TT-783 -- Bane of Our Business Lives -- Documents and Bureaucracy, e-Biz News From Japan

An Insider's comments on Japan's high tech business world
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.

General Edition Sunday, November 30, 2014, Issue No. 783

- What's New -- Bane of Our Business Lives -- Documents and Bureaucracy
- News -- Troubling news on e-cigarettes
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Flowers in Kyushu, Climbing Mountains in Iwate
- News Credits

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Over the last decade, our sister company, just like any other Japanese
company, has been spending JPY22,300 per month to store boxes of
documents -- contracts, receipts, bank slips, invoices, and anything
else the Tax Office, the Legal Affairs Bureau, the Public Employment
Service Office, and other bureaucracies may require it to for future
audits -- for a period of seven years. That's JPY2,676,000 for dusty
boxes that cost yet more to dispose of after the mandatory period is

Add to these costs the practical difficulties of finding a particular
document, especially when your Japanese staff these days switch jobs
at least once every 3 years, and well it's just an unwieldy and
time-wasting system. In fact, the average Japanese company stores (and
pays for) about five times the number of documents that the average
U.S. or South Korean company does. Put another way, document storage
is effectively a 0.6% increase in the tax rate, and Japanese firms
spend a collective JPY300bn storing such tax-related documents. All
this according to data put out by Keidanren.

It was with some pleasure, then, that we heard the Japanese Tax Office
will start accepting digitally stored company records for tax purposes
from next year. While the relaxation of regulations hasn't spread to
other government agencies yet, given that most of those other agencies
get not only their budgets but also their policy cues from the
Ministry of Finance, it seems pretty well assured that going paperless
will finally become a reality in Japan.

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The reason the Tax Office wants you to store so much paper is prove in
an audit years later that expenses being claimed are authentic. In
switching to digital, the Tax Office will require that companies
introduce internal compliance controls to achieve a similar result --
such as quick turn-around on scanning after receiving the documents,
and time stamping them. We haven't seen any clear procedural
definition yet, but right now the system as it is being suggested
seems rather lenient. It's pretty easy for a computer-savvy person to
change time/date stamps, so maybe the Tax Office will have to specify
that scanning can only be done with particular tamper-resistant
machines -- such as high-end scanners or multifunction printers.

On hearing the news, our sister company quickly cancelled its document
storage contract, and will shortly move all its dusty boxes back to
its office so that the admin staff can start scanning in anticipation
of the new rules in 2015. This rule change is likely to be devastating
to physical document storage companies whose warehouses will quickly
be emptied as companies around the country follow suit. Time, then,
for them to start working on developing a data center business and
local data storage systems, so that they can at least try to stay in


Despite that hopeful news, unfortunately the overall paper-based
bureaucracy culture is still alive and well. Contrast for example two
news reports that came out this week, which make you wonder if the big
fella upstairs scripted these news items as a cosmic joke.

Firstly from Singapore, an announcement by the Overseas Chinese
Banking Corporation (OCBC), Singapore's second largest bank, that its
April launch of a new service allowing customers to create new bank
accounts on their cell phones has been a big hit. According to the
bank, 8,000 accounts, or about 15% of all new accounts, were created
with cell phones. The reason is because it's so easy. Enter you name,
DOB, a photo from your official ID card (in Japan for foreigners that
would be our Zairyu cards and for Japanese their Jukinet cards),
validated proof-of-income details (gensenchoshusho for us in Japan),
and a digital signature. The process takes 10 minutes and no visit to
the local bank is necessary. New accounts are approved and issued
within one day.

Contrast that rather enlightened level of service, then, with a new
policy from the Japanese government to INCREASE paperwork for
companies, by requiring that for new corporate bank accounts,
companies will now have to confirm the identity of their shareholders
to prevent bank account usage by criminals. Given that in many smaller
but older private companies the updating of shareholder information is
difficult due to unrecorded deaths, residence moves, or simple lack of
communication, and where privacy laws make it hard for them to track
down such shareholders later anyway -- this law seems designed to
force those companies into taking the very same illegal behavior that
it is designed to prevent...!

Another aspect of the same law will also require individuals opening
bank accounts to show photo ID or else submit to a painful process of
producing even more paperwork than they do now, as to prove their
identity. Why, in a country where it is not compulsory to have an ID
card, a driver's licence, or a passport, and where personal seals
(hanko) have served the nation well enough for 100+ years, are they
implementing a rule like this?

OK, you can say that ID cards are long overdue and are necessary to
bind all the public services and tax/revenue tracking together. But is
it really necessary for the government to make it so difficult for
businesses and citizens to get something as mundane as banking done

The new rules will come into effect next year.

