Japan cuts company hurdles

Business Asia, Sept 13, 1999 by Randolph Ramsay

Conditions for foreign companies in Japan are getting easier thanks to structural reforms and work environment changes, according to Japan External Trade Organisation (JETRO) managing director Hiroshi Nakano.

In an upbeat assessment delivered as part of a recent Australia-Japan Business Forum in Sydney, Nakano said Japan's economy was on the rise and obstacles to foreign companies dealing in Japan were being removed.

"According to JETRO's latest survey of foreign companies working in Japan, three major impediments to business have lessened in recent years: they are the high cost of doing business, the demanding requirements of consumers and the local recruitment of staff," he said.

"Overheads have been reduced dramatically thanks to deflation and deregulation. For example, telecommunications rates are cheaper and the effective corporate taxation rate in Japan has now been reduced to 40.8 per cent."

He added that real estate prices had fallen dramatically since 1990, significantly lowering the costs of establishing a presence in Japan.

Nakano said low official interest rates contributed to an environment in which companies could easily obtain funds in Japan for business expansion.

He said the employment market was also going through drastic changes.

"Many employees are moving away from the lifetime employment mindset and are willing to change jobs more frequently than in the past," he said.

The JETRO survey also found the climate for investment in Japan was improving, with many companies forecasting improved profits for fiscal 1998.

The Japanese Ministry for Commerce and Industry has identified 15 industries which hold the greatest potential for growth.

The top sectors, in order of estimated market size by 2010, are distribution and logistics, information and telecommunications, medical care and welfare, quality of life and culture, and new manufacturing technologies and the environment.