Greetings from the Governor

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1 Greetings from the Governor Governor of Okinawa Prefecture Okinawa, Japan s only subtropical region, comprises around 160 islands and is blessed with a beautiful natural environment. The prefecture also has great geographic potential with its centrally located position between Southeast Asia and the Japanese mainland. Taiwan and Shanghai are just a 90-minute flight away and Tokyo, Seoul, Beijing, Hong Kong and Manila only two and a half hours away by plane. Okinawa is working hard to promote industry through special tax incentives based on the 2002 Okinawa Promotional Special Measures Law. These incentives have been generated to especially encourage trade, tourism resort and telecommunications industries. The location that offers the most advantages as a site for trade and commerce industries is the Nakagusuku Bay Port Development District Special Free Trade Zone, the only free trade zone in Japan. Enterprises setting up operations in this district are supported through generous incentives such as a 35% corporate income tax exemption and youth employment development subsidies. Initial investment subsidies for factory lease consolidation are also planned for the future. This pamphlet contains information on Okinawa s industrial infrastructure and support policies for enterprises that establish operations within the prefecture. I hope that readers will find this information useful and that enterprises looking for sites for new industrial facilities will consider Okinawa Prefecture as a strong candidate. August

2 Contents 3 Overview of Okinawa Prefecture 4 Air and Sea Connections 5 Roads S.F.T.Z. S.F.T.Z. S.F.T.Z. Special Free Trade Zone Factories for Lease Free Trade Zone Naha District Water Resources, Power Generation and Power Distribution Network Overview of the Okinawa Special Free Trade Zone Incentives Additional Subsidies Plot Sites Factories for Lease Overview of Current Tenants Incentives Offered in the Industrial Development Districts Possible Industrial Sites (Industrial Complexes) Incentives Offered in the Law for the Promotion of Industry in Okinawa Labor Power and Education Research Institutes 2

3 Overview of Okinawa Prefecture Beijing Seoul Tokyo Shanghai Hong Kong Fuzhou Taipei Okinawa 1,000km 2,000km 3,000km Manila Location Situated midway between Kyushu and Taiwan, Okinawa links mainland Japan to the north, Southeast Asia to the south, the Pacific Ocean to the east, and the East China Sea to the west. The advantages of this location make Okinawa the southern Japanese hub for international traffic, trade, and cultural exchange. Climate Temperature/Rainfall Surrounded by the Kuroshio Current, Okinawa Prefecture boasts beautiful coral reefs, and scenic beaches and coastlines. Okinawa enjoys Japan s only subtropical climate, with little temperature fluctuation throughout the year and an average temperature of 22.7 degrees Celsius. Population C Temperature mm 300 1,332,546 (as of May 1, 2002) 10 Rainfall 200 Annual Tourists ,433,400 (as of 2001) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 3

4 Air and Sea Connections Airport Connections (as of July 2001) SAPPORO Okinawa as the Hub of an International Network Serving as the southern gateway to Japan, Naha Airport has a 3,000-m runway, 25 apron berths, and four regular international routes, as well as flights to mainland Japan and other parts of Okinawa Prefecture. Direct flights now also run: Miyako Tokyo, Miyako Kansai, Ishigaki Tokyo, Ishigaki Nagoya, Ishigaki Kansai, and Kume Tokyo. SENDAI Seoul 4 flights/week SEOUL (1260 km) Fukuoka 10 flights/day flight time 1:30 (957 km) Kumamoto 1 flight/day flight time 1:25 (890 km) Nagasaki 1 flight/day SHANGHAI flight time 1:25 (940 km) Kagoshima 3 flights/day flight time 1:15 (762 km) Shanghai 2 flights/week (820 km) NAHA FUKUOKA KUMAMOTO NAGASAKI KAGOSHIMA HIROSHIMA NAGOYA OSAKA TOKYO Sendai 1 flight/day flight time 2:45 (2,051 km) Tokyo 21 flights/day flight time 2:20 (1,702 km) Nagoya 7 flights/day flight time 2:05 (1,475 km) Osaka 16 flights/day flight time 1:55 (1,285 km) Hiroshima 1 flight/day flight time 1:40 (1,106 km) HONG KONG TAIPEI Hong Kong 2 flights/week (1440 km) Taipei 2 flights/day (630 km) Fukushima Komatsu Okayama Takamatsu Oita Miyazaki 1 flight/day Kouchi 3 flights/week Matsuyama 4 flights/week Sea Connections Wharfs Capable of Handling Ships up to the 40,000-metric ton Class Major ports include Naha Port, Nakagusuku Bay Port, Unten Port, Hirara Port, Ishigaki Port, and Kin Bay Port. In particular, Naha Port constitutes a vital distribution center with a 40,000-ton quay and other facilities. Nakagusuku Bay Port, designed for distribution and processing, also has a 40,000-ton quay. NAGOYA TOKYO Tokyo Fukuoka Kagoshima OSAKA HIROSHIMA KAGAWA EHIME FUKUOKA Nagoya Osaka SHANG HAI KAGOSHIMA Kagawa Shanghai NAHA Ehime Hiroshima AMOI HONG KONG Amoi Gaoxiong & Jilong Long Beach & Dutch Harbor (non-direct) LONG BEACH DUTCH HARBOR Hong Kong (non-direct) Los Angeles & Oakland (non-direct) Honolulu (non-direct) LOS ANGELES OAKLAND HONOLULU 4

5 Roads Roads The Expressway provides easy access to Okinawa s major cities Local road networks connect all parts of Okinawa Island with three main routes: National Route 329 on the east coast, National Route 58 on the west coast, and the Okinawa Expressway. The Okinawa Expressway links Naha City to Nago City taking 45 minutes. The Okinawa Special Free Trade Zone (SFTZ) is adjacent to one of the main Prefectural roads (the Okinawa City Loop) and is located approximately 2km from Route 329, 4km from the Expressway and 27km from Naha International Airport. National Road Nago-Kunigami Line Major Regional Road Prefectural Road Okinawa Expressway Naha International Air Port Expressway Nago-Motobu Line Nago-Unten Bay Line Nago City Naha International Air Port Expressway (Under Construction) Kyoda I.C Ginoza I.C Ishikawa-Nakadomari Line Yaka I.C Kin I.C Okinawa Expressway Ishikawa I.C Ishikawa City Okinawa-Ishikawa Line Okinawa- Kadena Line Okinawa South I.C Okinawa North I.C Okinawa City Kitanakagusuku I.C Gushikawa City Yonashiro Town Katsuren Town Naha Port Nishihara I.C SFTZ (Nakagusuku Bay Port Naha Air Port Naha City Industrial Complex) Naha I.C Nishihara JCT Haebaru North I.C Yonabaru Town Itoman-Yonabaru Line Free Trade Zone Naha District Itoman City Haebaru South I.C Gushikami Village Itoman Industrial Complex 5

