TT-671 -- National Election this Fall? E-biz news from Japan.

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, July 22, 2012, Issue No. 671


- What's New -- National election this Fall?
- News -- Almost 1% of Japanese live overseas
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Arimatsu, Aichi & Tokyo Mountain Trails
- Japan Business Q&A -- Tax on dormant companies
- News Credits

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In Terrie's Take 668 on July 1st, we speculated about why
Osaka City mayor, Toru Hashimoto suddenly went silent about
the restarting of the Oi reactors by KEPCO, especially after
his earlier strident anti-nuclear stance. Ever since he won the
Mayoral race in November 2011, he has been quite vocal
about moving away from nuclear power and as a result
became one of the most popular politicians in Japan. Indeed,
for a time, it looked like he might become a linchpin in national
politics, not just in Osaka. Then on June 1st, Hashimoto
surprised everyone by saying that after seeing the
government's calculations showing the Kansai would have a
15% shortage of electricity, something that worried local
business leaders no end, he reversed his position and said
he would accept the two Oi reactors going back online

We wondered on July 1st if this was more than just a case
of economic prudence and whether Hashimoto didn't have
some "dirty laundry" that was being held over him by other
players. Actually, given Hashimoto's difficult upbringing
and sudden rise to fame it wasn't that hard for us to
imagine that he might have been naughty from time to
time. Ever since he won the Dad of the Year award back in
2006, though, he was supposed to have turned a new leaf,
but when there is a fire and suddenly no smoke, you just
know there has to be a reason. The whole nation found out
just what this reason was this week, when Hashimoto had
to admit that he'd had an affair with a club hostess for
about 18 months prior to running for governor of Osaka
Prefecture back in 2008.

Hashimoto commented publicly that the expose in the Shukan
Bunshun magazine is basically correct. This is the same
magazine that revealed last fall that his dad was a
gangster, despite the fact that his mom divorced the dad
when Hashimoto was very young and it is likely he never
knew him. From these two well timed revelations -- one
prior to the Mayoral election last November, and now, just
as rumors have Noda calling a snap election this fall, one
can imagine that Hashimoto's competitors have the knives
out and are using whatever dirty tricks they can to
discredit him.

[Continued below...]

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[...Article continues]

Unfortunately for them, Hashimoto is quite smart, although
prone to some bizarre personal values (like wanting to ban
tattooed employees from public servant positions where they
can be seen). He's smart enough that when he came out with
his admission last week, he went on to say that "I was not
a saint before I became governor." Shades of Barack Obama,
who had the brains to admit that he did actually inhale while
puffing joints. Both young politicians seemed to realize that
when you're at a certain inflection point with the media and
thereby your public, you can defuse a lot of future problems
by creating a "so what?" attitude. This is especially so
when you are alleged to have done something that most
of your electorate has probably also done at some point --
and the Japanese do love their extramarital affairs.

Anyway, the first revelation about a gangster dad last
November didn't hurt Hashimoto's election results, and
commentators are betting that the current one won't either.
Therefore, it is reasonable to assume that if Hashimoto
can get back on the populist bandwagon about no nukes,
then he and his fledgling Osaka Ishin no Kai (One Osaka)
party may still be one of the pivot points for the upcoming
election -- something that must be disturbing for PM Noda
and his ever-shrinking DPJ party. But Osaka Ishin no
Kai definitely need Hashimoto's star power, for without it
they easy to ignore. This was made abundantly clear by
the fact that they recently lost the Habikino mayoral
election by a significant number of votes to a
DPJ/LDP-backed candidate, while the "boss" was

This brings us to the phantom election itself. Firstly, we
are among those who think there will be an election this
fall and that the remnants of the Noda government are going
to strike some kind of deal with the opposition LDP to run
the country afterwards. We think they have to have an
election this year, otherwise Hashimoto, Ichiro Ozawa, and
any others thinking to defect from the DPJ will start gaining
traction and become more of a threat as time goes by.
Better for Noda and Co., to strike while most of their likely
opposition is still in their infancy and are disorganized. As
to timing, Noda knows that he needs to tactfully get past the
anti-nuke movement protests, which could yet still de-rail
him. If he moves too quickly, there are going to be an awful
lot of people who will feel the DPJ has sold them out, and
so our guess is that a November election is more likely
than, say, September.

