REPORT
CEO Blog
Autobiographical memory from An Entrepreneur （6）
Something we realized at the Great East Japan Earthquake
Currently, Index Consulting is growing its business pillars along with construction project management (construction PM) and the support of Public Private Partnership (PPP) projects in Japan and abroad.
Takatori in Nara Prefecture, Japan is promoting a fourth-generation heavy-ion cancer therapy facility construction project with surrounding municipalities as part of medical tourism, as well as a local toll road concession project (selling the right to operate a toll road to the private sector for a set period), and public-private partnership projects for water supply, sewerage, and public facilities.
As a prefectural policy advisor, I was also personally involved in the Aichi Toll Road and Aichi International Exhibition Center concession ("How Japan's First Toll Road PPP (Public-Private Partnership) Was Realized"). And I am currently involved in building Japan's PPP business, such as the arena and incubation facilities promoted by Aichi Prefecture.
Looking overseas, we are involved in PPP projects for toll roads, such as the widening of the expressway connecting Ho Chi Minh City and Long Thanh International Airport in Vietnam, as well as a pre-FS (Feasibility Study) for a PPP project in Ghana, which includes a toll road concession project and associated low-income housing and sewage improvement. JICA (Japan International Cooperation Agency) approved the Pre-FS in Ghana as a Preparatory Study for Cooperation (PPP Infrastructure Project) in September 2019, the first time since the JICA system was revised in April 2019.
Takatori in Nara Prefecture, Japan is promoting a fourth-generation heavy-ion cancer therapy facility construction project with surrounding municipalities as part of medical tourism, as well as a local toll road concession project (selling the right to operate a toll road to the private sector for a set period), and public-private partnership projects for water supply, sewerage, and public facilities.
As a prefectural policy advisor, I was also personally involved in the Aichi Toll Road and Aichi International Exhibition Center concession ("How Japan's First Toll Road PPP (Public-Private Partnership) Was Realized"). And I am currently involved in building Japan's PPP business, such as the arena and incubation facilities promoted by Aichi Prefecture.
Looking overseas, we are involved in PPP projects for toll roads, such as the widening of the expressway connecting Ho Chi Minh City and Long Thanh International Airport in Vietnam, as well as a pre-FS (Feasibility Study) for a PPP project in Ghana, which includes a toll road concession project and associated low-income housing and sewage improvement. JICA (Japan International Cooperation Agency) approved the Pre-FS in Ghana as a Preparatory Study for Cooperation (PPP Infrastructure Project) in September 2019, the first time since the JICA system was revised in April 2019.
Although we are not a large construction PM consulting firm, we are proud of our track record in PPP projects related to social infrastructure in Japan and abroad.
As I previously stated, developing countries are shifting to private financing rather than investment loans such as Official Development Assistance (ODA) to reduce the government debt-to-GDP ratio. Of course, developing countries are not the only ones affected. Considering the current situation, where fiscal expenditures are increasing due to the new corona countermeasures, developed countries with aging social infrastructures will also need to use private-sector funds for infrastructure construction and repair. PPPs are expected to become the norm for infrastructure investment around the world in the future.
Reconstruction through "Environmental Model City"
The Great East Japan Earthquake on 11th March 2011, inspired Index Consulting, whose main business had been construction project management, to enter the social infrastructure PPP business. I was in Kyoto on business that day and found out about the disaster at a cafe where I stopped for a late lunch. I remember being terrified when I saw images of the tsunami hitting the Tohoku coast on the cafe's TV. After lunch, I managed to get back to Tokyo by train.
Business resumed immediately because demand did not vanish as it did in the case of the Lehman Shock, but due to the devastation in the Tohoku region, I could not complete any work. To contribute to the disaster area through construction PM, I decided to collaborate with Professor Emeritus Hideaki Miyata of the University of Tokyo, who is now an outside director of Index Consulting (at the time, he was a professor at the University of Tokyo's Department of Systems Innovation), and members of Miyata's seminar to develop a concrete plan for the region and reconstruction plan.
