An Insider's comments on Japan's high tech business world

* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, March 26, 2017, Issue No. 889

– What’s New — Japanese Pragmatism in Applying Traffic Laws
– News — Recruiting fees rise 20%-100% for engineers
– Upcoming Events
– Corrections/Feedback — Responses to Inheritance Tax Changes
– Travel Picks — Archery in Fukuoka, Cosplay in Ehime
– News Credits

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Traveling to the airport recently on an inner city expressway, it struck
us how the Japanese have a seemingly ambivalent but actually very
pragmatic view of following the law. In this instance, it was about 4am
in the morning and in a stretch of road that had a posted speed limit of
60km/hour all the traffic was traveling at 80km to 100km per hour. We do
mean ALL the traffic. Trucks, passenger cars, lite vans… there wasn’t
a single vehicle traveling at 60. And yet, driving was safe and orderly.
No real speedsters up at that time anyway.

As long-time resident drivers will already know, even the police
generally accept that few people travel at the posted speed limit on
main roadways (suburban side streets are a different matter). For
example, police cars on traffic duty generally don’t bother stopping
speeding cars unless they’re doing more than 20km per hour above the
limit, or are doing something dangerous. This means the prevailing speeds
on the intercity expressways, where the posted speed is 80, is typically
around 100, with more risk-taking drivers doing up to 120.

In fact pretty much the only time you shouldn’t breach the speed limit
as a driver, is during traffic safety week or when a patrol car decides
to travel in full view of the rest of the traffic AND travels at exactly
80km/hr. At those times, everyone speeds until they see the patrol car,
then settles down to an orderly line behind it, waiting until the
officers reach the edge of their patrol area and exit. It is often funny
to see this result in a left lane traffic jam, while speeders coming up
from behind and not able to see the patrol car will come zooming up the
fast lane until spot the patrol car. They then hit the brakes and slink
back into the left lane as best they can – hoping the police up front
were not watching them in the rear view mirror.

Then there are parking laws, camping vehicle laws, bicycle-use laws,
skateboard laws, and restrictions on pretty much any type of transport.
And yet, while the laws are there, few people are apprehended and even
fewer charged. Drinking alcohol and driving, and actually causing
accidents being important exceptions.

So is Japan a nation of scofflaw drivers?

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applications is May 31, 2017

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Silver prize – 50,000yen x 2 persons
Bronze prize – 30,000 yen x 7 persons

[…Article continues]

Well, yes they are, but this lawbreaking falls in the category of
pragmatic risk taking and is a perfectly logical outcome of Japan’s
police mindset. There is a very good paper written in 1992 by Daniel H.
Foote, a professor at Tokyo University, who digs into the concept of
Benevolent Paternalism and the Japanese legal system. The title of the
paper is, “The Benevolent Paternalism of Japanese Criminal Justice”
which, as the name implies, is mostly about criminals already arrested.

However, the paper is valuable to us because it goes into some depth
about the mindset of the police, the prosecution, the judges, and
jailers, in terms of how they act with their charges. For them,
efficiency and reintegrating the offender back into society is more
important to the greater good than simply punishing the individual for
the purpose of deterrence.

Foote’s paper is here:

Wikipedia identifies paternalism as behavior by an organization (for our
purposes, the police when controlling traffic) or state that limits a
person or group’s liberty or autonomy for the greater good of society.
Benevolent paternalism is where the police act from a viewpoint of
societal benefit, rather than just promoting their own power, and thus
can have the discretion whether to “influence” offenders to return to
law-abiding lives or sending those who refuse to submit, to the courts.

Foote talks about how Japan’s criminal-justice system depends heavily on
community cooperation and informal social controls at all levels, from
crime prevention and detection through to rehabilitation and
reintegration. He says that for the purposes of criminal justice, the
relevant communities are not geographic but rather based on family,
company, and other social groupings.

Foote recognizes that skeptics might argue that the system’s
“benevolence” is largely an illusion and that police discretionary
powers are excessive, to the point of abuse – quoting Japan’s
unbelievably high conviction rates. However, he argues convincingly that
in the Japanese system at least, a relatively small number of suspects
wind up being prosecuted anyway, and instead low-impact cases are dealt
with directly by the police admonishing the perpetrator. He gives some
examples of just how much discretion they have, cases which in a western
context would require prosecution by a court of law.

