DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo
7 Jun. 2014 ~ 13 Jun 2014 (No.201423)
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Gov't panel proposes deregulation measures for growth strategy
TOKYO (Kyodo) -- A government panel tasked with regulatory reform on Friday came up with some 230 deregulation measures with the aim of revving up Japan's economy through medical, employment and farm reforms.
The proposals submitted to Prime Minister Shinzo Abe will be reflected in the government's new growth strategy to be compiled on June 27.
In its recommendations, the Council for Regulatory Reform headed by Motoyuki Oka, adviser to Sumitomo Corp., stressed the importance of reforms that would give people more options.
In the medical sector, the panel called for an expanded system of medical treatment combining insured and uninsured services based on patients' requests.
Japan has permitted a total of 94 uninsured advanced medical treatments to be combined with insured treatments, mainly for research purposes.
The proposed deregulation seeks to allow patients to receive such advanced treatments within some two weeks of requesting them. It also aims to increase the number of medical institutions where such treatments are available.
For cases using unapproved drugs, the panel called for shortening the approval time to about six weeks from six to seven months at present.
As employment-related deregulation measures, the panel proposed promotion of a merit-based pay system under the so-called white collar exemption system, which makes it possible for employers to pay some workers not for how long they work but for what they achieve.
It also called for the introduction of a system that obliges companies to ensure that workers take all their holidays.
In the farm sector, the panel urged stepped-up efforts to reform Japan's agriculture over the coming five years.
It called for an overhaul of the Central Union of Agricultural Cooperatives, the umbrella
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organization for agricultural cooperatives around the country, known as JA-Zenchu, so that local cooperatives would be allowed to run their business more freely.
The council also proposed transforming the National Federation of Agricultural Cooperative Associations, known as JA Zen-noh, into a stock company in the future. JA Zen-noh markets the agricultural products of its cooperatives.
In addition, the council said the restriction on private firms' ownership in agricultural corporations should be eased to less than 50 percent of their voting power from up to 25 percent at present to encourage newcomers. (Nikkei: June 13, 2014 10:12 am JST)
Japan to pledge cutting corporate tax rate below 30%
TOKYO -- Japan's government will stipulate plans to slash the nation's effective corporate tax rate to below 30% in economic policy guidelines due out this month, making a public pledge to start the reduction next fiscal year.
Akira Amari, minister of state for economic policy, and Takeshi Noda, head of the Liberal Democratic Party's tax commission, reached an overall agreement Thursday to bring down the top effective rate of 35.64% in Tokyo to the 20% level within several years.
After discussions with Finance Minister Taro Aso on Friday morning, the proposal will be included in draft policy guidelines to be presented at a meeting of the Council on Economic and Fiscal Policy later that day.
The business community wants to see the rate go down by 10 percentage points, bringing it in line with those of such countries as China and South Korea. The LDP's tax commission and Finance Ministry contend that the cut should be limited to around 5 percentage points. The final rate has been left vague for now.
The agreement is also ambiguous about funding for the cut, which has been a point of contention. It will state that the government "will secure permanent funding sources in light of the effects of Abenomics," but will not offer details.
Each 1-percentage-point decrease in corporate taxes will reduce revenue by some 500 billion yen ($4.85 billion). A 5-percentage-point cut would require 2.5 trillion yen in funding, while
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a 10-point cut would need 5 trillion yen.
The LDP tax commission and government tax authorities, concerned about Japan's fiscal health, have argued for a revenue-neutral plan that would make up the difference through such steps as repealing targeted tax breaks and imposing levies on money-losing companies.
While Amari and the business community agree that government finances must be considered, they have sought to allow the increase in tax revenue from the economic recovery to be used as a funding source.
The agreement is expected to include language acknowledging the government's goal of eliminating the primary balance deficit by fiscal 2020, serving as a deterrent against an unfunded cut. Meanwhile, the phrase "in light of the effects of Abenomics" leaves room to use revenue increases for making up for the loss.
The government's corporate tax reform efforts are aimed at reducing a rate that is higher than those of major Asian and European countries in hopes of making Japan more competitive and attracting foreign investment. The agreement marks a step toward this goal but puts off the details until tax revisions are discussed at year's end.
How low the tax will go, and over what period of time, will depend on how much funding can be found.
Size-based corporate taxes face heavy opposition, chiefly from small and midsize companies, and reductions to industry-specific tax breaks have been resisted by the business community. If the government implements an unfunded tax cut of several trillion yen, it will be forced to slash annual expenditures or issue more bonds. (Nikkei: June 13, 2014 5:26 am JST)
Japan April core machinery orders fall 9.1%
TOKYO (Dow Jones) --Japanese core machinery orders fell 9.1% in April from a month ago, the government said Thursday, an indication that companies are likely keeping a close eye on the effect of a sales tax increase on the economy before committing to further outlays on equipment.
The fall was smaller than expected by economists surveyed by The Wall Street Journal and the Nikkei, who estimated on average that core orders decreased 11.0% from March.
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DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo
7 Jun. 2014 ~ 13 Jun 2014 (No.201423)
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Unadjusted core orders rose 17.6% from the same month a year earlier.
The government said the fall in orders from the previous month was due to a decrease in demand from the manufacturing sector.
Core machinery orders in March reached their highest volume level since June 2008, largely on one-off orders in the transport, aircraft and computer industries.
Machinery orders are widely regarded as a leading indicator of corporate capital investment. The core figure excludes orders from electric power companies and those for ships, which are often a source of volatility in the overall data due to their large sizes. (Nikkei: June 12, 2014)
Japan to take in more foreign labor for elderly care, retail
Photo: Filipino nurses study Japanese in preparation for working in Japan.
TOKYO -- The Japanese government will seek to bring in more foreigners able to work in elderly care and retail store management, in addition to attracting workers with highly specialized skills.
The Industrial Competitiveness Council, chaired by Prime Minister Shinzo Abe, on Tuesday recommended overhauling the training program for foreigners and improving Japan's ability to take in individuals with highly specialized knowledge. These provisions will go into the growth strategy to be compiled this month.
A private advisory panel to Justice Minister Sadakazu Tanigaki suggested two changes: increasing the maximum period of the existing training program from three years to five or so, and expanding the scope to include such sectors as nursing care for the elderly; forestry; auto repair; inventory and personnel management in retail; and cooked-meal production. Currently, the program covers manufacturing, construction and agriculture, among other fields.
To ensure that trainees are not forced to work under unsuitable conditions, penalties for violators will be strengthened.
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The targeted sectors tend to lack labor. For example, Tokyo home nursing care provider JICC struggles to secure enough part-timers for weekend and holiday night visits even though it pays as much as 2,800 yen ($27.06) an hour.
Currently, based on economic partnership agreements, qualified Indonesian and Filipino citizens are allowed to work in Japan as nursing care providers. But over the past three years, only 242 individuals have passed the national exam for obtaining the qualification.
The government will now consider opening up the program to those from countries that do not have EPAs with Japan. Individuals from such countries would be able to work by obtaining the necessary qualifications in Japan.
Under a separate program, a new visa category will be created for employees of Japanese companies' overseas operations.
And for individuals with highly specialized skills, such as corporate managers, engineers and researchers, the government will likely make it easier for them to bring along someone to help with household chores. The change will apply in the six national strategic special zones in Tokyo, Osaka and elsewhere. Limiting the initiative will enable the government to alleviate the social impact while working to smooth out the challenges that come with increasing foreign labor.
The Japanese government targets a population of 100 million in five decades. Amid the prospect of the country's population shrinking by 20 million, attracting more foreign labor is seen playing an important role in meeting the needs of the country. (Nikkei: June 11, 2014)
Japanese restaurants hungry for part-time workers
TOKYO -- For many Japanese restaurant chains, the battle for employees is becoming even fiercer than the competition for customers.
Photo: Yoshinoya's outlet near Shibuya Station in Tokyo offers exceptionally high hourly wages for part-time workers.
