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TPP and new business opportunities in Japan

The broad agreement reached on Trans-Pacific Partnership offers unprecedented opportunities for business and property investment in Japan. A wave of new business startups from member countries will defy the pessimism claiming that Abenomics is losing steam and that the depreciation of the yen has stalled.

Indeed, the obvious beneficiary of the TPP is the United States as the top exporter of services in the world (30% of the country’s export). But it is only a matter of time before investors and entrepreneurs from Asia and Europe will find a new business frontier in Japan, as well.

As a matter of fact, the EU is now in a hurry to reach agreement on the Economic Partnership Agreement this year, lest it lose the Japanese market to TPP members that amount to 36% of global GDP. This strikes a contrast with the EU’s earlier indifference when the TPP negotiations were deadlocked.

If the negotiation on the Regional Comprehensive Economic Partnership can be concluded this year with China, India, and the ASEAN nations, the TPP will be followed by two mega free-trade agreements which respectively account for 30% of the world’s GDP.

The TPP abolishes tariffs on telecommunication, software, entertainment, and other digital contents. According to the TPP cross-border service obligations, online and other services will be guaranteed equal treatment with those provided by Japanese companies. E-commerce now can access the Japanese market even without placing computer infrastructure in Japan.

Subject to certain conditions, relaxed restrictions and a more open qualification system in Japan will enable foreign professionals to provide, e.g., legal, accounting, engineering, architecture, and research and development services. Full mutual recognition of qualification is yet to take place, but there is no doubt that professionals who know the systems of respective member countries will join forces to further open up the Japanese market to the world. Spouses of certain business persons will also benefit from the right to work in Japan and stay there for the same period.

Until recently, foreign investors have been scared away from the Japanese real estate market by unclear Japanese business practice and regulations, as well as insufficient information. These barriers are about to start disappearing. As a matter of fact, depopulation in Japan is translating into a surplus of properties. Unless owners welcome foreigners, their offices, hotels, and many other spaces will remain vacant. As such, matter have gone beyond lifting the ban on the use of private housing as guest houses;. Indeed, private lodging is being encouraged in the run up to the Tokyo Olympics as a way to effectively using vacant space.

Express delivery service will be encouraged by faster custom procedures, which in return will underpin both a more international supply chain and vibrant e-commerce. Efficient logistics will drive the advance of foreign retailers into Japan. Franchisers targeting the Japanese market are also under full sail thanks to protection of their concepts and trademarks.

How to set up a business in Japan?

The necessary steps involving foreign startups are, in sequence: 1) foreign resident registration, 2) seal registration, 3) office rental, 4) establishment of a Japanese branch or company, 5) filing tax documents, 6) visa application for the representative and employees, 7) recruitment of Japanese employees, 8) subscription to public insurance, 9) payroll calculation, 10) licensing, 11) account booking, and 12) tax filing . The entire procedure will take at least 30 days. When you enter Japan with a short-term stay visa (granted on arrival for most nationalities), make sure to act swiftly to complete all the steps within 90 days.

Some contents business can operate from a home country without renting an office in Japan. In other businesses, however, foreigners must secure a “place of business” in order to prove their continued business presence in Japan. This is necessary both for the application for an investor/business visa and establishment of a company.

Be careful to avoid rental agreements for properties designated for residential purpose, or you will need to go through additional paper work and hassles. Because of the visa application requirement, you may be surprised to rent an office first as a private person then later on your company name.

Therefore, the key is to find a flexible owner of a rental office. TSO perfectly understands the challenges encountered by foreign businesspersons. You can register your business at our rental office even with a short-term stay visa (equivalent of a tourist visa). Our group partner offers free accounting consultation and special discounts for you to have a head-start in Japan.

Based on our rich experience, the TSO team will be glad to help you with any questions related to rental offices and real estate in general.

(The article was first published on the TSO blog)