6 Water Resources, Power Generation and Power Distribution Network Water Resources Making steady progress in water resource development and water supply projects The water volume allocated for industrial use is 105,000m 3 /day and 16,700m 3 /day of that is allocated for the Nakagusuku Bay Port Industrial Complex at yen per m 3. Population growth, industrial development and improved living standards, however, all call for greater water supply. Most of the current water supply is generated from multipurpose dams, but an ocean water desalination facility, capable of producing 40,000m 3 of water per day, has also been in operation since Ishikawa Water Purification Plant Kushi Water Purification Plant Ishikawa City Motobu Town Nago City Benoki Dam Fukugawa Dam Aha Dam Arakawa Dam Fukuchi Dam Kadena Town Okinawa City Gushikawa City Power Generation A stable power supply provides for Okinawa s industries A stable supply is provided to support all kinds of industrial activities. Power Distribution Network Development of power plants and electricity transmission grid The Gushikawa Thermal Power Station, which started operation in 1995, is capable of generating 312,000kW. In addition, Generator No.1 (output capacity: 220,000kW) began operating at the Kin Thermal Power Station in February 2002, and Generator No.2 (output capacity: 220,000kW) is scheduled to begin operating in May Ginowan City Urasoe City Naha City Itoman City Itoman Industrial Complex Sashiki Town Haebaru Town Gushikami Village Ie 6,000 Yonashiro Town Katsuren Town Nakagusuku Bay Port Development Industrial Complex Nishihara Water Purification Plant Nishihara Town Yonabaru Town Ocean Expo. Park 50,000 Motobu 15,000 Awa 26,000 Ryukyu Cement Co., Ltd. Nakijin 10,000 Shin-Nago 15,000 Nago 30,000 Haneji 15,000 Industrial-use water main Completion scheduled for FY2004 Water purification plant Industrial-use water supply station Dam Okuma 16,800 Sea water pumping (generation) 30,000 Taiho 26,000 Comparative Electricity Rates Company Location Contract Category Tohoku Commercial PCR (Power consumption rate) Initial charge High voltage Low voltage Temporary use A B High voltage High voltage Initial charge PCR Initial charge PCR Initial charge PCR Fixed charge (1kW/day) Metered rate As of March 31, 2001 Summer Other season Summer Other season Summer Other season Summer Other season 1, Unit: yen Add 20% Tokyo Kansai Kyushu Okinawa 1,560 1,660 1,200 1,585 1,150 1, ,210 1,200 1,175 1,260 1,250 1,470 1,800 1,650 1,780 2,230 1,835 Add 20% Add 20% Add 20% Add 20% Ishikawa 10,000 Nakaishi 15,000 Iha Booster Pump Zakimi Iha 30,000 25,000 Enobi 225,000 Iramina No. 2 12,000 Iramina No. 1 16,000 Yara 33,000 60,000 Chatan Water Nakanomachi Purification Plant 40,000 Kuwae Makiminato 22, ,000 Chatan Takahara Makiminato No. 1 20,000 33,000 Zukeran 270,000 Adaniya 52,000 Toguchi 282,000 Gusukuma No. 1 Oyama 20,000 71,000 20,000 Futenma 48,000 Gusukuma Minami-Uehara 29,000 Arama 38,000 32,000 Serikyaku Maeda Kumoji 35,000 20,000 Nishihara 52,000 Ona Tomari 125,000 Higashimachi 20,000 40,000 Onaha 50,000 Kita-Naha 57,000 Tsubogawa 440,000 40,000 Sakashita Yonabaru Asato 40, ,000 Naha 40,000 Uema 50,000 Kohagura 40,000 Matsuo 30,000 60,000 Oroku Madanbashi Haebaru 30,000 30,000 20,000 Sashiki Ahagon 30,000 40,000 Tomoyose 390,000 Itoman 30,000 Chibana 77,000 Misato 20,000 Onna 15,000 Ishikawa Thermal Power Plant 280,000 Ishikawa (EPDC) 312,000 Ishikawa 353,000 Tengan 16,000 Kinaka 40,000 Gushikawa 312,000 Yokatsu 25,000 Shin-Kin 35,000 Nakagusuku Bay 20,000 Kise 15,000 Matsuda 18,000 Okinawa CTS Henoko 19,000 Kushi Water Purification Plant 132 kv 132 kv (Underground Transmission Line) 66 kv 66 kv (Underground Transmission Line) Power Plant (Thermal) Figures indicate output (kw). Substation Figures indicate output (kva). Switching Station 6

