This is the fourth in a series of short comments in which the professionals at Pacific Tax Partners discuss impact of the recent tragedy in Japan on the economy.
The Tohoku Pacific Earthquake and disasters that followed it will lead to many business changes and, once things have stabilized, new opportunities.
At larger corporations, there will be higher budgets and greater attention to risk management and Corporate Social Responsibility (CSR), and to contingency contracts with outside public relations advisors, especially in view of the clumsy work by TEPCO.
Some individuals will feel the urge to relocate away from urban conglomerations like Tokyo and Osaka, to exurban or regional areas that are believed safer.
Foreign companies employing expatriates assigned to Japan will face demands for a “Japan premium” to be added to their salaries and benefits. These persons will transfer children from international schools in Japan to boarding schools in the home country or elsewhere.
There will be enhanced safety standards and operating procedures for medical facilities, first-responders, homes for the elderly, and institutions of all kinds where there are patients or residents who need continuous medical care or supervision. This will generate work for architectural and engineering design firms and consultants.
There will be formation of social network groups in anticipation of critical events, and preparation for use of such networks at the time of an emergency. This will be done at the scale of corporations and their vendors and customers in separate schemes, on a regional basis, on an all-Japan basis, by event type, etc. This will mean universal ownership of cellphones, preferably smartphones, becomes mandatory.
The METI-supported “national digitization” movement (our term at Pacific Tax Partners) will be greatly enhanced with regard to personal medical records (meaning mandatory personal ID numbers will be promoted) but also for important information possessed and used by public and private entities of all types. This will include off-site backup storage of all sorts of information (such as the original and perhaps old architectural drawings of buildings, financial information, etc.).
To ensure no shortage in time of emergency, people taking prescription mediations will be enabled to have prescriptions filled for periods longer than the usual two weeks. Benefits will accrue to the drug companies and dispensing pharmacies, but the medical insurance system will see costs rise.
New facilities and procedures for persons who would be particularly disadvantaged at the time of disaster: the hard of hearing (who could not hear loudspeaker warnings), elderly persons living alone, persons requiring dialysis, and patients or residents of hospitals and other institutions who are bedridden or not ambulatory.
There will be a review of emergency laws to give the national government power to take over dysfunctional local government functions (a local airport authority near the disaster area refused to grant flight plans to Russian super-cargo planes filled with relief supplies), or even private companies (Tokyo Electric Power is the obvious example here).
Business interruption insurance, and most other types of policies and options will be reviewed and perhaps modified.
For more information on customized economic reports and tailored US-Japan tax advice that cuts to the chase, contact the staff economist and experienced tax professionals at Pacific Tax Partners.