It offers tax savings and perks to foreign firms in bid to spur economy
By Kwan Weng Kin, The Straits Times, 13 Jan 2012
TOKYO: In hopes of stimulating its sputtering economy, the government has taken a step that is unprecedented for Japan - a move to attract more foreigners to live and work here.
The scheme aims to tempt at least 50 foreign companies to set up Asian regional headquarters or research facilities in designated areas in Tokyo within the next five years, by giving them preferential tax treatment and other perks.
Tokyo also hopes to persuade another 500 or more foreign firms - in fields such as information technology, electronics, chemicals, medicine and finance - to move into the same areas, by providing savings in property and other taxes.
Japan has always been known as a notoriously tough place for foreigners to settle down and do business. Foreigners must in principle have lived here for 10 years just to apply to do so.
The present Democrat-led administration hopes the new policy will attract more foreign investments and promote greater collaboration between foreign and Japanese companies, helping to revitalise the economy in the long run.
As a first step in opening its doors wider to foreign talent, Japan will also soon make it easier for foreign academics, doctors and senior managers to take up permanent residence.
The scheme is aided by the recent designation of Tokyo as a 'comprehensive special zone for international strategy' under a national growth strategy that establishes special zones around the nation where bureaucratic red tape will be relaxed.
In a high-profile project that underlines the capital's big push for more foreign companies, a 15ha rolling stock yard in the southern half of the city will be turned into towering office buildings and commercial facilities.
The site is near bullet trains as well as domestic and international flights.
A new train station will put it two minutes away from Shinagawa station, from which bullet trains depart every 10 minutes or so.
Shinagawa is also a mere 15 minutes by express train to Haneda airport, and from which a planned maglev service will begin in 2027 connecting Tokyo to Nagoya in 40 minutes, or less than half the present commuting time.
But ease of transportation is not all.
Foreign companies that agree to locate themselves in the designated areas will have property taxes and other local taxes waived for the first five years.
In addition, those that establish regional headquarters or research labs will see their corporate taxes effectively slashed from 40.7 per cent to 28.9 per cent.
Japan's corporate taxes, the highest in this region, have long been a bugbear of foreign companies.
Tokyo expects the special zone scheme to create 930,000 new jobs and to yield direct and indirect economic benefits totalling some 14 trillion yen (S$234 billion).
The special zone concept has the support of Japanese business leaders.
Mr Hiromasa Yonekura, head of the powerful Nippon Keidanren business lobby, told an interview earlier this month: 'We hope very much to see the government move ahead with measures to stimulate domestic demand, through the comprehensive special zones and other measures.'
Besides Tokyo, special zones are being set up around the country, each with their own particular features.
For instance, a zone in neighbouring Kanagawa prefecture will bring together medical and drug-related companies as well as facilities engaged in leading-edge research in areas such as life sciences, cancer and public health, so as to boost Japan's international competitiveness in these fields.
As early as April, Japan is set to introduce new rules that will allow foreigners with the desired skill sets to put down roots after only five years of residence.
To determine their suitability, applicants will be given points depending on their educational background, length of career and even the size of their pay cheques.
For instance, a person with a PhD will score more points than one with just a basic degree.
Knowledge of Japanese and attendance at a Japanese college will also be pluses.
Applicants who score above a certain number of points will also be allowed to bring relatives or domestic servants with them to Japan. Their spouses will also be allowed to work.
The government hopes to draw an estimated 2,000 skilled foreigners a year under the new guidelines, which come against the backdrop of Japan's declining population, according to estimates released earlier this month.
A quarter of Japan's population will be aged 65 and above by 2020.
Welcoming gaijin at the gates
The Straits Times, 16 Jan 2012
JAPAN has finally bitten the bullet and made a historic move to attract foreigners to its shores in yet another move to kick-start the country's moribund economy. In the coming years, it will seek to attract 500 or more foreign firms to the country. It will also make it easier for foreign academics, doctors and senior managers to take up permanent residence. Tokyo seeks to attract an estimated 2,000 skilled foreigners annually.
Japan should be lauded for its boldness in breaking away from tradition. After all, it has long been known that it is woefully insular. According to an OECD report, it has one of the grouping's lowest levels of foreign direct investment and foreign workers. In 2007, a United Nations report noted that migrants in Japan face 'racism and discrimination, exploitation (and) a tendency by the judiciary and police to ignore their rights'.
Japan's latest move shows that it is cognizant of the global war for talent, as seen in other Asian countries. According to the Australian Bureau of Statistics, Australia and Singapore enjoyed high rates of skilled migrant intakes between 2005 and 2010. Malaysia has a Malaysian My Second Home policy to attract skilled foreign talent.
Foreign capital and talent will do wonders for Japan. Granted, Japanese firms have long resisted gaijin participation, for fear of excessive restructuring, layoffs and the potential ditching of supplier relationships. But the benefits of foreign participation are legion. Mr Michael Woodford, the sacked chief of Olympus, has lifted the veil on the company's secrecy and corruption. Nissan head Carlos Ghosn has been likened to General Douglas MacArthur, the American general who oversaw Japan's post-war reconstruction, in the way he transformed the company's culture.
Reforms ought not to stop there. Recently, Eamonn Fingleton caused a stir when he wrote in the New York Times that Japan had kept ahead of the United States even through its 'lost decades'. His argument has been contested, but the truth is that Japan can go further if it pulls itself together. Such gaman or spirit was in full display after the earthquake and tsunami that shook the country in March last year. The same reform-minded spirit should inform its approach to other issues of critical significance, say, its participation in the Trans-Pacific Partnership and its oft-thorny relations with China.
Japan's latest move is commendable. The challenge now is to put plans into action. The hope is that it will come up with more tradition-busting initiatives to stir the country out of the languor of the past two decades.
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