7 Overview of the Okinawa Special Free Trade Zone 1 General Overview (1) Applicable Law: Okinawa Promotional Special Measures Law (2) Purpose of Facility: To encourage business enterprises to establish facilities in Okinawa and promote trade. (3) Designated Area: Approx. 122 hectares. (4) Qualifications for Applicants: a) The applicant must be a corporate body and, in principle, be engaged in trade or a related business activity. b) The applicant must have a business plan incorporating a practicable plan for raising funds, etc. Okinawa Prefectural Economic Federation Sugar Processing Plant Green Area 0.1 ha Katsuren Green Area 3.7 ha Toyohara Maehara Prefectural Route 33 Prefectural Route Okinawa Loop Line Green Area 2.8 ha I 11,400m 2 U T 3,000m 2 3,000m 2 Y R 3,000m 2 3,000m 2 3,000m 2 E 3,000m 2 W 3,000m 2 Q 3,000m 2 10,000m 2 Industrial Technology Center 30,000 m 2 Harbor Route 2 Suzaki Bridge Tropical Technology Center, Ltd Site 3.6 ha { 12,000m 2 P U 5,150m 2 5,150m 2 I O Y 7,000m 5,150m 2 5,150m 2 2 I T 5,150m 2 5,150m 2 R E 3,300m 2 7,000m 2 W }1,650m 2 7,000m 2 O Q Q 8,500m 2 10,000m 2 Suzaki Trunk Route Harbor Route 3 W E R T Y U I P { } q Special Free Trade Zone Leased Factories Harbor Route 5 10,000m 2 10,000m 2 10,000m 2 Distribution Facility Site 20,038 m 2 18,831m 2 33,000m 2 Harbor Route 6 Green Area 0.9 ha Suzaki Trunk Route Green Area 2.8 ha Zoning Route 9 13,200m 2 U Y 3,400m 2 3,400m 2 T 2,500m 2 12,000m 2 R 2,500m 2 6,000m 2 12,000m 2 E 2,500m 2 W 3,000m 2 Q 2,000m 2 Plot Site Zoning Route 8 Site for Port Related Services 5.0 ha Wharf Site 15.9 ha (-7.5) 390m (3 Berths) 35,000m 2 Harbor Route 7 (-7.5) 390m (3 Berths) Green Area 1.0 ha Storage Facility Site 1.8 ha (-12) 240m (1 Berth) (-11) 760m (4 Berths) Green Area 3.8 ha Green Area 3.9 ha Harbor Route 8 Minamihara Fishing Port Green Area 5.0 ha Residential Area 25.9 ha 3,312m 2 3,312m 2 Kaiho Bridge 8,019m 2 Sewage Facility Site 9.6 ha Paper Processing Plant Site 1.0 ha 8,118m 2 17,000m 2 Harbor Route 1 18,393m 2 9,700m 2 6,600m2 30,696m 2 33,074m 2 Green Area 5.0 ha Workshop Site 7.4 ha Harbor Route 2 Harbor Route 4 33,872m 2 16,011m 2 16,300m 2 266,808m 2 5,000m 2 6,000m 2 5,000m 2 6,400m 2 7,900m 2 (-4) 270m Site for Port Related Services 0.9 ha (-4) 300m Anchorage (-4) (-4) 200m Storage Facility Site 4.1 ha Green Area 2.0 ha Site for Port- Related Services 2.8 ha (3 Berths) (-5.5) 270m Anchorage (-5.5) Storage Facility Site 1.2 ha Wharf Site 8.5 ha (2 Berths) (-7.5) 260m Anchorage (-7.5) 52,586m 2 Storage Facility Site 3.3 ha (1 Berth) (-10) 185m Sold Plots (1 Berth) (-13) 260m Anchorage (-10) Anchorage (-13) m 7

8 Overview of the Okinawa Special Free Trade Zone 2 Functions of the Bonded Area The bonded area is a designated area or facility where imported materials can be stored, processed or exhibited with the suspension of tariff payment and domestic consumption tax. In a non-bonded area, the payment of tariffs and domestic consumption tax must be completed before imported materials can be brought into the area. An authorized corporation in the SFTZ: 1) is exempted from tariffs and domestic consumption tax when its processed goods are re-exported. 2) is permitted to store, inspect and sort imported goods with deferment of tariffs and domestic consumption tax. Tariffs and domestic consumption tax must be paid when the imported goods are shipped into the domestic market. 3) is exempted from tariffs and domestic consumption tax on the part of imported goods that are shipped out of Japan or destroyed in the SFTZ. Overseas Bonded Area Overseas Products SFTZ Shipment of domestic goods Tariff and domestic consumption tax payment Tariff selection Foreign goods (parts, materials, products) Importation of Foreign goods Foreign goods (process, manufacture, store, inspect, remodel) Shipment of foreign goods (reshipment) Products Use Domestic goods (parts, materials) Non-bonded area Foreign goods (parts, materials, products) Importation of Foreign goods Tariff and domestic consumption tax payment Domestic goods (process, manufacture, store, inspect, remodel) Export of Domestic goods Shipment Products Products 3 Management administration The Okinawa Industrial Development Center has been providing a variety of service to SFTZ companies since the 1st of April These services include dissemination of SFTZ information, assistance in completing and filing government papers, and special request reviews. 8

9 Okinawa Special Free Trade Zone Incentives Incentives regarding national taxes, tariffs and local taxes National taxes Incentives Explanation Remarks 1) Income Tax Deductions 2 2) Investment Tax Deductions 3 3) Special Depreciation 3 For newly established businesses within the SFTZ with 20 or more full time employees, 35% of the income earned will be exempt from corporate tax, corporate business tax and corporate residence tax for the first 10 years following establishment. For businesses installing or expanding facilities within the SFTZ, 15% of machinery costs and 8% of building costs will be deducted from corporate tax (max 20% of corporate tax; carryover for up to 4 years; applicable to up to 2 billion yen in investment costs). This is applicable on a minimum investment of 10 million yen (on buildings, machinery and equipment). Applicable to 50% of machinery costs and 25% of building costs for minimum investment of 10 million yen (on buildings, machinery and equipment). 1: Select from 1), 2) and 3) 2: (1) is only applicable to businesses engaged in manufacturing, packaging and warehousing. 3: (2) and (3) are applicable to businesses engaged in manufacturing, packaging, warehousing, overland freight transport and wholesale. Tariffs 4) Selection of Items to which Tariffs Apply 5) 50% Deduction of Approval Free for Bonded Area In the case of tariffs on goods manufactured at a bonded facility 4 within the SFTZ and designated for shipment to a destination within Japan, the business may choose to have taxes applied to either the raw materials or the finished products, whichever is cheaper (this does not apply to certain product categories). The approval fee for bonded storage facilities and bonded factories is reduced by half. 4: A bonded factory or an integrated bonded area. Local taxes 5 6) Exemption from Business Tax 6 7) Exemption from Real Estate Acquisition Tax 6 8) Exemption from Fixed Property Tax 6 9) Special Property Holding Tax Exemption 7 Business tax will be partially exempted for 5 years for businesses installing or expanding industrial-use facilities within the SFTZ. Real estate acquisition tax will be partially exempted for acquisition of industrial-use buildings and land within the SFTZ in the first year after acquisition. Fixed property tax (levied by the Prefecture and related city) on industrial use machinery and buildings will be waived for 5 years. Fixed property tax on industrial-use land will also be waived for 5 years when facilities are installed or expanded in the first year after acquisition. Special property holding tax will not be imposed when land within the SFTZ is acquired for industrial use and facilities are installed or expanded on said land in the first year after acquisition. 5: Minimum investment of 10 million yen 6: (6), (7) and (8) are applicable to businesses engaged in manufacturing, packaging, warehousing, overland freight transport and wholesale. 7: (9) is applicable to businesses engaged in packaging and wholesale with an additional employment of 15 employees or more, as well as to businesses engaged in manufacturing. Comparison of Effective Corporate Tax Rates Inside and Outside the Special Free Trade Zone Tax Rate (%) years after establishment years after establishment 0 Outside the Special FTZ Inside the Special FTZ 9

