last chance?
Road to the International Financial City September 17, 18:04
Making
Tokyo an international financial city alongside New York and London
--- This is a theme that has been advocated many times over the past 20 years and has set foot in the middle of the road.
The government has included "establishment of an international financial city" in the "bone-shaped policy" compiled in July, and has begun studying concrete measures.
Why are you aiming to become an international financial city again?
Do you see the path to realize this time?
(Economics Department Reporter Toshiki Arai Akihiro Shiraishi)
Great leap forward to 3rd place in the world !?
This March, good news arrived to the people in Tokyo who are busy dealing with the new coronavirus.
In the "International Financial Center Index" released by the British think tank every six months, Tokyo ranked third, the highest in Asia.
For the past 10 years, Tokyo has been ranked 5th or 6th.
I have worshiped not only New York and London, but also Singapore and Hong Kong in the same Asia.
Since 2017, the capital has been focusing on attracting overseas financial institutions and investors, and the person in charge felt that the initiative was approved.
However, in August, the US Vanguard, one of the world's largest asset management companies, just announced its withdrawal from Tokyo due to a review of its business strategy and bases.
Is the leap to the third place in the world a result of reflecting the "growth" of Tokyo?
According to an analysis by a person in the financial industry, "although there is an effect of the steady efforts of the capital, there may be a large part of the ranking that has risen relatively due to" enemy loss "."
This time, rival Hong Kong has dropped significantly from 3rd to 6th.
It is believed that the background is that the "Hong Kong National Security Law" has been enforced and financial institutions and investors are worried about whether they can continue to do business and invest freely as before.
Why are you aiming?
In the first place, why is Tokyo aiming to become an international financial city in the midst of strong rivals such as Singapore and Hong Kong?
The expected benefits are not limited to financial employment.
The aim is to attract risk money to SMEs and venture companies with promising technologies to revitalize the Japanese economy.
Furthermore, if the “major leaguers” of asset management gather and the products for domestic investors are enriched, it is expected that the long-standing concern of “from savings to investment” can be supported.
Three challenges to achieve
The movement is accelerating, such as whether it is possible to attract financial institutions and highly-skilled personnel from Hong Kong, which is in an unstable situation, or the LDP will open a project team to consider concrete measures.
However, issues have emerged again.
There are three main points.
1 Tax system
The biggest barrier to an international financial city is the "tax system" that always stands in the way.
There are deductions, so it is not possible to simply compare, but for example, income tax.
If your annual income is 30 million yen, the tax rate in Japan is 40%.
In contrast, Hong Kong has 17% and Singapore has 22%.
If your income is 100 million yen, the tax rate in Japan will rise to 45%.
The tax rate levied on "financial income" such as stock dividends and gains on sale is 15% for Japan, while Hong Kong and Singapore are exempt from taxation.
Local taxes are also levied.
Not many people or companies are willing to pay a lot of taxes.
If these tax rates are reduced, it will be easier to attract financial institutions and human resources.
However, an official of the Ministry of Finance is cautious, saying, "It is against the fairness of the tax burden to reduce taxes on specific human resources."
"It is true that Japan's income tax is higher than Singapore and Hong Kong, but it is about the same level as China, South Korea and Australia," he argues.
Furthermore, considering that the financial situation has worsened due to the response to the new coronavirus, the road to "tax reduction" seems to be even steeper.
Bilingual
Japanese government agencies have few staff who can speak English, and it has been pointed out that it is inconvenient for overseas financial institutions.
The Financial Services Agency has also begun to move toward improvement.
We are allocating human resources who can handle specialized content in English, and are considering relaxing the requirements for fund management funds around the world to enter Japan.
3 Ease of living
Only one babysitter (housekeeper) who has taken care of the lives of investors in Hong Kong or Singapore is allowed, and the babysitter's family is not allowed to enter the country.
It has also been pointed out that there is a shortage of international schools for children.
A person in the securities industry said, "It is true that financial institution managers and employees have a large tax incentive, but it is almost the same level as in Europe and the United States, and it is not an absolute condition. Comprehensive including life. We should improve the environment from a different perspective. "
What is the charm of Tokyo?
So what is the appeal of Tokyo and Japan to financial institutions and investors?
Katsuyuki Hasegawa, Chief Economist of Mizuho Research Institute Ltd., who was involved in the proposals for international financial centers compiled by three think tank companies in 2014, points out as follows.
Mr. Katsuyuki Hasegawa
"Compared to Hong Kong and Singapore, Japan has thicker industrial and personal financial assets. In Japan, where the birthrate is declining and the population is aging, medium- to long-term asset management is required, so asset management-related business is the key. To do that, we need to make people feel that the financial business in Japan has potential. "
Prepare for the "last chance"
In this interview, an executive of the Financial Services Agency said, "Opportunity to'open'the inward-looking Japanese financial market. The number of foreigners to bring is not the game, but the asset management market for Japanese people. It will be a game to improve and globalize. "
Those involved in attracting overseas financial institutions can put their strength into consideration of the situation in Hong Kong and the situation such as Brexit in the UK, saying, "Now is the real last chance. We should be prepared to have no more." ..
Unlike the bubble era when all Western financial institutions entered the market, it is not possible to attract overseas financial institutions unconditionally.
In order to get a big result in the "final battle", it is necessary to clarify what is the strength, what to improve for that, and how to inform the merit, and steadily materialize it. is.
Reporter of the Ministry of Economic Affairs
Toshiki Arai
Joined the
Bureau in
2005
After working at the Kitami Bureau and Sapporo Bureau, he is
currently in charge of interviewing the Ministry of Finance.
Reporter of the Ministry of Economic Affairs
Akihiro Shiraishi
Joined the
Bureau in
2015
After working at the Matsue Bureau, he has been
in charge of interviewing financial institutions
since the first year
of Reiwa.