in paper & pulp despite
increased investment in power generation facilities using waste as fuel, as capacity investment in
waste paper processing passed a peak. Controls
on investment will also continue in cement, ceramics & glass, leading to reduced capitalspending.

10

Development Bank of Japan Research Report/ No. 40

Processing & Assembly (up 1.5%) {21.0%}
Setting aside the continued decrease expected infood & beverages, capital spending in the processing & assembly sub-sector will begin to increase as a whole, led by the third consecutive
increase in automobiles and the first increase inthree years in the heavily-weighted electric machinery.
The food & beverage industry will post asixth consecutive decline in spending despite an
upturn in beer & other alcoholic beverages, as
investment will be cut in soft drinks in reaction
to the substantial spending in the previous year.
Spending in general machinery will decline
slightly, as checks on investment will continue
mainly in industrial machinery.
Spending in electric machinery will increase
after two consecutive years of decline with contributions from investments related to flat panel
displays and semiconductors. Spending will also
turn up in precision machinery, led by semiconductor equipment. Despite reduced spending inparts & bodies, the automobile industry plans toincrease capital spending, mainly in new models
of four-wheeled vehicles.
Energy (down 3.3%) {17.3%}
Capital spending in energy is expected to decline
for the tenth straight year.
In the electric power industry, spending isslated to decline for the tenth consecutive year
despite increased spending in wholesale electric
power supply, due to restraints on power source
development and substantial reductions in investment for nuclear fuel by the nine major electric power companies. Despite planned increases
in spending in heat supply facilities and specialized LNG producers, capital spending in the gas
industry will experience a downturn as major
city gas projects passed a peak and as controls on
investment will become tighter. A substantial
decline is planned in petroleum in reaction to thesubstantial increases in the previous two years
driven by environmental protection projects.
Non-Manufacturing, excluding Energy(down 5.2%) {52.7%}
Looking at the non-manufacturing sector, excluding energy, an upturn is planned in leasing,but spending is set to decline in many industriesincluding transportation, real estate, telecommunications & information, services and wholesale& retail.
In leasing, capital spending will grow again
as increased demand is expected through the enhancement of corporate groups and tax measures
to promote IT investment.
In contrast, spending in transportation will
fall substantially despite an upturn in airlines, as
projects for new railway lines and extensions in
the Tokyo metropolitan area passed a peak,along with airport construction. Spending in realestate is also slated to fall following the peak oflarge redevelopment projects in the capital.
Spending will decline for the third straight year
in telecommunications and information, as controls on investment in wired phones will be accompanied by reduced spending in broadcastingin reaction to the construction of new premises in
the previous year. Spending in construction will
decline following the purchase of business offices in the previous year. Spending will also
decline in services following the completion of
new hotels and amusement facilities. In wholesale & retail, the continued establishment of new
supermarket outlets will be more than offset by
reduced spending in wholesale and department
stores, resulting in a small decline as a whole.
Trends and Features of Capital Spending for
FY2003, by Industry
The trends and features of capital spending in themain industries are shown below. The figures inparentheses ( ) indicate changes in the rate of
growth in capital spending for the industry inquestion between FY2002 and FY2003. The figures in curly brackets { } show the percentage ofeach industry in total planned spending for
FY2003.
Materials
Chemicals (-16.2% → 2.0%) {4.0%}
Spending will fall by double figures in pharmaceuticals, as new investment will be focused onplant consolidation and on a few new large-scale
projects. It will begin rising in organic chemicals
and other chemicals due to active investment inhigh-value added products including materials
for flat panel displays. Spending will also increase in inorganic chemicals. Overall, capitalspending in the industry is expected to turn upwards.
Iron & Steel (-17.3% → 10.6%) {2.0%}
The second consecutive decrease is planned in
special steel, as investment for rationalization
passed a peak, whereas a double-digit increase is
expected in ordinary steel, as large replacement
projects will get into full swing including blast
furnace refurbishment. Overall, capital spending
in the industry will begin to rise.
Non-ferrous Metals (-43.3% → 0.9%) {1.0%}
Continued controls in optical parts and fiber will
be more than offset by capacity investment in
300mm silicon wafer production equipment, resulting in an upturn overall.
Paper & Pulp (-20.1% → -14.7%) {0.9%}
Despite the introduction of boilers for power
generation using waste as fuel, the industry will
see the second consecutive year of decline incapital spending as capacity investment in waste
paper processing passed a peak.
Cement, Ceramics & Glass (-22.1% → -2.1%){0.7%}
Spending will increase in glass, as some projects
will be carried over from the previous year. Ceramics will maintain the spending level of theprevious year. Spending in cement will record adouble-digit decline, as controls on investment
will remain. On balance, the industry will experience the third consecutive year of decline incapital spending.
Textiles (-2.5% → -5.9%) {0.3%}
The decline in capital spending will accelerate
overall due to the continued decline in synthetic
fiber and a reactionary drop in cotton spinning.
Processing & AssemblyElectric Machinery (-17.7% → 5.4%) {7.3%}
While heavy electric machinery will see theseventh consecutive year of decline, spending inelectronic equipment (home electric appliancesand IT equipment) will increase for the first timein six years, led chiefly by visual equipment. It
will rise for the first time in three years in elec-

