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Tokyo Losing Ground as a Financial Centre!

Nearly a week ago, we reported on the rumor that the Japanese government was seeking to build a district for foreign businesspeople in Tokyo, to be modeled on London’s financial centre.

Then, today we got a piece from the Business Standard entitled Tokyo losing ground as a financial centre, which opens with this sentence: “The Japanese capital is looking increasingly in danger of being threatened by Hong Kong and Singapore.”

The article goes on to state:

Part of the problem is that, while the country was caught up in a prolonged financial crisis, its capital markets failed to keep up with global developments in key areas.

That’s a bit of an understatement. We’re still waiting for the shift from manufacturing to services to truly take root - in the education system as well as the economy - which even the government acknowledges. As financial services minister Yuji Yamamoto put it, “Japan cannot be totally dependent on manufacturing alone.”

Of course, service industries do account for about 40% of GDP, although their labor productivity lags at about 60 percent of US figures.

At any rate, you know it’s bad when not only the foreign firms are choosing to put their people in Hong Kong and Singapore:

Most Japan-focused hedge funds are also located outside the country and even big investment banks have staff in neighbouring cities doing work that would normally be done in Japan. “We have Japanese jobs being done by people in Hong Kong,” concedes the head of a foreign investment bank.

Of course, tax laws have something to do with the hedge funds not being in Japan, but this reporter doesn’t let that get in her way of making a point.

Anyone remember Yoshiaki Murakami’s MAC? The Murakami Fund moved its operations to Singapore as soon as it could. On a side note, I remember seeing an Asahi TV report on the Murakami Fund in which the reporter complained that when he called their office (in Singapore), no one there either could or would speak Japanese with him, so he had to communicate in English.

Telling.

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