U.S. tariff uncertainty very high, sentiment 'deteriorated,' says BOJ's Ueda
Bank of Japan Gov. Kazuo Ueda said Tuesday that uncertainties over high tariffs imposed by the administration of U.S. President Donald Trump remain extremely high.
Business and household sentiments "have deteriorated recently," Ueda said at an event hosted by the Research Institute of Japan, a Jiji Press affiliate, in Tokyo.
On the central bank's monetary policy moves going forward, he said that "nascent developments" toward achieving the BOJ's 2% price target "have steadily gained momentum."
Ueda also said that the BOJ will continue to raise interest rates if the Japanese economy and prices move in line with the central bank's outlook.
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Japan Times
27 minutes ago
- Japan Times
Japan to continue to seek tariff removal in latest negotiations ahead of G7
Japan will stick to its stance of seeking to have all U.S. tariffs be removed in what could be the final ministerial-level talks ahead of a leaders' summit this month, the nation's top trade negotiator Ryosei Akazawa said. "Japan will continue to strongly urge the U.S. to reconsider its series of tariff measures,' Akazawa said Thursday in Tokyo as he left for Washington. He added that he's not sure which U.S. officials will meet him for the fifth round of trade negotiations. Akazawa is set to return to Japan on Sunday, about a week before the Group of Seven gathering convenes in Canada. Prime Minister Shigeru Ishiba and U.S. President Donald Trump are expected to meet on the sidelines, with anticipation mounting for an announcement of a trade deal. Earlier this week, Akazawa said Japan will continue to seek a full reversal of the U.S. tariffs, adding that he didn't plan to accompany Ishiba to the G7 summit. While he cited progress toward an agreement after the previous round of talks, the U.S. this week doubled a levy on steel and aluminum to 50%. "We are collecting and analyzing information on the impact,' Akazawa said about the metals tariff. "We will respond appropriately based on the results of that analysis.' As with many other nations, Japan also faces a 25% levy on cars and a 10% levy on all other goods. The across-the-board tariff is set to rise to 24% in early July barring a deal.
Japan Times
an hour ago
- Japan Times
Japan eyes tougher rules and a tax hike for foreign residents and tourists
Amid a record inflow of visitors and workers into Japan, legislators are increasingly calling for reforms to address growing concerns over social services, tax and regulatory loopholes. The ruling Liberal Democratic Party established a panel on May 21 'to dispel public concerns' among citizens living with an increasing number of foreign residents. Its members discussed policy revision, including the current system that allows some foreign nationals to easily convert their driver's license issued in their home countries to a Japanese one. 'We need to comprehensively discuss what the people (Japanese citizens) are concerned about,' LDP policy chief Itsunori Onodera said at the meeting, adding that the central and local governments need to tackle such issues together. The LDP is expected to submit a proposal to Prime Minister Shigeru Ishiba on Thursday that includes urging the government to create a centralized government body to coordinate policies on foreign residents and tourists across ministries. Lawmakers are also discussing increasing taxes on foreign visitors amid an overtourism problem, or rethinking the country's tax-free shopping system amid rising cases of products bought under the program being resold domestically. Here are some of the key issues currently under debate. Foreign driver's licenses The National Police Agency is moving to tighten regulations for foreign nationals to convert their overseas driver's licenses into Japanese ones. Critics have long argued that the current process is overly lenient, resulting in an increase in the number of car accidents by foreign drivers, including drunken driving and driving on the wrong side of the highway. Foreign nationals with international driver's licenses can use them to drive in Japan for one year. But foreign visitors and nationals from countries that do not issue them — including China, Vietnam and Brazil, who are not members of the Geneva Convention on Road Traffic — must pass a written exam and driving test to convert their licenses to a Japanese one to drive in Japan. Ariake Junction in Tokyo in 2021. The National Police Agency is moving to tighten regulations for foreign nationals looking to convert their overseas driver's licenses into Japanese ones. | Bloomberg The written test, however, consists of just 10 questions, with a minimum passing score of seven, prompting criticism that it fails to properly assess applicants' understanding of Japanese traffic rules. Authorities have also identified a loophole in which applicants on short-term