Development Bank of Japan Research Report/ No. 40

11tronic component and devices due to continued
active investment in flat panel displays and an
upturn in investment related to semiconductors,
particularly for memories and visual devices.
Overall, capital spending in the entire industry
will increase for the first time in three years.
Automobiles (5.8% → 0.5%) {6.7%}
Although spending in parts & bodies will continue to fall as large investment projects completed previous year, spending in four-wheeledvehicles will remain firm, backed by investment
in new models and for enhancing domestic sales
networks. Overall, capital spending in the automobile industry is expected to increase for thethird consecutive year.
Food & Beverages (-4.5% → -6.4%) {2.1%}
Spending will continue to decline in processedmeat & dairy products, flour milling & sugar
manufacture and edible oils. Although spending
will turn up in beer & other alcoholic beverages,
a reactionary drop in soft drinks will result in a
decline in capital spending for the industry as awhole.
General Machinery (-9.6% → -0.2%) {1.9%}
Spending will continue to increase in boilers &motors, mainly for rationalization, as well as in
office and household equipment, driven by active
investment in new products. Industrial machinery and general machinery parts will experience
continued controls on investment, and spending
in metal processing machinery will see a double-digit decline due to the termination of investment projects related to head offices. Capitalspending in the whole industry is expected to
decline slightly.

12

Development Bank of Japan Research Report/ No. 40

Precision Machinery (-25.1% → 1.9%) {0.6%}
Spending will continue to decrease in medical
instruments, but will begin to increase in otherparts of the industry including semiconductor
equipment and measuring instruments. On balance, the industry is expected to see a slight recovery in capital spending.
EnergyElectric Power (-8.9% → -3.0%) {15.0%}
Although projected investment in wholesale
power supply will increase, the nine major electric power companies plan substantial cuts ininvestment for nuclear fuel. Power source development projects will also be reduced in wide
areas, especially in thermal power. Thus, capitalspending will decline for the tenth consecutive
year in the industry as a whole.
Gas (1.8% → -1.3%) {1.4%}
Spending in heat supply will accelerate due tothe construction and expansion of some large
plants, and spending by specialized LNG producers will turn upwards. However, spending incity gas will decline, as large projects passed apeak amidst an increasingly restrictive mood.
Capital spending will resume its decline in theindustry as a whole.
Petroleum (42.6% → -6.3%) {0.8%}
Despite continued investment related toself-service filling stations, capital spending in
the industry will decline for the first time in three
years, as investment for light oil desulfurizationin refineries passed a peak.

Non-Manufacturing Industries, excluding
EnergyLeasing (-1.5% → 3.9%) {18.9%}
In the leasing industry, capital spending will resume its growth, as demand is expected to increase thanks to the enhancement of corporategroups and tax measures to promote IT investment.
Telecommunications & Information(-6.4% → -4.5%) {13.0%}
Despite a slight increase in spending in mobile
communications thanks to investment in
next-generation portable phones, capital spending will decline in telecommunications due tocontinued controls on investment in fixed communications. Spending will decline in information services and broadcasting in reaction to theconstruction of new premises in the previous
year. All in all, the industry will see the third
straight year of decline in capital spending.
Wholesale & Retail (3.8% → -0.3%) {6.0%}
In wholesale, spending will be cut for the fifth
straight year, as investment related to head offices will continue to decline. In retail, spending
will decline in department stores due to a temporary pause in investment from the previous
year for new outlets and expansion, but will increase on the previous year in supermarkets and
DIY stores, resulting in the second consecutive
year of increase. On balance, capital spending in
the industry as a whole is expected to decline
slightly.
Railways (35.4% → -21.9%) {5.6%}
Although investment will continue to increase
for new line construction mainly in the Tokaiarea, major projects for new line constructionand extension passed a peak in the Tokyo metropolitan area. Overall, capital spending will
start to fall in the industry.

