* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * * * *
Helping foreign business figure out Japan.
By Terrie Lloyd, a long-term technology and media entrepreneur living
in Japan. (http://www.terrielloyd.com)

General Edition Monday Nov 14, 2022, Issue No. 993

– What’s New — Akiya, Inbound Foreigners, and the Recovery of the Yen
– News – Web3 versus Web 3.0 – from the man who invented the Internet
– Investment — Toursoft
– Events — Alishan Opens in Yoyogi
– Found on the Web

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Akiya, Inbound Foreigners, and the Recovery of the Yen

Yes, Terrie’s Take is back. No, I didn’t die or move to another
country. But a lot has been going on and for a short summary of my
personal situation, please read my note at the end of this commentary.

Also, note the new Investment section below. Toursoft.systems is our
new software start-up.

As most readers will know, I founded and run www.japantravel.com, a
vertically integrated media, travel, technology company that services
the inbound Japan travel market. In early 2020, the Japan Travel
business was in its 3rd year of 70% (annual) or higher growth, and we
were looking at another blow-out year that would have put us on track
for an IPO by 2025. But then Covid hit, and my, what a difference a
terrified government can make to your business… In our case, the
government simply banned our business by banning all international
travel, with little regard to us or the thousands of other travel
companies who were expected to survive somehow in the interim. I can
honestly say, it’s been a very long but very interesting 30 months of
stasis. But thankfully as most of the rest of the developed world has
reopened, pressure from the other G7 countries has caused Japan to
finally give in and agree to “live with Covid”. So now
www.japantravel.com has gone from almost no travel related revenue (we
did have some long-term loyal media customers) to hundreds of clients
banging on the door…

Yep, it never rains but it pours.

One reason they are banging on our door is because Japan has become so
incredibly cheap. The yen has tumbled from JPY115 to the US dollar in
January this year, to JPY145 (down 26%) this week (mid-November,
2022). If you earn a salary in American dollars, you’re getting great
travel deals right now. Other dollar-pegged countries, like Singapore
(+24%) and HK (+25%), are both up as well.

Right now we are still seeing the first trickle of intrepid travellers
arrive at Japan’s international airports. Nothing too huge, but from
what I can see from the rapid increase (up 10x in October) of travel
enquiries to our own company, I predict that the trickle will be a
torrent by March 2023. My best guess is that if China opens up and
makes easier for citizens to travel internationally again, for 2023 we
will be at 12-13MM inbound travellers, similar to the numbers in 2014,
and that within two years (2025) we will be back at 2019 numbers,
meaning around 32MM or so travellers. On the other hand, if China does
NOT relax its travel controls, a distinct possibility given the ruling
party’s commitment to “eradicating” Covid, then the numbers will be
half for next year – still very good news for most travel companies,
as Chinese travellers are typically corralled and managed by local
Chinese travel companies anyway, meaning that only hotels and
attractions really feel the “no-Chinese” pain. Of course, if you are a
hotel, that’s not such great news.

But for the rest of the world, being able to come to Japan and enjoy
the food, hospitality, and traditions is hugely attractive, and
apparently Japan was the most googled travel destination in October by
Australians, with Japan being followed by New Zealand and Thailand.
Indeed, Webjet, an Australian OTA, says that its bookings have
increased over 300%, and in Niseko, accommodation companies are fully
booked out over the peak skiing period this winter. Australians are an
important source market for Japan, because they are the highest
non-shopping spending people of any nationality and also because they
repeat travel to Japan. China, of course, holds the number one
position for buying “stuff”.

So, what does travel have to do with akiya, and how will travel help
the Japanese yen recover from its current plunge?

It’s pretty well established that the Yen-US Dollar rate is closely
coupled to US Fed policies, and at the moment those policies are to
tighten money supply and raise interest rates to cool off the US
economy. This has meant that apart from dollar-pegged currencies, most
countries in the world have seen their currencies decline against the
US, and nowhere more so than in Japan. Why Japan has been particularly
affected is because of the Bank of Japan’s (BoJ) stubborn insistence
that they should continue an easy money/low interest rate policy, in
order to stimulate a sustained inflation rate of 2%, and indirectly,
in conjunction with long-awaited government policy changes, increased
incomes for Japanese workers. Most of the rest of the world has
figured out that fighting the US economy doesn’t work, but, here in
Japan the BOJ’s Haruhiko Kuroda seems to be betting that the current
slump in the Japanese yen is just temporary and that as the US economy
cools off in 2023, the yen will recover anyway. He might be right.
Furthermore, given that Kuroda is retiring in April 2023, the next
governor of the BoJ may simply decide to change policy and follow
other secondary economies in increasing interest rates in moderate

Jesper Koll, the well known economist currently advising Monex Group,
stated in an October 26th interview that he also thinks the yen will
recover, to JPY115/120 by October 2023. Koll’s reasoning is that apart
from the obvious coupling to US economic policy, there is another
important factor at play, which is that the cheap yen is now
stimulating Japanese (and other country) multinationals to take a
second look at Japan as a reliable and low-cost manufacturing base.
Right now the nation’s companies are incredibly cash rich and are
sitting on financial assets of around (end fiscal 2021) JPY1,253TN, of
which cash and deposits comprise JPY323TRN (up 5% over last year).

