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The government has decided to focus on areas such as Fukuoka Prefecture and the Kansai region centered on Osaka Prefecture in its bid to attract foreign financial institutions, shifting from its Tokyo-focused approach to creating a global financial hub in the wake of the coronavirus pandemic, sources familiar with the matter said Tuesday.

The addition of the two areas also comes as the national security law in Hong Kong has raised concern about the semiautonomous region's status as a major financial hub in Asia, and the government hopes that these areas will become a magnet for companies and skilled people.

Despite the renewed push to boost Japan's appeal as a financial hub, the country still faces challenges, including higher corporate and income tax rates than Hong Kong and Singapore, a language barrier and administrative procedures that are often complicated. Another risk factor is the fact that Japan is prone to natural disasters.

The sources said the government plans to set up consultation services in Osaka and Fukuoka for foreign institutions by allocating ¥50 million in a state budget for fiscal 2021.

The coronavirus outbreak has heightened the need for more decentralization from Tokyo. The Kansai region also includes Kyoto and Hyogo prefectures, and Osaka has an integrated stock and commodity futures exchange. Osaka and Fukuoka have also been identified by the government as strategic areas for deregulation.

Beijing's recent imposition of the national security law on Hong Kong has triggered an international outcry and raised concerns that the former British colony will become less business-friendly, causing foreign firms to leave. Following its 1997 return to Chinese rule, Hong Kong was promised a high degree of autonomy for 50 years.

"It's natural that people will start moving to Japan and Singapore (from Hong Kong)," Finance Minister Taro Aso said at a news conference in early August. "We need to be mindful of Japan's position as a financial hub and address this issue."

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