10 Additional Subsidies 1 Subsidies to Promote Development of Okinawan Youth Employment (1) Subsidy for Promotion of Okinawan Youth Employment The Subsidy for Promotion of Okinawan Youth Employment is available following the completion of equipment purchase and installation as well as the hiring of youth under the Project Plan for Okinawan Youth Employment. The subsidy is available for a maximum of two years and covers one-third of the wages paid to newly hired residents of Okinawa Prefecture under 30 years of age (limited to 100 people per facility) employed full-time under the business proprietor s business plan. Subsidy rate per youth: Maximum of 2 years 1/3 (Ceiling: 100,000 yen per month) Note: Number of businesses receiving the above subsidies; 30 in all of Okinawa (2) Special Subsidy for Promotion of Okinawan Youth Employment The Special Subsidy for Promotion of Okinawan Youth Employment is offered to businesses meeting the four conditions ((1) to (4)) listed below. The total subsidy is determined based on the plant and equipment installation expenses undertaken by the business proprietor and the number of eligible persons employed, in accordance with the Project Plan for Okinawan Youth Employment. The subsidy is paid a total of three times following the completion of plant and equipment installation and the hiring of the employees. 1. The business proprietor must be receiving the Subsidy for Promotion of Okinawan Youth Employment described in section (1), above. 2. The business proprietor must have hired three or more persons based on the plan submitted, and be continuing to employ persons eligible for the Subsidy for Promotion of Okinawan Youth Employment ( Okinawan Youth ) described in section (1), above. 3. Okinawan Youth account for half or more of the persons employed under the plan submitted. 4. The business proprietor continues to employ Okinawan Youth on the last day of each one-year term following the completion of plant and equipment installation and the hiring of the employees. Expenses for Establishment Number Employed 3,000,000 to 4,999,999 yen 5,000,000 to 9,999,999 yen 10,000,000 to 19,999,999 yen 20,000,000 to 49,999,999 yen 3 to 4 Persons 5 to 9 Persons 10 to 19 Persons 20 or More Persons , , ,000 2,000 (Unit: 1,000 yen) ,250 2,500 The period for acceptance of business plans is set each fiscal year. Business plans should be submitted to the job placement office with jurisdiction over the place of business (where the applicable plant and equipment are located). The period of acceptance for FY2002 is from the 1st of April through 27th of December ,000,000 yen or more 2,500 3,750 5,000 6,250 2 Subsidies under Okinawa Prefectural Ordinance for the Promotion of Industrial Sites Subsidy for Industrial Site Survey Costs Subsidy for Environmental Improvement Costs Subsidy for Industrial Lot Acquisition Costs Subsidy for Employment Promotion Costs 3 Financing 1. Low-interest Financing from the Okinawa Development Finance Corporation Promotion Fund for Free Trade Zone and Other Special Areas (Industrial Development Fund) Plant and equipment funds: Up to 70% of acquisition costs. (Fund for Small- and Medium-sized Businesses) Plant and equipment funds: 720 million yen, working capital: 250 million yen. * Refer to page 17 for details. 2. Loan for Regional Development Project * Refer to page 18 for details. 10

11 Okinawa Special Free Trade Zone Plot Sites Designated Businesses Manufacturing, Packaging, Warehousing, Overland freight transport and wholesale. Overview of Fiscal Year 2002 Public Offerings and Plot Sites Area : Approx. 18 hectares Division : As shown below Price : 26,700 yen per square meter (as of FY 2002) Application Period : Initial public offering: April 15-June 28 Second public offering: July 1-September 30 Third public offering: October 1-December 27 Fourth public offering: January 6-March 31 (2003) 80 m 49 m 57 m 56 m 64 m 5,100 m 2 5,100 m 2 (1) (2) 3,100 m 2 3,100 m 2 (5) (6) 64 m (14) 89 m 5,050 m 2 (9) Acrorad Co., Ltd 3,550 m 2 64 m 64 m 57 m 64 m 3,550 m 2 (15) 89 m 5,050 m 2 (10) 5,050 m 2 (12) 5,100 m 2 (3) (4) 3,100 m 2 3,100 m 2 (7) (8) 64 m 3,550 m 2 (16) 64 m 74 m 5,100 m 2 9,500 m 2 89 m 5,050 m 2 (11) 5,050 m 2 (13) 64 m 3,550 m 2 (17) 129 m 50 m 71 m 50 m (31) 70 m 81m 90 m 74 m 9,500 m 2 (32) 3,500 m 2 (24) 5,700 m 2 4,900 m 2 (23) 71 m (26) 6,150 m 2 3,500 m 2 (25) (22) 90 m 81 m 74 m 9,500 m 2 (33) 70 m 5,700 m 2 (27) 6,300 m 2 (29) 74 m 9,500 m 2 (34) 71 m 5,700 m 2 (28) 6,300 m 2 (30) Note: Plot areas indicated are estimates only. Also, frontage and length figures are rough numbers, so the frontage multiplied by the length may not match the indicated area figure in some cases. Depending on the number of companies occupying plots and the area they occupy, etc., the configuration of some of the access roads shown in the diagram may be subject to change, and the building of some access roads may be cancelled. Plot Green Area 80 m 5,100 m 2 (18) 5100 m 2 (19) 5,100 m 2 (20) 5,100 m 2 (21) Storage Facility Site Okinawa Special Free Trade Zone Harbor Route 7 Green Area 2.2 ha Harbor Route 6 Green Area 0.9 ha Green Area 0.8 ha Green Area 0.6 ha Green Area 3.9 ha Green Area 2.8 ha Leased Factories Plot Site Harbor Route 8 Site for Information Services Harbor Route 5 Green Area 2.8 ha 11

