The decision of the Abe administration to opt for monetary and fiscal stimulus in Japan is destined to see an increase in tourist numbers to Japan. Tourism collapsed in the wake of the Tohoku earthquake and tsunami in northern Honshu. The tsunami crippled the Fukushima nuclear power station, resulting in a melt down of a reactor, as well as severe and irrepairable damage to other reactors, closing the plant permanently. Today, there is a 'no-go zone' of 12km2 around the plant, as well as problems containing the contamination from the plant. High radioistope counts in the river and offshore have sparked import restrictions from countries like Korea. The concern of course is that Japan will dump contaminated food in foreign markets.
On the positive side, the weakness is the Yen has prompted many people to travel to Japan. Perhaps they are avoiding the 'nuclear zone', located about 100km north of Tokyo's Narita International Airport. In any respect, Japan is 'cheap' because:
1. It has not experienced inflation thanks to weak wages growth and growing competition
2. Travel is still appealing with the Japan Rail Pass
3. The weak Yen, which is the result of low interest rates, a falling savings rate over the last decade
4. Expansion of the monetary base in recent times, which has effectively debased the currency.
Japan will of course be looking to strong exports and tourism to make up for the difference. It is a very attractive policy for the Japanese for several reasons:
1. There is still strong support for opening up Japan to immigration. Tourism helps to familiarise Japanese people with foreigners, because they still carry a great deal of apprehension.
2. The influx of foreigners can be expected to contribute to the Japanese economic recovery, and thus, rather than being associated with high crime, they might instead be associated with a strong economy and prosperity.
Nationalists will of course lament the 'selling out' to foreigners. This of course more likely a point of vulnerability when the Conservatives are in fact in power, so they will need to offset disgruntled Nationalists by sustaining the support of former Democratic Party of Japan (DPJ) supporters. This seems likely.
To date the policy is working for tourism, given that tourist arrivals at Narita alone have grown from 321,625 in April 2011 (right after the quake/tsunami) to a 30-month high of 834,089 (March 2011).* The implication is that tourism levels have normalised; so it remains to be seen whether this trend will be sustained because globally tourism is weaker. There is of course the concern of Japan 'stimulating' its economy when the rest of the world is struggling with difficult trading conditions. This will of course mean that Japan just sucks in more imports. Greater tourism from Asia might be the saving 'grace' for the country.
Japan has a lot to offer. I spent a month in Japan at my holiday home; a foreclosed property I bought some 10 years ago now. Japan surprisingly has the cheapest property in the world. My property was purchased for $28,000 at the time, and it costs me just $300 per annum in fees. The land is more valuable. I bought 7km from a major city centre and rail head, and its just 36 minutes by express train to Ikebukuro, on the edge of Tokyo city. There are smaller cities like Tokorazawa which are even closer. My local city however has plenty of restaurants, bars and department stores, so I need only go to the city to meet foreigners, and perhaps to buy electronics. I bought the property as a tourist, however home ownership is not a basis for staying in the country. You need to leave every 90-days...so I generally fly to the Philippines or HK and return. It is common to seek sponsorship to work in Japan with an English school in the country. If you want more information on foreclosed property, you might want to view this page. For more information on Japanese tourism, read my other posts, or you can ask me questions, and I'll respond on this blog by directing you to the update.
* “Narita to retire inter-terminal buses, use walkways” by Tomohiro Osaki, Japan Times, website, SEP 20, 2013.
