The Government of Japan intends to achieve a “virtuous cycle of growth and distribution” in which Japan’s household savings flow more into productive investment, and the profits of increased corporate value are returned to households, leading to further private sector investment and consumption.
Therefore, the “Plan for the Realisation of Asset Management Nation” (hereinafter, the “Plan”) was approved on December 13, 2023. As one of its major policies, special zones for financial and asset management were established. On June 4, 2024, the Financial Services Agency announced the Policy Package to Achieve Special Zones for Financial and Asset Management Businesses. In this article, we will pick up and report on the measures of this Package which could have the most impact on Spanish companies entering the Japanese market.
I.-Target Areas
The Financial Services Agency decided to assign the following four areas as Special Zones for Financial and Asset Management Businesses:
- Hokkaido and Sapporo City
- Tokyo
- Osaka Prefecture and Osaka City
- Fukuoka Prefecture and Fukuoka City
Hokkaido and Sapporo City will aim to strengthen financial functions and build a supply chain for the Green Transformation industry, and create employment opportunities as a renewable energy supply base for the whole nation.
Tokyo aims to contribute to the growth of Japan and Asia as a whole as a gateway to attract global funds, talent, technology, and information.
Osaka Prefecture and Osaka City aim to create an environment to enable startups and universities, etc. to boldly take on challenges.
Fukuoka Prefecture and Fukuoka City will maintain their efforts to attract financial institutions and improve the business and living environments, focusing on asset management companies and fintech firms etc. that have a particular affinity to the characteristics of Fukuoka.
II.- Initiatives for Starting a Business in Japan
・ Procedures in English for the setting up of a company upon entry into Japanese markets
In the application for the setting up of a company regarding commercial registration and certification of the articles of incorporation, the Japanese government will take necessary measures to help applicants prepare written applications and documents to be attached, such as articles of incorporation, in English, so that procedures can be completed in English, on condition that the relevant local governments cooperate, by the end of March 2025.
In the procedures for applying for an application for certificate of eligibility for residence status, if reference materials attached to an application form are prepared in English, Japanese translations may be omitted. The national government will make this the standard practice, disseminate it broadly to users, and will take necessary measures by the end of March 2025.
・ Creation of a new status of residence for foreign investors who make investments in startups.
In order to attract investments from overseas to startups in Japan, the national government will take necessary measures by around the end of March 2025 to create a new category of residence status for foreign investors (including angel investors) who satisfy the requirements of investing a certain amount of money in startups in Japan and who carry out activities that will contribute to the creation and development of the ecosystem of startups within the national strategic special zones.
・ Assistance for foreigners in opening bank accounts.
There are cases where foreign nationals have difficulties in opening bank accounts in Japan due to language barriers and the need to submit various documents for screening, and a considerable clerical burden and time are often required. From the perspective of accelerating and facilitating procedures for opening bank accounts, in all of the four areas designated as special zones, financial institutions and the relevant local governments will build support networks for foreign nationals who intend to expand their overseas business (namely, in Japan), on a trial basis, by around the end of March 2025
III- Practices that affect energy-related businesses
・ Deregulation of the restriction on compressed hydrogen storage.
With regard to the restriction on compressed hydrogen storage under the Building Standards Act, the Ministry of Economy, Trade and Industry and the Ministry of Land, Infrastructure, Transport and Tourism will deliberate on safety standards necessary for obtaining special permission, in collaboration with the relevant local governments, with the aim of developing hydrogen storage facilities as a pioneering initiative as stated in the submitted proposals on the special zones. A conclusion will be drawn by the end of March 2025. Based on the conclusion, both Ministries will jointly and immediately commence deliberations for establishing safety standards under the High Pressure Gas Safety Act, that should qualify for exemption from the application of the restriction on storage, toward the social implementation of hydrogen.
・Utilisation of foreign-flag ships and foreign workers for the installation and maintenance of offshore wind power plants.
When it is difficult to ensure enough working vessels flying Japanese flag to install/maintain an offshore wind power plant and a related private enterprise requests the national government a special permission, under Article 3 of the Shipping Act, to utilise those vessels flying a foreign country’s flag in a mission to install/maintain the plants, the national government could collectively issue those permissions for some transportations only after the enterprise makes clear the details of those transportations and the difficulty in completing them with working vessels and flying Japanese flags alone is proven. In order to make it more foreseeable for enterprises to invest in the project of offshore wind power plants, the national government will take the necessary measures, including amendments to related ministerial ordinances, about this special permission within the 2024 fiscal year.
・Installation of offshore wind power generation facilities in the EEZ of Japan.
The national government submitted the Bill for the Act for Partially Amending the Act on Promoting the Utilisation of Sea Areas for the Development of Marine Renewable Energy Power Generation Facilities during the ordinary session of the Diet in 2024.
The amended Act incorporates the implementation of surveys on marine environments, among others, by the national government in order to designate the zones for offshore wind power generation projects in the territorial sea, internal waters, and the exclusive economic zone (EEZ) of Japan. Furthermore, the amended Act also incorporates the establishment of a scheme to permit business operators to install offshore wind power generation facilities, etc. in the EEZ of Japan.
The House of Representatives passed this Bill on May 28, 2024, but the House of Councillors decided to continue its examination on June 21, 2024.
Although investment into Japan had been considered scarce in the past, the recent depreciation of the yen and the improvement in the investment environment described in this report have made investment in Japan more promising than in the past.
As we have seen in the latter half of this article, the inclusion of many energy-related projects, which is Spain’s strong point, would be expected to stimulate investment in Japan from Spanish companies. We expect to see further economic relationship between the two countries to continue to grow.
Satoshi Minami
Vilá Abogados
For more information, please contact:
30th of August 2024