12 Harbor Route 6 Okinawa Special Free Trade Zone Factories for Lease Factories available for lease within the SFTZ are designed to reduce the initial investment burden on newly established enterprises. Six factories became available in April 2000 and three in April Businesses utilizing these facilities are eligible to receive incentives such as bonded status under the tariff laws and 35% exemption of earned income from applicable corporate taxes. Overview Location : Aza Suzaki, Gushikawa, Okinawa Prefecture Site Area : 44,052 m 2 Floor space : 13,000 m 2 (2,000 m 2 facility: 2, 1,500 m 2 facility: 4, and 1,000 m 2 facility: 3) Construction : Steel frame Form : Stand alone Suitable Business Activities In principle, manufacturing Overview of Facilities The leased factories within the SFTZ consist of nine buildings, one factory per site. Each site houses a parking lot and an area for loading and unloading materials and products. Each factory contains office space that can be used for meetings and negotiations. Type Factory Factory Factory Total Number of Buildings Building Area 1,000 m million yen 1,500 m 2 2,000 m 2 13,000 m 2 Leasing Charge (monthly) 1.2 million yen 1.6 million yen * Building to land ratio: approximately 30% Ceiling Height Floor Load Limit Height Beneath Girders 550 cm 2t/m2 Main Equipment, etc. Shutters, boiler room, sinks, toilets (separate for men and women), parking lot, landscaping site, office space, accommodation for installation of hoist crane Q W E 1,000 m 2 1,000 m 2 1,000 m 2 R 1,500 m 2 T 1,500 m 2 6,985 m 2 O 1,500 m 2 4,545 m 2 I 1,500 m 2 U 2,000 m 2 Y 2,000 m 2 Q Appian Co., Ltd W Speed Industries Co., Ltd E Octanorm Asia Co., Ltd R Speed Industries Co., Ltd T Okinawa Photonics Co., Ltd Y Tropical Plants Resources Institute I ARSHA Co., Ltd O Camellia Asia Pacific Co., Ltd Okinawa Special Free Trade Zone Harbor Route 7 Green Area 2.2 ha Green Area 0.6 ha Green Area 3.9 ha Green Area 0.9 ha Green Area 0.8 ha Green Area 2.8 ha Leased Factories Plot Site Harbor Route 8 Site for Information Services Harbor Route 5 Green Area 2.8 ha 12

13 Overview of Current Tenants QAcrorad Co., Ltd. Rep: Takashi Shirahata May 2000 A manufacturer of semiconductor devices for use in medical equipment. The first enterprise in the world to manufacture the miniature gamma camera. Plot site W Tropical Plants Resources Research Institute Rep: Toichiro Nago April 2000 A manufacturer of fertilizer machines that produce EM vacteria, an environmentally friendly fertilizer invented by the institute. Leased factory EAppian Co., Ltd. Rep: Naoki Miyagi April 2000 Appian is affiliated with a major tile producer in Italy and imports and processes tiles. Leased factory ROctanorm Asia Co., Ltd. Rep: Cyrilus Wadya April 2001 Octanorm Asia has a main office in Germany, from which their aluminum materials are shipped. The corporation processes and assembles booths, counters and entrance arches for exhibition sites. Leased factory 13

14 Overview of Current Tenants TOkinawa Photonics Co., Ltd. Rep: Daijiro Nakayama November 2001 Research and development, manufacture and sales of optical fiber links and devices. Leased factory YSpeed Industries Co., Ltd. Rep: Yasuho Shigeno November 2001 Speed industries assembles motorcycle engines with parts imported from China. The reasonably priced Japanproduced motorcycles are mostly exported to Vietnam. Leased factory UARSHA Co., Ltd Rep: Horuhe Arakaki June 2002 ARSHA is affiliated with a Canadian steel house producer. They assemble imported parts into typhoon resistant steel houses, which are both exported overseas and sold domestically. Leased factory ICamellia Co., Ltd. Rep: Takanori Tsubaki May 2002 A manufacturer of print-circuit boards and accessory equipment. Their highquality products are available at low prices due to the low cost of imported parts. Leased factory 14

15 Incentives Offered in the Industrial Development Districts Businesses that establish offices within the IDD, as designated under the Okinawa Promotional Special Measures Law, are eligible for preferential tax treatment. Designated areas Northern and Central Areas: Ishikawa City, Gushikawa City, Nago City, Okinawa City, Kin, Yonashiro, Katsuren, Yomitan Southern Areas: Naha City, Ginowan City, Urasoe City, Itoman City, Tomigusuku City, Nishihara, Haebaru Motobu Village Nakijin Village Ogimi Village Kunigami Village Higashi Village Nago City Eligible Businesses Manufacturing, etc.; Manufacturing, Packaging, Warehousing, Overland freight transport and Wholesale Industrial development; Leasing business, Industrial equipment leasing business, Office supplies leasing business, Machine repairs, Ad agency, Display, Industrial facilities cleaning, Non breaking test industry, Design, Management consultants, Mechanical design, Engineering and Natural science research Non-tax incentives Onna Village Ginoza Village Kin Town Ishikawa City Yomitan Village Gushikawa City Kadena Town Yonashiro Okinawa Town City Chatan Town Kitanakagusuku Katsuren Town Village Ginowan City Urasoe Nakagusuku Village City Naha Nishihara Town City Haebaru Yonabaru Town Town Ozato Sashiki Tomigusuku City VillageTown Chinen Village Kochinda Town Tamagusuku Village Itoman City Gushikami Village Northern and Central parts Southern part Incentives Description Remarks National Taxes (1) Investment Tax Deductions (2) Special Depreciation For businesses installing or expanding facilities within the IDD, 15% of machinery costs and 8% of building costs will be deducted from corporate tax (max 20% of corporate tax, carryover for up to 4 years, applicable to up to 2 billion yen in investment costs). Applicable to 34% of machinery costs and 20% of building costs for minimum investment of 10 million yen (on buildings, machinery and equipment). Select from (1) or (2) Eligible businesses: manufacturing, ad agency, design, mechanical design, management consultants, engineering, display, natural science research Prefectural & Municipal Taxes Special Property Holding Tax Exemption Exemption from business facility tax Exemption from Business Tax Exemption from Real Estate Acquisition Tax Exemption from Fixed Property Tax Special property holding tax will not be imposed when land within the IDD is acquired for industrial use and facilities are installed or expanded on said land in the first year after acquisition. For businesses installing or expanding facilities within the IDD, business facility tax on those facilities will not be imposed when constructed by proprietor. Applicable when overall acquisition cost of machinery and apparatus within facilities is more than 10 million yen and overall acquisition cost of facilities is more than 100 million yen. Business tax will be exempted for 5 years for businesses installing or expanding industrial use facilities within the IDD. Real estate acquisition tax will be partially exempted for acquisition of industrial-use buildings and land within the IDD in the first year after acquisition. Fixed property tax (levied by the Prefecture and related city) on industrialuse machinery and buildings will be waived for 5 years. Fixed property tax on industrial-use land will also be waived for 5 years when facilities are installed or expanded in the first year after acquisition. Eligible businesses: manufacturing, packing, wholesale, industrial development Eligible businesses: manufacturing, industrial development 15

