TOKYO — Three cities — Tokyo, Osaka and Fukuoka — will compete to become Japan’s next international financial center under a plan developed by Prime Minister Yoshihide Suga.
Japan “can expect a market revitalization by attracting financial personnel from overseas,” Suga told Nikkei and other media outlets in early October.
The plan is to attract highly skilled workers from around the world through tax perks and special residency rules that will apply to the entire country. But the city that can demonstrate steady achievement will receive focused government support in its development as a financial hub.
“Of course I expect Tokyo to develop [as a center],” said Suga, who also spoke of plans to “create an environment where financial functions can be improved” throughout Japan — raising the possibility that a hub could be in another city.
Tokyo has previously served as the city of choice for government-led initiatives to form a financial hub, given the heavy concentration of headquarters and branches of financial groups. The Japanese capital offers special visas to select foreign arrivals, for example.
Despite this, the city has lagged. The latest Global Financial Centers Index, published in September, ranked New York, London and Shanghai as the top three. Tokyo slipped one place to fourth. Critics have said high tax rates and language barriers are among the reasons for the city’s relatively poor performance.
Suga pledged to “quickly address matters including taxation, residency requirements and administrative support in English.”
Details for the plan will be hammered out quickly. Tax legislation for fiscal 2021 is expected to feature lower income and inheritance tax rates for highly skilled overseas professionals, as well as cuts for foreign enterprises. Expanded budgetary provisions for accommodating English speakers will also be on the table, along with residency extensions.
Japan sees an opportunity to