With more than half the world’s population and economies booming across the region, Asia is fast becoming a global hub, particularly with its well-situated financial capitals of Hong Kong, Shanghai and Singapore.
Nevertheless, Tokyo remains a leading destination in the region, despite competition from these cities. This is not only because of its sheer size, but also because it is attractive to foreign firms. Tokyo still plays host to the most corporate headquarters of global enterprises.
That said, Japan’s capital risks slipping from the top spot if it doesn’t invest in infrastructure and other means to lure more international firms.
The competition among major cities in the region is fierce in terms of attracting corporate investment.
Surrounding Asian countries offer cheap labour, and have introduced prestigious projects and large investments in infrastructure, such as harbours and airports. These factors threaten Tokyo’s global position.
To address the issue, the Tokyo metropolitan government has come up with a master plan that revolves around the creation of a so-called special zone. The goal of this project is to persuade more then 500 foreign firms to set up shop in the city by 2016.
To achieve this goal, the government must prove that Tokyo has more to offer then its competitors.
A necessary first step would be to provide foreign employees with such benefits as preferential tax treatment and financial assistance packages in English.
This is especially relevant because Japan consistently ranks lower than its Asian neighbours in terms of the ability of the population to communicate in English. This language deficiency could seriously harm Tokyo’s international reputation.
Between 2005 and 2010, the number of foreign firms in the capital slumped from 2,645 to 2,330. This decline should be addressed, and the latest plan proposes doing so by creating five special business zones.
The designated areas would encompass Roppongi, Shibuya and other business districts, where prominent businesses already have, or will be encouraged to, set up operations. The firms targeted are involved in the fields of technology, chemicals, precision instruments and aviation, as well as medicine.
The benefits of establishing operations within the five zones include:
• Reduced corporate tax rates, from the standard 38% to 28.9%
• Eligibility to receive up to ¥5mn in subsidies to cover start-up costs
• Access to assistance in English from the Business Development Center Tokyo, to facilitate the transition to working here
• Generous fiscal and financial assistance packages
• Livelihood support provided in English by specialist agencies
• Subsidies from the Tokyo Metropolitan Government
The quality of life in Tokyo is widely seen to be high. The city is recognised as one of the most liveable places in the world, due to its low crime rate, excellent medical care and good school system.
Clean water, fresh air, numerous parks, as well as many other attractions in and around the city offer something for everyone, making Tokyo a prime spot for investment and for businesses to establish home bases.
Through its efforts to attract foreign firms with these benefits, Tokyo hopes to retain its number one position in Asia for decades to come. The world will see Tokyo first-hand through the 2020 Olympic and Paralympic Games, and we shall see if it succeeds with this master plan to stay on top.