Promotion and Development

By Japanese standards, Okinawa's market is relatively small, but there are still significant opportunities. American companies are helped by the fact that Okinawans tend to be open to imported food and consumer goods, especially from the U.S. Okinawa also has the youngest workforce in Japan, a workforce that is actually still growing, thanks to a robust birthrate. Okinawa also has the lowest wage scales, low commercial property rates and a range of tax incentives and subsidies for potential investors and employers (see below for details). Service industries seeking to cut their costs and become more competitive in the Japanese market have even begun considering moving their back office operations to Okinawa.

The two largest sectors of the local economy are construction and tourism, areas in which U.S. companies excel. One large-scale public investment project in the works is the establishment of the "Okinawa Institute of Science and Technology," a project that is hoped will play a major role in the economic and social development of Okinawa in the 21st century. The national government has increased the project budget 1.8 times over the previous year from 2.9 billion yen (29 million in US$) in FY2004 to 5.1 billion yen (51 million in US$) for FY2005. American companies are expected to be competitive with their on and off campus and research facility design expertise. An American company, Kornberg Associates, has already won the tender for master design of this OIST project with NIKKEN DESIGN and Okinawan design company KUNIKEN. The plan to build a new airport on the nearby island of Ishigaki has also been approved by the central government and budgeted for construction. Moreover, the U.S. Naval Hospital Okinawa, which is the largest overseas hospital in the U.S. Navy, is in the processing of moving its facilities. This project is expected to bring business opportunities to U.S. firms, not only in terms of design, but also in terms of medical equipment and supply procurements.

The number of tourists visiting Okinawa has grown steadily. In 2004, 5.15 million people visited the island. As evidenced by the January 1, 2005 opening of "DFS Galleria Okinawa", the world's second largest Duty Free Shoppers outlet, Okinawa offers American firms potential business opportunities in connection with first class resort hotels, hotel operations and marine sports, out door equipment and related services. In addition, the continuing development of Okinawa as a retirement community may also offer attractive business opportunities. It should be noted that about 23,000 Mainland Japanese move to Okinawa each year to take advantage of the warm climate, beautiful beaches, great food and friendly people.

Okinawa Prefecture is also promoting policies to encourage the introduction of foreign capital. For example, Okinawa has established the first and so far only Special Free Trade Zone in all of Japan. Various tax incentives apply to, not only the Special Free Trade Zone, but the Information and Communications Industry Promotion Zone, Special Information and Communications Industry Zone and Financial Businesses Promotion Zone as well. These incentives include exemptions on the payment of national and local taxes. There are other incentives only available in Okinawa, including subsidies to promote the employment of Okinawa youth and support measures to reduce domestic and overseas communication costs.

One sector that has benefited from central government and OPG support has been Okinawa-based call centers, including the high-tech "server farm" at Ginoza. In all, the OPG has succeeded in inviting 36 call centers and another 60 IT-related companies to the island and since 1990. These companies employee close to 9,000 people – 7,300 in call centers and 1,500 in IT. Participating companies include American firms such as IBM, American Home Insurance (AIU), CITIBANK, Cisco Systems and Oracle.