Unlikely. However, the government seems to think otherwise. According to Kyodo News, [1] Japan’s central government has decided to target Fukuoka and Osaka to attract companies and skilled people from Hong Kong, Asia’s financial hub facing a political crisis, shifting from its Tokyo-focused approach to create an alternative global financial hub.
Political Background
This sounds too unrealistic to take at face value. There exists almost nothing relevant to a financial hub in Fukuoka, even in a domestic context.
A weekly magazine Daily Shincho [2] insists that Chief Cabinet Secretary Yoshihide Suga, the leading candidate in the LDP presidential election, is taking the initiative for this move in return for support for his election from Finance Minister Taro Aso, who is from Fukuoka.
If that is the case, this new policy is merely a political gesture and is unlikely to bear fruit.
Can Tokyo Challenge Hong Kong’s Financial Hub Status?
Aside from Fukuoka, which I will discuss later, can even Tokyo challenge Hong Kong’s financial hub status?
On the face of it, Tokyo has ranked 3rd place ahead of Hong Kong and Singapore in the latest Global Financial Centres Index (GFCI) [3]. However, I think it cannot be called an international/global hub.
CFA Society Japan analyzed Tokyo’s performance in the GFCI in 2016, when it was ranked 5th, saying that ’despite being in 5th place overall, Tokyo is an ‘Established Transnational’ center rather than a ‘Global Leader.’ This is because Tokyo appears to be more insular and less open to foreign talent than the international, cosmopolitan hubs of Hong Kong and Singapore.’[4]
This explains my impression of Tokyo and Hong Kong very well, both of which I have lived.
Note:
[1] Kyodo News on 18 August.
[2] Daily Shincho on 26 August.
[3] The Global Financial Centres Index published by Z/Yen Partners on 26 March 2020
[4] ‘Tokyo as an International Financial Centre, an Analysis of Tokyo’s Performance in the Global Financial Centres Index’ issued by CFA Society Japan in July 2016
Taxation
There seem to be mainly three factors discouraging foreign businesses/professionals from working in Japan: taxation, language barrier, and bureaucracy.
Among these things, having more English speakers or changing the legal system, on the whole, will take time, although we should tackle these problems as well. If the government takes this project seriously, a change in taxation seems to be the only and the most effective way to attract them. In this regard, Fukuoka might have some chance to join this race.
How should Fukuoka Respond?
Regardless of whether there is a political background, we should take advantage of any opportunity given. Mayor Soichiro Takashima has already made a statement welcoming this move. [5]
Of course, Fukuoka is not Tokyo, Singapore, or Seoul. If there is any chance, it will be some unconventional role that it should take. For instance, Fukuoka, as a National Strategic Special Zone, could give tax advantages to Fintech companies/engineers in line with its existing effort in the name of Startup City Fukuoka.
Mr. Takashima has once succeeded in introducing a tax reduction scheme (see my earlier article ‘Fukuoka City National Strategic Special Zone (2) “Tax Reduction for Startups”). The next step could be a further development of this scheme.
After the coronavirus pandemic, decentralization will further be pushed forward. I am sure that Fukuoka’s strong points, such as quality of life (i.e., a balance between city life and nature…) will highly be regarded both at home and abroad. Fukuoka will have an excellent opportunity to become a more attractive city.
Note:
[5] Sankei Shimbun on September 2.
Disclaimer: While every effort has been made to ensure that the information on this article is accurate at the time of posting, it is not intended to provide legal advice as individual situations will differ. If you do require advice or wish to find out more about the information provided and related topics, please contact the author.
Text by: Atty. Atsushi Miyake of Miyake Law, September 2020.
Read more original and informative articles here.
