The island nation of Japan has the most developed economy in Asia. In 2015, it had the highest total wealth in the region at USD 25.9 trillion. Japan and China joined the United States and Germany as the four wealthiest nations, with around 60% of the world’s richest individuals in 2016. The country has more millionaires than any other Asian country, and therefore a unique potential for growth in philanthropy.

Japan’s economy suffered a downturn in 2016. The government of Prime Minister Shinzo Abe is working to stimulate economic growth through various policies collectively and colloquially known as “Abenomics”, while battling local headwinds such as the world’s highest proportion of people aged 65 and above, a pronounced gender gap in employment, a shrinking workforce, faltering productivity, and the largest government debt in the world.

The Organisation for Economic Co-operation and Development (OECD) has urged Japan to strengthen its innovation performance by collaborating with other nations, narrowing the gap between large companies and SMEs, reducing the gender gap in work conditions, and improving government finances in order to be able to drive inclusive growth.

In trade and investment, Japan displays a heightened interest in Southeast Asia — for the past five years. Japan’s foreign direct investment (FDI) outflows to the ASEAN-6 countries, namely Singapore, Thailand, Malaysia, Indonesia, the Philippines and Vietnam, averaged USD 20 billion per year between 2011-2015. About 56% of Japanese firms intend to invest in the ASEAN region in the coming three years, compared to 48% planning to expand in China. As the emerging economies of ASEAN move from agrarian to industrialised, and their populations from poor to middle-income, ASEAN represents a significant opportunity for Japan to support development and raise living standards in these nations.

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Japan’s 2017 Fact File

World Giving Index Rank

2016
114 102 in 2015
  • 23%giving money
  • 23%volunteering time
  • 25%helping a stranger

Population

2016
126.7 million

GDP (PPP)

2016
USD 5.24 trillion World Rank 4

Poverty

2013
16.1%

Per capita GDP (PPP)

2016
USD 41,275 World Rank 27

Global Competitiveness Index

2016
8 6 in 2015

Number of Millionaires

2016
2,826,000 2.2%% of the population

Source: CIA, Charities Aid Foundation (CAF, 2016), Credit Suisse (2016), OECD (2016), World Economic Forum (WEF, 2016), World Bank (2017)

Economic Context for Investors

  • Favourable
  • Moderately favourable
  • Unfavourable
Factors Index Score/Rank Description
GDP Growth 2016
Index Score/Rank
0.5%
The economy grew at the same rate of 0.5% in 2015 and 2016. In 2017, GDP growth is projected to be between 0.5 - 1%.
Governance 2015
Index Score/Rank
1.3
Japan ranked above 90% of 215 countries in the 2015 World Bank’s Worldwide Governance Indicators.
Consumer Market 2015
Index Score/Rank
USD 2,741 billion
Consumer spending decreased slightly by 0.4% from 2014 to 2015. Japan is the world’s second-largest retail market and is witnessing dramatic shifts in the attitude and behaviour of consumers.
Labour Force 2016
Index Score/Rank
65 million
Labour force decreased slightly by 0.5% from 2015 to 2016. Japan faces a labour shortage caused by two major demographic trends: a shrinking population due to a low fertility rate and the post-war generation who are leaving the labour force for retirement.
Infrastructure 2016
Index Score/Rank
6.3
Japan ranked 5 out of 138 countries for infrastructure in the 2016 WEF’s Global Competitiveness ranking due to its advanced infrastructure which is regularly expanded and upgraded.
Financial Access 2014
Index Score/Rank
97% of the population
Japan’s financial inclusion percentage is one of the highest in Asia.
Digital Access 2015
Index Score/Rank
91% of the population
91% of the population had internet access in 2015, up from 89% in 2014. 64.9% of people in Japan owned a smartphone as of 2016 and most digital and internet activity is shifting to phones.
Ease of Doing Business 2016
Index Score/Rank
34/190
Japan ranked 34 (32 in 2015) out of 190 countries in the 2016 Ease of Doing Business ranking. The government aspires to improve Japan’s ranking so that it is among the top three among OECD countries.
  • Favourable
  • Moderately favourable
  • Unfavourable

SDG Dashboard

On 11 March 2011, the Great East Japan earthquake struck Japan and triggered the tsunami and the meltdown of Fukushima’s nuclear power plant. Over the last six years since the earthquake, the economy has gradually recovered.

In 2013 Japan experienced a spike in growth on the basis of Prime Minister Abe’s economic revitalisation agenda using the “Three Arrows” — monetary easing, flexible fiscal policy, and structural reforms to correct rising inequalities. During the 2015 downturn, Abe revised his government’s policies in order to raise nominal GDP by 20% to USD 5.32 trillion by 2021, stem population decline by raising the fertility rate, and provide more support to workers with children and ageing relatives. “Womenomics”, another aspect of “Abenomics”, works to remove obstacles to female employment, notably by increasing the availability of affordable childcare and balancing the culture of long working hours.

Being highly vulnerable to natural disasters such as earthquakes and typhoons, Japan has developed some of the best disaster management practices in the world. Following the earthquake in 2011, greater attention has been given to investment in decentralised renewable energy projects.

