Japan is the 3rd largest economy by GDP and has been stagnating for the longest time. Recently, there is renewed interest for investors to enter the Japanese market. Read on to find out why.
An Ever Growing Economy
Statistics from Ministry of Finance of Japan has shown that across all industries, corporate ordinary profits increased by 20 trillion yen from FY 2011 – FY 2015, from 45.3 trillion yen to 68.2 trillion yen! In a separate report and labour survey, it was reported that unemployment rate is at it’s lowest at 3.14% in 2016. Job-to-applicants ratio is also at it’s highest at 1.36. These data indicates positive sentiments in the labour market.
The government has also rolled out series of initiatives to attract foreign business into Japan. These include designating National Strategic Special Zones to bring significant deregulation and reform in leading edge industries. Rules were tweaked to shortened the time required for highly skilled professionals to apply for permanent residence permit in Japan.
Huge & Sophisticated Market
Tokyo has the world’s largest city population. High literacy rates and their high standards of living meant that Japanese and foreign companies in Japan are required to constantly innovate, and establish the global standards for their businesses. A Euromonitor survey has reported that foreign companies hold a high share of sales in Japan, particularly in the consumer-related markets.
These factors has attracted 52 companies out of the Fortune Global 500 have their HQ in Japan!
Japan is ranked 1st among G7 countries in research funding and percentage compared to GDP. It meant that Japan is very active in R&D and innovation and has filed a large number of patents, many of which have high universal validity. Strong areas include patent application for drugs and medical devices, super computing, and a forerunner in regenerative medicine.
Business Friendly Infrastructure
An interesting result emerged out from a simulation done by KPMG in 2016. Japan’s transportation fee (including air transport and air freight) reported that Japan’s annual costs based on scheduled deliveries from factory is lower than Germany, France and almost half of Australia, US and UK. Average monthly internet fee is also among the lowest in developed countries. Rental of Grade A offices is also lower than Singapore and Hong Kong.
Comfortable Living Environment
The Global Peace Index 2016 has ranked Japan 1st in Asia for being a safe and peaceful country. Additionally, a separate survey in 2015 has ranked Tokyo as the world’s safest city.
The medical infrastructure is well developed. The number of beds per 1000 people is ranked 1st among OECD countries. The ratio of nurses to physicians is also ranked 2nd among OECD countries
To sum it up, Japan is a stable, with transparent laws that safeguards foreign investors. With established infrastructure, companies will find it attractive to invest in Japan. It was reported recently that there there a number of wards in Tokyo experiencing population growth. As a property investor, it may be wise to pay more attention to these markets.
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