16 Possible Industrial Sites (Industrial Complexes) 1 What is a Possible Industrial Site? Possible Industrial Sites are registered lands for favorable industrial factories based on the Factory Location Law. 2 Benefits of establishing a factory on a Possible Industrial Site (1) Smoothing of the farmland diversion process (2) Preferential tax treatment when replacing industrial-use property (3) Okinawa Industrial Location Promotion Act assistance Yabu Possible Industrial Site Nago City Kin Town Kin Interchange Industrial Site Akasaki Possible Industrial Site Yomitan Possible Industrial Site Yomitan Village Ishikawa City Kombu Possible Industrial Site Gushikawa City Okinawa City Yonashiro Town Hiramiya Industrial Site Oyama Possible Industrial Site Toyosaki Possible Industrial Site Itoman Industrial Complex Ginowan City Nishihara Town Haebaru Town Tomigusuku City Sashiki Town Itoman City Shioya Possible Industrial Site Katsuren Town Nakagusuku Bay Port Development Industrial Complex Onaha Possible Industrial Site Agarizaki Possible Industrial Site Tsukazan Possible Industrial Site Tsuhako Possible Industrial Site Possible Industrial Sites Industrial Complexes Nakagusuku Bay Port Development Industrial Complex Itoman Industrial Complex Akasaki Possible Industrial Site Kombu Possible Industrial Site Shioya Possible Industrial Site Yomitan Possible Industrial Site Oyama Possible Industrial Site Onaha Possible Industrial Site Tsuhako Possible Industrial Site Toyosaki Industrial Site Yabu Possible Industrial Site Tsukazan Possible Industrial Site Kin Interchange Industrial Site Hiramiya Industrial Site Agarizaki Industrial Site Location Okinawa City Gushikawa City Katsuren Town Itoman City Ishikawa City Gushikawa City Gushikawa City Yomitan Village Ginowan City Nishihara Town Sashiki Town Tomigusuku City Nago City Haebaru Town Kin Town Yonashiro Town Nishihara Town Total Area (ha) (Not Located) (98.5) (14.5) 17.1 (0.4) 35.2 (27.4) 6.0 (5.1) 21.8 (6.1) 33.6 (5.8) 78.6 (13.5) 8.1 (6.3) 68.8 (52.9) 13 (13) 8.3 (1.8) 4.1 (4.1) 39.6 (39.6) 6.2 (5.9) General Land Classification Reclaimed Land Reclaimed Land Reclaimed Land Plain Field Complex Reclaimed Land Field Plain Reclaimed Land Plain Residential Forest Non residential land Reclaimed Land Road 2km to Nat l Rte.329 4km to Okinawa Minami IC 1km to Nat l Rte km to Haebaru Minami IC Adjacent to Nat l Rte m to Ishikawa IC 500m to Nat l Rte.329 3km to Okinawa Kita IC 3.5km to Nat l Rte.329 5km to Okinawa Minami IC Adjacent to Nat l Rte.58 8km to Ishikawa IC 1.3km to Nat l Rte.58 6km to Kitanakagusuku IC 120m to Nat l Rte.329 5km to Nishihara IC Adjacent to Nat l Rte.331 4km to Haebaru Minami IC 1.5km to Nat l Rte km to Haebaru Minami IC 800m to Nat l Rte.58 8km to Kyoda IC Adjacent to Nat l Rte.507 1km to Haebaru Minami IC Adjacent to Nat l Rte m to Kin IC 15km to Nat l Rte km to Okinawa Kita IC 1km to Nat l Rte.329 5km to Nishihara IC Port Electric Power (KVA) Water (m 3 /day) 0km to Nakagusuku Bay Substation Watersupply Industrial Nakagusuku Bay Port 20,000 (16,700) 10km to Naha Port 17km to Nakagusuku Bay Port 12km to Nakagusuku Bay Port 1km to Nakagusuku Bay Port 28km to Naha Port 9.5km to Naha Port 13km to Nakagusuku Bay Port 0.5km to Baten Port 6km to Naha Port 18km to Unten Port 6km to Naha Port 18km to Nakagusuku Bay Port 10km to Nakagusuku Bay Port 13.5km to Nakagusuku Bay Port Ahagon Substation 40,000 Ishikawa Substation 10,000 Tengan Substation 20,000 Nakagusuku Bay Substation 20,000 Iramina Substation 12,000 Futenma Substation 15,000 Onaha Substation 20,000 Yonabaru Substation 38,000 Ahagon Substation 40,000 Shin Nago Substation 4,100 Uema Substation 4,000 New Kin Substation 35,000 Ishikawa Substation 4,100 Onaha Substation 20,000 Watersupply Industrial (5,000) Watersupply Industrial (44,679) Watersupply Industrial (10,000) Watersupply Industrial (10,000) Watersupply Watersupply Watersupply Industrial (5,000) Watersupply Watersupply Industrial (2,500) Watersupply Watersupply Industrial (5,000) Watersupply Industrial (44,000) Watersupply Industrial (20,000) Watersupply Industrial (5,000) Estimated Price (Y/m 2 ) 26,700 25,232 31,991 75,000 12,600 44, ,000 90,900 65,600 72,000 30,659 15,100 85,000 5,000 50,000 35,000 16