tourist visas use hotels or other temporary accommodations as their registered address when applying for their license. The NPA plans to make it mandatory for applicants to submit their resident registration records and make the written and driving tests more difficult. National health care program An increasing amount of premiums for the national health care program has been left unpaid by foreign residents in Japan, with the local governments forced to allocate taxpayer's money to cover the deficit. When foreign nationals stay in Japan for more than three months, they must join the national health care program, called kokumin kenkō hoken. If they are hired at companies as full-time employees in Japan, they and their family members will be covered under the company's health care program. But those who are not, such as exchange students, are sometimes unaware they need to join the national health care program. Under the current rules, invoices are mailed out after enrollment, but many foreign residents fail to follow through. A health ministry survey of 150 municipalities from April to December 2024 found that only 63% of the foreign residents who need to pay the premium have done so — far below the 93% overall rate that includes Japanese citizens. In a parliamentary session in May, opposition lawmaker Hirofumi Yanagase, of Nippon Ishin no Kai, said that in Tokyo's Shinjuku Ward, households headed by a foreign resident paid only ¥870 million out of ¥2 billion in assessed premiums in a single year, leaving more than ¥1.1 billion unpaid. If this percentage is applied nationwide, he estimated that unpaid premiums by foreign residents may total over ¥400 billion annually. The ruling LDP is now proposing to have newly enrolled foreign residents pay a set portion — or potentially the full amount — of annual premiums upfront when they register their residency at local municipalities. The proposal was handed over to Ishiba on Monday. The LDP is calling for offering clearer explanations of premium payment obligations for the health care program during the visa application process, as many foreign nationals come from countries without public insurance systems and may be unfamiliar with Japan's model, and as such, might not realize they have to pay. Another issue is that when foreign nationals arrive in Japan, the calculations for their previous year's income are recorded as zero, thus making their first-year premiums extremely low and thereby creating a built-in deficit in the insurance pool. Tax-free shopping system Lawmakers are also considering drastic changes to the tax-free shopping system for foreign tourists, pushing for stricter oversight — or even a complete abolition of the program — amid mounting evidence of abuse and tax evasion. The exemption, introduced decades ago to boost spending by international travelers, allows foreign visitors to purchase goods from designated retailers without paying the country's 10% consumption tax, provided the items are taken abroad. But in practice, the system has been increasingly exploited for unauthorized resale and tax avoidance. In fiscal 2022, there were nine individuals who purchased tax-free products, but didn't have the goods with them when they left the country, meaning they failed to pay ¥340 million ($2.4 million) in consumption tax, according to the Board of Audit. The surge in inbound tourism has also amplified the financial implications. Government estimates suggest that of the ¥8.1 trillion spent by foreign visitors in 2024, roughly ¥2.4 trillion went toward tax-free shopping — though officials acknowledge the exact figure is uncertain. Critics have long argued that the current process allowing holders of foreign driver's licenses to convert to Japanese ones is overly lenient, causing an increase in the number of car accidents by foreign drivers. | REUTERS To curb abuse, the government approved a series of tax reforms that will shift the tax-exemption model to a post-purchase refund system starting in November 2026. Tourists will be required to pay the full 10% tax upon purchase and instead apply for a refund at the airport after presenting their goods to customs — similar to systems used in countries such as France and Italy. Retailers have expressed concern that the change could dampen consumer demand and overwhelm airport staff. But policymakers argue the reform is essential for restoring fairness and protecting tax revenue. However, some LDP lawmakers say the overhaul doesn't go far enough. Last week, members of an LDP study group drafted a proposal seeking to scrap the tax-free system altogether. The proposal will be submitted to the party's tax panel chief so it will be deliberated in next year's tax reform. Departure tax The government is considering increasing the ¥1,000 departure tax — mandatory for both foreign and Japanese nationals leaving Japan — just for foreign travelers. According to Finance Ministry data