So how does benevolent paternalism play a role in uniform speeding and
other acts of mass traffic disobedience? Since at least the beginning of
the Tokugawa period over 400 years ago, Japan has been a populous
country and as a practical consideration, rules were made to not only
control but also facilitate the movement of people and goods. The
authorities of the day quickly found that by establishing grey zone
laws, the general populace would in its pursuit of ordinary life
regularly transgress the rules and thus be easy pickings when those in
power wanted to make an example of them. This idea of benevolent
paternalism, the right of the “father figure” state organ to punish but
generally to forebear for the good of society, has successfully
continued through to the modern day.

So taking the idea that the police see their role as the safe but
efficient movement of vehicles, and given that the majority of drivers
are in themselves a “community” the police are willing to let that
community (at the police’s discretion) to set its own speed limits
(within some band of reasonableness) rather than try to stick to the
letter of the law.

To give you some idea of just how powerful this concept of community and
its influence on the police is, a radical change in the legal view of
bicycle usage had to be reinterpreted by the police after it was found
to obviously be not practical. More specifically, in 2008 the National
Police Agency (NPA) tried to change the traffic laws to ban mothers from
carrying two kids on their bikes to get them to school. The front/back
seat “mamachari” are famous world-over as the transportation of choice
for budget-conscious young mothers.

There was such an uproar as mom groups all over the country complained
to the local authorities, and anyway basically just ignored the police,
the NPA got the message. To save face it declared that they would allow
bicycles that met a new safety standard to continue to still carry two
kids. Since then, we have never heard of a mom getting charged,
regardless of whether their bicycle meets safety regulations or not.

So next time you see a vehicle speeding at just on 20km an hour past
you, you’ll know that you’re watching a unique feature of Japanese
culture in action…!

…The information janitors/

———————— Banner —————————-

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has been making close on 14% p.a. with very consistent returns. We are
confident in the capacity of the fund to continue with similar returns.

It’s in loans to developers in Australia and has the security of the
collateral backing the loans. Loans for building projects that are then
paid back at completion of the project. It’s not a property fund–with
the attendant liquidity problems–but a loan fund. It runs a number of
different loans at the same time, with different completion / repayment
dates, so there’s quite a lot of liquidity in the process. Investments
into the retail version start from AUD $25,000. At retail, we anticipate
returns in the 10-12% range.

For full details – please email


+++ NEWS

– 75 or older? Driving tests are about to get a lot tougher
– Heat of Moritomo school scandal rises for PM
– Son is richest Japanese
– Chinese consumer TV program stimulates slide in shares
– Recruiting fees rise 20%-100% for engineers

=> 75 or older? Driving tests are about to get a lot tougher.

After a series of accidents caused by senile elderly drivers, the
government has this month passed new legislation requiring stiffer
driving and mental competency tests for drivers aged 75 and older. The
accident that was the tipping point was one where an 85-year old man
drove his light truck into a group of elementary kids, killing one and
injuring six. The nation’s 5.13m drivers older than 75 now need to take
a tougher dementia test each time (every 3 years) they apply. ***Ed:
There is already an elderly mental competency test in place, but it has
only been applied if drivers first broke the law and where dementia was
an obvious cause. For example, reversing instead of moving forward, or
driving through a red light. So the new law serves more of a preventive
function.** (Source: TT commentary from, Mar 25, 2017)

=> Heat of Moritomo school scandal rises for PM

PM Abe and his wife are taking even more heat from former friends,
following the explosive claims of the principal of the Moritomo Gakuen
school, Yasunori Kagoike, that Abe’s wife handed him an envelope full of
money as part of Abe’s informal support for the school. The latest heat
comes from Osaka Governor Ichiro Matsui, who was also a member of the
right-wing organization Nippon Ishin no Kai along with Abe and Kagoike.
Matsui reckons that Abe is disingenuous in saying that there was no
implicit understanding between himself and Kagoike over the school’s
questionable land deal. Matsui pointed out that if in fact there was no
“between the lines” understanding, as Kagoike claims, then why did the
deal go through so easily. ***Ed: Interesting to see all these right
wingers stabbing each other in the back as their misdoings become public
knowledge. Abe may survive this scandal, but the public will certainly
now be thinking that the LDP is back to its scandal-ridden dealings of
the past.** (Source: TT commentary from, Mar 25, 2017)

