What Singaporean investors can expect from Okinawa’s development

A 40% tax cut in setting up business is expected to lure investors.

The Okinawa Prefectural Government  is beefing up support to its international logistic goods network to boost investments and tourists inbound.

On a trip to Okinawa, Japan for the inaugural Great Okinawa Trade Fair, Singapore Business Review (SBR) caught up with Keida Kimio, director, International Logistics and Commerce Division, Department of Commerce, Industry and Labor, Okinawa Prefectural Government, to talk about the blazing trade sector of the region. The official said that the government has been pushing the promotion of Okinawa as an international flight logistics hub in the past five years. The trade fair itself has become one of Japan's largest international food business meeting sessions of the type based on appointments made in advance. The participants include 200 exhibitor companies from throughout Japan and 161buyer companies from 16 countries and regions. Singapore is the second largest participating country with 17 Singapore buyers, only a slight difference versus Hong Kong's 19. China is on the third spot with 16 firms.

“Okinawa’s major strength as a trading hub includes the fact that it is located in the vibrant southeast region of Asia. It is also the center point of Asia. Traders from Japan to Asia can make most of the location. It is a place where you can get almost anything from Japan,” said Kimio.

According to Kimio, international cargo flies from Okinawa in 8 Asian cities 6 times a week. Within Japan, one can also fly easily from Okinawa to other places in the country. To date, Kimio noted that there are 19 domestic flights inside Japan and the number is increasing from only 3 to 4 flights five years ago when it started.

This year, some airlines also started flying from Okinawa to Singapore after Singapore Changi Airport and the Okinawa Prefectural Government inked a deal to establish new direct routes.

 A staff from a project office also added that Okinawa has a 24-hour custom check for goods. This means that goods are delivered to your doors the next day. Unfortunately, most people do not know about the merit of trading through Okinawa, he lamented.

“Okinawa’s [being] near coastal helps. It only takes around 5 hours for goods to be transported from Okinawa to Singapore versus 7 hours from Tokyo to Singapore. This is not a common knowledge even among Japan locals,” he said.

According to Kimio, most of the products that are currently transported through Okinawa include IT devices from all over Asia. Second in line are food products from Japan. Tuna fish is exported mainly to Singapore, including sea-grapes and peanut tofu.

Kimio also added that the government is offering financial support to logistic facilities and it is investing with them. To encourage companies to set up operations in Okinawa both for local and overseas, Kimio said that 40% of corporate tax is cut off. When they also set up their factories in Okinawa, they also provide financial support through subsidies based on certain conditions.

“We will keep doing this for 8 years,” he said while adding that one Japanese firm is setting up facilities in Okinawa for Halal products.

After April next year, the government is setting up its Singapore office to lure more inbound tourists and investments from Singapore as well as to promote export products. Currently, the Okinawa government has offices in Shanghai, Hong Kong, Beijing and Taipei. Its Singapore office will be the first in SEA.

“Singapore is an important market to Okinawa because it is only a 4-hour distance. Singapore firms are mainly investing in food products,” said Kimio.

Interview with Singapore Buyer

SBR also caught up with one of the 17 Singapore firms which attended the event. Alfred Ang, managing director at Rosen International shared that he had around eight meetings in a day during the fair. “ I was invited by the government and I found it a good venue to look for new supplier, new products, and new customers,” he said.

Rosen International supplies Asian products like kitchen wares, table wares, as well as healthy lifestyle products to hotels, restaurants, aircraft and more.

Ang said that he has been visiting Japan for 20 years, but his first time to Okinawa was only last year. He has since then visited the island four times to bring in customers interested to buy Okinawa products.

Ang noted that they are benefiting from support coming from the Okinawa government through reduced cost. “For example for every 300 kilos of cargo for exports, the freight cost is reduced to 110 yen per kilo from normally 300 yen per kilo,” he said.

He added that the Okinawa Prefecture Government is also supporting them financially in attending promotional events. “The government covers up to 50% of our cost as long as we have 50% Okinawa products to promote,” he noted.

Rosen International recently exhibited at JCS Japan Fair held at Orchard last October 22-26, 2014.

“The government has been trying to promote Okinawa products in the past 5 years. They are helping us keep the pricing competitive. We expect the Okinawa government’s support to continue in one or two years or else what we have started won’t materialize,” said Ang.

According to Ang, prices for Okinawa products are slightly cheaper than other products, but one of the challenges they are facing now is that they cannot sell them yet in supermalls in Singapore as the risks are too high. “Okinawa products are not yet popular because there is currently lack of knowledge about them. It is taking slow and I think it will take time to gain the trust of the market and to get all things done,” he said.

Interviews with local business men

During interviews with local businessmen, they also highlighted the support they are receiving from the government mostly in financial terms.

Okashigoten, famous for Okinawa’s own beni-imo or purple sweet potato-flavored tart, is receiving support for its promotional activities abroad. “The government covers 90% of our promotional cost abroad,” Mitsuru Oshiro, sales director at Okashigoten told SBR. “We tried to do it all by ourselves two to three years ago, but it was very difficult and costly,” he shared.

Okashigoten is conducting several food tastings in Singapore and Hong Kong and Oshiro shared that the major challenge right now is making their prices competitive amidst high tax rates.
 

Yoshikatsu Yamakawa, CEO of ‘Shikuwasa’ farm company Katsuyama Shiikwasa meanwhile shared that they are receiving 60% financial support in purchasing and upgrading their facilities.

Shikuwasa is a citrus fruit and native to Okinawa.

Yamakawa added that they are looking at exporting their 100% extracted juice products to Taiwan as its trial market.