The Japanese government’s recent pledge to encourage a doubling in foreign direct investment from overseas is a welcome and appropriate step to help resuscitate the flagging economy, according to the new president of the American Chamber of Commerce in Japan.
“Japanese investment in the United States in the 1980s was a major contributor to returning the American economy to economic growth in the 1990s,” observed ACCJ President Lance E. Lee in a recent interview with The Japan Times. “Investment from the U.S. and other countries can do the same for Japan today.”
Lee, who assumed the top ACCJ post last month, recounted when stepped-up Japanese direct investment in the U.S. in the 1980s brought employment, tax revenues, new technologies and management techniques to the stagnant economy and industry.
Prime Minister Junichiro Koizumi, in a policy speech to the Diet on Jan. 31, said direct foreign investment in Japan can bring similar gains.
“Rather than seeing foreign investment as a threat, we will take measures to present Japan as an attractive destination for foreign firms in the aim of doubling the cumulative amount of investment in five years,” Koizumi said.
Japan’s cumulative foreign direct investment currently stands at around 6.5 trillion yen.
Lee says he agrees 100 percent with Koizumi, saying it is nonsense for Japanese to blame foreign investors for pushing Japanese companies out of the domestic market.
“I am optimistic (about the future of Japan’s economy) because Japan has built up the world’s second largest economy,” the 50-year-old Lee said. “Japanese people should have more confidence (in the economy).”
While welcoming Koizumi’s pledge, the ACCJ chief also stressed the need to amend the Commercial Code and relevant tax laws to give foreign companies the right to make tax-deferred share exchanges, something Japanese companies are already able to do in both Japan and the U.S.
Extending the same tax treatment to cross-border mergers and acquisitions would go a long way to increasing American investment in Japan, including regional economies, he said.
As an influential lobby for American interests in Japan, the ACCJ has offices in Tokyo, Osaka and Nagoya, covering nearly 3,200 individual members and more than 1,400 companies.
While the group’s top position has hitherto been held by executives of local branches or subsidiaries of major American corporations, Lee has been living and doing business in Japan for nearly three decades.
Lee, who originally came to Japan with the U.S. Air Force, has worked as a consultant for a U.S.-based investment firm and as a teacher in American schools. He currently owns two Japanese companies; IGC Japan, which operates training gyms, and the Resource Group, which provides medical equipment worldwide.
Based on his business experience, Lee suggests American companies study Japanese culture to help crack the competitive market here. As an example, he noted that Japanese people place greater importance on harmony than diversity of opinions in the decision-making process.
Lee added that he started his business here partly because of the strong work ethic and high abilities of Japanese people. The punctuality of public transport also helps point to the Japanese market as an attractive investment destination, he said.
“Japanese people are concerned about China (which many fear will replace Japan as the largest investment destination in Asia), but (given the social infrastructure) Japan is still the best market in Asia to operate a business,” he said.
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