Students and "freeters," or job-hopping part-time workers, are the backbone of the restaurant industry, allowing chains to keep labor costs down and profits up. But Japan's economic recovery means more of this once-plentiful labor pool
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is landing full-time employment elsewhere. As a result, chains are struggling to secure workers despite offering higher hourly wages.
Costly competition: The hardest-fought battle for part-time workers is taking place around Shibuya Station, one of Tokyo's busiest railway stations.
In early June, an outlet of gyudon beef bowl chain Yoshinoya put up posters advertising openings for part-time positions. The shop, located near a busy intersection in front of the station, was offering exceptionally high wages -- 1,500 yen ($14.5) per hour for night shifts and 1,200 yen for day shift. The nearby outlets of Yoshinoya's two main rivals, Sukiya and Matsuya, were also promising high hourly wages of between 1,100 and 1,375 yen.
To put this into perspective, hourly wages for part-time workers at restaurants in the Tokyo metropolitan area as a whole average just 971 yen, according to a recent survey by employment information company Recruit Jobs.
Some chains operating around Shibuya Station are growing desperate to attract applicants. A Gyu-Kaku yakiniku barbecue restaurant has put up a part-time recruitment poster taller than a person, while a Gusto family restaurant outlet located on the second floor of a building in the area has a now-hiring sign on ground level at the foot of the stairs leading up.
The competition for employees is not limited to Tokyo, nor is it limited to restaurant chains. Convenience store operators, rushing to open new outlets, are also hungry for staff.
"Some restaurants in urban areas have raised hourly wages by around 50 yen in the past year," an official at Recruit Jobs said.
New ways to cope: Family restaurant operator Skylark started concentrating its part-timer recruiting activities at its headquarters in May after determining that individual outlets were no longer able to cope on their own. Skylark now matches applicants with outlets that meet their needs, such as location and work hours.
Skylark "has been able to avoid a serious adverse impact (from the tight labor market) on its operations," said President Makoto Tani, though he added, "We still have trouble recruiting night-shift workers."
Not all restaurant chains are having the same difficulty securing employees.
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DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo
7 Jun. 2014 ~ 13 Jun 2014 (No.201423)
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An Excelsior Caffe coffee shop near Shibuya Station was recently offering an hourly wage of 950 yen, significantly lower than either gyudon restaurants or izakaya pub chains.
"Part-time jobs at cafe chains are popular with young people," said Kazumasa Wakasugi, president of Dynac, which operates the Hibiki izakaya pub and other restaurant chains. "Those seeking part-time work are being swayed by the image," he said.
Restaurant operator Toridoll has set a target of increasing the total number of its Marugame Seimen restaurants, which specialize in sanuki udon noodles, to 1,000, including outlets abroad. Toridoll plans to expand the chain's operations beyond its traditional base in suburban areas and into more urban locations.
But President Takaya Awata admits this will not be easy. "Hourly wages in Tokyo are too high," he said. "We cannot open new outlets if we do not find properties with low rents."
Labor shortages could become a major hurdle for many expansion-minded restaurant chains. (Nikkei: June 11, 2014 7:00 pm JST)
Japanese fashion chain opens doors in Thailand
Photo: The chain used models popular in Thailand to boost its name recognition.
BANGKOK -- Fashion store Tokyo Runway opened an outpost in Bangkok's commercial Ratchaprasong district on Thursday, aiming to catch up to local and Western rivals.
The store offers 10 fashion brands popular with Japanese in their teens and 20s, including Liz Lisa, which specializes in frilly, feminine designs. Prices will come to around 5,000 yen to 10,000 yen ($48 to $96).
The chain is operated by i-GRiTZS, which also holds the popular Tokyo Runway fashion event. The company joined hands with such local businesses as Taokaenoi Food & Marketing to expand into Thailand. It plans to grow its presence to 10 stores over the next three years.
The opening was delayed for a month after political turmoil caused construction delays at the
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commercial center housing the store. (Nikkei: June 6, 2014 5:29 am JST)
Japanese carmakers targeting Myanmar's affluent
Photo: Most vehicles motoring along Myanmar's streets are used Japanese cars.
