The Journal The Authority on Global Business in Japan

Ministry of Economy, Trade and Industry (METI)
Rapid deployment of free trade accord expected

After more than five years of negotiations, broad agreement is expected in November on a Regional Comprehensive Economic Partnership (RCEP) that will comprise 16 nations, including Japan, China, and the 10 members of the Association of Southeast Asian Nations. In July, Japan inked an Economic Partnership Agreement (EPA) with the European Union and has also just completed domestic arrangements for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11), a version of TPP that includes 11 of the 12 original nations, minus the United States. With the early realization of RCEP, Japan will have taken the lead in supporting the creation of a global free trade system.

Japan expected to have appointed a nego­tia­tor by the end of August with the aim of reaching a joint agreement by the next summit meeting, scheduled for November in Singapore. Hopes are for the group to issue a joint statement by the end of this year.

If RCEP comes to fruition, it will create the world’s largest economic bloc comprising about half the world’s population and 30 percent of global gross domestic product and trade. As Japanese Prime Minister Shinzo Abe pointed out, “If we can tap into this huge latent potential, it should open the way to additional prosperity.”

The acceleration of RCEP negotiations has, until now, been held back by China, which has been contentious concerning the protec­tion of intellectual property and market-opening measures. It will be considered significant if China concedes on these points.

Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
True impact of New Minpaku Law unclear

Minpaku, or homesharing, became legal on June 15 when the New Minpaku Law went into effect. Previously, permission was based on the laws governing hotels. The new statute is meant to support the target of 40 million inbound visitors by 2020 while alleviating the anticipated shortfall in accommodations during the Tokyo 2020 Olympic and Paralympic Games. However, many nontransparent factors remain and it is uncertain whether minpaku will emerge as a significant portion of the hospitality business.

Certain aspects, such as the frequent comings and goings of unspecified numbers of people, are raising concerns that minpaku will negatively affect the residential environment. And entry by certain “antisocial forces” (a euphemism for organized crime) into the industry has been conspicuous. MLIT has reacted by cracking down on illegal minpaku and Minister of Land, Infrastructure, Transport and Tourism Keiichi Ishii said, “The new law bans online sites from introducing illegal minpaku, and we’d like to see the Ministry of Health, Labour and Welfare, the National Police Agency, local govern­ments, and others work closely with us on this.”

Some aspects of minpaku are not suffi­ciently known by those considering entry. “Although expectations are high that large revenues can be anticipated, the business isn’t as lucrative as some anticipated,” a source in the real estate field pointed out. For example, an apartment that would typically command monthly rent of ¥100,000 would bring in ¥200,000 when used for minpaku, presuming it could be rented out 20 nights a month at ¥10,000 a night. But, after deducting cleaning fees, commissions, and other costs, the property might clear only ¥20,000 more per month.

If rooms are rented out to so-called nomadic workers, or others who spend a majority of their time staying in the room, the charges for electricity, water, and other utilities would rise, further cutting into the profit.

Although the new law was heralded for what is expected to be a major economic impact, the particulars are being closely examined from a variety of perspectives so that data can be made available to the public.

keizaikai magazine