Japan to Designate Tokyo, Osaka, Fukuoka, and Sapporo as "Financial and Asset Management Special Zones"

The Japanese government has decided to designate Tokyo, Osaka, Fukuoka, and Sapporo as "special financial business zones." This initiative aims to lower entry barriers for foreign asset management firms and startups by allowing administrative procedures to be completed in English and simplifying the visa application process for foreign investors.

On May 31, the mayors of these four cities will meet with Prime Minister Fumio Kishida at the Prime Minister's Office to discuss the special zones. Based on the results of this meeting, the government will finalize the designation and support measures for these cities in early June.

The special zones are part of the "Asset Management Nation "plan, introduced by the government at the end of 2023, to attract foreign financial institutions and investment funds through regulatory reforms. This initiative will utilize the "special zones for financial and asset management businesses" framework, which promotes deregulation in specific regions or sectors.

Sapporo is expected to be newly recognized under this framework, while Tokyo, Osaka, and Fukuoka are already designated as national strategic special zones. The four cities have proposed support measures tailored to their regional characteristics to attract foreign financial institutions, startups, investors, and financial professionals.

Key Proposals from the Cities:

Tokyo: Proposed 16 measures, including expanding the ability to complete startup procedures in English. This would allow foreign asset management firms to apply for tax procedures, corporate registration, and employment insurance in English.

Osaka: Requested relaxation of requirements for compliance personnel, allowing them to concurrently work for their overseas headquarters. Osaka also seeks to reduce corporate taxes for foreign asset management and fintech companies.

Fukuoka: Focused on nurturing startups by easing requirements for fund management targeting professional investors and facilitating venture capital fundraising. Fukuoka also proposed a passport system to recognize foreign financial licenses for domestic operations.

Sapporo: Aimed at promoting green transformation (GX) with tax incentives for related businesses. Sapporo, which has top-tier wind and solar power generation capabilities, seeks to build a cluster of financial and GX industries.