Asset Management Special Zones : Attract Funds by Taking Advantage of Local Strengths

Editorial

16:09 JST, July 1, 2024

To develop the economy using regional strengths, it is important to attract investment from both domestic and foreign sources.

The government has designated four areas — Tokyo; Osaka Prefecture and Osaka City; Fukuoka Prefecture and Fukuoka City: and Hokkaido and Sapporo — as “Special Zones for Financial and Asset Management Businesses.” The goal is to attract overseas asset management companies and other companies through special deregulation schemes and support measures for the firms to open bases in the zones.

Within this fiscal year, the government will set up offices in all the special zones to provide English-language support for businesses to register in Japan. The government will consider creating a new residency status in the hope that foreign investors will reside in the special zones and invest in local and other startup companies.

Asset management companies engage in investment activities using funds entrusted to them by their clients. In Japan, these firms are mainly affiliated with major financial groups such as securities firms and banks. In Europe and North America, on the other hand, independent firms have sophisticated investment management capabilities and much larger amounts of money to invest.

If competition between foreign and domestic companies becomes more active, it can be expected to attract domestic and foreign investment funds.

In Japan, cash and deposits account for more than half of the over ¥2 quadrillion in household financial assets. For the Japanese economy to continue to grow, it is essential to create a virtuous cycle in which these funds are actively invested in businesses, leading to the development of industry and the return of profits to households.

To make the most of the funds, the most important thing is to nurture attractive companies and projects. It is important for Tokyo and Osaka to develop as core international financial centers. Other regions also have high potential.

Hokkaido is reportedly aiming to attract companies and human resources related to the Green Transformation (GX), which aims to create a decarbonized society.

There are many areas in Hokkaido suitable for offshore wind power generation. The government will address the shortage of ships for work by relaxing regulations to make it easier to use foreign-flag vessels for construction and maintenance of relevant facilities.

In Hokkaido, construction of a plant by Rapidus Corp., which aims to domestically produce advanced semiconductors, is underway, and there are also plans for building one of the largest data centers in Japan. Increasing the supply of renewable energy is expected to attract more companies that want to decarbonize their factories and other facilities.

Fukuoka is geographically close to other parts of Asia, where high growth is expected. It is said that a liaison organization of industry, government and academia has already succeeded in attracting 24 companies from Japan and abroad, including asset management companies from Hong Kong and Taiwan. They hope to attract funds at an increased rate to nurture local startups.

It is also important to control investments to prevent the spread of excessive risk-taking and damage to household assets.

(From The Yomiuri Shimbun, July 1, 2024)