A new understanding of tourism industry and the effect of inbound tourism policy in Japan
Authors:   Asia-Europe Perspective Association, Park Jaesung James , KIM HeeJae 
Published: June 2018

Focused on inbound tourism in Japan, this study examines the development and performance of the policy that foster tourism as a new growth engine. Japan has built its reputation as a manufacturing country represented by Monozukuri, but has recently developed an active inbound tourism policy to cope with population decline and changes in industrial structure. The Japanese government has focused on fostering the tourism industry from former Prime Minister Koizumi, who has been initially promoting tourism, to the current Prime Minister Abe, and the number of foreign tourists visiting Japan and the amount of foreign tourists consumption in Japan have surged. This is a result of the quantitative improvement activities such as eliminating inbound tourists’ concentration of the metropolitan area and expanding major visit areas, as well as the qualitative improvement activities such as raising the visitor re-visit rate. As a result, the inbound tourists that have been concentrated in Tokyo, Osaka, and Hokkaido are spreading to Kyushu, Hokuriku, Nagano, Kanto, Toukai, Tohoku, and Sanyo. Until 1991 in Japan, the emphasis was on Japanese domestic travel and overseas travel, and the importance of attracting inbound tourists did not appear. The “Foreign Visitor Attraction Act” was enacted for the first time in 1997, and since 2000, the importance of inbound tourism has been emphasized, setting an objective for the number of tourists visiting Japan and implementing an active tourism policy to promote visit to Japan in target markets. Former Prime Minister Koizumi declared the policy of “achieving 10 million foreign tourists in Japan” in 2003, and as a result, the “Tourism Nation Promation Basic Law”, which stipulated specific policies for promoting tourism, was enacted in January 2007. In 2008, the Ministry of Land, Infrastructure, Transport and Tourism established the Japan Tourism Agency, and in 2012 the Tourism Nation Promotion Basic Plan was implemented based on this law. The “the Tourism Nation Promotion Basic Plan” is part of Abenomics, which used bold monetary policy and fiscal policies aiming to overcome a long-term recession. In the tourism sector, the approach of attracting inbound tourists and linking tourists to shopping has been proposed to revitalize the tourism industry. As a result, the number of foreign tourists visiting Japan will continue to increase in 2014 and 2015, exceeding 20 million in 2016.
Followings are the points of inbound tourism policy that the Japanese government strongly implemented to revitalize the tourism industry. First, reformed tax exemption system increases foreign visitors consumption in Japan. Since the foreign visitors’ main purpose of their traveling is shopping, tax exemption process has been simplified for the convenience of foreign visitors by 1st and 2nd revisions of consumption tax exemption system. Expanded tax-exempt list and simplified tax exemption process increase foreign visitors consumption dramatically. As duty-free shops spread from the metropolitan area to local area, the regional economy has been revitalized. Second, relaxing visa conditions increases the number of foreign tourists. In case of countries whose GDP per capita is over 3,000 USD, they expected that the demand of outbound tourism is going to increase based on relaxed visa conditions. As a result, the number of visitors from those countries has increased sharply. Finally, Japan developed new air routes by attracting LCC. Inbound tourists can easily access to Japan because of improvement of facilities and policy support for LCC. It is also expected in the future that local economy would be stimulated if the number of foreign tourists goes on increasing when the services of LCC expand to local airports.