Japan is ushering in a new era for foreign entrepreneurs, addressing one of the key barriers to entry in the world’s third-largest economy. Previously, stringent requirements for obtaining a residence permit had stifled the inflow of global entrepreneurs.
However, a progressive new policy allows foreign entrepreneurs to stay in Japan for up to two years without needing an established office or initial capital investment.
Policy Changes for Business Visas
To foster innovation and economic growth, the Japanese government has significantly relaxed the rules for foreign entrepreneurs seeking to establish a business in Japan.
Under the existing system, foreign nationals had to meet two key conditions to obtain a business visa:
- Secure a physical office space
- Employ at least two full-time staff members or invest a minimum of 5 million yen.
Addressing the Capital Constraint
These stringent requirements posed a significant hurdle for emerging businesses. Startups, often cash-strapped and in their nascent stages, found it challenging to secure the 5 million yen in initial capital.
The new policy aims to alleviate this obstacle by providing a two-year grace period. During this time, entrepreneurs can focus on growing their businesses without the pressure of immediate capital investment.
Digitalization and Language Barriers
While the new policy marks a significant step forward, it’s worth noting that other challenges remain.
The government is also focusing on streamlining administrative procedures through digitalization and addressing language barriers, which can be major roadblocks for foreign entrepreneurs.
Nationwide Applicability and Future Amendments
This change isn’t limited to major cities like Tokyo and Fukuoka, where most foreign entrepreneurs have historically concentrated. The new policy is applicable nationwide, aiming to spur local economies and diversify regional business ecosystems.
Moreover, the Immigration Services Agency of Japan is expected to amend the residence permit rules related to “business management” by the end of fiscal year 2024, thus creating a more favorable environment for startups.
Integration of National Initiatives
Additionally, two separate programs run by the National Strategic Special Zones and the Ministry of Economy, Trade and Industry are being consolidated.
If an entrepreneur’s business plan is approved, they will be eligible to stay anywhere in the country for up to two years.
Current Statistics and Future Prospects
Since its inception in 2015, over 380 entrepreneurs have benefited from the special zones designed to support foreign entrepreneurs. However, most have gravitated towards 13 key areas, including Tokyo and Fukuoka, while rural areas have yet to see significant interest.
As of the end of June 2023, approximately 35,000 foreign nationals reside in Japan under the “business management” category. This is nearly double compared to 2015.
Despite the increase, the government acknowledges that there are still hurdles to entrepreneurship and aims to remove these in the future.