Taking the next steps
Established in 2019 with the goal of boosting the attractiveness of Tokyo’s financial ecosystem, FinCity.Tokyo is aiming to transform Japan’s capital into a major global financial city to rival the likes of London and New York. General manager Kazuhiko Yoshimatsu tells Shun Tanabe the seven steps they plan to take to get there
Step one: Make Tokyo the natural choice
“There was a time when Tokyo was the financial hub of Asia, and the city was placed in the same rank as London or New York. However, from the collapse of the bubble economy in the 1990s to the 2008 global financial crisis, Japan experienced long-lasting economic deflation under which industries and businesses struggled to flourish. This, together with a declining birthrate, aging population, and the country letting go of its competitive edge, caused Tokyo to lose its appeal as a hub for business and finance.
During that same time, cities like Shanghai, Hong Kong, and Singapore built up their stature. With sights set on the 2020 Tokyo Olympics and redevelopment projects moving forward in the city, The Global Financial City: Tokyo was a vision set out in 2017 by the Tokyo Metropolitan Government to make the city attractive to businesses and investors worldwide again. It was created with the acute awareness that if we forgo this chance, Tokyo will miss this opportunity to once again become a major player in Asia.”
Step two: Lead from the top
“Although the idea of Tokyo as an international financial city has been discussed many times in the past, executing such a plan requires a long-term, broad-based approach. Even if the work that needed to be done was evident, it was previously unclear who would be carrying out specific tasks and where the funding would come from. However, things are different now as the metropolitan government has taken the lead.
With the Global Financial City: Tokyo initiative, the Tokyo Metropolitan Government proposed concrete measures complete with budgets, the necessary infrastructure and an agreed consensus with the relevant parties. This led to the establishment of the Financial One-Stop Support Service that provides English support for the launch of businesses in Tokyo and Fintech Business Camp Tokyo, an accelerator program where Japanese banks offer guidance and advice on financial technology. In addition, the Tokyo EMP Fund subsidizes projects that boost Tokyo’s status as a financial city and programs lowering the costs of middle and back office operations have also been launched.”
“If we forgo this chance, Tokyo will miss this opportunity to once again become a major player in Asia”
Step three: Bring the public and private spheres together
“The Tokyo Metropolitan Government realizes it cannot do this alone and is collaborating with domestic and foreign financial institutions. In 2019, it launched FinCity.Tokyo – an organization which encourages public-private partnerships, spearheads promotional activities and raises awareness of the business opportunities available in Tokyo. FinCity.Tokyo has also been serving as a point of contact for international companies to expand into the Japanese market, providing them with useful information, offering the necessary networking support, and providing feedback to both the national and metropolitan governments on the requests of international companies.
Our goal is for Tokyo to be known as a top city that is the preferred destination of people, goods, and money, and for Tokyo to become a globally recognized city that immediately comes to mind the moment Asia is mentioned.”
Step four: Take Tokyo to the world
“Japan has become a highly popular tourist destination as a result of the tourism policies implemented by the Japan Tourism Agency since 2012. Unfortunately, Japan still has a weak presence in the business and financial sectors, and many people are currently setting their sights on China instead. Therefore, it is imperative to not only create a domestic system to attract international companies and investors, but also to actively disseminate information to the rest of the world. “Access to Tokyo” is an initiative set up in four cities – Paris, London, San Francisco, and Singapore – to spread market information on Japan to government agencies, trade associations, and investors in key countries.
In addition to holding promotional events in New York, London, Paris and Hong Kong, FinCity.Tokyo will also be actively holding its own webinar after the Covid-19 pandemic to continue sharing the appeal of Japan with business entities overseas.”
“Our goal is for Tokyo to become a globally recognized city”
Step five: Raise the sophistication of financial services
“Japan has been criticized for its emphasis on deposits and savings of personal financial assets. According to the Bank Of Japan, of its ¥1,903tn worth of household financial assets, more than 50 percent (¥1,008tn) belongs to deposits and savings. The lack of money flow is detrimental to personal asset formation, the expansion of asset management, and economic growth. Actively investing in personal funds leads to the growth of companies, industrial competitiveness, and the revitalization of the economy.
We need to encourage people to invest out of their own wallets. Current projects we are implementing to do this involve attracting advanced financial human resources and companies, as well as business support, aiming for the sophistication of financial services such as asset management and fintech.”
Step six: Get Tokyo ready for business
“Tokyo already has the environment and infrastructure needed to expand the financial sector. Communication and increasingly business can be done in English. There is already an English-language manual on how to complete financial license registration procedures and The Financial Services Agency recently announced that from January 2021 it will handle the registration procedures, supervision, and inspections in English for overseas investment managers and advisors who recently arrived in Japan.
They are also considering tax incentives, with several proposals in the draft tax reform request for 2021 including corporate tax reduction for asset management companies and the relaxing of restrictions on executive compensation deductions. More and more offices for Fintech and asset management companies are opening in Tokyo’s long-time financial districts like Kabutocho, where the Tokyo Stock Exchange is located. Business start-ups and expansions are also being supported via office and infrastructure development, business matching support, and middle-back service support. Both foreign and domestic businesses that had left Japan
to expand overseas are returning to Japan to establish bases. We’re beginning to see a business movement like no other in history.”
Step seven: Seize Tokyo’s opportunity
Asian financial centers such as Hong Kong and Singapore face rising business costs as a result of their rapid growth, including expenses for human resources and offices. In Hong Kong, concerns are also growing due to the increasing political unrest. Now is the time for Tokyo to increase its presence as a financial hub in Asia, as the world is starting to explore new perspectives on society, economy, and business in the post-corona world.
The momentum is with Japan and there is an opportunity to promote excellent, emerging Japanese companies and technologies worldwide. Japan’s SMEs are often not targeted for investment by overseas investors due to their lack of name recognition. However, many of them possess advanced technology and boast top shares in the global market. With global interest in achieving sustainability, Japanese companies with unique technologies in industries such as green tech, specialized materials, and biomedical science may become the focus of attention in the future. It is FinCity.Tokyo’s plan to promote Japan’s future to the world.”