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+++ NEWS

- Troubling news on e-cigarettes
- Faulty airbags recall forced on makers
- Government financed international arms sales?
- International basketball suspension
- Japanese drug appears effective against Ebola

=> Troubling news on e-cigarettes

In random testing of e-cigarettes by the National Institute for Public
Health, researchers found at least one sample with ten times the level
of formaldehyde of regular cigarettes. Formaldehyde is a probable
cause of sick building syndrome and is obviously not desirable to suck
into your chest. The researchers reckoned that vaporizing elements in
e-cigarettes can overheat and release high levels of the substance.
***Ed: Young smokers in Japan are rapidly switching to e-cigarettes,
since they are supposed to be less damaging to health and are being
marketed as a fashion statement.** (Source: TT commentary from, Nov 28, 2014)

=> Faulty airbags recall forced on makers

In a move that highlights Takata's inability to properly respond to
crisis situations, the U.S. government is issuing an order to
automakers using Takata airbags to recall the cars and fix them. Now
the Japanese government has said that it will follow suit. So far
Toyota and its subsidiary Daihatsu, and Honda, have been affected, and
to their credit they have already recalled 2.6m cars in Japan and more
than 11m elsewhere. However, the latest move indicates that the
existing recalls have not been complete and only piles on more
pressure to get the problem under control. ***Ed: It's been painful to
watch the initial slow and defensive response by Takata. One would
hope that it and other parts makers would have learned from Toyota's
lessons with suspect faulty accelerators some years ago.** (Source: TT
commentary from, Nov 27, 2014)

=> Government financed international arms sales?

Reuters put out an interesting story this week, saying that unnamed
sources had told them that the Japanese government is forming an
advisory panel after the election to look at how government can
promote Japanese-made arms overseas. The panel will apparently
recommend establishing a new trade and financing entity that will
handle everything from outright financing of arms deals, through to
simply finding the deals and facilitating negotiations. The sources
said that the new entity could wind up looking like a military version
of the Japan Bank for International Cooperation (JBIC) crossed with
the Japan International Cooperation Agency (JICA). In the military
hardware sector, Japan makes everything from small arms to submarines
and military aircraft. (Source: TT commentary from, Nov
26, 2014)

=> International basketball suspension

Japan Basketball Association's inability to merge two competing
national leagues into one body has now resulted in Japan being
suspended from international competition -- including the 2016
Olympics. The bombshell, which was not totally unexpected after many
warnings from the international governing body, FIBA, means that
Japan's highly successful women's team may miss out going to the
Olympics. They won their first Asian Championship title in 41 years
last year. ***Ed: Interesting to see that FIBA will send a
troubleshooter to Japan to help JBA restructure. "Gaiatsu" is
sometimes the only way to break roadblocks put up by feuding Japanese
organizations.** (Source: TT commentary from, Nov 26,

=> Japanese drug appears effective against Ebola

An obscure antiviral drug called Avigan, which is produced by
second-tier Japanese pharmaceutical company Toyama Chemical (actually,
now owned by Fujifilm), appears to be effective in dealing with Ebola.
Recent news reports of the full recovery of a French nurse who was
treated with the drug in September have led to emergency clinical
trials in Guinea, Africa, the results of which are expected in
February next year. The drug was previously considered an "orphan"
because it was positioned as a treatment for influenza, but was
demonstrated to be less effective than Tamiflu. (Source: TT commentary
from, Nov 29, 2014)

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



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=> No feedback or corrections this week.



=> Flower Park Kagoshima
Flowers for all seasons in southern Kyushu

No matter the season, you can always find a bright spot to visit at
the southern end of Kagoshima's Satsuma Peninsula. Flower Park
Kagoshima, Japan's largest flower theme park, promises colorful blooms
no matter the season and it's a promise they deliver on more than

Flower Park Kagoshima boasts over 2,400 species of flowering plants,
and nearly 40,000 species of plants in total. Some come from as far
afield as South Africa and Brazil. Kagoshima's somewhat balmy climate
allows most tropical blooms to thrive, although less hardy plants are
kept in enclosed greenhouses. Certain flowers are highlighted
depending on the season - during my visit in February, fields of
tulips were ablaze and the hothouses were full of carefully tended
roses. At other times of year, you can find typical Japanese flowers
like azalea, hydrangea and rhododendron.

=> Climbing Mount Hiyachine, Iwate-ken
Iwate's second highest peak

Hiyachine is the second highest mountain in Iwate, and is just across
from Mount Iwate. In fact, it is sometimes described as Iwate's lover,
although I'm not sure how two mountains could get close to each
other?! It is about 100 meters lower than Mount Iwate, at 1,917 meters
as per recent calculations. It seems that the great earthquake in 2011
forced it a little higher.

Although both mountains are similar in height, climbing them is quite
a different experience. Mount Hiyachine starts quite gradually but
gets extremely steep near the top. Just before getting to the top
there are some ropes and chains to help us get through that part. The
lower part follows a stream that becomes Hiyachine river, and some
sections are quite challenging as we cross the creek several times -
good luck staying dry, I didn't.

You'll also get the chance to see a lot of rare flowers and plants;
however, it is strictly forbidden to take any with you. Along the way
you'll see a lot of birch trees and other leaf trees, some parts are
quite slippery and muddy, so be prepared for that. About half way up
we leave the creek bed and follow a rocky valley, and gradually the
trees disappear and it gets steeper and steeper until it is solid rock
only. I have to say though that it is quite beautiful.



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