But Koll also argues that a lasting yen recovery can’t work without
appropriate legislation from the government to force zombie companies
(defined as those who can’t cover their debt service costs) out of
business, and to further force healthy companies to increase workforce
salaries. The question is whether the government has the stomach to
tip tens of thousands of technically insolvent zombie companies out of
business and to circulate millions of newly unemployed voters out into
the labor market. I am guessing that it does not have the guts, and
that Koll’s vision will not come to pass. That means, instead, other
economic events have to happen to improve the economy and personally
I think that tourism and travel is one such source.

[Continued below…]

——— Mid- and Senior Full Stack Software Engineers Available ————-

Over the last 6 years, Japan Travel and its partner company MetroWorks
have benefitted from excellent software engineers recruited in
Bangladesh, India, and Sri Lanka. We have been employing resources
both locally in each country and later sponsoring the best developers
to emigrate to Japan and join our teams here. This system makes for a
great trust relationship and improves employee retention and
satisfaction. Now MetroWorks is able to offer the same service to
other companies.

If your firm is interested in reviewing resumes of mid to senior-level
full stack, front-end and back-end web engineers, and separately block
chain engineers, please contact us and we will put you in touch with
the MetroWorks representatives operating in each country and sourcing
these engineers. To be clear, this is not an outsourcing offer. You
get to employ the engineers directly and therefore, to keep the
trained engineer for the future, thus retaining each valuable and
customized skill set. Of course, you can also bring the engineer to
Japan and embed them directly into your team.

What does it cost? Local salaries are typically in USD and range from
US$1,200~$2,500/per month. These are all-inclusive costs, apart from a
modest service fee for the in-country representative. Details on
salaries and fees will be discussed on review of your needs.

For more information, email: terrie@lincmedia.co.jp

[…Article continues]

Commentators like to point out that Japan’s travel sector is not a
great contributor to GDP, which on the face of it is somewhat true.
Inbound tourism in 2019 contributed about 0.8% of GDP, while overall
travel contributed possibly 3-4%. But if you look at indirect
contribution through salaries of people peripherally related to the
travel sector, estimates are that in 2019, travel contributed about 8%
of GDP. OK, granted, it’s only going to be inbound tourism that
impacts the yen (as it’s technically an export), but what is great
about inbound tourism is that it costs virtually nothing to grow, and
Japan’s infrastructure and public services are easily able to cope
with an extra 3MM people a month passing through the country. In
short, Inbound tourism is a very capital efficient method of
increasing GDP.

The Japanese government understands this well and announced in October
that they are targeting spending of JPY5trn (US$34bn) from tourists
over the next financial year. About 20% of this will come from inbound
travellers, who spend a ton more than domestic-only travelers. So
that’s an estimate of JPY10trn for the Inbound sector, about 20% of
the FY2019 number. That’s not bad, considering the country only opened
last month (October) to ordinary foreign travellers and where it is
still irritatingly difficult to do the paperwork needed to travel

But looking beyond direct spending by tourists, there are a number of
secondary travel-related contributors to GDP, such as services
suppliers and property investors. Each of these segments is small
compared to overall GDP, but they add up and have significant
influence on more general investment activities nationally. For
example, look at new hotel construction of 4-star and 5-star hotels
alone, a segment that primarily targets foreigner inbound travelers.
It’s estimated that over US$1BN in new hotels are in the pipeline over
the next 3 years. This number doesn’t capture 3-star and lower hotels,
which cater mostly to Japanese and which represent 60% of the market,
and so we can reasonably assume that the number of hotel starts is
more likely to be around US$2BN.

