“Challenges and expectations for a global financial city”

It has long been said that the Japanese language and Japan’s tax code are two big obstacles to the nation’s ambition to emerge as a global financial center. When moderator Takeshi Kawasaki pointed out that there has been gradual improvement in the business environment and taxation to benefit foreign asset managers, Yuri Okina stressed the importance of more progressive policy measures, while acknowledging that the tax reform is a major step forward. She called for efforts to give Tokyo unique competitive advantages through deregulation, infrastructure development, the upgrading of the settlement system and digitalization.

Akira Sugano also lauded partial development of infrastructure but emphasized the importance of mapping out a strategy for using the infrastructure to offer competitive services. As a key policy goal, Sugano singled out the need to liberalize publicly offered investment trusts. “As more foreign investment companies expand into the Japanese market, competition will intensify, leading to more sophisticated investment. Publicly offered investment trusts need to transform from instruments used mostly by senior citizens to invest their savings to vehicles for asset formation for all generations,” he said.

Alberto Tamura said, “Making Tokyo an international financial hub is important not just for foreign investors but also for Japanese financial institutions.” He stressed the importance of improved literacy of individual investors and the development of talented portfolio managers. He suggested that startups should also adopt the international accounting standards.

From left: Alberto Tamura, Akira Sugano, Yuri Okina

“The role of asset owners in a post-COVID era”

Moderator Keiichi Aritomo asked the panelists three questions: How do they, as investors, view the economic and financial impacts of the new coronavirus pandemic? How do they think the role of investors will change as a result? What kind of policy efforts do they expect the government to make? Kazushige Okuno said the pandemic has not caused his organization to change its basic investment policy of focusing on structurally sturdy companies. “It is important for investors to exercise their ownership by investing in companies that are truly useful for society and pursuing active dialogue with such companies.”

Noriaki Sakamoto, who invests in Japanese universities and overseas assets, said: “Society needs to change for new technology to be woven into its fabric. The pandemic will force social reforms and promote technology investment.” He called for simple and speedy policy measures to promote venture capital investment.

Jason Low, who invests Singapore’s foreign reserves, pointed out that the pandemic has accelerated two important trends: DX (digital transformation) and sustainability. He said he planned to invest more in Japan’s competitive niche industries in the coming years. 

Ted Lee said: “Increasing digitalization will not change the decision making of long term investment policies and asset allocations. Japan has a wealth of talent pool that other countries are actually eager to tap into and learn from. That being said, going forward, competition from other financial centers in the region will intensify.”

From left: Keiichi Aritomo, Kazushige Okuno, Noriaki Sakamoto, Jason Low, Ted Lee

“Advancement of industrial finance and promotion of
innovation through DX”

At the outset of discussion, Moderator Hideo Tomita cited four key words - DX, industry finance, innovation and Tokyo - and asked the panelists to offer their views and thoughts about them. As for DX, Masuo Kuremura said it is not that DX per se is important. He maintained that what is vital is to change the way companies are managed through DX to create new businesses. “We plan to bolster our policy efforts to improve the business environment for using data for creating added value,” he said.

Ichiro Sakata of the University of Tokyo, who was instrumental in the university’s issuance of the first university bond in Japan, said DX has shifted the main source of value from goods to knowledge and information, thereby ushering in a new era of knowledge intensive economy. “I’m keen to see more investment in intangible intelligence value,” he said. “We hope Tokyo, as an international financial city, will provide support for our efforts to build a market for university bonds.”

Hiromi Yamaoka said that the government’s policy responses to the pandemic have been focused on maintaining employment and ensuring the survival of businesses. He warned that this approach would lead to a “moral hazard” if it continues for long. The challenge, he said, is to figure out how industry finance should support the structural changes of the economy caused by the pandemic. Takehiko Nagumo said DX helps solve social problems caused by urbanization. “I hope financial institutions will perform their advisory roles in promoting smart cities. It is also crucial to stimulate a flow of digital experts from Tokyo to other parts of the nation,” he added.

From left: Hideo Tomita, Hiromi Yamaoka, Masuo Kuremura, Ichiro Sakata, Takehiko Nagumo