Real Estate (12.8% → -13.7%) {4.4%}
Although investment in shopping malls will continue to increase, large-scale redevelopment projects in the Tokyo metropolitan area passed apeak, resulting in a downturn in capital spending
for the entire industry.
Services (-31.8% → -5.8%) {1.2%}
Despite investment related to waste disposal andparking lots, capital spending in services will
decline for the third consecutive year, largely inreaction to the completion of new hotels andamusement facilities.
Warehousing & Transportation (41.8% →-30.9%) {1.2%}
Although investment will increase in logistic
centers, capital spending in the industry willplunge, as airport construction projects will havepeaked.
Airlines (-16.7% → 18.8%) {1.0%}
Total capital spending will start to grow thanks
to the introduction of new airplanes and an increase in system-related investment.
Construction (9.0% → -27.8%) {0.6%}
As curbs on investment will continue particularly
among general contractors, capital spending in
the industry will fall substantially in reaction to
the purchase of business offices in the previous
year.
Marine Transport (-29.7% → -39.9%) {0.1%}
Capital spending will decline for the second
straight year, as investment will continue toslump in ship construction.

Development Bank of Japan Research Report/ No. 40

13Characteristics of Capital Spending by Industry

Figures indicate

Change on previous year in FY2002

-40

-30

Food &
beverages

-20

0

－20.1
Cement, ceramics 1.3

Manufacturing

Share (%)

& glass－22.1
0.9
Iron & steel
－17.3
2.1

10

10

20

50 Change on
previous year

40

42.6

Non-ferrous metals
－43.3
1.7

32.4

-40

-30

Food
& beverages

－6.4
2.2

-20

0

－14.7
1.1

3.8

Cement, ceramics& glass－2.1
0.7

Electrical machinery

29.6

－17.7
7.9

10.6
1.8

1.0

Electrical machinery

5.4
6.7

Precision machinery

20

1.9

Automobiles

0.5

13.5

－8.9
2.1

30

0.2

Construction

2.0
－0.3
5.8

Real estate
－13.7

5.4
Real estate
12.8

40

40

5.0

4.3

Marine transport

Railways－21.9

Marine transport

Railways
35.4

－29.7
0.2

3.8

Wholesale & retail

0.7

3.8

Other manufacturing

Construction

－27.8
0.8

9.0
Wholesale & retail

6.5

－7.8
0.3

Other transport equipment

6.0

Other manufacturing

－39.9
0.2

5.0

6.9

Airlines

18.8

Warehousing & transportation

Airlines
－16.7

41.8
Other transportation

1.0

Non-manufacturing

－8.9
16.2

60

Other transportation

Warehousing & transportation

7.7

Electric power

0.8

50

1.2

0.5

Non-manufacturingNon-ferrous metals

0.9

－0.2
1.9

0.5

30

3.4

－30.9
1.7

0.6

Electric power

－3.0
15.0

60

Gas

Gas
1.8

－1.3
1.4

－4.8

1.3

70.4

70

70
Telecommunications &information technology

Telecommunications &information technology

－4.5
13.2

－6.4
13.8
80

80

Leasing－1.5

90

Leasing90

16.0

Other non-manufacturing

－13.3
0.2

0.2
-30

-20

17.6

Other non-manufacturing

17.2

1.7
-40

3.9

Services－5.8
1.2

Services
－31.8

14

50

Iron & steel

Generalmachinery

Other transport equipment

5.8

100
-50

40

-10

0

10

20

30

40

50

100
-50

-40

-30

-20

-10

0

10

All industries average

All industries average－3.8 %－3.0 %Development Bank of Japan Research Report/ No. 40

20

Change onpreviousyear (%)

Automobiles

－25.1
0.7

67.6

30

2.0

Precision machinery

－0.2

20

Textiles－5.9
0.4
Chemicals

－6.3
0.8
10

10

1.1

20

50

Share in FY2002 spending

Increase-10Paper & pulp

Petroleum

Petroleum

－9.6
2.0

－11.4

-50
0

(%)

0.6

Generalmachinery

Change on previous year in FY2003

Decrease30

Textiles－2.5
0.4
Chemicals
－16.2
4.3

Paper & pulp

－4.5
2.2

Figures indicate

Increase-10

Share (%)

Decrease-50
0[FY2003]

Share in FY2001 spending

Manufacturing[FY2002]

30

40

50

3.