My personal interest isn’t in US$200MM hotels, though, which are the
domain of major corporations. Rather, I think the Japanese government
has a unique opportunity to go downstream from hotel building and
embrace inbound tourists who want to own holiday property here. How
hard would it be for the government to create a “holiday home” visa
that can be either limited in duration of stay, or which could require
the visa holders to have a certain level of assets and health
insurance before they can settle. The government certainly has
evidence that foreigners owning real estate in Japan is a good thing
and controllable. That evidence comes in the form of Niseko, and more
recently Hakuba and Miyoko. Property that 15 years ago sold for
JPY500/tsubo (about JPY150/sq. m.) in Niseko now sells for 450-600
times that price! I’m sure the local farmers who watched the whole
Niseko phenomenon from the sidelines rubbed their hands with glee upon
finally selling. And now that the place is a foreign enclave, it
reliably attracts tens of thousands of well-heeled foreign skiers
every year, including those big spending Australians I mentioned

So how many other Nisekos can Japan support around the country,
especially if there was a holiday home visa? I’m guessing that pretty
much every picturesque seaside and mountain village, the same places
that are depopulating right now, would be suitable candidates. The
lesson learned from Niseko is that the location doesn’t need to be
near a big city, and it doesn’t need to become flooded with foreigners
owning real estate. Just you need enough of them to tip the scales and
stimulate locals to invest in the same vision – and thus all ships

There is evidence that the idea of “locals catching on to a good
thing” is already happening with the Work from Home (WFH) movement
thanks to Covid. According to e-stat.jp, the government’s statistics
unit, the number of extensions and renovations of Japanese homes in
2019 was just 64,893 units, but in 2022 that number is estimated to be
94,700 units, up a massive 45%. On the other hand, the number of new
housing starts dropped 3% over the same period. So clearly something
significant is going on in the renovation space that isn’t being
signalled in the news – and I think that something is that city
dwellers loving the WFH idea are either moving out of the cities or
are buying secondary homes. So why not apply this new source of demand
to the whole wide world and invite international well-heeled folks and
digital nomads to the good life in Japan?

As has been well publicized, there are over 8.49MM akiya in Japan, so
with the rate of renovations made so far, amounting to just over 1% of
the vacant housing stock, this could be a HUGE opportunity.
Furthermore, that 8MM number is from 5 years ago, and is likely to
double as the “Dankai no Sedai” generation of oldsters dies out over
the next 10 years.

So the proposal is this: the government should make it easy for
foreigners to buy holiday homes in Japan and provide visas that offer
guaranteed entry and semi-permanent stay rights. Doing that would
rapidly increase the amount of housing stock being renovated, due to
95% of it being bought by Japanese investors wanting to cash in on a
coming boom. It would also significantly increase the unit value of
that housing stock, as happened in Niseko. My estimate, based on an
average of JPY10MM spent per property now, is given the JPY2.98BN
being spent on renovations this year, a foreigner holiday property
visa program would increase akiya renovations 10x and the per property
value by 2-3x (or more), thus making the renovations sector worth
about JPY7.4TRN and adding another 1.5% to the GDP directly and maybe
double that indirectly.

And that, dear Sherlock, might help the yen recover sustainably.


Early 2019, my eldest daughter told me she was expecting, and asked if
she could stay with my wife and I to look after the baby at our home?
Of course we said “yes” and with that decision I realized that my life
was going to change significantly, especially in terms of available
hours of the day. So along with some business rearrangements, I
decided to put Terrie’s Take on hold for “a while” and get my
priorities sorted out. In fact, this was my first break of longer than
a couple of weeks since I’d started Terrie’s Take in 1997 – which
some, including my wife, would call obsessive… The good news is that
the birth was successful, and my granddaughter is now a bright and
active 3-year old.

Then, not long after my granddaughter started standing, Covid came
along and chaos in the travel sector ensued, ensuring that Terrie’s
Take and other side activities would have to wait a while longer. So
here we are now in November 2022, my daughter and granddaughter are
back in Japan after spending two years in Tanzania and the DRC
(Africa) for the Japanese government aid organization JICA, Japan’s
international travel restrictions have lifted, and I am back at the
keyboard working on the Take again. This time around there will be a
few changes, such as a less frequent schedule, more guest interviews,
and a greater focus on commentary versus news updates. This latter
change is in recognition of the great job that Yuri Kageyama, Tobias
Dreesman, David Ogilvy, Jason Ball, Edo Naito, Richard Katz, and many
others are doing bringing us breaking news on Linked In. It’s hard to
compete when these people are covering all the bases – thanks guys…!
But I will cover at least one topic each issue that is close to my
area of expertise. Today, that’s Web3.

+++ NEWS

Should You Invest in Web3? Web, HTML Inventor Tim Berners-Lee Says “No”

On Friday, at the Web Summit 2022 in Lisbon, Portugal, Tim Berners-Lee
made a strongly negative statement about whether Web3 is viable. As
the inventor of the World Wide Web and HTML, Berners-Lee is a gifted
scientist and has a huge following – so people listen to him. He was
comparing Web3, which is a concept and name dreamed up by Ethereum
crypto players, with Web 3.0 (confusing, we know), which is the
direction that he feels the Web is going to take. Berners-Lee reckons
that while blockchain may be good for some things, it’s overkill for
the average user, and too slow – thus he feels it’s not likely to
become the foundation of the future web. Instead, he is backing SOLID,
a standard that allows for personal data privacy in the cloud, and
data sharing methods through standardized APIs.

