Reuters, Amsterdam: Japan will take at least five years to reconstruct its earthquake and tsunami afflicted regions as it balances the need to rebuild houses, roads and power grids with planning for disaster-proof infrastructure.
As the world's third largest construction market, Japan has the resources, skills and social cohesiveness required to rebuild quickly, but that the disaster will spur it to think even harder about urban planning and protection, experts say.
'Reconstruction after the 1995 Kobe earthquake in Japan took a bit less than five years, I would expect reconstruction here to last five years,' said Abhas Jha, programme leader at the East Asia disaster risk management unit of the World Bank.
The world's third-largest economy, already saddled with public debt double the size of its $5 trillion output, must rebuild its infrastructure — from roads and rail to power and ports — on a scale not seen since World War Two.
Some cost estimates put the recovery and reconstruction bill at $180 billion, or 3 per cent of Japan's annual economic output, but the World Bank's Jha cautioned that such initial numbers usually get revised.
'This is a disaster of once in 100 or 200 years,' said Hirokazu Anai, senior analyst at JP Morgan Securities in Japan. 'This will force us to change the thinking of infrastructure and safety regulations and that will take time.'
The extension of damage from the 9.0-magnitude quake is still unclear. Planned blackouts including in the capital city of Tokyo aimed at saving energy in the wake of crisis at quake-hit nuclear plants are delaying economic activities as well.
Anai said it might take at least three months to be able to rebuild minimal roads to distribute water, food, and fuel to the quake-hit north-eastern Japan, with some towns completely wiped out by the tsunami. After that, the construction of temporary homes for survivors begins before starting a real rebuilding process, he added.
The rebuilding will give a short-term jolt to Japan's construction industry, which faces a bleak future of declining population, slow economic growth and high public debt that hampers future investment in major infrastructure projects.
This will buoy Japan's construction groups such as Kajima Corp and Taisei Corp as well as engineers who specialise in seismic — and increasingly tsunami — protection.
The market is also likely to keep an eyen on Penta-Ocean Construction, which specialise in shoreline and river protection work.
But the quake could also cool interest in investing in Japan and is likely to hurt corporate capital spending in the construction sector in the coming months, analysts said.
While the short-term needs of the population, from sanitation to a reliable power supply, will have to be quickly addressed, social planning takes longer, said David Alexander, professor of disaster management at the University of Florence.
'Few are the cases where reconstruction takes less than five years, because it's a case of not just physically doing it but also planning it, which requires things such as geotechnical surveys and sorting out land ownership,' he said on Tuesday.
Standard & Poor's said on Tuesday that Japan's central government will play a major funding role in the reconstruction drive but that local governments will also need to finance the efforts with their own bond issues.
'Research seems to show that building in safety into new investments adds about 5 to 7 per cent over the regular costs, but you more than make that up in terms of future reconstructions costs,' Jha said.
But the government will need to be careful not to make devastated regions too reliant on the construction sector.
'It is good practice not to have a boom and bust situation in which the only motor of the local economy is the construction industry. Reconstruction can finish without any other viable themes for the local economy,' Alexander said.
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