Investor Presentaiton

I know that many countries are coping with declining birth rates, but perhaps more than in other countries, the results of this shrinkage in Japan are clearly visible. Brendan Barrett of Melbourne based RMIT University recently visited Tsuwano in Shimane Prefecture and Tokushima Prefecture in Shikoku. "Only when you travel to rural Japan do the impacts of population decline become apparent. Last year, I spent time in these two rural prefectures. I visited the small town of Tsuwano in Shimane Prefecture. According to Masuda's projections, Tsuwano will experience a 75% drop in the number of young women and its population will more than halve to 3,451 in 2040 (down from 7,500 today). In October, I visited Tokushima Prefecture in Shikoku, where the picture is very similar for most towns and villages. In both locations, I came across many abandoned farms and houses." The Japan Times reported that by 2040 land in Japan with unclear ownership is projected to a total of 7.2 million hectares and would cost JPY 6 trillion or EUR 50 billion (the Netherlands measures 4.1 million hectares.) Then there is the phenomenon of 'akiya' or deserted houses. According to the Ministry of Internal Affairs and Communications in 2013, over 8 million out of 60.6 million homes in Japan were considered to be akiya, or vacant, making that no less than one in seven houses are abandoned. Recent findings (2019) show that the number of akiya in Japan has risen to exceed 10 million. By 2033, it is estimated that 30 percent of all homes will be vacant or abandoned. One reason why you see so many deserted houses in Japan's countryside are taxes: fixed asset taxes on empty lots are six times higher, so it makes sense not to demolish old houses or farmsteads. The akiya, mostly wooden homes that are a few decades old, are less likely to withstand typhoons, fires and earthquakes. This means that any clean-up of damaged empty properties falls on the community. Many rural areas try to lure younger people from the big cities to have their second home and have made their own akiya-bank websites or created subpages for abandoned homes on the market on the municipalities' official sites (mostly in Japanese only.) On December 24, 2019 Japan's health ministry announced that Japanese births totaled 864,000 in 2019, a decline of nearly 6% from the year before and the lowest number since the government began collecting data in 1899. Point of concern is that the government expected that only in 2022 the number of births would drop below 900,000, so the decrease is bigger than anticipated. In an effort to respond, the Abe government has tried to make it easier for women to both work and have children. Japan is also doing more to encourage immigration. But even the modest measures taken so far have proved controversial in a country that treasures its cultural homogeneity. "Japan is on the brink of crossing a long- feared demographic line where the indigenous population will be shrinking at the rate of one person every minute, according to a new government forecast", reported the Financial Times three days later. 4

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