Tokyo financial hopes face hurdles big and small

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.  Continued...