***Ed: Berners-Lee may have a point. After all, if the objective of
Web3 is to simply decentralize and to protect personal data, then
requiring users to adopt wallets, pay real money to play in
Metaverses, and put up with slow transactions, is probably a good
recipe for them to ignore Web3. And indeed, we are seeing from recent
revelations that the real number of Web3 users visiting Metaverses is
probably a lot less than advertised, such as Decentraland’s 8,000
visitors a day (or 675, depending on who you believe) and in any case,
a fraction of the Web2 population.

But what Berners-Lee seems to miss is two key elements that hint it’s
too late to stop Web3. Firstly, if we are to give users control of
their own data as a key evolution of social media, then in order to
keep the internet running commercially there will also need to be
efficient methods to make identifiable but anonymous micropayments so
that advertisers can pay and connect with said users. Yes, blockchain
is overkill, but it does today already support millions of really
small payments reasonably reliably, and so it’s a working technology.
(Yep, ignoring the security risks for now!) Furthermore, Polygon and
other Level 2 Ethereum services have shown that the Web3 community is
quite able to innovate and come up with faster and more user-friendly

Secondly, there have been some significant announcements by major Web2
players, in particular, Meta and Google, that they are now supporting
at some level Ethereum, NFTs, and crypto payments. As an example of
its commitment, despite firing 13% of its staff, Facebook says it is
still going to continue intensive investment in Web3. I’m sure that
each of these Web2 companies would love to hijack the Metaverse
concept, but it seems that they have at least accepted that payments
is going to be a core part of our web future, and they have therefore
started linking to crypto standards. This has all been happening over
the last few weeks and comprise major endorsements of Web3, thus
encouraging more businesses onto the blockchain and the premise that
crypto payments and Web3 in general is here to stay. Of course the
route forward won’t be without its bumps and bruises, as FTX’s
collapse this week shows…** (Source: TT commentary from cnbc.com,
Nov 13, 2022)



This is a new section, where we introduce investment opportunities.
All information here is for educational purposes only and if you want
to request more information contact us at terrie@lincmedia.co.jp. Per
the law, only the first 49 responses will be accepted for each company
featured, and we will introduce you directly to the principals for
those firms. Oh, and if you are a founder and have a company to fund
or sell, contact us, we may be able to help get you an audience.

A. Featured This week

OK, this first one is one of our’s… Toursoft.systems is a
Singapore-based spin-off from www.japantravel.com, and comprises
technology and knowhow we gained by operating Japan Travel. The
business has gone independent and is managed by co-founder Saurabh

* Pre-seed, Singapore. Toursoft International – Community & tools for
travel agents
Toursoft.systems is building community and back office systems for
Travel Agents and Travel Planners. Many have predicted the death of
travel agents at the hands of Booking.com and Expedia, but in fact,
30% of global travel, around US$500BN, is still handled by Travel
Agents. Why? Because OTAs are limited in their ability to provide
transfers, handle groups and special needs customers, and do the
countless hours of research that wealthier/busier customers just don’t
want to deal with. Toursoft.systems offers a low-cost, full-featured
toolset for travel agents and at the same time is building out the
world’s first professionally-created itineraries marketplace. The
company is in late-Beta and revenue is expected to flow from January
2023. This is its first external raise. Suggested minimum for angel
investors: US$10K~US$20K per investor. Investor Memorandum available.
Raising US$200K additional in this round. Code: TOURSOFT-Pre-Seed-2022

B. Others in the Pipeline

* Seed, Bern, Switzerland. Precept Health – ICU medical devices
connectivity and data company. Raising US$1.5MM. Code:
* Fund of Funds, Mumbai, India. VC fund looking for final strategic
investor(s) for Maiden fund. Raising US$30MM. Code: CVP-Fund1-2022.
* Series A, Tokyo. AI English-language learning company. Raising
US$1.5MM. Code: AI-ENG-SeriesA-2022.

For more information, email: terrie@lincmedia.co.jp


Alishan Opens in Yoyogi

Our favorite organic foods importer and vegetarian cafe, Alishan, has
recently opened a cafe around the back of Yoyogi Park, right opposite
the parking area. Naturally called Alishan Park, they have two floors
of bright open space with a cool hippy vibe and really great food. A
good selection of their most popular products are also on display.
Dogs are welcome!


…The information janitors/


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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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