Japan is attracting more interest from foreign asset managers, sparked by the government’s drive to remake Tokyo into a major financial hub, a top regulatory official said. 

“People feel that Japan may be getting out of deflation and there could be an economic transformation,” Shigeru Ariizumi, the Financial Services Agency’s vice minister for international affairs, said in an interview. “How can we dispel the negative sort of bias towards Japan that has accumulated over the past two or three decades is the key.”

The commitment to change Japan’s image is fully supported by Prime Minister Fumio Kishida and his administration, Ariizumi said. An increasing number of foreign workers, as well as rising rate of women and older workers in the economy, are ways the country is trying to overcome an aging population problem, a challenge not unique in Asia to Japan, he said.

Tokyo inched up one position higher to 19th place in the Global Financial Centres Index published last week, behind Singapore and Hong Kong that are third and fourth respectively. In Asia, other cities that rank higher include Seoul, Shenzhen and Beijing. Still in sectors like trading, investment management and banking, Tokyo fares better than its overall position on the index. 

The country is accelerating efforts to remove language barriers, Ariizumi said, noting the Japan Exchange Group’s policy to require top-tier listed firms to disclose financial results in both English and Japanese from next April.

“We’ll do our best” to enhance Japan’s appeal, he said, adding he sees more private equity firms and hedge funds engaged in the market.

Confidence is growing that the world’s fourth-largest economy is exiting decades of price declines and subdued growth, offering support to Kishida’s push to bolster the nation’s global presence. The Bank of Japan last week ended the world’s last remaining negative interest rates, underscoring confidence among policy-makers in the country’s latest phase of recovery.

Ariizumi said separately in a Bloomberg TV interview that the financial regulator will monitor developments post-BOJ action, and look carefully at the overall risk management of financial institutions in Japan.

Meanwhile, the government has pledged to promote corporate governance reforms on top of promoting investing by households. Japan businesses “clearly will look harder” at ways to improve efficiency, including the unwinding of cross-shareholdings, Ariizumi said.

  - Bloomberg