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Global Resident

Japan launches new fast-track residency system to attract skilled workers

EB5Investors.com Staff

Japan

By EB5 Investors Magazine Staff

The Japanese government earlier this year relaxed rules to allow foreigners to get permanent residency for a period of one year. The move, by the world’s third largest economy, is an effort to retain highly skilled and educated foreign professionals.

Historically, foreigners were required to reside in Japan for 10 years to receive permanent residency. Highly skilled foreigners are now eligible to apply for permanent residency under a new fast-track system that assigns permanent resident visas based on a point system. The change became effective at the end of March 2017.

Preferential immigration treatment for highly skilled foreign professionals, such as the points-based system, is used in other countries like Canada, the U.K., and South Korea.

In Japan, highly-skilled professionals are foreigners who have at least 70 points on the Ministry of Justice’s immigration scorecard, which is based on an assessment of criteria such as education, professional qualifications and annual salary. The Ministry introduced the points-based system in 2012 for applicants who fall into three categories of activities: advanced academic research, advanced specialized/technical and advanced business management.

Previous Japanese immigration rules stipulated that five years was the required minimum residence period for applicants in these categories before applying for permanent resident status.

With the new rules in place, the waiting period has been shortened to three years for those scoring above 70 points and just a year for those scoring over 80 points. Other achievements by the applicants can garner extra points under the new system, such as employment in technology and other growth industries, being a graduate of a top university, and a career as a successful high net worth investor.

“The program is designed to attract high skill and high income foreigners to Japan although it is still too early to make any long-term predictions about its success,” said Nicholas Jesson, an attorney with the Ohara Law Firm, based in Osaka, Japan.

Jesson says in 2015, some 51 people were granted investor visas through the points based program, and in 2016 the number was around 132, according to Japanese government statistics. He said the visa application should not take more than a few months. 

“The required period of residency in Japan has been shortened to one year for certain qualified individuals. The primary benefit for investors who have permanent resident status would be the access to low mortgage interest financing available through Japanese banks to purchase real estate,” said Yasuyo Numajiri, Global Mobility Services Director for PwC in Japan.

Prime Minister Shinzo Abe has vowed to provide the world’s fastest path to permanent residency for skilled workers. In 2016, foreign workers in Japan numbered 1,083,769, marking the first time these numbers exceeded one million. Of these workers, highly skilled personnel which support overseas business development of Japanese companies, typically fall into the category of specialized or technical fields, some 200,000 people, according to Japan External Trade Organization (JETRO) Global Trade and Investment Report 2017.

“I think that shortening the waiting time for permanent residency improves prospects for investors in the sense that it becomes easier to fix talented employees in Japan to work in foreign investor owned companies,” said Eric Perraudin, president of Japan Management Consulting. 

In 2013, the prime minister set the goal of doubling inward foreign direct investment stocks in Japan to 35 trillion yen by 2020. To address any impediments by overseas companies to choose Japan as an investment destination, the Japanese government adopted five promises, such as removing language barriers when it comes to laws and regulations as well as establishing an investment advisor assignment system.

Perraudin said Japan currently has a big shortage of qualified people who can speak English. He said in this sense, shortening the waiting time allows Japan to hire more qualified foreign staff “which will improve human resources quality and maybe also the well-known lack of efficiency of Japan’s services industry.”

Japan also has an aging population. More than a quarter of Japan’s population is aged 65 or older.

Many experts have noted that Japan has a population that is both decreasing and aging rapidly and “industries that cater to the elderly are probably more prevalent here than in other countries,” Jesson said.

Numajiri said to partly address the demographic issue of declining birth rate and aging society in Japan, “the Japanese government has been accepting foreign talent that will bring value to the Japanese market and society.”  However, at the same time the Japanese government is cautious and focused on preserving national security, such as preventing terrorist or criminal entry into Japan.

“Aggressive implementation of measures targeting illegal foreign residents under the guise of permitted activities would be introduced in the future to curb any abuse from the relaxation of the immigration rules,” said Numajiri.

In the meantime, there are efforts to also make the residency process smoother. The government plans to launch an online service to allow foreigners to apply and update their residency status in Japan from fiscal 2018.

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