  • No Poverty
  • Zero Hunger
  • Good Health and Well-Being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
  • Reduced Inequalities
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life On Land
  • Peace, Justice and Strong Institutions
  • Partnerships for the Goals
  • Sustainable Development Goals

Source: sdgindex.org (2016)

Government Focus on Development Gaps

Focus Area SDG Goals Gap Government Focus
Climate action
SDG Goals
  • Climate Action
  • Life Below Water
  • Life On Land
Gap
Japan emits 9.8 tonnes of carbon dioxide per capita per year, the sixthhighest amount of emissions rate globally. In 2016, Japan ranked 17 out of 171 countries in terms of risk with a high exposure rank of 4.
Government Focus
Japan’s Intended Nationally Determined Contributions (INDC) by 2030 is to reduce its greenhouse gas (GHG) emissions by 26% from 2013 levels.
Gender equality
SDG Goals
  • Gender Equality
Gap
Japan occupied rank 111 out of 144 in terms of gender gap in 2016. Women’s wages were 30% lower than men’s wages for the same job in 2015.
Government Focus
Japan’s education goals for 2030 are to address gender-inclusive education, skill development, and human security. “Womenomics” includes plans to extend childcare leave, provide skills training, and enact pro-women tax reforms such as tax deductions for dependent spouses.
Poverty alleviation
SDG Goals
  • No Poverty
Gap
As of 2017, poverty has risen to 16.3% in Japan, which is the highest in the past 30 years. Japan has the highest rates of child poverty in the developed world, ranking 34 out of 41 industrialised countries.
Government Focus
The government’s livelihood protection law established schemes for job training, housing assistance, family finance advice, and study assistance for children. Japan has policies for state assistance for out-of-school children and is encouraging small-scale nurseries.
Small and medium-sized enterprise (SME) growth
SDG Goals
  • No Poverty
  • Decent Work and Economic Growth
Gap
Japanese SMEs contributed to 50% of GDP and employed 70.2% of the total workforce in 2015. SME growth is key to reducing relative poverty.
Government Focus
Japan has a comprehensive SME ecosystem with institutional infrastructure in the areas of human resources, management support, and finance. This includes SME Universities, the Chamber of Commerce and Industry, and the Japan Finance Corporation, respectively.
Social protection
SDG Goals
  • Good Health and Well-Being
  • Reduced Inequalities
Gap
Japan has the oldest population in the world with the median age of 46.5 as of 2015.
Government Focus
The Basic Law on Measures for the Ageing Society enacted in 1995 and the law to assist those experiencing hardship enacted in 2014 regulate long-term care at home, use of generics in medicine and health insurance system to bring about a balance between government and private healthcare.

Social Economy

The social economy in Japan is rapidly growing with innovative investment models and support structures.

There are 205,000 NGOs and 51,526 SEs in Japan.

Category Factor Rating Description
SPOs
Factor
Legislative environment
half Japan’s non-profit sector is supported by a set of laws including the Association and Foundation Law, the Law on Recognising Organisations as Public Interest, and the Law to Consolidate Relevant Laws. While there is no specific legal status for SEs, SEs are clearly defined and regulated by the Cabinet Office.
SPOs
Factor
Government support for SEs
half The government supports SEs through seed funding and credit guarantee schemes. There is a dedicated Cabinet Office to spur the culture of giving.
SPOs
Factor
SEs across sectors
three-quarter SEs are active in an array of sectors including elderly care, child care, agriculture, the arts and culture, women’s employment, environment and education. Many were established after the 2011 earthquake.
SPOs
Factor
Presence, size, and maturity of SEs
half Japan today has 51,526 registered NGOs and 205,000 SEs. Many are in the early to growth stage.
Investors
Factor
Philanthropic contributions
three-quarter There are over 820 local foundations nation-wide. Local foundations such as the Sasakawa Peace Foundation, the Inamori Foundation and the Benesse Foundation have a rich tradition of philanthropy. Venture philanthropy has also gained significant momentum with the establishment of JVPF in 2013. However, HNWIs’ share of social investing is among the lowest in Asia.
Investors
Factor
Presence of social investors
three-quarter There is a fair presence of local social investors such as KIBOW, BlackRock, BlueOrchard who provide SEs with support from the early to growth stage.
Investors
Factor
Corporate sector
full Corporate giving and investing are a dominant force in the social economy in Japan in terms of size, innovation, and maturity of investing. Partnership Opportunity
Enablers
Factor
Incubators, accelerators, and capacity-builders
half Social Venture Partners Tokyo, JVPF, and Hub Tokyo provide SEs with incubation, networking and mentoring support by mainstream business professionals. AVPN, Japan Sustainable Investment Forum and the Social Business Network regularly convene stakeholders in the social economy to share best practices. Partnership Opportunity
Enablers
Factor
Networks and platforms
three-quarter Japan has 10 networks and platforms to connect investors with SPOs and fundraising avenues. Prominent ones include: ANDE Japan, AVPN, British Council, Japan Fundraising Association, Japan Sustainable Investment Forum (JSIF), Social Business Networks, and Toniic.
Enablers
Factor
Knowledge and research
three-quarter The Japan Foundation Centre, the Japan NPO Centre, Nippon Foundation, Sasakawa Peace Foundation, Japan Fundraising Association (JFRA) and National University of Singapore have published research on Japan’s social investment landscape. Research and knowledge documentation in English, however, is not yet commensurate with the level of activity. Partnership Opportunity
Enablers
Factor
Partnerships
three-quarter There are several examples of corporate, government, academic, and network partnerships such as the Nippon Foundation–banks–SE tie-up and the KIBOW fund. Partnership Opportunity
Enablers
Factor
Impact Measurement
half The Social Value International (SVI) Network Japan provides training and resources for quantifying social impact. The National Advisory Board also released its impact toolkit in 2015.

partnership Partnership Opportunity

Demand, Supply and Support Ecosystem in Japan

Case Studies in Japan

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Offering a diversified portfolio of capacity building measures to Japanese interested in social entrepreneurship at any stage.

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Funding social innovation projects through grants, while building the capacities of their investees.

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