Hiroshi "Mickey" Mikitani, Chairman and CEO, Rakuten, Inc.
@hmikitani_e

Japan needs immigrants and it needs to start calling them by that name.

An aging population means our population of 127 million looks set to shrink by 16 million by 2040. Faced with a 2.5% unemployment rate, hotels, farms and construction sites are struggling to fill positions.  An open-to-the world, internet-savvy, and service-oriented Japan requires workers with diverse skills from around the world.

The government’s announcement in June that it aims to allow more than 500,000 guest workers into the country by around 2025 represents a welcome first step. Of particular note is the emphasis on accepting not just high-skilled, but also workers with medium skill levels.  A new legal residency status for these workers will be established. In discussions leading up to this announcement, five industries were identified as being in critical need: agriculture, social care, construction, hotels and shipbuilding.

Welcome as these reforms are, they remain too timid. The government continues to insist that the new measures do not represent “an immigration policy.” Guest workers will not be allowed to stay for longer than five years or bring family members to Japan. Instead of just setting limits on foreigners, we should set targets to encourage newcomers. We should stop calling them guests. We must also establish a clear road to citizenship for people born in Japan.

This transformation will be challenging. Throughout history, Japanese have feared foreigners would cause social unrest and erode national identity. The word gaijin that describes foreigners suggests their inability to truly understand Japanese culture. Many of us predict a rise in social frictions if we move from a homogeneous to a heterogeneous society. This explains why Japan takes in fewer than one tenth the number of immigrants accepted each year in the United States. While foreigners made up 9.3% of the German population and 23.3% of the Swiss population according to available data, they made up a mere 2.0% in Japan in 2017.

Such half-opened doors must swing fully open for Japan to prosper in the 21st century. Until now, we have depended on our strength in precision manufacturing, churning out world-class cars, consumer electronics and petrochemicals. We must reinvent ourselves as a digital-services superpower, encouraging tourism and embracing artificial intelligence, big data, deep learning and the sharing economy. Talented foreigners bring much-needed energy. About half of the world’s business founders are immigrants, including so many of the Silicon Valley giants.

My own company Rakuten, an enterprise built around internet-based services, shows the benefit of opening up to foreigners. Rakuten has made English its official language and about 80 percent of our new engineering hires are non-Japanese; all together, about a fifth of all our employees are non-Japanese, representing more than 70 nationalities in Tokyo alone. Their ideas, skills and energy are key to Rakuten’s global push.

Foreigners are essential for Japan to succeed in service industries. Although my homeland benefits from a bounty of tourist attractions, from Tokyo’s neon skyscrapers to Kyoto’s temples, we have long suffered from a reputation for being inaccessible, inscrutable and expensive. Encouraged by the yen’s drop and some visa deregulation, this perception is changing. We’re now welcoming new, mostly Asian tourists, with visitors rising by nearly 50% in the past two years to surpass 28 million in 2017. The Japan Association of New Economy (JANE), of which I am the representative director, urges Japan to aim for 100 million visitors a year by 2030.

A tourist boom will require a new openness to the outside world and the internet. On a basic level, we need translation apps, greater acceptance of cashless payment options and increased Wi-Fi access to overcome language barriers. On a deeper level, we need to embrace digital-driven collaborative innovations, such as home-sharing and ride-sharing. Ride-sharing will not only attract tourists. It will aid cross-cultural communication, increase mobility in our underpopulated countryside and boost the entire economy, adding ¥3.8 trillion ($36.7 billion) to GDP, according to JANE estimates. Ride-sharing will also facilitate a flexible way of working, as almost anyone can drive part-time.

Long-term, Japan must do more to encourage immigration, for both economic and moral reasons. We refuse to admit refugees from the Middle East and we resist a birthright citizenship law. We call foreigners working in Japan guest workers. This creates a class of permanent outsiders. Even if their children speak only Japanese and grow up with Japanese culture, they lack Japanese passports and suffer discrimination, and even racism.

To address population decline and labor shortage issues, the four specific measures we proposed to the government on behalf of the Japan Association of New Economy earlier this year were to open up discussion of an “immigration policy” (a term which has yet to be recognized by government decision makers), to reform social welfare, to promote sharing economy initiatives and to transform Japan into a super-tourism-oriented country.

As we gain experience living and working with foreigners, Japanese society should warm to the idea of immigration and integration. Over time, I’m convinced that other Japanese companies will follow Rakuten’s path and open up their hiring policies. As foreigners drive economic growth, I hope support for pro-immigration policies will grow. Japan’s future prosperity depends on it breaking down walls, not building them.