=> Son is richest Japanese

Fortune magazine has just named Softbank CEO Masayoshi Son as the
wealthiest person in Japan. The magazine says that at 34th place among
billionaires worldwide, Son is worth US$21.2bn. Son edged out Tadashi
Yanai of Fast Retailing for the top place. Yanai is currently worth
around US$15.9bn. (Source: TT commentary from, Mar
21, 2017)

=> Chinese consumer TV program stimulates slide in shares

An annual Chinese state-run CCTV program “3.15 Gala” has hit a number of
foreign companies with charges of consumer fraud. Included were two
prominent Japanese firms: Ryohin Keikaku (Muji brand operator in China)
and Calbee, which saw their respective share prices slide about 4% each
after the show ran. In the program, both companies were accused of
exporting products to China that contain materials/ingredients from
“import-ban areas” (meaning northeastern Fukushima). Both companies deny
shipping any products to China from the banned areas, but that didn’t
save them a JPY30bn share drubbing on the Tokyo stock market in the
meantime. (Source: TT commentary from, Mar 16, 2017)

=> Recruiting fees rise 20%-100% for engineers

According to a Nikkei article, a severe shortage of construction and
software engineers is driving up the commission rates of placements by
headhunters. The standard placement fee in Japan is currently 30%, but
the article reports many agents are charging at least 35%, and in some
cases as much as 100% more than the going rate. The demand for
construction engineers is of course fueled by the 2020 Olympics, while
that for software engineers is simply because there are not enough to go
around. The current SI jobs to applicant ratio is 3.67:1. The overall
average for jobs to applicants for all industries is 1.82:1. (Source: TT
commentary from, Mar 25, 2017)

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.


——— From Veggie Burgers to Carrot Cake ————–

Our commitment at Alishan Organics is to give our customers the best of
western organic foods, but prepared with a Japanese twist. That’s why
our menus cover such a broad range of styles and tastes. If you’re just
getting to know us, why not visit our cafe by the river in Saitama? That
way you can try out a variety of dishes and decide for yourself. Choose
from an Amy’s organic pizza straight from the oven, a mouthwatering
veggie burger packed with seasonal greens and reds, or if you’re feeling
chilly, a filling vegetable curry with rice. And although we’re healthy
minded, we don’t skimp on desserts. Favorites include Jack’s scrumptious
carrot cake, vegan brownies (of course with vegan icecream), and baked
banana cheese cake.

Our Cafe:


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Speaker: Sriram Venkataraman – ex SVP Infosys Japan and presently
Independent Business and Technology Advisor
Title: “India as an Innovation Center: Is there a case?”

Details: Complete event details at
Date: Thursday 20th April, 2017
Time: 6:30pm Doors open
Cost: 1,000 yen (members), 2,000 yen (non-members) Open to all. No sign
ups at the door!!!
RSVP: By 5pm on Monday 17th April 2017
Venue: Room F, 9F, Sumitomo Fudosan Roppongi Grand Tower 3-2-1 Roppongi,
Minato-ku, Tokyo, 106-0032


** In TT-887 we covered some new tax changes that are pertinent to
foreign permanent residents here, and received a veritable torrent of
response. Two of the best ones are repeated here:

=> PWC Response:

These tax changes are very significant – good for some and not so good
for long-term residents. While in most situations there is very little
one can do from a tax planning perspective, there are ways to avoid or
minimize inheritance tax exposure if some upfront planning is
undertaken. If your readers are looking for some advice, please feel
free to have them contact my colleagues Thomas Lu and Marcus Wong here
at PWC Japan.

One point to keep it in mind is that at the time when we wrote the below
Alert the transition rules were not known to us. Subsequently, we have
learned that any foreigner who leaves before April 1, 2017 (just a
couple of weeks left) could avoid the 5-year look back assuming there is
no Japan connection ( family or asset wise).

In summary, there will be three major changes effective April 1, 2017:

The Good:

1. Relief for foreign nationals temporarily in Japan – Exemption from
gift and inheritance tax on non Japan situs assets for foreign nationals
residing in Japan for ten years or less out of the last fifteen years
and who hold a “table 1” visa that generally does not allow them to stay
indefinitely in Japan, such as a work-related visa.

However, please note the transfer of overseas assets with Japanese
nationals or other foreign nationals who are subject to gift and
inheritance tax would not be excluded. Also, the transfer of Japanese
assets would continue to be subject to Japan gift or inheritance tax
regardless of how long the foreign national has been in Japan. In
addition, individuals holding a “table 2” visa such as a spouse of
Japanese national visa or a permanent resident visa at the time of the
inheritance or gift will not be exempt from tax on overseas assets.