Investment Motives

Investment Motives in the Manufacturing and
Non-Manufacturing Sectors for FY2003
Looking at the share of each category of investment motive for the manufacturing sector, compared with FY2002 decreases are expected in“expansion of production capacity” and “others,”
as well as increases in the shares of “maintenance and repair” and “rationalization and laborsaving.”In the manufacturing sector, the share of“expansion of production capacity” is expected
to increase substantially with the contribution
from electric machinery, to the detriment of“product development and upgrading.” In the
non-manufacturing sector, the share of “expansion of production capacity” is expected to decline, as capacity investment related to transportation including railways passed a peak, whilethat of “maintenance and repair” is expected toincrease.
Investment Motives in the Manufacturing
Sector’s “Materials” and “Processing &Assembly” Industries
This section examines the share of each categoryof investment motive within the manufacturingsector, comparing the materials sub-sector withthe processing & assembly sub-sector. For thematerials sub-sector, the motives “maintenanceand repair” and “rationalization and labor saving” are relatively high, whereas for the processing & assembly sub-sector, “product development and upgrading” is more important.
The characteristics of investment motives
for the materials industries in FY2003 are as follows:
i. A further increase in the traditionally large
share of “maintenance and repair” in many of theindustries (32.5% → 34.5%);ii. A rising share of “rationalization and laborsaving” (13.1% → 14.3%), with contribution
from chemicals and paper & pulp;
iii. An increase in the share of “expansion of
production capacity” (25.5% → 26.4%), with
contributions from non-ferrous metals andchemicals; andiv. A decline in the share of “product development and upgrading” (10.8% → 9.0%), especially in chemicals, iron & steel and non-ferrous
metals.
The expected significant trends for theprocessing & assembly sub-sector are as follows:i. An increased share of “expansion of production capacity” (25.6% → 30.4%), due to a substantial increase in electric machinery, particularly in electronic components and devices;
ii. An increase in the share of “rationalizationand labor saving” (12.7% → 13.5%), with contributions from electric machinery and automobiles; andiii. A decrease in the share of “product development and upgrading” (26.9% → 22.5%), especially in electric machinery.
Shift in Investment Motives within the
Manufacturing Sector
We now look at the change in the percentage shareof each category of investment motive for the
manufacturing sector. The share of “expansion of
production capacity” has increased substantially(25.4% → 29.1%), with the contribution fromelectric machinery including the heavy-spending
businesses related to electronic component and devices.
The share of “product development and upgrading” has increased in the heavily-weighted
transport equipment industry, but has declined
for the sector as a whole (21.5% → 18.0%) due
to a substantial drop in electric machinery.
For “rationalization and labor saving,” theshare has increased (13.1% → 13.9%) in mostof the industries in both the materials and processing & assembly sub-sectors.
The share of “research & development” hasincreased slightly (6.7% → 7.0%), with contributions from the processing & assembly industries including electric machinery and transport
equipment.
For “maintenance and repair,” the share has
increased (22.1% → 22.8%), with contributions
from iron & steel and chemicals.

Development Bank of Japan Research Report/ No. 40

15Investment Motives
Total

Non-Manufacturing

Manufacturing

Processing &(2,029 firms)
Materials
Assembly
FY2002 FY2003 FY2002 FY2003 FY2002 FY2003 FY2002 FY2003
Estimated Planned Estimated Planned Estimated Planned Estimated Planned

FY2002 FY2003
Estimated Planned

Expansion of
Production Capacity

47.0

45.7

25.4

29.1

25.5

26.4

25.6

30.4

53.6

51.7

Product Development
and Product Upgrading

7.0

7.6

21.5

18.0

10.8

9.0

26.9

22.5

2.6

3.9

Rationalization andLabor Saving

5.1

6.0

13.1

13.9

13.1

14.3

12.7

13.5

2.7

3.2

Research andDevelopment

2.5

2.8

6.7

7.0

6.1

5.8

7.4

7.9

1.1

1.4

Maintenance andRepairs

18.1

19.2

22.1

22.8

32.5

34.5

16.4

16.7

16.8

18.0

Others

20.4

18.6

11.2

9.2

12.0

10.0

11.0

9.0

23.2

22.0

Total
100.0
100.0
Note: Figures are given as percentages.

