Rupakjyoti Borah

Opinion | How the coronavirus may change Japan for good

The government’s new growth strategy to promote digitisation and diversity at work aims to shift the economy onto surer footing, following Covid-19 blows to its tourism and hospitality sectors

Plans to move the production lines of Japanese companies out of China and greater cooperation with the US will also weigh on relations with Beijing

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A kimono-clad tourist and others visit the Sensoji temple in the Asakusa district of Tokyo, Japan, on June 24. As tourist arrivals are unlikely to pick up in the short term, capacity in the hospitality sector will remain underutilised for some time. Photo: EPA-EFE

Rupakjyoti Borah

Published: 10:30am, 9 Jul 2020Updated: 10:49am, 9 Jul 2020

On July 3, the Japanese government presented a new growth strategy to tackle the requirements of the post-coronavirus era. It seeks to promote “cashless payments and diverse workstyles”, among other things. One way to do so would be by slashing interbank transfer fees, seen as an impediment to cashless transactions. In addition, the Abe government is toying with a series of other measures to boost the economy in the aftermath of the coronavirus setback.

Since the fiasco on board the Diamond Princess cruise ship, Japan has largely been able to rein in the pandemic. The number of cases and fatalities remains far fewer than in many other countries.

That said, Covid-19 is bound to have a long-lasting impact on the economy and society as a whole.

The most visible effect has been the postponement of the Tokyo Olympics and Paralympics, which were slated for this year, to late July next year. In the wake of the coronavirus outbreak, the government unveiled a massive 108 trillion yen stimulus (US$1 trillion) – equivalent to close to 20 per cent of Japan’s economic output.

As part of this package, 220 billion yen has been earmarked for companies wishing to shift production back to Japan and 23.5 billion yen for those wanting to relocate production to third countries.

This marks a major policy shift for Japanese industry, as it had been taking advantage of low labour costs in China. The shifting of some production lines away from China means their production costs will increase, thereby eating into their profit margins.