Capital city
Yuriko Koike is on a mission. Since being elected governor of Tokyo in 2016, the first woman to hold the city’s top post, she has publicly called for the Japanese capital to reinstate itself as a global financial center on par with London and New York.
Since her reelection in a landslide victory in July 2020, those calls have got louder. In an exclusive interview, she tells Akio Fujii, Chair of Editorial Board, Nikkei Inc how she plans to turn Tokyo into a financial powerhouse
What is your vision for Tokyo as a global city?
“My aim is for Tokyo to remain a city that people choose to live in, work in and visit. Why someone chooses a city depends on the person doing the choosing: it could be because that city is fun, challenging, great for raising children, or has delicious food. Tokyo has all of those merits, so I think we have great potential. If you’re looking for economic opportunity, Tokyo stands out.”
“We have a vibrant economy, we are a city that knows how to make money. But having a great economy isn’t everything”
“We have a vibrant economy, we are a city that knows how to make money. But having a great economy isn’t everything. The city needs to be a fun place. We also have what’s probably the best public transportation system in the world, where a 10-second delay leads to an apologetic announcement. Tokyo is also a very walkable city, and one where bicycles are an integral part of everyday life. I’d like to keep cultivating these strengths and make sure that Tokyo remains a city people from all over the world choose.”
You’ve said you’d like Tokyo to become a global financial hub. The city’s tried to achieve this several times before, what’s different this time?
“I believe that the percentage of the economic pie that the traditional industry of finance occupies in Japan is insufficient. In other words, there is room to grow. It will lead to the revitalization of the country’s economy, and we want to implement measures at the right time. I was a television journalist before becoming a politician. I was following the financial industry, the stocks, currencies and oil prices, keeping track of them on paper, since there weren’t any search engines. Back then, Tokyo was one of the world’s three great financial hubs along with New York and London, pulling the levers of the world economy. Then the economic bubble burst and various financial institutions gradually left Tokyo, moving to other cities in Asia.”
“Ever since becoming governor, I’ve argued for the importance of Tokyo again being a financial hub. The city has plenty of people, goods, capital and information – all the factors of production – plus stability and the ability to attract people from all over the world. I’d like to make better use of that. Donald Trump has been talking about building a wall for some time now. I’m more interested in building a Wall Street – in Tokyo. I’d like to promote Tokyo as a stable financial capital in Asia.”
Singapore, Hong Kong, and more recently Shanghai have led the way in Asia, but we’ve seen Hong Kong suffer from serious instability in recent years. What are Tokyo’s strengths in comparison to its Asian competitors?
“First, the volume of Japanese personal financial assets, which amount to about 1,900 trillion yen [19 trillion USD]. Second, the Japanese GDP is the third-largest in the world. Third, thanks to the Dollar-Yen exchange agreement the Bank of Japan has with the US Federal Reserve, we have stable access to dollar funds.”
“Tokyo is also home to a significant number of Fortune 500 companies.”
“Tokyo is also home to a significant number of Fortune 500 companies. Our city’s population and annual budget are larger than those of many independent countries. These numbers drive home the size of our market. Our society is stable, with low crime, and high levels of public health and hygiene. As for data and information, our protection of personal information is at a very high level, which certainly helps when you’re doing business. Beyond that, Tokyo is a fun city to be in, in terms of art, entertainment, food.”
Osaka and Fukuoka have both recently stated their intentions to become international financial hubs. How would you compare Tokyo to these two cities, and could the three coexist as hubs?
“A financial capital needs to have global pull factors and an ecosystem to support global talent. Tokyo has this ecosystem, including education in the form of international schools, a multilingual healthcare system, and availability of professional services [lawyers, accountants etc] in multiple languages. Tokyo is also well on its way to establishing 5G network availability, which is crucial since cutting-edge communication technology is absolutely necessary for the financial sector. Our plan involves a wide range of actors from the financial industry, many of whom are working together with the Tokyo Metropolitan Government on FinCity. Tokyo, an organization established to promote and further develop the city’s financial sector. Tokyo has historically been the financial center of Japan, and that history translates to a rich financial ecosystem. We’re set in urban development terms, but need to take things up to a higher level in the field of global finance.”
What steps would you like to see the financial sector take to further Tokyo’s position?
“Many of our financial institutions are already participating in the FinCity. Tokyo initiative. I’d like to keep that collaboration, which will help develop the city as a financial capital, going.”
“I’m also sensing a change in the investment mindset of many banks and other financial institutions. Back when I was environment minister, finance and the environment didn’t have much in common. Now that terms like ESG [Environmental, Social and Governance] investing and Sustainable Development Goals have come to the forefront, I feel like we’re finally seeing connections being made between finance and the environment, which I think is a plus for society as a whole.”