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

4.

Trends in Land Investment, by Principal
Business Sector

Estimated Actual Land Investment for
FY2002
Despite the peak of investment in transportation
for new airport sites and the acquisition of landfor business restructuring in industries such as
construction and wholesale & retail, actual land
investment for FY2002 (based on figures for the
1,558 firms that gave responses regarding both
FY2001 and FY2002) is estimated to have declined 3.7% as a whole, due to declines inchemicals and telecommunications & broadcasting, respectively in reaction to the acquisition ofplant sites and the construction of new premises
in the previous year. (Land investment accounts
for 7.6% of total estimated actual capital spending in FY2002.)

16

Development Bank of Japan Research Report/ No. 40

Planned Land Investment for FY2003
Planned land investment for FY2003 (based on
figures for the 1,963 firms that gave responses
regarding both FY2002 and FY2003) is down
61.4%, following the completion of investment
in new airport sites in transportation and thepeaking of large redevelopment projects in theTokyo metropolitan area in real estate. (Landinvestment accounts for 2.5% of total capitalspending planned for FY2003.)
It should be noted that there is a tendency
for large upward revisions in land investment
between the planning stage and actual
implementation.

Trends in Land Investment
FY2001
FY2002
ActualEstimated(1,558 firms)

Growth Rate(%)
2002/2001

Total Investment
Investment excluding Land
Investment in Land
Share of Land (%)
Manufacturing
Investment excluding Land
Investment in Land
Share of Land (%)

8,013.7

8,084.8

7,378.8
634.9
7.9

7.6

2,409.9

2,110.1

2,290.6

2,037.1

119.2

730

4.9

3.5

Non-Manufacturing
Investment excluding Land
Investment in Land
Share of Land (%)

5,603.8

5,974.7

5,088.2

5,436.4

515.7

538.3

9.2

9.0

FY2002
FY2003
Estimated
Planned
(1,963 firms)

Growth Rate(%)
2003/2002

0.9

10,106.5

9,651.4-4.5

7,473.5

1.3

9,475.2

9,407.8

-0.7

611.3

-3.7

631.3

243.7

-61.4

6.2

2.5

-12.4

2,486.2

2,522.1-11.1

2,407.0

2,499.3

3.8

-38.8

793

229

-71.1

3.2

0.9

6.6

7,620.2

7,129.3

6.8

7,068.2

6,908.5

-2.3

4.4

552.0

220.8

-60.0

7.2

3.1

1.4

-6.4

Note: Monetary amounts are in billion yen.

Growth Rate of Total Investment in Land by All Industries
93

94

95

96

97

98

99

2000

2001

2002

(FY)
2003

(％) 30
20

18.1

10
0
-10
-20
-30
-40
-50
-60

-11.1

-6.5

-4.1

-4.3
-11.6

-14.0
-18.0

-16.5
-22.7
-23.9
-24.5
-26.2
-28.8
-29.9
-31.6
-31.9
-34.3
-36.3
-40.7
-41.6
-41.6
-39.7
-47.6
-56.7
-53.6
-58.3

-70

-3.7
-11.3

-61.4

ActualEstimated (Survey in February of the following year)
Planned (Survey in February of the same year)

Development Bank of Japan Research Report/ No. 40

17Planned capital spending by foreign-affiliatedfirms for FY2003 is up 10.3% from the previous
year. The manufacturing sector will see an increase of 12.7% with steady growth in chemicals,
petroleum, electric machinery and transport
equipment. In the non-manufacturing sector,
spending will rise in telecommunications & information from the substantial drop in the previous year. Substantial growth is also planned inwholesale and retail. As a result, capital spendingby foreign affiliates will increase 8.0% in the
sector as a whole.
Among the foreign-affiliated firms, those
owned 100% by foreign capital (43 firms, accounting for 0.5% of total foreign affiliates) are
estimated to reduce capital spending in Japan by
2.2% in FY2002. They plan to increase spendingby 32.7% in FY2003.

