Success Stories

AIM Japan Interview (June 2021)

Mitsuo Kojima Affirmative Investment Management Japan Inc. (“AIM Japan”)
President and Representative Director
Interviewer: Financial Services Agency (June 2021)

Mitsuo Kojima
Affirmative Investment Management Japan Inc. (“AIM Japan”)
President and Representative Director

Mr. Mitsuo Kojima has spent many years as head of global investment management at several asset management companies such as Goldman Sachs Asset Management and Sumitomo Mitsui DS Asset Management.
In 2019, he became the Board member of the United Nations University-Institute for the Advanced Study of Sustainability (UNU-IAS).
He currently serves as President and Representative Director of AIM Japan, the Japan base of a dedicated impact bond asset manager. Through his activities at AIM Japan, he focuses on promoting and implementing sustainability-themed asset management, such as Green Bonds and Impact Bonds, and aims to increase the understanding of sustainable societies from an asset management perspective.

Company profile
Company: Affirmative Investment Management Japan Inc.
Established: December 2020
Main Business: Financial Instruments Business (Investment Advisory and Agency Business)
Financial Instruments Business Operator: The Director-General of Kanto Local Finance Bureau (Kinsho) No. 3243
Member Association: Japan Investment Advisers Association

Screenshot of the 'About AIM' page of AIM's company website (in Japanese).

1. Introduction

Congratulations on obtaining a financial business license and starting operation of AIM Japan. Please tell us about your business in Japan.

Affirmative Investment Management ("AIM"), based in the United Kingdom, was established in 2014 as an asset management company specializing in impact bond investments.

With a vision "to mobilize mainstream capital to address the major challenges the world faces," AIM's mission is to manage fixed income portfolios that generate positive environmental and social impact without compromising financial returns.

In December 2020, we established AIM Japan as a base to steadily promote and expand our mission throughout Japan. We completed the registration of financial business license (Investment Advisory and Agency Business) in April 2021. After joining the Japan Investment Advisers Association in May 2021, we have finally started our business operation in Japan this June. I am very excited that the time has come.

Why did you decide to acquire a financial business license and start Investment Advisory and Agency Business in Japan?

In recent years, environmental and social issues have been highlighted as one of the most important issues the world is facing, and accelerated efforts are being made to solve these issues.
When you look at Japan, impact investment blends in well with Japanese-style capitalist society and we expect increased interest over time. As such, we have been exploring the right timing to start business in Japan.
In July 2020, we entered into a capital and business alliance with the SMBC Group, and as the next step, we decided to obtain financial business license to enter the Japanese market.

What kind of potential does the Japanese market have for foreign investors?

As a general observation, we can expect increased investment demand in the asset management industry while personal financial assets continue to expand due to the aging of society.
In particular, asset management, which has a positive impact on solving environmental and social issues, is expected to become the mainstream in the future, because it is compatible with our social background and culture characterized by "sanpo-yoshi (benefits for all three sides: buyers, sellers and the society)" and the spirit of "coexistence and mutual help" which are imprinted in our DNA.


2. Acquisition of financial business license

AIM Japan became the first company to obtain a financial business license (Investment Advisory and Agency Business) using the FSA's one stop service (Financial Market Entry Office). Tell us about your process after contacting the FSA for the first time, until your registration was completed.

We never intended to become the first registration case, but we were very lucky to be the one.

Around the time when we established AIM Japan in December 2020, we received a notice from a law firm that FSA would establish an English one-stop support office in January 2021. Our UK headquarter was more than happy to obtain a financial business license in English, so it was a godsend timing.

People told me that it would take about six months or more to obtain a financial license, and that the procedure would be complicated, so I was prepared for a long-term battle. But when I actually went through the process, I realized that it was a groundless fear.

Many members of the FSA and the Kanto Local Finance Bureau participated in the video interview with the Financial Market Entry Office. Our UK headquarter, followed by the Japan representative presented the business overview in Japan. Then, FSA members gave us an explanation on how to proceed from there on. Shortly after the interview, we received an English version of the “Summary of Registration Applicant” (document for prior consultation).