We focused our attention on the government's "Environmental Model City" concept and urban development via the special zone system at that time.
Only a year before, in 2010, the "Environmental Model City" concept, which aims to create a low-carbon society, was chosen as one of the national strategic projects. There is no reason not to use the special zone system, which provides for various deregulations. As a result, Professor Miyata and I decided to support Ofunato City, Rikuzentakata City, and Sumita Town's application for a special zone for the Kesen Environmental Model City and the planning of a sustainable town that meets the needs of a low-carbon society.
Professor Miyata and I visited the area every week to discuss with residents to develop the concept for the Environmental Model City. Out of love for the town, some employees working on the Kesen reconstruction team relocated to Ofunato City. To be honest, I was very busy because I was also managing Index Consulting, but I always looked forward to returning to the area every time.
To create a town as a model for a low-carbon society
The environmental model city concept's main goal was to create a model for urban development in which the three values of "environment," "society," and "economy" coexisted in harmony and to create a region that would serve as a model for other small cities not only in the Tohoku region but also around the world. To that end, the environmental model city plan was based on five themes: developing a compact city, promoting agriculture, fisheries, and other industries, popularizing wooden houses made of Kesen timber, and creating an elderly-friendly medical, nursing, and welfare community.
About energy, we have developed a plan to build the world's first regionally distributed mega solar power plant equipped with an energy storage system, as well as a microgrid and other distributed energy storage facilities to build a distributed energy society that is locally produced for local consumption.
Regarding a compact city, we aimed to create a city that integrates housing for the elderly, medical and nursing care facilities, and places to work, complete with ICT and elderly-friendly transportation systems such as light rail. We attracted agriculture and crop processing, fishery processing, forestry, the housing industry, and eco-city-related companies, including plant factories, for industrial development. Concerning the revival of Kesen timber housing, we advocated for strengthening a series of wooden housing production systems ranging from forestry cooperatives and timber processing to construction companies, as well as the development of model houses with excellent environmental performance.
The project's final phase is establishing a comprehensive community care system in which medical, nursing, healthcare, welfare, and other stakeholders collaborate and use ICT to ensure residents can live safely and comfortably.
Each of these five themes has taken shape.
In terms of energy, for example, Goyasan Solar Power Plant was constructed on a ranch near the border of Ofunato and Kamaishi cities, and a wooden government building with wood biomass power generation was built in Sumita Town, utilizing the local forestry industry. In the tsunami-ravaged area around Ofunato Station, the compact city has culminated in the public-private partnership organization "Cassen Ofunato."
In terms of agriculture, forestry, and fisheries, a sustainable forestry industry is being built in Sumita Town, where the forestry is thriving, with a focus on woody biomass and CLT (wood structural material with stable strength) production, and wooden houses with high environmental performance, including heat insulation, air tightness, renewable energy, and the use of storage batteries, have been successfully developed.
Furthermore, for community comprehensive care, an essential organization for a community comprehensive care system has been established, centered on Ofunato Prefectural Hospital in Ofunato City, in cooperation with Iwate Medical University, Sumita Medical Center in Sumita Town, Prefectural Takata Hospital in Rikuzentakata City, clinics, general practitioners, dispensing pharmacies, nursing facilities, home nursing care, and others.
A survivor's tearful plea
The idea behind this concept was that rebuilding affected areas should not only restore them to their original state but also evolve them into a form that is appropriate for the times. It was my and Professor Miyata's belief that "there will be no reconstruction of Japan unless Tohoku is rebuilt."
Even if levees destroyed by a tsunami are restored, they will break if another large tsunami hits. If this is the case, then we should consider other uses, such as creating a compact city on higher ground and using the high-risk coastal area as a base for new environmental businesses, such as mega solar power generation. I believe this is what the environmental model city concept is all about.
However, we also realized during the Tohoku reconstruction assistance that it is meaningless to force our ideas to others.
At first, I would tell people what I and Professor Miyata thought would be best for them, but one day, a disaster victim tearfully told me, "You talk about 'thinking about the future', but we don't even know how to live for tomorrow."
