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Fukuoka -- a booming population in aging Japan

Mayor says deregulation helps boost jobs, tax receipts and services

 (Courtesy of Fukuoka City)

Despite Japan’s general demographic decline, the populations of big cities are growing, drawing people from smaller towns and the countryside.

But none is growing faster than my city, Fukuoka, which has in the past 10 years overtaken the ancient capital of Kyoto and the port of Kobe to become Japan’s fifth largest city.

Business is booming, local tax receipts have been at an all-time high for the past five years, and the city is investing the money heavily in its citizens’ welfare in everything from child care to education and disaster prevention. 

As mayor of Fukuoka, I can say that our strategy is to promote the development of the city's economy and improve the quality of life of our 1.58 million citizens with the fruits of economic growth, that is higher tax revenues.

To help the city grow, we have been simultaneously taking measures aimed at the short, medium and long term.

For short term growth, we focused on increasing business and tourist visitors. Since 90% of working residents in Fukuoka are employed in services, I think that there is widespread economic benefit in boosting visitors and so increasing the consumption of services. We are actively promoting tourism and as well as conferences, business meetings and exhibitions.

For the medium term, we are approaching companies to build a center for knowledge-creating industries, which generate high added value.

In the long term, we are supporting startups to grow out of the branch office economy which has long characterized Japan’s regional centers, including Fukuoka. We have been too reliant on the local representatives of big Japanese groups with their headquarters elsewhere. In Fukuoka, we want to be home to head offices.

Under Abenomics -- the economic policy of Prime Minister Shinzo Abe -- we have more tourists thanks to the weaker yen and softened visa requirements. Special economic zones, where regulations are more flexible, have improved the business environment, bringing in more companies and creating startups. Credit loosening has induced businesses to invest more.

The results are clear. Fukuoka attracts 20 million tourists and business visitors annually, compared with 16 million five years ago. We have the most cruise ships calling of any Japanese city and host many international conferences.

Over the seven years since I took office, 357 companies have located their businesses in the city, creating more than 17,000 jobs. For startups, Fukuoka is the only large city where the ratio of new companies to existing companies has topped 7% for five years in a row.

But we have problems, notably a shortage of hotel capacity. Occupancy rates have risen to 84% from 73 % five years ago, a level at which hotel bookings are usually difficult to make.

A lack of high-quality hotel space was cited as a reason why last year, Fukuoka failed in its bid to host the 2019 Group of 20 summit, though the city was selected for the G-20 finance ministers' meeting.

With demand for space for offices and shops as well as hotels, commercial land prices have risen in five consecutive years from 514,600 yen per sq. meter in 2013 to 766,100 yen in 2018 -- faster than in Tokyo or Osaka. To increase overall capacity, we are implementing big construction projects.

One example is Tenjin Big Bang, a scheme aimed at promoting the rebuilding of old buildings in the city's central district of Tenjin, not by injecting tax money but through deregulation of planning rules.

The airport is only 5 km from Tenjin and reconstruction had been delayed by restrictions on the height of buildings for aviation security. But the limits were eased after the government designated Fukuoka as a national strategic special zone with authority to implement many regulations more flexibly. The city has also eased its own rules, for example on the floor-area ratio. We aim to have 30 buildings rebuilt by 2024, increasing their total floor space by 70%. Seven have already been given the go ahead.

Meanwhile, in the city's waterfront area we are implementing the Waterfront Next project, including an exhibition hall, hotels, stores and a bigger wharf for cruise ships, so that we no longer have to turn away cruise ships for lack of berths and no longer have to turn down conferences for lack of capacity. We intend to advance this project by making full use of the vitality of the private sector by granting concessions for the seaport and conference facilities.

To grow out of the branch-office economy, the city needs to help create growing companies, focusing on startups.

Fukuoka was in 2014 designated a national strategic special zones for Global Startups and Job Creation by the national government.

In the special zone, the government provides corporate tax cuts and relaxed visa requirements for startup entrepreneurs. Together with support from Fukuoka’s startup accelerator Fukuoka Growth Next, the largest accelerator in Japan, the city has attracted talented people from inside and outside Japan. Fukuoka Growth Next now houses more than 170 startups, of which 24 have received investments totaling 7.1 billion yen ($62.9 million).

In Japan, where the working population is decreasing with the falling birthrate and aging population, a pressing task is to raise labor productivity. Growing startups help because they deploy labor-saving technologies, such as devices based on the internet of things, artificial intelligence, self-driving cars and drones.

However, startups would find it difficult to succeed alone. They need government support, for example in dealing with restrictive old regulations and in securing a convenient site for demonstrating innovations.

Fukuoka is the best city in Japan to develop such ideas, with a large demonstration site downtown. We can relax legal regulations in the special zone and have the authority of the ordinance-designated city, which means we have been extra rights on a par with Japanese prefectures.

The government is moving ahead with plans for the Fukuoka Smart EAST project, which involves building an ultrasmart city that uses novel business models and cutting-edge technologies, including for self-driving cars and the use of internet-based devices to watch over children and elderly residents, in a 50-hectare area in eastern Fukuoka.

We are also encouraging overseas entrepreneurs to establish startups through cooperation with 14 startup support bases in 10 countries and regions, including San Francisco, Estonia and Singapore.

Fukuoka is a livable city that combines harmony with nature and well-developed urban functions, where we think make it easy to produce creative ideas. We very much hope that you will join with us.

Soichiro Takashima is mayor of Fukuoka, Fukuoka Prefecture.

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