17 Incentives Offered in the Law for the Promotion of Industry in Okinawa.Prefectural Subsidies Classification Title Description Eligible Expenses Eligible Businesses Manufacturing Overland Freight Transport Warehousing Packaging Wholesale Software Data processing services Information services Designing Natural science research institutions Okinawa Prefectural Ordinance for the Promotion of Industrial Sites Subsidy for industrial site survey costs Subsidy for industrial lot acquisition costs Subsidy for environmental improvement costs Cost of underground water survey (boring and/or water quality tests) Cost of measuring the bearing capacity of the ground Cost of land acquisition for factory construction and operation The enterprise must employ more than 20 local residents (more than 10 new employees within which 5 or more are local residents in case of high-tech manufacturing industry) Total land of 5,000m 2 or more (2,500m 2 or more for software manufacturers) The enterprise must begin operating within 2 years after land acquisition Cost of environmental improvement of areas surrounding the factory (roads, greenbelt, parking areas, etc.) at the time of factory construction 1/2 of expenses, up to 3 million yen. To qualify, the firm must have: 15 or more employees (including 3 or more new employees) Land of 3,500 m 2 or bigger (1,000 m 2 or bigger for software firms) Subsidy amount The amount of the subsidy is determined by multiplying the number of new local employees by 400,000 yen and adding the amount corresponding to the applicable category below. If the amount calculated in this way exceeds the maximum subsidy, the maximum subsidy is awarded. (Acquisition cost x subsidy rate) + no. of new local employees x 400,000 yen Subsidy rate classification and limit amount When new employees are: 50 or more: 10%, 1 billion yen; 35 to 49: 7.5%, 600 million yen; 20 to 34: 5%, 200 million yen High-tech manufacturing industry Subsidy rate classification and limit amount Purchased land: When new employees are: 50 or more: 10%, 1 billion yen 35 to 49: 10%, 600 million yen 10 to 34: 10%, 200 million yen Leased land: When new employees are: 50 or more: 10%, 1 billion yen 35 to 49: 7.5%, 600 million yen 10 to 34: 5%, 200 million yen Total floor area x 7,500 yen x 1/2; up to 75 million yen. To qualify, the firm must have: 15 or more employees (including 3 or more new employees) Total land of 3,500 m 2 or more (1,000 m 2 or more for software manufacturers), or with building area of 1,000 m 2 or more (500 m 2 or more for software manufacturers) Subsidy for employment promotion costs Cost of employing local residents as full time employees 50,000 yen for each new local employee, up to 15 million yen. To qualify, the firm must have: 15 or more employees (including 3 or more new employees) Total land of 3,500 m 2 or more (1,000 m 2 or more for software manufacturers), or with building area of 1,000 m 2 or more (500 m 2 or more for software manufacturers) 17

18 Incentives Offered in the Law for the Promotion of Industry in Okinawa.National Subsidies Title Subsidy for Promoting the Relocation of Industries Subsidy for Promotion of Industrial Relocation to Thermal Power Plan Area Description Supports development of environmental preservation facilities, welfare facilities, disaster prevention and security facilities, employee facilities, etc., closely related to the relocation, construction or expansion of factories or specific industries (as designated by CYBER Community Law, Article 2). Supports development of environmental preservation facilities, welfare facilities, disaster prevention and security facilities, employee facilities, etc., closely related to the relocation, construction or expansion of factories or specific industries (as designated by CYBER Community Law, Article 2). Eligible Expenses & Conditions Factories: Limit (yen) Relocation 7,500 yen/m million Construction/Expansion 5,000 yen/m million Specified Industries: Relocation 7,500 yen/m million Construction/Expansion 5,000 yen/m million Factories: Limit (yen) Relocation 10,000 yen/m million Construction/Expansion 7,500 yen/m million Specified Industries: Relocation 10,000 yen/m million Construction/Expansion 7,500 yen/m million Subsidy for Regional Employment Subsidy for Promotion of Regional Employment Special Subsidy for Promotion of Regional Employment Supports payment of wages for a period of one year from the date of hire. Supports hiring expenses according to number of people hired. To qualify, businesses must hire 5 or more employees (3 or more for small businesses). Large businesses: up to 1/6 of total expenses Medium and small businesses: up to 1/4 of total expenses Subsidy amount New employees Expenses (million yen) 5 to under to under to under or more 5 (3) to 9 persons ,000 2, to 19 persons ,500 3,750 (unit: 1,000 yen) 20 persons or more 500 1,000 2,000 5,000 Subsidy for Promotion of Okimawa Youth Employment * Refer to page 10 for details..financing Classification Classification Description Interest Rate Loan Term (Deferment Period) Maximum Amount Prefectural & Municipal Loan Incentive Loans for regional development project Interest free loans for firms operating in areas designated by the Industrial Plan to Promote Local Areas and People developed by each local government authority (1) Eligible projects: 1. Projects that serve the public interest and are financially feasible, but make low profit 2. Expected to have new employment of: 10 or more (prefecture); 5 or more (municipalities) 3. Equipment/facilities investment exceeds 25 million yen or more 4. Those operational within 3 years after land acquisition No Interest Up to 15 years (up to 3 years) 20% of the total loan amount Prefecture: 3,300 million yen Municipalities: 800 million yen Sponsored by the Okinawa Development Finance Corporation Free Trade Zone and Specified Area Promotion Fund (Industry Development Fund) Free Trade Zone and Specified Area Promotion Fund (Medium and Small Business Fund) 1. Operate their business based upon the Okinawa Promotional Special Measures Law (Article 43, Para.1) within the FTZs. 2. Manufacturers or businesses engaged in industrial development within the Industrial Development Area. 3. Businesses in the FTZs or within 10km of the industrial Development Area that import and export more than half of their products to (Naha Port, Nakagusuku port or Naha International Airport). (1) and (3) are at policy rates (2) is at standard rate Special rate (Standard rate for operating capital) Within 25 years (within 5 years) Facilities: within 20 years (within 5 years) Operating capital: within 7 years (within 3 years) 70% of capital 720 million yen (including operaing capital of 250 million yen) 18

