After Hong Kong crackdown, Japan cities wrestle for Asian financial hub status

TOKYO, Nov 3, 2020, Kyodo. The major cities of Tokyo, Osaka and Fukuoka are embroiled in an escalating competition to attract foreign companies, as Prime Minister Yoshihide Suga aims to shape Japan into an international financial hub, The Japan Times reported.

The idea to boost Japan’s standing in the financial sector is not new, but China’s imposition of a national security law and its tightening on semiautonomous Hong Kong, known as an Asian financial hub, is injecting new momentum into the drive. The three cities have emerged as candidates for financial centers.

Tokyo is stepping up its campaign to draw foreign financial institutions to the capital with a renewed focus on Asia by setting up a liaison office in Hong Kong.

The office provides support and consultations, both online and face-to-face, to financial firms aiming to establish a business base in Tokyo. The municipal government is also planning to update its 2017 document explaining its vision for a global financial city.

“The situation surrounding international finance has become tense. We will see intensifying competition with other Asian cities,” said Tokyo Gov. Yuriko Koike when she unveiled the plan for the liaison office. “We believe this is going to be the last opportunity for us to draw companies and human resources in the financial sector.”

Many foreign financial institutions have offices in Tokyo, which has the world’s third-largest stock exchange after the New York Stock Exchange and the Nasdaq Stock Market, both in the United States, and lists about 3,700 firms.

Tokyo ranked fourth after New York, London and Shanghai in the Global Financial Centers Index from London-based think tank Z/Yen Group and the China Development Institute, slipping one notch from its previous ranking among the world’s leading financial hubs.

Higher taxes and language barriers are often cited as making Japan less attractive than other Asian rivals. Suga, who inherited “Abenomics,” his predecessor’s namesake economy-boosting program, when he became prime minister in mid-September, has promised to change that.

“We will look swiftly at the tax system, make sure administrative services are provided in English and consider easing visas to create an international financial center for Asia and the world,” Suga told the Diet in October.

In Fukuoka Prefecture, a public-private sector initiative has been launched to make the region a new magnet for foreign financial companies.

The city of Fukuoka, which has been attracting IT firms recently, opened a consultation center aimed at foreign financial institutions last month. It provides support and advice in doing business in the city, with experts such as lawyers and accountants also available.

“In times like this, speed matters,” a city official said.

Osaka is also eager to raise its status. The full-day trading outage recently at the Tokyo bourse due to a system glitch and the global coronavirus pandemic have apparently strengthened the resolve of those championing the city which they say offers an alternative to Tokyo. Osaka has Japan’s first integrated bourse for stocks and commodity futures.

Osaka Gov. Hirofumi Yoshimura has indicated that the city has what it takes to serve as an international financial center, and that it will step up to the plate if the central government is “serious” about changing the tax and visa systems accordingly.

Financial firm SBI Holdings Inc., led by President and CEO Yoshitaka Kitao, is pushing for a plan to create an international financial center in Osaka and neighboring Hyogo Prefecture, in cooperation with local governments.

“The time has come to create the next-generation international financial center (in Osaka and Hyogo),” Kitao told a recent news briefing, adding that the Osaka governor had promised to boost efforts toward that end. “We will increase our calls to make it come true.”