Okinawa – Part Two: Impressions
One of my clients is setting up a data center in Okinawa. Although I have known that it offers tax incentives and is rapidly improving its infrastructure, my impressions of Okinawa have been based on a visit I made to the island 7 or 8 years ago. At that time, I saw a small Asian city that I didn’t recognize as part of Japan. There were few hotels, lots of run-down cars and roads, and in bearing the brunt of the 1990’s recession, lots of unemployed young people.
Going back just last month was an eye-opener. New airport facilities, new monorail, lots of new buildings – especially in and around Naha New Urban Center, beautification of public spaces, and most importantly to me, dramatically improved IT infrastructure, all contribute to bringing Okinawa up to par with the rest of the country as a place to live and work. While some people may decry the loss of traditional Okinawa in the face of all this progress, probably they don’t have to earn a living on the island. What I saw looked like it was benefiting the local people as much as the newcomers.
I flew down to Naha from Tokyo in 2 1/2 hours, not much longer than going to any of the other islands, on Skymark Airlines. Their ticket prices are quite reasonable, at JPY25,000 for a return flight if you book 21 days in advance. Unfortunately, you pay for the pricing by having somewhat inconvenient departure times. The first flight leaves from Narita at 06:55am. I can only assume that they did this, because it allows commuters (!?) to get to Naha by 09:30am. Indeed, the return flight is at 19:30, so you can feasibly make Okinawa a day trip. I suspect that this is no coincidence and is instead some part of a larger plan to make setting up and operating a business extension of a Tokyo head office relatively convenient.
Although the monorail is excellent, as I found out later, cabs are amazingly cheap in Naha, starting at JPY430, and you can get to downtown Kokusai Dori for about JPY1,300. I’d heard a lot about traffic congestion, which with the influx of mainlanders setting up call centers and what not, is supposed to be getting worse. Luckily the traffic flowed well for me, so the trip was quick and convenient.
Since I now have a business in Okinawa, I need to start hiring local staff, which has meant delving into salaries and non-cash benefits. From strictly an employer’s cost point of view, without factoring in the possible issues of long-distance staff management, Okinawa salaries and government subsidies are very enticing. Call center staff in Shinjuku, Tokyo typically cost about JPY230,000-JPY300,000 per month. In Okinawa, this is the salary level of a desktop service engineer, while call center staff make about 2/3 this amount.
On top of salaries, there are tax incentives and staff employment incentives, which can significantly reduce the cost of employing someone in Okinawa for the first two years. This program of incentives is the main reason so many outsourcing firms are finally starting to discover the prefecture.
Low salaries are possible because the cost of living in Okinawa is also relatively low. Rents appear to be about 1/2 of what they are in Tokyo, and no location is particularly far from downtown. Again, though, traffic is pretty tough and the bus service leaves a lot to be desired. One of my team members commutes from about 1/2 way up the island, and even though he takes the highway bus directly to a stop close to the airport in Naha, it still takes him 2 hours to get to work. That’s a long time for a 70km commute.
Food is about 2/3 the cost of Tokyo, similar to other rural prefectures, unless you want fruit and vegetables that have to be shipped in, then the prices are higher. Apples for example, are really expensive.
What is really well priced in Okinawa is clothing, and there is an impressive range of stores at the Naha New Urban Center shopping center. At times I felt like I was shopping in Hawaii. The facilities and atmosphere are really well done.
Actually, I was at Naha New Urban Center because that is where Okinawa’s Hello Work office is located. I dropped by to visit a manager and get briefed about the availability of staff, since it is kind of tough to convince staff in Tokyo that Okinawa is a good place to be to get ahead in your career. Next week I’ll cover the availability of people, as well as the opportunities for work in the prefecture.