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Japan Construction Industry Overview

Updated: Sep 25


Artificial Intelligence in Japan Construction Industry, Construction Safety and Productivity. viAct in Japan.
Construction Industry Overview - Japan

By estimation, the Japan Construction Market will grow at a compound annual growth rate (CAGR) of approximately 5%.


In the 2017 supplementary budget, the huge government spending and budget in the restoration of damaged civil engineering facilities and the thriving tourism sector, Japan's construction industry regained growth in 2017 for 2.6%, 1.4% higher than in 2016 in real terms. It brought a growth from JPY109.3 billion (US$1.0 billion) to JPY290.7 billion (US$2.6 billion) in 2017, about a 166% increase.


In January 2018, a plan to invest JPY1.5 trillion (US$13.9 billion) in the development of the Metropolitan Inter-City Expressway and the Tokai Expressway was announced by the government. (Business Wire, 2019) Due to the government's work to develop the country's road and airport infrastructure, it is foreseen a CAGR of 3.92% in nominal terms. It is estimated that about 5%(28.4 trillion Yen) was contributed by the Japanese construction industry to Japan's GDP.


In addition, the government gave out efforts to develop the country's tourism sector, supporting construction activity in the commercial construction market. According to the Ministry of Land, Infrastructure, Transport and Tourism, in the 2018 budget, the government increased its allocation towards the tourism sector by 15.0% to JPY29.4 billion (US$262.1 million) in 2018. (Business Wire, 2019)



During 2019, 5.3% of the nominal gross domestic product (GDP) in Japan was contributed by business activities in construction. Also, the construction sector's nominal GDP generated has increased by 0.4 percent to around JPY30 trillion.


In fact, there is an important issue that was not mentioned yet is accidents of foreign workers. In 2020, 4682 foreign workers were injured and 30 died. This is a significant increase from 3928 and 21 in 2019, respectively.


People believe that foreign workers are more prone to labour accidents because they are in a disadvantaged position, but the problem is not limited to this. Because it is difficult for foreign workers involved in accidents to seek appropriate compensation for the damage caused by accidents, accidents are often hidden. Therefore, efforts to support the recurring rights of foreign workers have become more and more necessary.


From statistics by nationality, the perspective of the proportion of casualties of foreign workers in the top five countries, Vietnam 1,245 (925), China (including Hong Kong) 707 (599), Philippines 682 (579) will have 624 (683) in Brazil and 220 (197) in Vietnam (The numbers in parentheses are for 2019). The number of casualties in Vietnam is outstanding, characterized by an increase of 300 people in the past year.


Judging from the proportion of casualties among workers of various nationalities, the total number of Vietnamese workers working in Japan is 0.28% of the 443,998 workers. The total number of Chinese citizens is 419,431, of which 0.16%, it is also a country with a higher rate of occupational accidents among Vietnamese workers.


Expected Growth


Since the burst of the economic bubble in the 1990s, the Japanese construction sector has rebounded from a period of negative growth bypassing the last decade.


In addition, ignoring the impact of Coronavirus, high demand in 2020 in the construction industry was created by the Tokyo 2020 Olympic Games. For instance, the planned construction projects for the World Expo 2025 in Osaka and the construction of the Chuo Shinkansen maglev line, proving that infrastructure maintenance and urban redevelopment are increasingly important in the construction sector in the future.

It is estimated that JPY898.8 billion (US$8.4 billion) will be used to develop Olympics-related infrastructure for 2020.


A nominal CAGR of 3.29% is foreseen for the infrastructure construction market, supported by the government's development to improve regional connectivity during the 2020 Olympics. With the expected growth and support from the government, the total cost of construction related to the Olympics is expected to be JPY182.2 billion (US$1.7 billion). (PRNewswire, 2017)


Industry Challenges


Labour shortage, which is a serious problem worldwide, has affected Japan's construction industry, making it one of the least productive sectors in Japan compared to other sectors like automobiles, consumer electronics industries.


With the small labour pool and high average age(over 1/4 skilled workers are over 60) for the construction industry, the industry's potential growth was being limited. In order to offset the problem, the Japanese government has also started to promote the use of technology in the construction sector, allowing the industry a tendency to invest in Artificial Intelligence (AI) and computer vision, which will reduce human resources. In addition, an i-construction initiative was introduced by the Ministry of Land, Infrastructure, Transport and Tourism in 2015, aiming to improve productivity in the construction sector. With the use of IoT, BIM (Building Information Modelling), and CIM (Civil Information Modelling) software at construction sites, the cost of construction industry and the accident rate will be reduced by over 70%.


Here are some applications of Artificial Intelligence (AI) and Computer Vision (CV) which viAct can deploy in order to help Japan’s Construction Industry in overcoming this scenario. First, by applying Artificial intelligence, construction sites can complete danger zone monitoring without humans. Combining with cameras and AI, managers can effectively reduce the accident rate by over 70% and promote construction site safety. With the AI scans and drawn danger zones, alerts will be alarmed immediately once workers are being detected from entering danger zones.


Second, AI enabled tool developed by viAct can help with human safety detection by identifying whether the workers are wearing proper personal protective equipment, i.e., helmet, gloves, mask, and high visibility jacket or not. Alerts will be sent out for warning. Accidents like falling from the roof to death, fingers being cut, etc.


Regardless of the reduction of human and time use, the productivity and safety level of both foreign and local workers can still be improved in Japan by viAct.


To solve the challenges, from construction project productivity to safety concerns of construction sites, try out viAct. Feel free to take a free trial and know more -https://app.viact.ai/signup

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