TOKYO -- Japan has set up a system to accept investment funds that run into problems in Hong Kong due to civil unrest, as it tries to lure global talent from Asia's financial hub.
The Financial Services Agency will waive the regular registration process, allowing funds to relocate temporarily. The new system allow funds to be transferred from Hong Kong to Japan in as little as three days if large demonstrations in the territory make their management difficult.
The FSA in July amended a Cabinet Office Ordinance related to the Financial Instruments and Exchange Law, creating an exception that enables overseas investment funds and securities operators to operate in Japan temporarily. The standard process requires overseas investment funds to register as financial instruments and it takes about six months to complete.
If approved by the FSA commissioner, overseas investment funds will be able to operate in Japan for up to three months. If there is no prospect of resuming operations in their original location, an extension will be granted. The approval process is expected to take as little as three days.
While Japan imposes a 15% tax on earnings from investments, Hong Kong and Singapore do not impose tax. Singapore, like Hong Kong, is a major Asian financial center.
Wide use of English in the city-state is another lure for global financial talent. Some professionals in the financial sector have already begun moving to Singapore from Hong Kong.
Japan is also rushing to create a system to accept skilled workers from Hong Kong. The ruling Liberal Democratic Party's Special Committee on Foreign Workers is discussing specific measures, such as preferential tax treatment.
Due to restrictions on entry in the wake of the novel coronavirus pandemic, it is currently difficult for foreign nationals to enter Japan from Hong Kong. The government has begun negotiations to reopen to international business travel.