TOKYO (Kyodo) -- Major Japanese companies plan to increase domestic capital investment by 21.6 percent in the current fiscal year from the preceding year, the sharpest rise in 38 years, a Development Bank of Japan survey showed Wednesday.
In fiscal 2018 through next March, both the manufacturing and non-manufacturing sectors are expected to boost domestic investment spending, for example on expanding car production lines and to introduce labor-savor facilities to deal with a national manpower shortage, according to the survey.
It is the seventh consecutive year of increase in planned domestic capital investment. But it remains unclear whether the increases will be implemented as planned amid uncertainties such as the U.S.-China trade row as well as U.S. trade protectionism in general. It is also unclear how the recent rain disaster in western Japan will affect spending.
Based on a survey in June that covered 2,059 companies capitalized at 1 billion yen ($8.9 million), spending by manufacturing companies was set to rise 27.2 percent, the biggest increase since fiscal 1974.
A major driver is spending by the transport equipment sector as carmakers move to modify production lines to produce more hybrid and electric vehicles and on developing self-driving cars. Ramped up spending by chemical and electric machinery manufacturers which make batteries and auto parts is also fueling the increase.
Planned spending by non-manufacturing companies is set to increase 18.5 percent, the highest growth rate since fiscal 1980.
That rise is led in part by transport companies seeking to improve the efficiency of their logistics facilities in the face of a labor shortage. In the wholesale and retail sector, investment is being driven by spending on labor-saving equipment by convenience stores.
As Japan continues to attract more foreign travelers, business investment is planned on renovating and rebuilding accommodation facilities, according to the survey.