If Tokyo does regain its financial mojo, it won’t be as a result of the campaign led by FinCity Tokyo to increase its appeal.
The two loveliest words in the English language, “Default,” according to Homer Simpson, maybe the key to Tokyo’s hopes to regain its status as a major financial centre.
The city has been attempting to repair its damaged reputation. Formerly a financial hub, it dropped last month and was ranked outside the top 20 banking hubs, behind rival Asian cities like Seoul and Beijing. Three decades ago, when Tokyo’s markets were at their height, Shenzhen was merely a dot on the financial map. Today, it is ranked nine places higher.
There are several unchangeable truths that have resisted all attempts to win over foreign business, including those led by the likes of Governor Yuriko Koike: Compared to Hong Kong and Singapore, there is a heavy tax burden, and there is also a lot of red tapes and daily life is conducted in Japanese rather than English.
There are signs that Tokyo may be beginning to look more appealing, if only because its main competitors are beginning to look less appealing. Citadel, a hedge fund run by Ken Gryphon, intends to establish itself in the city for the first time since the global financial crisis, according to Bloomberg News. That comes after market-maker Citadel Securities, a different company Gryphon established, moved to the capital city last year. Citadel Securities was one of nine financial companies to receive licences for the 2022 financial year. Steve Cohen most recently announced that Point72 Asset Management is expanding its employees there by 20%.
It’s a modest beginning, but it’s still a beginning. After a protracted period of isolation during COVID, the globe is taking another look at Japan. With his first visit in 12 years earlier this month, Warren Buffett gave the market his blessing, claiming a “strong feeling” that it will keep expanding over the ensuing 50 years.
However, it won’t be because of the campaign led by the FinCity Tokyo organisation to increase its appeal if Tokyo does regain its financial mojo. When that group was established in April 2019, more important events were taking place elsewhere, including the pro-democracy demonstrations in Hong Kong. Things have changed significantly during the past four years. Although Beijing has shown the hollowness of its claims about the One Country, Two Systems doctrine, the city may now be rebounding from the restrictions it faced during the pandemic. The population of Hong Kong is declining as expatriates leave, as shown by a 12% decrease in the number of foreign pupils enrolling in international schools last week.
Shanghai, Beijing, and Shenzhen are among the top financial centres on the mainland, but the Covid-Zero era and its tumultuous finale alarmed many. The deteriorating US-China relations and the talk of war over Taiwan have also contributed to this. Although the risk may be modest, after Canadians Michael Kovrig and Michael Spavor were detained for nearly three years, ex-pats are concerned about the sporadic arbitrary incarceration of foreign nationals. The most recent arrest was made this month and involved an Astellas Pharma Inc. employee from Japan.
Low taxes and very safe This has made Singapore the logical winner—almost to an excessive extent. It has its own problems, chief among them an absurd rise in home prices amid a dearth of available dwellings. Rents increased by 30% just in 2022. While it is challenging to accept everyone who wants to leave Hong Kong due to visa limitations, the city-state is also attempting to strike a balance between luring in foreign talent and internal worries about wealth disparity.
That provides Tokyo with a window. For the first time in four years, tourists are returning in large numbers, and they frequently comment on how the city is defying the narrative of its impending doom. The city now appears better than ever thanks to a development boom that persisted throughout the pandemic. It is one of the few significant, developed metropolises that also constructs. This year, the reconstruction of the Toranomon business area and the tech-friendly Shibuya will add 760,000 square metres (8.2 million square feet) of new office space to Tokyo’s five main business wards.
According to one survey, the number of rental properties is at an all-time low, but the city is nevertheless shockingly affordable: In the last three years, the average rent has increased by just 3.6%. Workers will find accommodation far more easily in Tokyo than in places like Hong Kong, despite the fact that the city’s housing market is so brutally efficient that it may not be a wise investment.
The nation is keen to draw in top professionals despite a reputation for being anti-immigration. For educated, high-earning individuals, the government recently introduced a fast-track visa programme that allows for permanent residency in just one year.
Additionally, several issues that the ex-pat community finds troubling are being addressed. More than 3,000 extra student seats will be added to existing international schools in the coming years as organisations like Harrow construct campuses. Many people are unaware of a domestic help visa that allows the wealthy to sponsor housekeepers, an option that, astonishingly, isn’t even open to Japanese citizens. While live-in help, popular in Singapore and Hong Kong, isn’t common here, it is here.
Additionally, several issues that the ex-pat community finds troubling are being addressed. More than 3,000 extra student seats will be added to existing international schools in the coming years as organisations like Harrow construct campuses. Many people are unaware of a domestic help visa that allows the wealthy to sponsor housekeepers, an option that, astonishingly, isn’t even open to Japanese citizens. While live-in help, popular in Singapore and Hong Kong, isn’t common here, it is here.
