By Tony Munroe and David Dolan - Analysis
TOKYO (Reuters) - From high taxes and arcane regulations to ATMs that don't accept overseas bank cards, Japan faces a tough slog to change its image as closed to foreign investors and remake itself as a global finance centre.
Japan likes to tout its size, $13 trillion in household savings, revitalized banks and ongoing liberalization of a financial sector that has long curbed foreign participation.
Yet critics say that reforms are too little, too late, as investors have already turned their attention to faster growing countries such as China and India.
The government is keen to reverse the tide. A bill passed by Japan's parliament last month will relax barriers between banks and brokerage and allow firms to engage in more exotic businesses such as emissions trading.
Tokyo has also retooled tax rules so that representatives of offshore funds in Japan, such as hedge fund managers, will no longer be taxed twice.
"With the non-performing loan problem over and little negative impact from the ongoing global market turmoil, now is an excellent time for Japan to close the gap with other markets," Takafumi Sato, commissioner of Japan's Financial Services Agency, told the Reuters Japan Investment Summit this week.
"Our aim is making (Tokyo) one of the leading world financial centers and No. 1 in Asia," Sato said.
Japan's drawing card as a financial centre is its massive wealth, which has long settled for safe but low returns.
"We have very stable, good quality money here, and we want to make this money as efficient as possible," Atsushi Saito, the president of the Tokyo Stock Exchange, told the summit.
Skeptics say Japan is unable to compete with regional rivals Singapore and Hong Kong, which boast low taxes, more transparent regulation, multicultural societies where English is widely spoken and looser immigration policies.
"The chance for Tokyo to become a regional financial centre in its own right has passed," said Kirby Daley, senior strategist with Newedge Group in Hong Kong.
"The fact that Tokyo is becoming less important on the world economic and financial stage compared to five or 10 years ago in comparison to China means intuitively the tide has turned away form Tokyo," said Daley, who was previously based in Tokyo.
Some financial services firms that had Asia-wide functions based in Tokyo have moved or dispersed them around the region.
Lehman Brothers LEH.N, which has its Asia headquarters in Tokyo, has over the past 18 months shifted its foreign exchange and commodities base to Singapore and its equities and investment banking hub to Hong Kong while maintaining its fixed-income centre and chief executive's office in Tokyo.
BARRIERS Continued...
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