All the explanations were in English, so we were able to ask questions directly to FSA without an interpreter. Communications after the video conference were all made in English through an e-mail group which included the members of the Financial Market Entry Office as well as the members of the UK headquarter and AIM Japan. This was really helpful. Our UK headquarter pointed out that it must be meaningful for Mr. Kojima not to spend much time communicating back and forth. The fact that we could all see the conversations clearly, lead to our smooth documentation work. It was also important that our compliance officer of AIM Japan was a bilingual and familiar with the financial business.

Our registration for Investment Advisory and Agency Business was completed in two and a half months after the submission of the “Summary of Registration Applicant” (document for prior consultation). As a result, we were able to start operations in June, in line with our most optimistic scenario. The UK headquarter was surprised at this speed.

Any issues or problems in obtaining an Investment Advisory and Agency license?

The language barrier has been a major issue in providing the UK headquarter with sufficient information to understand the licensing system, registration requirements and procedures, and the type of financial businesses we can conduct in Japan.

When communicating from Japan with overseas headquarters, it usually involves translation from Japanese to English and vice versa. It takes lots of time and effort to provide accurate technical information relating to registration procedures and various laws and regulations, and at the same time, to respond quickly to questions from the headquarter.

If Financial Market Entry Office was not established, would it have taken more time to obtain a financial license?

Yes. It surely would have taken more time. It probably took more than twice the time.

By using the Financial Market Entry Office, we were able to communicate effectively in a timely manner, and by preparing registration applications in English, we were able to complete registration earlier than expected.

The English version of the "Guidebook for Registration of Investment Management Business and Other Financial Instruments Businesses" includes flowcharts and illustrations.
The guidebook was very useful for explanations to the UK headquarters.

What surprised me most was that the procedures through the Financial Market Entry Office, starting from the video conference until the completion of the registration, were all done in English. In other words, there were no materials in Japanese. The Japan Investment Advisers Association, also accepted these documents in English. This is very helpful for foreign asset managers entering Japan.


3. Why Japan?

Japan is often compared with Hong Kong and Singapore in Asia, but what is the clear difference from Japan?

People often talk about how Japan can become like Hong Kong or Singapore, but I think there is not much difference except language barrier.
Some people say, "The tax gap is overwhelming," and it is true that Singapore and Hong Kong have low taxes. But when you look at the world, Japan is not much different from London and Frankfurt, so I think that the tax gap is not Japan's decisive disadvantage.

Then, what is the difference? I think it is the English ability.
In my experience, I feel that there is a mindset in Japan that it is not preferable to present materials to customers in English or to have discussions in English. Unfortunately, it is also undeniable that, in general, the average level of English conversation skill is lower compared to Singapore and Hong Kong.
With the intention of including some self-discipline, I personally believe that we must overcome the language barrier.

4. International Financial Center

Many countries, including Europe, United States, and Asia, are struggling in expanding their role as the International Financial Center. Can you please tell us why foreign investors should invest in Japan?

As mentioned before, the investment demand for financial assets in Japan is expected to increase and continue.

In the future, what do you expect from the Financial Market Entry Office?

The one-stop service in English provided by the Financial Market Entry Office is a remarkable attempt.
We confirmed that on-going supervision will also be conducted in English by the Financial Market Entry Office. Since this is a new initiative, we may encounter unexpected issues or challenges along the way.
We are happy to be part of FSA’s challenge, and hope that we will be able to address various issues and build a cooperative framework with FSA so that this new trend will continue and develop even more.

What do you expect from Japan's International Financial Center in the future?

As I mentioned earlier, in order to transform Japan into an international financial center, it is essential to build up fundamental English skills.
We often hear people asking for policy flexibility and changes in the tax system. In these areas, Japan has made considerable progress in establishing a global standard.

In the future, I hope that English will become a standard language in the financial industry, so that English language communication will become widespread in Japan, a day when English support by the Financial Market Entry Office will not be featured in the news.