YANGON -- While Chinese automakers are touting low prices to tap Myanmar's growing appetite for passenger vehicles, Japanese competitors are taking a decidedly different tack -- rolling out high-priced models for the country's upper class.
Toyota and Nissan have both opened showrooms in Yangon, while Mazda has launched operations at a temporary site, all offering vehicles that are considerably more expensive that Chinese models.
The Toyota showroom just opened its doors in March. With only few cars in stock, it mostly accepts orders. The facility got off to a slow start, with only about 10-20 groups visiting on an average day.
The Southeast Asian nation has just started to ease its import restrictions on new cars. New Japanese models are popular because of their fuel efficiency and relative ease of acquiring replacement parts. But with tariffs driving up their prices, consumers tend to gravitate toward used models, according to a used-car importer.
Still, Japanese automakers are offering midlevel and luxury models to attract the growing upper class. At Mazda's three-day sales event at a commercial facility in Yangon earlier this year, high-end offerings, mainly SUVs, were particularly popular. A company official said the ranks of wealthy consumers are heftier than imagined.
However, U.S. and European carmakers that have already moved into Myanmar, including General Motors and Jaguar Land Rover, also have their sights set on the affluent. So, foreign companies are fighting over a pie that is still relatively small. (June 10, 2014 4:59 am JST)
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DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo
7 Jun. 2014 ~ 13 Jun 2014 (No.201423)
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Tokyo's Yamanote Line to get new station for redevelopment project
TOKYO -- East Japan Railway plans to build a new train station on its major line circling central Tokyo as part of a redevelopment project near the capital's fast-growing Shinagawa district.
JR East, as the railway operator is called, said Tuesday it will build the station between Shinagawa and Tamachi stations along the Yamanote Line by 2020, when Tokyo hosts the Summer Olympics.
The company will spend a year on working out a redevelopment plan for areas around the new station in cooperation with the metropolitan government, Minato Ward and participating railway companies.
The concourse of the planned station will have a plaza for events, and the entire station will be covered by a transparent roof so that visitors can take in views of the surrounding cityscape.
In making the announcement, JR East President Tetsuro Tomita emphasized the importance of the area, saying Shinagawa Station will be the terminus of the planned maglev train line and is close to Haneda Airport.
Welcome to Japan: A major objective of the redevelopment project is to create a convenient gateway to Japan that offers rich opportunities for foreign visitors to enjoy the country's historical and cultural heritage.
The new station will be located halfway along the 2.2km stretch between Shinagawa and Tamachi stations. It will be built on the site of a rail yard located about 1km north of Shinagawa Station. Trains for the Keihin-Tohoku Line service will also use the station.
The station's name has yet to be decided, though one option being discussed is to accept suggestions from the public. JR East said it has not estimated the costs yet.
The station will be a two-story structure, with platforms and a bus terminal on the first floor and a concourse -- with ticket barriers and ticket counters -- on the second. The plaza will also be on the second floor.
Tomita said JR East will consider building "some type of passageway" covering the 300 meters between the new station and Sengakuji Station on the Toei Asakusa subway line.
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DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo
7 Jun. 2014 ~ 13 Jun 2014 (No.201423)
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About 13 hectares of land currently used by the rail yard will be allocated for redevelopment use around the station. JR East's redevelopment plan will cover not only this land but also surrounding property, including Sengakuji Station.
The rail company will develop the plan in cooperation with the Tokyo metropolitan and municipal governments and the Keikyu and Seibu groups, which operate train stations and hotels in the area. JR East hopes to finalize the plan by the end of the fiscal year through March 2016.
It will be the first new station along the Yamanote Line since Nishinippori Station opened in 1971. The addition will push up the number of stops on the loop to 30.
High-rise condominiums are fast springing up in the Shinagawa district amid expectations of a jump in the local population and visitor traffic in the years leading up to and following the start of the maglev service between Tokyo and Nagoya in 2027.
JR East is also considering launching a new train service between Tokyo Station and Haneda Airport. (Nikkei: June 7, 2014 1:00 pm JST)
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