Indeed, we had hoped to use the recovery from the earthquake as an opportunity to create a city that would serve as a model for the world. On the other hand, the people of the region were not thinking about the future, as their top priority was to establish their own livelihoods. They probably felt that the consultant from Tokyo was only talking about dreams.
I still believe the same thing: as long as we are investing massive amounts of government money, it is necessary to evolve the affected areas into a form that is appropriate for the coming era. However, each affected area has its own set of circumstances. In retrospect, I should have communicated with them more closely. I have strong feelings, but I've learned yet again that our own feelings are sometimes nothing more than our ego, and that we must pay attention to the feelings of others.
The only businessman policy advisor
In fact, at that time, I was also serving as a policy advisor for the Ministry of Land, Infrastructure, Transport and Tourism (for less than a year, starting in September 2011).
The reason I was asked to become a policy advisor was the "Council on Aging Condominiums," which was established in 2009 to promote the rebuilding of aging condominiums. It was just around the time when the Democratic Party of Japan (DPJ) came to power through a change of government. And my contact on the DPJ side was then-Councilor Takeshi Maeda, who later became the Minister of Land, Infrastructure, Transport and Tourism. After that, I had various discussions with Mr. Maeda during the countermeasures meeting.
Then, right after Mr. Maeda was appointed Minister, I was called to a French restaurant. When I visited the restaurant without knowing anything about it, I found that the previous Minister of Land, Infrastructure, Transport and Tourism, Mr. Seiji Maehara, a member of the House of Representatives, and others were in attendance. I found out later that the meeting was a handover of the ministerial position. It was at that meeting that Minister Maeda asked me to become his policy advisor.
"The Ministry of Land, Infrastructure, Transport, and Tourism is a massive organization, and the various bureaus do not get along. I'd like you to assist us in strengthening bureau cooperation in order to achieve sustainable urban development." I was the first and only private-sector businessman to join MLIT as a policy advisor. I wondered what I, as a businessman, could do.
However, it is certainly an honor, and I am eager to meet Minister Maeda's expectations. Above all, I accepted the appointment as Policy Advisor because I believe that it is not in vain to share my experience as a project manager in construction in order to build a better Japan.
Awakening social infrastructure development through PPP
It is also because of Mr. Maeda that we have been able to get involved with the Kesen area, including Ofunato City.
When I went to Mr. Maeda's office to greet him for a conference on aging condominium measures, he introduced me to Shuji Kawai, then president of the National Association of Health Care Facilities for the Elderly, who happened to be there. This introduced me to Dr. Noriya Kikawada, who runs a medical corporation and nursing care facility in Ofunato, and I became involved in the Kesen area's Environmental Model City project.
In retrospect, the time I spent as a policy advisor was an experience that would be difficult to have in the private sector. I was asked to "deepen horizontal cooperation among the bureaus of the Ministry of Land, Infrastructure, Transport and Tourism," so I formed a group of policy officers with the section chiefs of each bureau and had many discussions with the members about the future of Japan and construction and real estate management. Since they had never been to the earthquake site, all the members of our policy officer group took them to the Keshan area, and we also went to the Ministry of Economy, Trade and Industry, the Ministry of Agriculture, Forestry and Fisheries, the Ministry of Health, Labor and Welfare, and other ministries and agencies in order to establish cooperation with them.
I am not sure how much I was able to contribute during my time as a policy advisor, which lasted less than a year, but it certainly provided me with a good opportunity to think about what issues and solutions exist amid the division of roles between the central government, which develops laws and systems, and the local governments, which actually implement them. Above all, it was a good opportunity to realize the importance of social infrastructure development through cooperation between the public and private sectors.
Since then, we've formed a team separate from construction project management (construction PM) to help with project conceptualization, project formulation, and business planning. Today, that team is a core part of Index Group to promote social infrastructure PPP projects in Japan and abroad, as well as leading projects to support business creation in schools, medical institutions, and other settings.
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