The Bank of Okinawa,Ltd 3 People’S Bank Competitive Advantage of Okinawa’S Ideal Location

The Bank of Okinawa,Ltd 3 People’s Bank Competitive Advantage of Okinawa’s Ideal Location

With major Asian cities within range of 4 hours, located in the heart of East Asia

Seoul 2h 10min

Beijing Dalian Tsingtao 2h 50min Seoul Tianjin Busan Narita Shanghai 2h 5min Tsingtao Haneda KansaiNagoya Taipei Shanghai 1h 30min

Hangzhou

Okinawa Hong Kong 2h 35min Okinawa Amoyアモイ Taipei Bangkok 4h 25min Hong Kong Hanoi Macau Locations within 4- Singapore 5h hour flight from Vientiane Okinawa Amoy 2h Manila (From October 2015) Bangkok Phnom Penh Ho Chi Minh Manila 3h (From October 2015) Narita 2h 25min Kuala Lumpur

Singapore Haneda 2h 20min Nagoya 2h 15min Kansai 1h 50min

The Bank of Okinawa,Ltd 4 People’s Bank

Okinawa Growth Industry Strategy: Development as a Gateway to Asia State of of Okinawa State  The Conference of Industrial Competitiveness in Kyushu and Okinawa was established to  An international air cargo hub business began in 2009 to connect various Asian cities with Points consider growth strategies in the Kyushu and Okinawa regions, in light of an emergency the mainland, utilizing the locational benefits of Okinawa. Okinawa is well suited as an resolution by the Japan Revitalization Strategy and the National Governors’ Association. industrial location targeting emerging markets.  To consider growth strategies in Okinawa and cooperative measures between Okinawa and  A world-class research educational institution (OIST) was opened. Drug discovery startup Kyushu, the Okinawa Subcommittee was established under the Conference. venture firms and IT firms have entered and converged.  A wealth of attractive regional resources (environment, agricultural products, and culture)

Basic Concept Okinawa’s Potential Position Okinawa as a “Gateway to Asia,” hub for trade and “Knowledge Foundations” Okinawa’s Potential Research and development institutions to attract interaction in people, products, money, and information and develop personnel “Locational Benefits”  Okinawa Institute of Science and The center of East Asia Technology (OIST) International logistics hub-related industries Health / Bio / Sports / ICT Industries →World-class interdisciplinary and Concentrating products nationwide to Okinawa and expanding Making Okinawa a hub for internal and external international research and education  Key cities of Tokyo, Seoul, Hong into Asia advanced information and technology exchange  Okinawa Clinical Simulation Center Kong, Shanghai, Taipei, Manila, →Facility for personnel development for  Enriching and differentiation for international etc., within 1,500km (within four  Strengthening intellectual foundations by the latest medical treatment expos and business meetings, including the concentrating internal and external advanced hours by airplane) from Naha Great Okinawa Trade Fair researchers and companies  Strengthening cooperation with other regions  Creating and adding value in sports-related  Concentration of Okinawa-type industries industries adjacent to airports and sea ports  Effective utilization of IoT and big data  Development of infrastructure toward  Promotion, etc., of measures in island-type Sapporo strengthening logistics hub functions environmental business, renewable energy Beijing Aomori development, and energy-saving measures Pyongyang Okinawa’s Potential Seoul Osaka Tokyo “Regional Resources” Busan Subtropical climate and diversity born of an island Kagoshima environment Shanghai  Nature and landscape with blue skies, Fuzhou Taipei Okinawa seas and mangrove forests Hong Kong Industries Utilizing Regional Resources  Traditional entertainment and culture such as music, “eisa,” and traditional Creating new industries in view of the Asian market through use of Okinawa’s diverse biological and dance tourism resources, etc. Manila  Unique island produce such as  Adding value to tourism peucedanum japonicum, turmeric,  Expanding production capacity and adding value to agricultural hemerocallis fulva, and lxeris and fishery products and foods produced in Okinawa  Broadcasting artistic and cultural industries to the world

Personnel development to support key strategic industries  Personnel to create new businesses via  Developing world standard global business comprehensive cooperation across industrial  Personnel with advanced technological skills personnel sectors

The Bank of Okinawa,Ltd 5 People’s Bank Population of Okinawa (Future Prospects)

The population of Okinawa is expected to take a downward turn in and after 2025. Population is on the increase at this stage, but active steps towards population growth are being taken now.

(in thousands) Population trends in Okinawa (2100) 2,030

(2050) 1,620 Efforts to facilitate natural (2035) increase in population 1,540

1,393 1,434 Creation of a society that allows people to marry, (2010) (2015) give birth to and raise children without undue worries Projected population curve Elimination of childcare waiting list based on risk scenarios Promotion of “health and longevity in Okinawa” campaign

Efforts to enhance growth of society

Creation of a dynamic society that is open to society Job creation and securing diverse human (2100) resources 840 Increasing tourists and visitors

Aims to revitalize isolated islands and depopulated regions

Creation of a society that delivers well-balanced and sustainable population growth Projected population Improvement of conditions for long-term residence Industrial development by demonstrating attractive regional characteristics

The Bank of Okinawa,Ltd 6 People’s Bank

Number of Visitors to Okinawa

FY2016 marked a record 8.76 million tourists visiting Okinawa The number of overseas tourists was 2.12 million (up 27% YoY), renewing a record high