Much as with Hashimoto, ex-DPJ kingmaker Ichiro "Destroyer"
Ozawa, needs some time to get past the public relations
hurdles that have confronted him over the last two years.
If there is an election in the next two months, it's likely
that Ozawa's Kokumin no Seikatsu ga Daiichi (People's Life
Comes First) party will be considered irrelevant and out of
touch by the voting public, based on the fact that Ozawa
continues to harp on about killing the consumption tax raise
even as as most voters consider the need for a rise a
done deal, no matter how much they don't like it. OK, we
suppose he could modify his stance, by tapping into the
general impression that consumption tax is a tax on the
poor, by pushing for certain product/services exemptions
for the poor. This would win him a lot of support and let him
off the hook in trying to figure out other ways to increase
government income.

For Ozawa, a much better and more emotional issue to pick
on is the No Nukes movement. The public, especially young
families and retired people, are highly sensitive to the
fears of nuclear power and radiation. The timing is
perfect, with major rallies being planned in Tokyo over
next week and August, and the media is now aware of the
groundswell of interest in the movement. Accordingly, we'd
be highly surprised if Ozawa doesn't try to do what former
PM Yukio Hatoyama pulled off last Friday, giving a speech
saying that "I feel the same way as you who are attending
this anti-nuke demonstration, and say NO to the Kansai
Electric Company restarting the Oi nuclear power plant in

But Ozawa should hurry up, or he may find his limelight
taken by Hatoyama, Hashimoto, or any one of half a dozen
other politicians realizing the opportunity at hand.


A reminder that the Coalition Against Nukes plans to
completely surround the Diet with a human chain next Sunday
July 29th, to protest the use of nuclear power in Japan.
We plan to be there to see history in the making. Get off
the train at Kasumigaseki any time before 18:00, and follow
the crowd and TV cameras.

...The information janitors/


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+++ NEWS

- Almost 1% of Japanese live overseas
- Foreign tourist numbers back to 2010 levels
- Current account surplus plummets 63%
- Yahoo Japan beefs up its cloud capabilities with M&A
- Australia's Toll has enough of Japan

=> Almost 1% of Japanese live overseas

According to the Foreign Affairs Ministry, almost 1% of
Japanese citizens now live abroad. A record 1.18m people
were domiciled overseas as of October 1st, 2011, up 3.43%
on 2010. Of these people, more than 1m were recorded as
living abroad either permanently (399,907 people) or for
more than 3 months (782,650 people). The greatest number
live in the USA, 397,937 people, followed by China and
Australia. ***Ed: What would be interesting is to find
out how many people live abroad in retirement.** (Source:
TT commentary from, Jul 21, 2012)

=> Foreign tourist numbers back to 2010 levels

According to numbers from the JNTO, there were 686,600
tourists traveling to Japan in June, the highest number
since June 2009, and 1.4% up from June 2010 (before the
earthquake). The countries supplying the most visitors were
China, Thailand, Indonesia, Malaysia, and Vietnam. The Thai
numbers were apparently up 40% after Japan relaxed its visa
issuance rules. At the same time tourist numbers from South
Korea, France, and Germany are still notably lower, due to
continued concerns in those countries about nuclear safety in
Japan. ***Ed: One major travel agency told us that their Thai
numbers are way up, and are expected to stay that way.
Japan has underestimated the power of Southeast Asians in
the tourism stakes, preferring to focus on China instead, but
we expect this to quickly change if those SE Asian tourists
wind up spending the same way the Chinese do.** (Source:
TT commentary from, Jul 21, 2012)

=> Current account surplus plummets 63%

There may be general optimism amongst Japanese companies
about the economy, but manufacturers have to be concerned
about the big drop off in orders for machinery in May, which
were the lowest since 1985. Overall, Japan's trade
performance (all trade, not just exports) was JPY215.1bn, while
most economists expected it to be more in the order of
JPY493.1bn. Analysts say that the drop off is probably caused
by local manufacturers being worried about the global
economic downturn, coupled with the once-again increasing
yen. ***Ed: Our guess is that while the Bank of Japan is saying
things are on the mend, all eyes are turning towards the
upcoming US election and fears that some very significant trade
and currency moves that will arise from that election.** (Source:
TT commentary from, Jul 21, 2012)

