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The Emergence of Tourism as a New Economic Driver in Japan

The Emergence of Tourism as a New Economic Driver in Japan

The government of Japan’s campaign to boost the tourism industry and turn it into a successful economic sector is yielding fruit. The contribution of tourism has now grown so immense, that it is even beginning to rival the contribution of areas like the giant car industry.

Hong Kong, July 13, 2016 — Tourism is therefore gaining more and more attention from the Japanese government and it is receiving more focus in the country’s economic policy.

The Japanese Prime Minister, Shinzo Abe, started taking steps towards increasing the efforts of the Japanese government in promoting tourism in Japan after Tokyo won the bid to host the 2020 summer Olympics.

As part of his Abenomics policy, the Prime Minister set a goal in January to double the number of tourists visiting the country per year to 20 million by 2020. Months later in June, the government came out with a new action plan, which included improved strategies for the promotion of tourism.

The following are a collection of the questions and answers, about the Japanese government’s policy of boosting the country’s tourism sector, that we asked Mr Gary Chambers, Chief Investment Officer and Director of Corporate Trading for Fidea Wealth Management,

Are there any results being recorded yet?

According to Mr Chambers “Since 2003, the number of visitors to Japan has been increasing. There have been drops in 2009 and 2011. The 2009 drop was due to the global economic crises, while the 2011 drop in visitors was after the great earthquake and tsunami in East Japan.”

The figures have risen to 10.36 million by last year, compared to the 2003 figures of 5.24 million, which was when the ‘Visit Japan’ campaign was started, which is good news because 10 million visitors was the campaign’s goal. This was also the first time that the amount of annual visitors exceeded 10 million.

Last month’s figures show a record 1.27 million visitors per month, which simultaneously is the fifth straight month with figures exceeding the 1 million visitors mark.

The popularity of Japan as a tourist destination is growing not only around Asia, but also as far away as America, where a recent survey by Travel + Leisure, a popular U.S. travel magazine announced last month that its users have chosen Kyoto, Japan as the world’s No.1 city.

Among Chinese and South Korean visitors, there was a significant drop in October of 2012. This was the period that Japan nationalized the Senkaku Islands, which has been a cause of dispute between the two countries, but the number of visitors has picked up again since then and there now a steady increase in Chinese visitors. According to Mr Chambers of Fidea Wealth Management, “The Japanese National Tourism Organisation (JNTO) expects that the number of annual Chinese and Korean visitors will continue to increase, although political tensions may remain. Chinese tourism companies for example, have started offering boat rides again to Japan.”

In what ways does the boom in tourism affect the economy?

Mr Chambers explains “As export figures continue to disappoint, tourism could contribute greatly to the economy. Figures released by our firm back in June and published in the papers, estimated the annual economic contribution of tourism to the economy at around 16.7 trillion Yen. This exceeds the estimated 14.9 trillion from electronics and even the 16.6 trillion estimated economic impact of the transportation machinery sector.”

This figure, he continues, represents about 3.5% of the country’s GDP and includes the economic impact on other sectors of the economy like hotels, amusement parks, tourist agencies and transportation like cabs, buses and the railways.

What exactly is the main program of the government?

“The current program of the Japanese government is the use of the opportunity provided by the 2020 Olympics, in boosting tourism in the country. Mr Shinzo Abe is the chairman of the ministerial council for the promotion of Japan as a popular international tourist destination. In January, this council unveiled its plans to boost the yearly amount of tourists into the country to 20 million by 2020. A corner part of this plan is the promotion of Japanese tourist attractions beyond the cities, in the hope of creating a sustainable tourism industry long after the Olympics.” Explained Mr Chambers.

What are the key policies?

“There are extensive polices aimed at making Japan more friendly for foreigners. This includes the upgrade of services like free Wi-Fi hotspots, including on moving trains, airport upgrades and the relaxation of entry visa requirements for visitors.” Said Mr Chambers.

“Starting from July 2013, the government waived visa requirements for short-term visitors from Malaysia and Thailand. This was in a bid to attract these countries’ growing middle class as tourists.” Continued Mr Chambers.

What is the private sector’s reaction to the boom in tourism?

Mr Chambers finished by saying, “Tourism related businesses are re-adjusting their strategies in order to benefit from the boom in tourism. NTT Docomo for instance, has launched a paid wireless Internet service at over 150,000 locations across the country. The East Japan Railway Company will also be launching a new line to Haneda airport direct from the centre of Tokyo. The project will considerably reduce the travel time from about 40 minutes down to 20 minutes.”

Source: Mr Gary Chambers, Chief Investment Officer and Director of Corporate Trading with Fidea Wealth Management

Kazuko Rei
Fidea Wealth Management
Tokyo, Japan

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