Target for FY2021 revised upward: Trends in the入域観光客数と観光収入の推移 number of visitors and tourism revenues 10,000,000 ⇒12,000,000 (単位：百万円)(¥ million) (persons) Target29年度計画 for FY2017 9,500,000950万人 700,000

(単位：人) 600,000 12,000,000 700,000 500,000 10,000,000 600,000 33年度計画Target for FY2021 400,000 500,000 8,000,000 1,200万人 12,000,000 300,000 400,000 6,000,000 300,000 200,000 4,000,000 H28年度入域観光客数 876万人 Number of visitors in FY2016 200,000 （前年度比 83万人増） 8,760,000 (up by 830,000 YoY) 100,000 2,000,000 100,000

0 0 2003H15 04 H16 05 H17 06 07H18 08 H19 09 H20 10 H21 11 12H22 13 H23 14 H24 15 H252016 H26 2021 H27 H28 H33 (fiscal year) (年度)

(出所) 沖縄県「第5次沖縄県観光 Japanese visitors Overseas visitors Tourism revenues Number of port call by cruise ships in 2016: 387 振興基本計画」国内客(左軸) 外国人客(左軸) 観光収入(右軸) 平成28年クルーズ船寄港回数387回 (left axis) (left axis) (right axis) Scheduled number of port call in 2017: 502 (up 30%)

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Housing Market Trends in Okinawa

・Housing market in Okinawa remains strong ・According to the national census 2015, growth rate of population and number of households are both the highest in Japan

Number of new housing starts by housing type Total population and total number of households in Okinawa

(thousand households) (in thousands) House for Company Condominiums and detached 18,000 Owner-occupied持家貸家給与住宅分譲住宅 rent -owned housing Total population and total number of households

1,829 1,933 2,077 Total population 16,000 1,339 Total number of 41 30 households 163 14,000 25

944 12,000 1,381 85

794 205 10,000 93 10,772 10,914 10,726 11,135 8,000 8,253 As of the 1st of As of October 1 of each month 7,469 6,000 7,381 each year

4,000

2,000 3,976 3,148 3,170 3,103 2,441 2,773 3,431 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 National census 2016 2017 ２２2010年２３ 2011年２４ 2012年２５2013年２６ 2014年２７ 2015年２８2016年

The Bank of Okinawa,Ltd 8 People’s Bank

Economic Trends in Okinawa 1 BOJ Tankan

Overview ◆ The prefectural economy is 日銀短観業況判断DI BOJ Tankan Business Confidence DI expanding overall.

◆ In terms of personal spending, trends are strong against a backdrop of an increase in the prefecture’s population, tourism demand, and an improved employment and 50 earnings environment within the prefecture. Okinawa沖縄県

40 National average In terms of tourism, performance is favorable as 全国 domestic visitor demand is strong and demand 30 from foreign visitors is on a rising trend. 20 In construction-related terms, public investment 10 is solid. Additionally, residential investment is trending at high levels against a backdrop of an 0 increase in the prefecture’s population. ▲(10) 10 In terms of employment and earnings trends, H25.3 H25.9 H26.3 H26.9 H27.3 H27.9 H28.3 H28.9 H29.3 Mar. 2013 Sep. 2013 Mar. 2014 Sep. 2014 Mar. 2015 Sep. 2015 Mar. 2016 Sep. 2016Mar. 2017 improvement is significantly advancing.

Source: BOJ Naha Branch

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Economic Trends in Okinawa 2

Official land prices

(%) Residential住宅地 land prices 4 3 Overview 2 ◆ In land for residential use, demand 1 0 remains strong overall for both detached homes -1 and condominiums against a backdrop of an -2 -3 increasing population. -4 In particular, in central Naha, the Shintoshin 25年 26年 27年 28年 29年 area, and the Makabi area, demand is vigorous 2013 2014 2015 2016 2017 Okinawa沖縄県 for land for detached homes and condominiums, Fukuoka福岡県 National全国 average and due to the scarcity of suitable land, the growth rate has exceeded the previous year in Commercial商業地 land prices (%) some areas.

4 ◆ In land for commercial use, demand 3 2 for land for use as storefronts and hotels, etc., 1 remains solid against a backdrop of an increase 0 in both domestic and foreign tourists. -1 -2 -3 201325年 2014 26年 2015 27年 2016 28年 2017 29年 Source: Ministry of Land, Infrastructure, Transport and Tourism

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Economic Trends in Okinawa 3

Employment situation

Trends完全失業率の推移 in unemployment rates (単位：％(%)) ◆ In the past, Okinawa suffered nearly twice the unemployment rate of the national average, but the rates have steadily fallen, becoming closer to the national level. 8.0 差異 Difference (times) 7.0 Okinawa Active opening有効求人倍率（季節調整済） ratio (seasonally adjusted)

6.0 National沖縄県 average

5.0

4.0 全国 1.06 1.04 3.0 1.02 1.00 2.0 0.98 1.0 0.96 0.94 0.0 0.92 H24 H25 H26 H27.3 H28.3 H29.20.90 2012 2013 2014 Mar. 2015 Mar. 2016 Feb. 2017 0.88 0.86 Source:出所：沖縄県、総務省 Okinawa Prefecture, Ministry of Internal Affairs and Communications 28/1-3月Jan. - Apr. 28/4-6月 - Jul. - Sep. 28/7-9月Oct. - 28/10-12月Jan. - 29/1-3月 Mar. Jun. 2016 Dec. Mar. 2016 2016 2016 2017

The Bank of Okinawa,Ltd 11