5. Trends in Capital Spending byForeign-affiliated Firms, by Principal
Business Sector
Out of the 2,915 firms that responded to the survey for both FY2002 and FY2003, 119 are classified as foreign-affiliated firms (more than
one-third foreign ownership). They account for
5.6% of total capital spending (FY2003).
Estimated actual capital spending by foreign-affiliated firms for FY2002 is 13.9% lower
than in the previous year. As regards the manufacturing sector, spending will decline in electricmachinery and chemicals, but will increasesteadily in transport equipment and petroleum,
resulting in a decline of 2.1% for the sector as awhole. The non-manufacturing sector will see a
23.1% drop in capital spending by foreign affiliates, with a substantial decline in telecommunications & information.

Capital Spending by Foreign-Affiliated Firms, by Principal Business Sector
Capital Spending

Growth Rate (%)

FY2001 FY2002 FY2002 FY2003
2002/2001 2003/2002
Actual Estimated Estimated Planned(110 firms)(119 firms)
Total

Composi- Share oftion
All Firms(%)(%)
FY2003(119 firms)

1,121.5

965.8

973.8

1,074.4

-13.9

10.3

100.0

5.6

Wholly owned foreign firms

81.7

79.8

77.5

102.8

-2.2

32.7

9.6

0.5

Manufacturing

491.6

481.5

483.5

544.8

-2.1

12.7

50.7

9.0

Non-Manufacturing

629.9

484.3

490.3

529.6

-23.1

8.0

49.3

4.0

Materials

167.2

151.6

153.3

172.1

-9.4

12.3

16.0

9.7

Processing & Assembly

309.0

302.8

303.1

337.7

-2.0

11.4

31.4

8.3

By sector

Notes: Foreign-affiliated firms are firms with over one-third foreign ownership.
Monetary amounts are in billion yen.

18

Development Bank of Japan Research Report/ No. 40

6.

Capital Spending Cash Flow Ratio,
by Principal Business Sector

In FY2003, total revenue in all industries is expected to increase only slightly (up 1.7%), which,nonetheless, will result in a double-digit increasein ordinary profit (up 21.6%). The ratio of capitalspending to cash flow (net income plus depreciation expenses) will thus fall from the previous
year to very low levels in both manufacturing
and non-manufacturing (down from 111.1% in
FY2002 to 90.5% in FY2003 for all industries).

Capital Spending Cash Flow Ratio(Unit: %)Revenue Growth(1,819(1,306
firms)
firms)
FY2002 FY2003
Total
Manufacturing
Non-Manufacturing
SubMaterials
sector
Processing & Assembly

FY2002

FY2003

FY2002

FY2003

Capital Spending/Depreciation
Expenses Ratio
FY2002
FY2003

Estimated

Forecasted

Estimated

Forecasted

Estimated

Forecasted

Estimated

Forecasted

-1.5
0.2
-3.0
-1.9
0.2

1.7
1.6
1.8
2.6
2.2

17.9
37.5
4.7
25.6
45.8

21.6
27.3
17.3
30.6
17.3

111.1
82.9
120.3
73.0
97.1

90.5
60.4
104.2
60.6
60.1

130.2
89.6
145.0
81.3
100.4

120.9
96.0
129.9
90.9
101.6

Income (Ordinary)
GrowthCapital Spending/
Cash Flow Ratio

Note: Capital spending cash flow ratio = {capital spending ÷ (net income + depreciation expenses)} × 100.

7.

Information Technology Investment,
by Principal Business Sector

Contents
This part of the survey concerns the investments
related to information aimed at improving thebusiness efficiency and productivity of firms(corresponding to any of the following four factors: “tangible fixed assets,” “intangible fixed
assets,” “leasing contracts,” or “other expenses”).
This is the sixth survey on information
technology investment since its inception in
August 2000.
Estimated Actual IT Investment in FY2002
Investment in information technology in FY2002,
based on the 1,451 firms that responded to thesurvey for both FY2001 and FY2002, is estimated to have decreased in the non-manufacturing sector (down 1.0%) but to have increased
despite a decline in overall capital spending in
the manufacturing sector (up 4.4%), resulting ina 0.9% increase for all industries. In the
manufacturing sector, brisk investment is observed in production and inventory management
systems, customer management and sales support. In the non-manufacturing sector, on theother hand, the continued increase in industries

