The Government of Japan has decided to designate four cities - Tokyo, Osaka, Fukuoka, and Sapporo - as 'special zones for financial and asset management.' These special zones aim to promote the entry of foreign asset management companies and start-ups by lowering barriers to entry, such as completing administrative procedures in English and simplifying the application process for residency status for foreign investors.

On 31 May, the leaders of the four cities met Prime Minister Fumio Kishida at the Prime Minister's Office to exchange views. Based on the results of the meeting, the Government plans to officially decide on the designation of the four cities as special zones and the details of support measures in early June.

Special zones for financial and asset management are part of the Plan for the “Realization of an Asset Management Nation,” which was launched at the end of 2023 with the aim of attracting foreign financial institutions and investment money through deregulation.

The four cities - Tokyo, Osaka Prefecture and City, Fukuoka Prefecture and City, Hokkaido and Sapporo City - have proposed to the Government a menu of support for special zones based on their regional characteristics.

The Tokyo Metropolitan Government has included 16 items in its proposal, including the expansion of English-language start-up procedures, with the aim of enabling overseas asset management companies to complete all procedures for entering the Japanese market in English.

Osaka Prefecture seeks to ease the requirements for allowing compliance personnel to concurrently work at overseas headquarters, reduce the burden of back-office operations, and reduce corporate taxation in order to encourage new foreign asset managers to enter the market.

Fukuoka Prefecture will focus on nurturing start-ups and easing requirements for fund management businesses for professional investors and creating an environment that makes it easier for VCs to raise funds. It also calls for the introduction of a passport system to recognize overseas financial licenses in Japan.

The city of Sapporo has put forward the promotion of Green Transformation (GX) and is considering tax incentives for related businesses. Based on its nation-leading track record in wind and solar power generation, the city is aiming to develop a cluster of financial functions and GX industries.

The Government plans to announce the full details in June after finalizing the proposals of the four cities.

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