=> Yahoo Japan beefs up its cloud capabilities with M&A

Yahoo Japan's datacenter subsidiary, IDC Frontier, has just
invested US$6.1m into a US-based cloud storage technology
company called Basho Technologies. Yahoo will apparently
roll out Basho's technology in Japan -- indicating that the
company is going to get serious about data centers. ***Ed:
Our guess is that Yahoo will go into competition with GMO
and several others in terms of offering cloud data storage
to SME companies. Also, it's interesting how they managed
to get this deal done despite having a relatively new
CEO.** (Source: TT commentary from, Jul 17,

=> Australia's Toll has enough of Japan

Australia's Toll Holdings appears to be getting ready to
leave Japan, with the appointment of an external adviser to
sell off Toll Japan (formerly Footwork Express). Apparently
Toll will lose somewhere around 50% of its investment after
the Japanese unit again lost JPY500m (approx.) for the last
financial year. Market experts are saying this loss will be
somewhere between AU$30m and AU$100m. ***Ed: Interesting to
see the logic of a major fund-oriented operator like Toll,
where they'd rather cut their losses than try to hang in a
bit longer. In contrast, a Japanese company would rationalize
that the AU$100m that Toll will lose on a sale is equivalent to
20 years of ongoing losses (at the current rate), and so
would give themselves 20 years to turn the business around.
We think it's a fair bet that there will be an improvement in the
global economy within the next 20 years, and therefore this
is a good argument for Toll to be more patient and hang on
to their asset.** (Source: TT commentary from, Jul
20, 2012)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


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---------------- Start a Company in Japan -----------------

Entrepreneur's Handbook Seminar 29th of September, 2012

If you have been considering setting up your own company,
find out what it takes to make it successful. Terrie Lloyd,
founder of over 17 start-up companies in Japan, will be
giving an English-language seminar and Q&A on starting up
a company in Japan.

This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally
answered in business books. All materials are in English
and are Japan-focused.

For more details:



In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

*** No feedback this week.



=> The History Trail
Follow an Ancient Road through the Mountains of Tokyo

The history path follows and old Edo era road through the
mountains. It is the shortest of the Tokyo area Fureai no
Michi trails, however this is not any disadvantage for the
trail as it has really great views in places, of the
surrounding mountains and valleys, and on its descent to the
north there are many traditional Japanese style mountain
cottages perched along steep inclines with their various
orchards and gardens. It offers a glimpse of a way of life
that cannot be seen from any of the major cities, and is
what some call "the real Japan".

The slowly disappearing Satoyama culture is definitely
something to be savored while there is still a chance. At
the northern end of the trail is Hinohara village, a
Japanese tourist destination by itself. From the large bus
and car parking lot there are large signs depicting the
various trails to waterfalls and scenic small river valleys.
A traveler could easily walk the trail in the morning and
then enjoy the sites of this very beautiful area that very
few foreign tourists get a chance to explore.

=> Arimatsu Textile Museum, Aichi-ken
Hand-tied dying techniques dating back centuries

Visit the textile museum in Arimatsu for a chance to see
the amazing patterns they create, or try it for yourself with
their hands-on experience! Men and women have very specific
roles in the crafting process Arimatsu is famous for. A
point of pride for the women is the speed with which they
can complete their task. In fact, they say that a girl
"should know her family’s distinct pattern with her eyes
shut before she is twelve years old."

Men create the patterns on the fabric for the specially
detailed designs. They carefully design the pattern and cut
or chisel it out of paper. Then it is printed onto the
fabric using a brush and special washable ink created from
flowers. The design is then stitched or tied by the women
before it’s off to specialist tie-dye factories to be dyed.
After dying, the stings are removed (this can take up for
four days on a large piece with a complicated design!) to
reveal the final result.



=> Question

I’m thinking of incorporating a company, but won’t be
doing any business through it for a year or so. What are the
minimum taxes and other fees that I have to pay to keep such
a semi-dormant firm going?

*** Answer

In principle, the minimum tax a dormant company will owe
is the per capita levy which is taxed according to the scale
of the amount of paid in capital (shihonkin) and the number
of employees the company is hiring. For example, if the amount
of the paid in capital of a company which is established in the
Tokyo Special Wards is not more than JPY10,000,000 and the
number of employees it is hiring is not more than 50, the amount
of the per capita levy is JPY70,000 per annum. The same rule
is applied to a dormant company, therefore the minimum tax a
dormant company will owe is JPY70,000 in the above example.
Please note that the amount of the per capita levy will vary
according to the district a company is established.

To continue reading



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