released Monday, the levy for fiscal 2024 is expected to generate a record high with the figure for 11 months from June 2024 already posting a record ¥48.1 billion in revenue, far exceeding government forecasts. Tax revenue for a fiscal year is calculated based on payment made from June through May the next year. Ishiba expressed support for a rate hike during a parliamentary session in May, noting that Japan's fee is low compared with other nations. Australia charges roughly ¥6,400, while Hong Kong's is around ¥2,200. Haneda Airport in April. The government is considering increasing the ¥1,000 ($7) departure tax — mandatory for both foreign and Japanese nationals leaving Japan — only for foreign travelers. | Bloomberg Government officials have floated the idea of using any additional revenue to improve tourism-related infrastructure and address overtourism in regions overwhelmed by growing visitor numbers. Critics have argued that applying a higher rate exclusively to foreign tourists could violate international agreements. Naturalization A growing number of foreign nationals are opting to acquire Japanese citizenship through naturalization rather than applying for permanent residency — largely because the former is conversely easier to obtain under current laws, much to the chagrin of some policymakers. In Japan, naturalization requires five years of residency, while permanent residency requires 10. A background check for naturalization typically looks at just one year of tax and insurance payments, compared to five years of tax and two years of insurance history for permanent residency applicants. Justice Minister Keisuke Suzuki acknowledged the discrepancy during a parliamentary session in May, saying it would be 'clearly inappropriate' if naturalization were the easier path. 'Both pathways should involve strict evaluations,' he said, adding that the government would review the legal framework for consistency. Nippon Ishin's Yanagase, who raised the issue, said the current system lacks coherence and called for legislative changes. 'Naturalization grants voting rights and access to one of the world's most powerful passports. It should not come with lighter requirements than permanent residency,' he said.
Japan Times
an hour ago
- Japan Times
Space-debris firm that saw shares surge 62% on IPO loses half its value
When Astroscale Holdings began trading in Tokyo a year ago, excitement over the Japanese space-debris pioneer was riding so high that the stock surged 62%, making it a billion-dollar company. That lasted one day. The value of its shares have since halved after those lofty expectations soured, with the company announcing delays of some projects and lowering some of its earnings estimates. Astroscale is now the worst performer among Tokyo's 10 biggest listings in the past year and it's trading below its initial public offering price, data shows. While the company says the setbacks are temporary, its stock performance illustrates how fast investor patience can run out even for frontier industries like space. "Investors had put high expectations on the company, and the delay in scheduled plans resulted in the stock's underperformance,' said Ikuo Mitsui, a fund manager at Aizawa Securities. "There was a mismatch between investors and the company in terms of timelines.' The company, whose services include removing space debris and repairing satellites in space, recently downgraded its earnings estimates, projecting net losses doubled to ¥22.5 billion in the year ended April 30. It cited delays in new contract signings and revenue recognition for existing projects, according to a release by Astroscale, which will report earnings next week. It didn't help that the company also issued more stock to raise funds, diluting the value of existing shares, according to Koji Endo, an analyst at SBI Securities. Though investors are aware the company needs money, it needs to show better growth, he said. There are some positive signs, however. The company posted its first gross profit during the fiscal third quarter and its operating losses have been narrowing the past two quarters. The company remains optimistic that recent setbacks are only transitory. "We expect more growth for the current fiscal year and aim to achieve better profitability than last year,' said Nobuhiro Matsuyama, chief financial officer at Astroscale, in an interview. Astroscale aims to improve its profitability further by controlling costs and securing 20 to 30 projects globally, he said. The company has enough funding for now, raising about ¥12 billion in a recent share sale, but Astroscale will continue to raise funds if there's a need for investment, Matsuyama said. Toshiyuki Tateno, an analyst at Phillip Securities Japan, agrees that the company's long-term prospects remain bright. Despite the recent weak performance, the technology the company has should revalue the stock higher going forward, he said.