19 Labor Power and Education The Dependable Power of Our Youth Will Create Our Tomorrow Many graduates settle for jobs outside Okinawa, but in fact they prefer local employment. National and prefectural Polytechnic institutions, the University of the Ryukyus, and prefectural technical high schools were all established to meet the needs of the business world..employment Rate of New Graduates.Entry Position Pay Rates by Industry (as of end of March 2002) (Unit: persons) (2002) Category No. of Graduates High Schools 17,541 Junior Colleges 4-year Colleges 679 3,348 Vocational Schools 3,197 Division Industry High School Graduates Male 135,000 (165,000) Female 129,000 (154,000) College Graduates Male 167,000 (207,000) Female 165,000 (197,000) No. of Employed 1, ,063 2,069 Manufacturing 137,000 (165,000) 125,000 (156,000) 184,000 (206,000) 170,000 (200,000) Inside Okinawa ,849 Wholesale and retail sales 139,000 (167,000) 130,000 (159,000) 172,000 (208,000) 152,000 (200,000) Outside Okinawa Service 126,000 (160,000) 128,000 (150,000) 169,000 (206,000) 172,000 (199,000) Figures in parentheses are national averages..universities and Colleges Name Type Faculties/Departments/Programs Faculty of Law & Letters; Faculty of Education; Faculty of Science (Mathematical Science 40, Material Geochemistry 65, Marine Natural Science 95); Faculty of Medicine; Faculty of Engineering University of the Ryukyus National (Mechanical Systems Engineering 118, Civil Engineering & Architecture 99, Electrical & Electronic Engineering 93, Information Engineering 60); Faculty of Agriculture; Graduate School Okinawa Arts University Okinawa Prefectural College of Nursing Okinawa International University Okinawa University Meio University Okinawa Christian Junior College Okinawa Women s Junior College Prefectural Prefectural Private Private Private Private Private Faculty of Arts & Crafts; Faculty of Music; Graduate School Nursing Department College of Law; College of Commerce and Economics; General Culture Department; Graduate School Department of Law & Economics; Humanities Department Department of International Cultural Studies; Department of Management & Information Sciences; Department of Tourism; Graduate School English Department; Department of Early Childcare and Education Department of Business; Department of Child Education.Prefectural High Schools (Full-time curriculum High Schools) Engineering/Design Southern Part and Naha City Middle Part Northern Part, Miyako, and Yaeyama Shuri High School (Textile Dyeing & Design) Naha Technical High School (Mechanics, Auto lab, Electrical, Graphic Arts, Fashion Design) Okinawa Technical High School (Electronics, Computer Science, Construction, Civil Engineering, Industrial Chemistry) Nanbu Technical High School (Mechanics, Electrical, Equipment Installation) Chubu Technical High School (Mechanics, Auto Lab, Electronics, Civil Engineering) Misato Technical High School (Mechanics, Electrical, Construction, Equipment Installation) Urasoe Technical High School (Information Technology, Interior Art Design) Hokubu Technical High School (Mechanics, Electrical, Construction) Miyako Technical High School (Mechanics, Auto Lab, Electrical) Yaeyama Commercial & Technical High School (Mechanics, Electrical) 19

20 Research Institutes Research Support to Meet the Needs of Industrialization The Okinawa Industrial Experimental Laboratory was situated with enhanced capabilities in the Tropical Techno-Park in Nakagusuku Bay Port Complex and renamed, Okinawa Industrial Technology Center. It supports business with basic research. The Tropical Techno-Park is located with the Industrial Technology Center to cooperate in supporting business with applied research, human resources development, and science and technology information..polytechnic institutions Name Okinawa Polytechnic College Gushikawa Polytechnic School Urasoe Polytechnic School Okinawa Polytechnic Promotion Center Courses Specialized curriculum (2 years): Control Technology (30), Electronic Technology (20), Electrical Technology (20), Information Technology (30), Residential Environment (30), Logistics Information (20), Hotel Business (20) Applied curriculum (2 years): Production Machinery Systems Technology (20) Short-term curriculum: Production Systems Technology Control Course (40), Production Systems Information Course (40) Regular curriculum: Electrical-Electrical Engineering (15), Type 2 Automotive-Automobile Repair (40), Machinery Repair-Construction Machinery Repair (10), Office Business-Office Automation Equipment Skills (25), Printing and Binding-Platemaking (15), Facilities Construction-Plumbing (15), Agriculture and Forestry-Landscape Gardening (30) Short-term curriculum: Electrical Engineering (15), Construction Machinery Repair (20), Office Automation Equipment Skills (100), Architectural facilities (15), Information Systems (20), Drawing (Training for Handicapped Students) (10) Regular curriculum: Electrical and Electronic-Electrical Equipment (30), Type 2 Automotive-Automobile Repair (25), Office Business-Office Automation Equipment Skills (Training for Handicapped Students) (10) Short-term curriculum: Welding (25), Equipment Systems (25), Electrical Equipment (30), Construction Machinery Repair (20), Dressmaking (30), Architectural Plastering (30), Office Automation Equipment Skills (60) Electrical Equipment (30), Metal Machining (60), Building Management (60), Residential Services (60), Decorating Services (60), Business Work (60), Transport Machinery Services (60), Office Automation Equipment Business Skills (60).Prefectural Testing and Research Institutions Name Okinawa Industrial Technology Center Industrial Arts & Crafts Institute of Okinawa Okinawa Prefectural Agricultural Experiment Station Okinawa Prefecture Livestock Research Station Okinawa Prefecture Forestry Test Station Okinawa Prefecture Fisheries Testing Station Okinawa Prefecture Ocean Farming Center Location Gushikawa Haebaru Naha Nakijin Nago Itoman Motobu Research Topics Testing and research of chemical products, food, ceramics, and machine metals Testing and research in dyeing, lacquer and woodwork Testing and research of agricultural product cultivation and biotechnology Raising cattle and pigs, experimentation and research on animal fodder and fattening livestock for market Testing and research in pests, tree cultivation, and forestation site selection Testing and research of fishery culture Improvement tests on fishery culture technology.university Laboratories and Research Institutions Name Location Research Topics Iriomote Station Tropical Biosphere Research Center, Univ. of the Ryukyus Sesoko Station, Tropical Biosphere Research Center, Univ. of the Ryukyus Miyako Subtropical Farm, Tokyo University of Agriculture Okinawa Regional Research Center, Tokai University Taketomi Motobu Gusukube Taketomi Testing and research on breeding and cultivation of tropical/subtropical animals and plants Marine science Testing and research in marine technology and cultivation of tropical/subtropical animals and plants Basic Research on fisheries.private Laboratories and Research Institutions Name Tropical Technology Center, Ltd. Location Gushikawa Research Topics Technological R & D in the comprehensive use of sugarcane and shell ginger, and research in porous ceramics and polyurethane Ocean Exposition Commemorative Park (Government Foundation) Motobu Research in tropical/subtropical plants 20

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