such as retail and railways is estimated to havebeen more than offset by a decline in electric
power in reaction to the intensive investment
made in the previous year.
Planned IT Investment for FY2003
Planned investment in information technology for
FY2003 based on the 1,394 firms that responded
to the survey for both FY2002 and FY2003, is
expected to begin to increase in the
non-manufacturing sector (up 13.4%) and willcontinue to increase in the manufacturing sector(up 2.7%), leading to an overall increase of 9.5%.
In manufacturing, the increase will be led bysoftware investment for production and inventory
management and the integration of core businesses. In non-manufacturing, investment in information technology will increase almost acrossthe board, particularly in heavily-weighted industries such as retail and electric power.
Revisions to IT Investment
In comparison with the previous survey of August 2002, estimated actual investment in information technology for FY2002 was revised
downwards in both the manufacturing sector(down 5.8%) and the non-manufacturing sector(down 4.8%), leading to an overall downward
revision of 5.1%.
Development Bank of Japan Research Report/ No. 40

19Overview of IT Investment (estimated figures for FY2002)
Industrial Sector(1,451 firms)

Amount of IT Investment(%)

Growth Rate (%)
Change in IT
Investment

Change inCapitalSpending

Share of IT Investment(%)

IT Investment/
Capital Spending(%)

FY2001
Actual

FY2002Estimated

2002/2001

2002/2001

FY2001
Actual

FY2002Estimated

FY2001
Actual

FY2002Estimated

Total

859.0

866.7

0.9

-4.1

100.0

100.0

9.0

9.5

Manufacturing

300.0

313.2

4.4

-11.6

34.9

36.1

12.0

14.2

559.0

553.5

-1.0

-1.5

65.1

63.9

7.9

8.0

Non-Manufacturing

Note: Monetary amounts are in billion yen.

Overview of IT Investment (planned figures for FY2003)
Industrial Sector(1,394 firms)

Amount of IT Investment(%)

Growth Rate (%)
Change in IT
Investment

Change inCapitalSpending

Share of IT Investment(%)

IT Investment/
Capital Spending(%)

FY2002Estimated

FY2003
Planned

2003/2002

2003/2002

FY2002Estimated

FY2003
PlannedFY2002Estimated

FY2003
Planned

Total

488.7

535.2

9.5

-5.9

100.0

100.0

7.4

8.6

Manufacturing

178.5

183.3

2.7

8.9

36.5

34.3

14.0

13.2

Non-Manufacturing

310.3

351.9

13.4

-9.4

63.5

65.7

5.8

7.3

Note: Monetary amounts are in billion yen.

Revision to IT Investment
Industrial
Sector

FY2002, Estimated
IT Investment
Revision(1,371 firms)(%)
Aug. 2002 Feb. 2003

Total

875.2

830.3

-5.1

Manufacturing

314.3

296.1

-5.8

Non-Manufacturing

560.9

534.2

-4.8

Note: Monetary amounts are in billion yen.

Definition of IT Investment
For the purpose of this survey, IT investment refers to the capital spending deemed as such by the respondent firm, and covers the following four items:(i) Tangible fixed assets,(ii) Intangible fixed assets (software development and other costs credited to assets rather than accounted for as costs),(iii) Leasing contracts (the amount of newly concluded leasing contracts and not that of leasing
charges for the fiscal year), and(iv) Other expenses (PCs and other office equipment accounted for as costs).

20

Development Bank of Japan Research Report/ No. 40Components of IT Investment(actual FY2002)
Other
expenses
16.4%

Intangible
fixed assets
35.3%

Tangible
fixed assets
22.1%

Lease
contract
amounts
26.2%

Note: The chart shows the distribution of the
1,451 firms that responded to the survey
in both FY2001 and FY2002.

Components of IT Investment(planned FY2003)
Other
expenses
16.4%

Intangible
fixed assets
31.6%

Tangible
fixed assets
27.8%

Lease
contract
amounts
24.1%

Note: The chart shows the distribution of the
1,394 firms that responded to the survey
in both FY2002 and FY2003.

Development Bank of Japan Research Report/ No. 40

21

List of Back Numbers (Including JDB Research Report)
No. 40 Survey on Planned Capital Spending for Fiscal Years 2002 and 2003 (Conducted in February2003) (this issue)
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, April 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, November 2002
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
Disparities 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 Be-havior, 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