The Bad:

2. Ten year “tail” for Japanese nationals – Japanese nationals may be
considered “unlimited taxpayers” even if residing outside of Japan if
they or the donor/decedent had a jusho in Japan within five years of the
inheritance or gift. The proposed tax reforms would increase this time
period from five years to ten years.

The Ugly:

3. Five year “tail” for foreign nationals – for the first time, the
receipt or transfer of worldwide assets by longer-term foreigners will
remain subject to Japan inheritance and gift tax after they depart Japan
until they have no longer had a jusho in Japan for ten out of the last
fifteen years. Therefore, receipt or transfer of worldwide assets by
longer-term foreigners could remain subject to Japan inheritance and
gift tax for up to five more years after permanent departure from Japan.

To clarify, this means that the transfer of assets involving foreign
nationals who had a jusho in Japan for ten years or more could be
subject to Japan gift or inheritance tax as well as potentially transfer
tax in another country for up to five years after permanently moving out
of Japan. Even if the foreign national no longer holds a Japanese visa
or if the assets are located overseas or if the transferor/recipient has
never resided in Japan before, the transfer of assets involving the
foreign national would be subject to Japan gift or inheritance tax.

In addition, no transition measures were announced in the proposed tax
reform. This would mean that individuals who previously moved out of
Japan prior to April 1, 2017 could be subject to Japan inheritance and
gift tax. One would need to count back fifteen years from the transfer
date of the asset to determine if the individual had jusho in Japan for
ten years during this period. Therefore, if a gift takes place on April
1, 2017 then theoretically, someone who permanently moved out of Japan
as far back as April 2, 2012 could be subject to Japan gift tax.

=> Reader Two Response:

As in most countries, the Japanese Government establish tax laws and
regulations for the subjects living in Japan which happens to be more
than 90% Japanese of the total population. They do not crack down on
foreigners but do in fact accommodate foreigners favorably who stay less
than 5 years, however, for long-term residents like ourselves, why
should it be different?

You forgot to mention the new “tail” in connection with Inheritance Tax
taking effect from 1 April 2016 whereby the Japanese State still can
impose tax up to 10 years after having left Japan. How this will
practically take place remains to be seen but I am sure tax treaties on
double taxation will be amended to consider it.

Exit tax only refers to financial securities – not real estate and other
property. 15% tax is very reasonable in my view. If fund managers have a
problem with that then never mind, they must be poor people totally
governed by greed. By the way it is my understanding that there is a 5
year grace period for the exit tax for foreigners. In other words in
kicks in from 2020.

It is antisocial not to pay tax and contribute to the state/society no
matter which country we live in perhaps with the exception of Monaco,
Dubai and similar states.



Japanese Archery Demonstration, Fukuoka
Kyudo: The Way of the Bow

Visiting Kokura Castle any time of year brings you in touch with history
as well as festivals and seasonal events. Furthermore, the castle makes
for a great backdrop for other special events, such as this kyudo, or
the Japanese martial art of archery, demonstration.

This was a fantastic opportunity to see experts in this ancient art from
all around western Japan and show off their skills and wisdom. A free
event, it attracted an impromptu gathering of spectators, along with
some traditionally-dressed participants of another event at the Kokura
Castle Japanese Garden that day. If you’re looking for authenticity in
cultural events, this had plenty.

=> Cosplay at Matsuyama Castle, Ehime
Hobby, lifestyle, or escapism?

These days, outside of Harajuku, Japan’s cosplayers seem scarcer than
they once were in the 1990s. It’s been suggested that this may be due to
the rise of “utility” or “normcore” fashion. So these sort of gatherings
aren’t common occurrence these days.

However, this only contributes to a heightened sense of intrigue,
excitement and novelty surrounding large scale cosplay events,
especially in a smaller city like Matsuyama. The Japanese friend I was
with at the castle expressed just as much fascination at the extravagant
outfits we saw. At the end of the day, he reached the affectionate but
bewildered conclusion that cosplayers are in a world of their own.

The cosplayers themselves were incredibly welcoming and more than happy
to pose for photographs. After all, they didn’t labor for months over a
sewing machine or spend hours on fastidious hair and makeup with the aim
of going unnoticed or unadmired…



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