Jasper Koll has an article in the wall street journal today that does a nice job of summarizing the economic issues facing Japan. Improving terms of trade and aggressive corporate restructuring put the export sector in a good place to benefit from any global recovery. On the other hand, the domestic sector suffers from ever increasing “quagmire” of rules and regulations. We know ourselves from trying to manage our real-estate brokerage business here in Japan that the complicated tax system makes it very difficult for small business operators to grow and invest in their businesses. The high tax rates and counter-intuitive rules regarding compensation create all sorts of strange incentives for business owners.
That being said, Jasper is bullish on real-estate – and of course so am I :
“Tokyo’s fiscal policy has also helped kick-start a new housing and construction boom. Unlike other developed countries, Japan avoided the real estate and housing bubble that crashed the U.S. economy. Unsold inventories are close to historic lows, and Japan is set to emerge first from the global housing slump. When this happens, discretionary consumer spending should increase, further boosting the recovery.”
He goes on to call for political reform to encourage entrepreneurial activity - which is all good but don’t hold your breath. My suggestion has always been : translate the Singaporean tax code into Japanese and implement. That alone will solve most of the problem – then you just need to reduce the size of the public sector. Anyway enough of my free advice. Read Jaspers’ full article here: