Prime Minister Fumio Kishida Unveils Policy to Strengthen Japan’s Asset Management Industry Through New Entry

Prime Minister Kishida Addresses UN General Assembly to Strengthen Japan’s Asset Management Industry

Date: September 21, 2023

Prime Minister Fumio Kishida delivered a speech at the United Nations General Assembly on September 21 (22nd in Japan time) during his visit to the United States. He outlined his policy to promote new entries in Japan and from abroad to strengthen the country’s asset management industry. This move is aimed at boosting individuals’ income from financial assets and fostering a positive economic cycle of growth and distribution. To achieve this, the government plans to address barriers to access and relax regulations, with specific policies to be announced by the end of the year.

Furthermore, Prime Minister Kishida unveiled plans to establish a special asset management zone to attract foreign participation. Regulatory reforms will also be implemented to enable administrative processes to be conducted exclusively in English. Additionally, a Japan-US asset management forum will be launched to enhance collaboration between the two countries.

During his speech, Prime Minister Kishida emphasized the need for structural reforms and highlighted the success of previous initiatives such as the expansion of the NISA (Small Investment Tax Exemption System). He expressed his intention to further expand investment funds in the future and reform the asset management industry and asset ownership.

Specifically, Prime Minister Kishida stated that Japan’s unique business practices and entry barriers would be corrected. Support programs for newcomers and deregulation efforts to facilitate the outsourcing of back office operations are also part of the government’s strategy.

The Financial Services Agency aims to develop a comprehensive policy plan by the end of this year to transform Japan into an asset management powerhouse. The plan is expected to address various challenges identified in the agency’s Progress Report on Advancing the Asset Management Industry, such as the proliferation of asset management companies linked to financial institution groups, human resource shortages, information disclosure deficiencies, and inefficient industry practices.

To support this initiative, the government will introduce a program for newcomers based on models used in the United States, France, and Singapore. The specific details of this program are yet to be determined, but it is expected to attract foreign pension funds and government-linked funds to collaborate with new market players.

Currently, Japanese asset management companies oversee approximately 833 trillion yen, a notable increase from 572 trillion yen in 2020. However, cash and deposits still account for a significant portion of Japan’s household financial assets, leaving room for further growth in the asset management industry.

Prime Minister Kishida views the current situation as a turning point in history, with positive economic indicators such as higher wage increases and strong nominal GDP growth. He pledged to focus on “structural wage growth” and “public-private investment to strengthen sustainability” in his upcoming economic measures this fall.

The government’s commitment to fostering a robust asset management industry is expected to contribute to the overall financial stability and prosperity of Japan. These efforts align with the Financial Services Agency’s goal of developing a concrete policy plan to position Japan as a global leader in asset management.

Our Standards: The Thomson Reuters Trust Principles.

Prime Minister Fumio Kishida gave a speech on the 21st (22nd Japan time) in the United States, where he is visiting the United Nations General Assembly, and announced his policy to encourage new entry from Japan and abroad in order to strengthen the asset management industry Japan. . The photo was taken on the 20th (2023 Reuters/Bing Guan)

[21ain (Reuters)]- Prime Minister Fumio Kishida delivered a speech on the 21st (22nd Japan time) in the United States, where he is visiting the United Nations General Assembly, and encouraged new entry from Japan and abroad in order to strengthen Japan’s asset management industry He announced the company its policy to do so. A plan to implement policies such as correcting barriers to access and relaxing regulations will be released by the end of the year. It is set as part of a policy which aims to increase individuals’ income from financial assets and create a virtuous circle of growth and distribution.

In addition, he announced plans to create a special asset management zone to encourage foreign participation, advance regulatory reforms to ensure administrative responses can only be handled in English, and launch an asset management forum focused on Japan and the US states

Prime Minister Kishida said, “We will carry out structural reforms, which have been pointed out as lagging in Japan’s efforts,” and said, following the significant expansion and permanent NISA (Small Investment Tax Exemption System), “ “In the future, we will expand the number of investment funds that will increase.”We will reform the asset management industry and asset owners.

Specifically, he said, “We will correct Japan’s unique business practices and barriers to entry, and develop support programs for newcomers. In addition, we will implement deregulation to enable the outsourcing of back office operations.”

The Financial Services Agency has stated in its Financial Administration Policy that it will draw up a concrete policy plan by the end of this year towards becoming an asset management nation, and these robust measures are expected to be included.

So far the government has expanded NISA and implemented corporate governance reforms. This will be the next initiative.

There is an “investment chain” where companies in which investors invest expand profits by increasing their value over the medium to long term, and the resulting increase in dividends and wages is returned to household budgets eventually decided it was necessary to do so. strengthen the asset management business.

In April, the Financial Services Agency released a Progress Report on Advancing the Asset Management Industry, which identified problems such as the large number of asset management companies linked to financial institution groups, shortages of human resources, lack of information disclosure, and inefficiencies due to that. to industry practices.

Barriers to entry include the exclusive practice of asset management companies and trust banks each calculating the standard price of investment trusts and collating them daily (double counting), and the fact that asset management companies exchange investment trust information with companies sell on a The lack of consistency of the “public sales network” used by the public is one of the reasons for this.

The support program for newcomers that we are launching this time is based on the EMP (New Managers Program), which has been introduced in countries such as the United States, France, and Singapore. Although the specific system will not yet be considered, foreign pension funds and government-linked funds are said to employ new business operators to some extent.

The amount of funds managed by Japanese asset management companies is 833 trillion yen, a 1.5-fold increase from 572 trillion yen in 2020. However, cash and deposits account for 111.7 billion yen out of Japan’s 2,115 trillion yen in household financial assets , and there is room for further growth as the asset management industry becomes more sophisticated and new entrants are encouraged.

Prime Minister Kishida positioned the current situation as a “turning point in history,” and pointed to things like the realization of wage increases that were higher than commodity prices and an annual nominal GDP growth rate of 11.4% (April-June 2023). for 2020 shows the best performance since 30 years ago. He said he would commit to economic measures this fall that focus on two points: “structural wage growth” and “public-private investment to strengthen sustainability.”

Our Standards: The Thomson Reuters Trust Principles.

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