A cross-ministerial effort for reform is underway to boost the attractiveness of the country’s financial and capital markets. Here, an expert well-versed in the Japanese market speaks about her expectations toward Japan.
A dedicated website has been launched to enhance the provision of information in English. It offers necessary information on the improved procedures for opening a business and acquiring residence status. https://www.fsa.go.jp/internationalfinancialcenter/en/
Japan’s financial and capital markets are now in the global limelight. That newfound centrality can be attributed to the Suga administration’s cross-ministerial policy package, launched in order to create an international financial center—a goal raised in the government’s Action Plan of the Growth Strategy announced last year. Japan has the strengths to stand out as a financial center, including political stability, legal systems, public security, and a favorable living environment. In addition, its sizeable domestic economy, with a GDP of JPY 560 trillion (about USD 5.15 trillion), and financial assets held by households worth more than JPY 1,900 trillion (about USD 17.5 trillion), also strengthens Japan’s appeal within the asset management business.
Alicia Ogawa previously lived and worked in Japan for 15 years. “Japan was a wonderful place to live in. It’s safe, beautiful, and the transportation is amazing.”
Alicia Ogawa, director of the Project on Japanese Corporate Governance and Stewardship at Columbia Business School, who worked at a Japanese financial institution for 15 years, and is an expert on the Japanese economy and Asia’s financial markets, says, “Japan has been saddled with issues such as language barriers—particularly in terms of offering administrative services in the English language—as well as high tax rates and a shortage of workers with professional skills. Many past initiatives have attempted to tackle these issues, but I believe that the earnest efforts Japan is currently making are different. We can see that Japan is now seriously committed to becoming an international financial center. Expectations toward Japan’s financial and capital markets are also growing among foreign investors.”
Foreign firms interested in entering Japan are already using the services of the recently launched Financial Market Entry Office, which communicates with foreign asset management companies and helps them with the regulatory process.
(ASO Taro, Minister of State for Financial Services, on the left, and AKAZAWA Ryosei, State Minister for Financial Services, on the right)
According to Ogawa, “There has been a major change regarding better dialogue between investors and companies on account of broad acceptance of the corporate governance code compiled by the Financial Services Agency and the Tokyo Stock Exchange. Interest in Japan as an investment destination is growing significantly; that is due to expectations surrounding the growth of the Japanese economy and innovations, as well as to the rise of young and ambitious talent.”
She also proposes ways in which the country can aim even higher. “Japan needs to make further advancements in digitalization—an area that the Suga administration is stepping up efforts to promote. And, above all, it is essential to raise public sentiment for society as a whole to welcome foreign asset management companies and financial talent. To that end, disseminating information both within and outside Japan is an important endeavor for related ministries and agencies.”
Initiatives to realize an international financial center have just begun. Japan will actively implement each measure designed to boost Japan’s economy and strengthen its presence in the global financial market.