As 2024 approaches, three issues are likely to generate a good deal of political and economic concern and debate in Hokkaido. These include the impact of the so-called 2024 problem on local transportation and construction sectors, efforts in the city of Chitose to welcome Rapidus and related firms — especially foreign firms and their foreign employees — and efforts to diversify local seafood export markets, especially following China’s ban on Japanese imports.

'2024 problem'

Like the rest of Japan, Hokkaido is preparing for April 2024, when an annual cap will be set on the number of overtime hours allowed in industries, such as construction and transport, at 720 hours annually. For Hokkaido, the new rule poses a couple of challenges. First is the fact that, due to the Hokkaido Shinkansen project and the coming of the Rapidus semiconductor plant to Chitose in 2025, the labor market is already tight.

Add to that the spike in costs for imported construction materials, which has led to smaller, private construction projects in Sapporo being rethought, as local firms wonder if workers and materials may increasingly be prioritized for the nationally backed shinkansen and Rapidus projects. In addition, the nationally mandated overtime cap next year comes after Hokkaido's minimum wage was raised to ¥960 per hour for all employees in October — an additional cost that local construction and transport firms will also have to figure into their overall personnel budgets for 2024.

Cities, towns and villages in Hokkaido also face the annual need to employ a portion of the prefecture’s almost 20,000 officially licensed construction-related firms for snow removal during the winter months and road repairs during the spring and summer months, which puts further pressure on the labor market.

Then, there is Hokkaido's transportation industry, which is also working to adapt to the new law on overtime hours. Distances between major cities on the western side of the island (Sapporo, Otaru, Chitose, Niseko and Hakodate) and the more sparsely populated eastern half of the island are sometimes more than 400 kilometers, a long day's drive that can require overtime. Unlike many other parts of Japan, rail transportation between eastern and western Hokkaido is limited and not always an easy option.

Many Hokkaido firms are making plans to try and reduce a driver’s time on the road for distances of 300 to 400 km and beyond, including the use of more expressways, shifting to rail transport where possible and setting up relay stations along routes to shorten the distance needed to pick up cargo. Some firms are looking at cooperating with one another in order to reduce the burden on individual drivers from any one firm. But Hokkaido's geography and the lack of other quick forms of transport often means long-haul trucking is the only option.

Rapidus

Despite the labor concerns in particular, 2023 marked the groundbreaking ceremony in Chitose for the construction of the Rapidus semiconductor plant, which is expected to produce the world’s smallest (2 nanometer) semiconductor chips starting in 2025.

For Hokkaido, the hope is that Rapidus, which is cooperating closely with America’s IBM and Belgium’s IMEC on the project, will serve as a magnet for other foreign firms to set up in Chitose and the surrounding area, which includes Sapporo (about 30 minutes by train from Chitose).

Dutch firm ASML and America’s LAM Research, both involved in semiconductors, have expressed interest in setting up in Chitose. In November, the Canadian semiconductor firm Tenstorrent announced a tie-up as well. Atsuyoshi Koike of Rapidus traveled with then-trade minister Yasutoshi Nishimura to San Francisco in mid-November, where they met with another eight American semiconductor firms that have an interest in Rapidus.

While Hokkaido and Chitose are welcoming more Rapidus-related firms, especially foreign firms, one of the unknown questions is how many foreign nationals will be living and working at, and around, Rapidus in the coming years.

At present, Chitose has about 1,000 foreigners. As more move into the area thanks to Rapidus, issues ranging from easy access to international schools (Hokkaido International School is in Sapporo) to housing (Sapporo has more apartments and houses) and the provision of needed services such as local foreign language medical care are just some questions the town will face.

Chitose officials are aware that they have to do more to deal with a potential influx of new foreign residents. With the Rapidus plant slated to open in 2025, next year will hopefully see an acceleration of those efforts.

Seafood

Finally, there is the issue of Hokkaido’s seafood exports and the search for new markets. China’s continued ban on Japanese seafood imports, which came after Japan began to release treated tritium-laced water from the crippled Fukushima No. 1 nuclear power plant in August, has hit Hokkaido particularly hard. Hokkaido seafood and seafood exports to China were worth ¥53.2 billion ($370 million) last year. Some items such as crab, shrimp and scallops were particularly popular with Chinese consumers.

Hokkaido Gov. Naomichi Suzuki says the prefecture is aware of the risks of relying too much on one country for its exports, and that efforts are being made to increase the diversification of seafood export destinations and varieties.

To that end, Suzuki traveled to Singapore and Vietnam in November to promote Hokkaido products, including seafood products. U.S. military bases in Japan such as Yokota Air Base have also become a destination for Hokkaido scallops.

With no sign that the Chinese ban will be lifted anytime soon, Suzuki and Hokkaido are likely to increase their public relations and sales efforts in 2024 to promote Hokkaido seafood exports in other parts of Asia and possibly the United States.

Other questions for Hokkaido in 2024 range from how well the Niseko resort area does over the winter months, especially given the favorable exchange rate for foreign tourists, to whether progress will be made with Russia to allow former residents of the Russian-held islands off Hokkaido to visit their ancestral graves. This year, six visits by 384 people to the bays of two islands (Kunashiri and Habomai) were allowed, but the boats were not allowed to land.

There are fewer than 5,300 remaining former islanders, and their average age in 2023 is over 87. Next year, they will continue to press Hokkaido, and the Japanese government, to work with Russia to arrange direct graveside visits, which were suspended in the wake of Russia’s invasion of Ukraine last year.