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  5. 2. Toward Improvement of the Business Environment

JETRO Invest Japan Report 2016 (Summary) 2. Toward Improvement of the Business Environment

1. Improving business environment in Japan

(1) Creation of business opportunities through regulatory reform

  • Energy field
    FIT (Jul 2012), full liberalization of the electricity retail market (Apr 2016), Negawatt trading market, full liberalization of the gas retail market (Scheduled in Apr 2017)
  • Life science field
    Revised Pharmaceutical Affairs Act (Nov 2014) → Elimination of drug lag and device lag, Fast Track Designation System (Apr 2015)
  • Tourism field
    Relaxing of visa requirements (14 countries, with focus on ASEAN), Great increase in the landing slots at Haneda and Narita, Expansion of exemption of consumption tax for foreign tourists, Revision of tour guide-interpreter system, deregulation of vacation rental rules

Foreign visitor arrivals and their consumption amount

This is a chart showing the number of Foreign visitor arrivals and their consumption amount between 2011 and 2015. The number of Foreign visitor arrivals was 6.2 million in 2011, 8.36 million in 2012, 10.36 million in 2013, 13.41 million in 2014, 19.74 million in 2015. Their consumption amount was 814 billion yen in2011, 1,085 billion yen in2012, 1,417 billion yen in 2013, 2,028 billion yen in 2014, 3,477 billion yen in 2015.

[Source] "2015 Foreign Visitors & Japanese Departures" (Japan National Tourist Organization),
"Consumption Trend Survey for Foreigners Visiting Japan" (Japan Tourism Agency)

(2) Reduction of effective corporate tax rate

37.00% (FY2013) → 34.62% (FY2014) → 32.11% (FY2015) → 29.97% (FY2016) → 29.74% (Scheduled in FY2018)

Reduction of the effective corporate tax rate

This is a chart showing the effective corporate tax rate in Japan between 2013 and 2018, and the effective corporate tax rate in foreign countries in 2016. The effective corporate tax rate in Japan was 37% in 2013, 34.62% in 2014, 32.11% in 2015, 29.97% in 2016, and it will be 29.74% in 2018. The chart of effective corporate tax rate in foreign counties indicates 40.75% in US State California, 33.33% in France, 29.72% in Germany, 25% in China, 24.2% in South Korea, 20% in UK, and 17% in Singapore.

[Note] The tax rates for countries except Japan are as of April 2016
[Source] Website of the Ministry of Finance and "FY 2016 Tax Reform Outline"

(3) Strengthening corporate governance

  • Stewardship Code (Feb 2014)⇒Adopted by 213 investors(As of Sep 2, 2016)
  • Corporate Governance Code (Started in Jun 2015) ⇒Ratio of TSE-listed companies appointing independent outside directors 87.7%(2015)→ 97.2%(Aug 2016)

(4) Utilization of National Strategic Special Zones

  • Startup-related visas(Fukuoka City: from Dec 2015; Tokyo: from Jan 2016; Niigata City: from Apr 2016)
  • Startup tax reduction(Started on Sep 1, 2016)

2. Measures to attract foreign companies

(1) Investment Advisor Assignment SystemExternal site: a new window will open (Five promises for attracting foreign businesses to Japan)

List of companies chosen for the Investment Advisor Assignment System

Company Nationality Sector State Minister Name of Japanese Subsidiary
IBM US IT State Minister of Economy, Trade and Industry IBM Japan Ltd.
Air Liquide France Chemistry State Minister of Economy, Trade and Industry Air Liquide Japan Ltd.
Johnson & Johnson US Medical device State Minister of Health, Labour and Welfare Johnson & Johnson K.K.
3M US Chemistry State Minister of Economy, Trade and Industry 3M Japan Limited
DuPont US Chemistry State Minister of Economy, Trade and Industry DuPont K.K.
Pfizer US Medicine State Minister of Health, Labour and Welfare Pfizer Japan Inc.
Philips Netherland Medical device State Minister of Health, Labour and Welfare Philips Electronics Japan, Ltd.
Micron Technology US Seminiconductor State Minister of Economy, Trade and Industry Micron Memory Japan, Inc.
Merck US Medicine State Minister of Health, Labour and Welfare MSD K.K.

Five promises for attracting foreign businesses to JapanExternal site: a new window will open (determined by the Council for Promotion of Foreign Direct Investment in Japan in March 2015)

  1. Overcome language barriers at retailers and restaurants
  2. Facilitate better Internet connectivity (Free Wi-Fi)
  3. Accommodate business jets at local airports
  4. Enhance educational environment for expatriate children (International schools)
  5. Strengthen advisory and consultation services to support foreign businesses (Investment Advisor Assignment System)

Attracting and fostering globally competitive human resources

  • A “Japanese-version green card” for highly-skilled foreign professionals, which will be the most quickly obtainable green card in the world
  • Online applications for residence status, etc.

Improvement of living environment for foreign nationals

  • Japanese language support for all children who require it by 2020 (currently 80%)
  • English-language information on medical institutions, banks and electricity/gas suppliers, to be posted on JETRO's website, etc.

Improvements in regulations and administrative procedures

  • Working Group for Revising Regulations and Administrative ProceduresExternal site: a new window will open (“Working Group”) was established by the Council for Promotion of Foreign Direct Investment in Japan.
  • Working Group will draw conclusions within one year as to how regulations and administrative procedures that are deemed too complex for foreign companies can be simplified. Matters on which conclusions can be reached early on will be addressed ahead of others by deciding on concrete measures by the end of 2016 and promptly implementing them.

    Topics/issues discussed at Working Group:

    • 1st meeting (Aug 17, 2016): Incorporation of a company in Japan, paying capital fund
    • 2nd meeting (Oct 6, 2016): Dispatching information on regulatory systems and administrative procedures in foreign languages, residence statuses, contractor licenses
  • An additional 500 laws and regulations at minimum will be translated into foreign languages by fiscal 2020, and services of Tokyo One-Stop Business Establishment CenterExternal site: a new window will open will be expended.