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Japan’s tight border rules threaten foreign investment, business groups say

The largest international business group in Japan has warned that the country’s tight border restrictions risk staunching foreign investment and crushing Tokyo’s efforts to compete as a global financial centre.

Christopher LaFleur, a special adviser and former chair of the American Chamber of Commerce in Japan, said a de facto ban on the entry of non-resident foreigners would probably deter international companies from maintaining a presence in the country.

“The policies that Japan has implemented with respect to travel are at a minimum going to greatly retard those efforts. Also, frankly, they cast some doubt on Japan’s willingness to serve as a reliable host to foreign-based businesses and for foreign-originated investment,” LaFleur told the Financial Times in an interview.

Some companies had been unable to bring employees to take up positions in Japan or specialists to help serve local clients, making it a struggle “to fully maintain their business operations in Japan”, he added.

The ACCJ has joined a rising chorus of dismay from Japanese business leaders, academics and educational institutions at the tough border curbs.

Prime minister Fumio Kishida reimposed the measures in late November following the emergence of the Omicron coronavirus variant around the world. Japan posted record high numbers of new Covid-19 infections this week, with more than 70,000 cases reported on Wednesday, and the restrictions are set to remain until at least the end of February.

The measures were introduced even as the world’s third-largest economy managed to avoid high death tolls and lockdowns imposed in Europe, the US and China. Japan has recorded fewer than 19,000 deaths and more than 75 per cent of the population is vaccinated.

Executives say the move puts Japan at a competitive disadvantage to its G7 peers such as the UK, the US and some EU countries, which have relaxed travel curbs as vaccination levels have risen and kept borders open.

On Prime Minister Kishida’s announcement this morning, what point is there in not allowing entry of new foreign nationals at this stage? This decision is just way too illogical. Do we want to isolate Japan from the rest of the world?

— H. Mickey Mikitani (@hmikitani_e) January 11, 2022

“Now that most of the strains in Japan comprise the Omicron variant, there is no point in continuing the measure,” said Masakazu Tokura, chair of the Keidanren, Japan’s largest business lobby group, on Monday.

Hiroshi Mikitani, chair of Rakuten, the ecommerce platform, warned this month that the curbs were “obstacles to innovation” and compared the approach to Japan’s isolationist policy between the 17th and 19th centuries.

“What point is there in not allowing entry of new foreign nationals at this stage? This decision is just way too illogical. Do we want to isolate Japan from the rest of the world?” he wrote on Twitter.

Japan’s prolonged isolation has meant businesses have struggled to fill jobs in one of the tightest labour markets in the world. The country’s gross domestic product contracted at an annualised rate of 3.6 per cent between July and September last year, and executives warn the restrictions will make it impossible to attract international talent, and hamper face-to-face global dealmaking.

The government has defended the restrictions, with Kishida telling the World Economic Forum last week that he intended to “protect the elderly and other vulnerable people who are at high risk of infection”, adding that the Japanese public wanted stricter border rules.

A survey by NHK, the public broadcaster, conducted after the restrictions were tightened, revealed Kishida’s support rose 7 points to 57 per cent and almost two-thirds of respondents said they supported his handling of the pandemic.

Fumio Kishida, Japan’s prime minister, speaks to the World Economic Forum last week
Fumio Kishida, Japan’s prime minister, told the World Economic Forum last week that the public supported restrictions designed to protect the elderly and vulnerable © AP

Takahide Kiuchi, executive economist at the Nomura Research Institute, a think-tank, said many companies had coped with border restrictions by using Zoom and other online tools, mitigating against a significant hit to the economy. But he said that the controls risked making Japan look like it had “low awareness of human rights towards foreign nationals”.

The World Health Organization has advised countries to ease travel bans, describing them as “ineffective” because they “do not provide added value and continue to contribute to the economic and social stress”.

Hundreds of academics and experts have also signed an open letter to the government, warning that some students from North America are dropping Japanese as their foreign language and shifting their focus to countries they can visit.

A group in Japan led by people separated from their overseas family members has launched a petition on change.org that has garnered about 15,000 signatures, calling on the government to ease the controls.

Rakuten has hired Indian engineers but many have had to remain outside Japan, meaning they have not been able to test its mobile networks in the country.

Chika True-Daniels, who manages human resources at the company’s mobile division, said more than 150 prospective graduates in India had taken up Rakuten’s job offer this year.

“I’m waiting for them to come, hopefully when the borders are open, after graduation,” said True-Daniels. “We have a lot of projects and positions to fill.”

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