Japan Skin Divers Eye Tourists as Depopulation Hurts Growth

At the Sea People restaurant in Shima, a hamlet on Japan’s eastern coast, sea-diver Machiyo Yamashita wants a piece of a tourism industry dominated by the cities that sapped her town’s vitality by luring away its youth.

“I want to cook and serve customers abalones I caught myself an hour ago,” said Yamashita, 64, over a March 9 lunch of shellfish, sea lettuce and bowl of seaweed soup, all featuring items she found in the sea that morning. “The real stuff is cheap and delicious, and has to be fresh.”

Attracting tourists to Shima, renowned for women divers who harvested pearls before K Mikimoto & Co. set up a farm nearby, would help the town counter the economic decline caused by the depopulation blighting Japan’s provinces. With Prime Minister Shinzo Abe identifying tourism as a source of growth for the world’s third-largest economy, local bankers and officials are taking unprecedented steps to stimulate the industry.

“Tourism is an area the bank has not really had its hands on before,” said Nobutaka Hashimoto, an executive at Kiyo Bank, a regional lender in Wakayama Prefecture on the opposite side of the Shima Peninsula, east of Osaka on the Pacific coast. “It’s been difficult to resist the forces of the local economy shrinking and population declining, and we need to get going.”

Investment Fund

Australia, which has seen a more extreme example of the slide in manufacturing jobs that’s affected Japan, gets about triple the revenue from tourism as a share of its economy compared with Japan, where the sector accounted for 1.8 percent of gross domestic product in 2011, down from 2.2 percent in 2006. Australia drew 5.5 percent of its GDP from tourism in 2011, according to the Japan Tourism Agency.

Japan is targeting a surge to 30 million foreign visitors by 2030, with momentum projected from the summer Olympic Games to be hosted in Tokyo in 2020. The yen’s 26 percent decline against the dollar from a peak in 2011 may help.

Kiyo Bank in January established a fund to promote tourism jointly with the government-backed Regional Economy Vitalization Corporation of Japan. The fund aims to collect as much as 1 billion yen ($10 million), with an investment period of eight years, and is now searching for investment targets.

The lender hopes to use Revic’s expertise and networks to find ways to lure more people to Wakayama, which features mountains, waterfalls and more than 100 temples. The Abe administration in March 2013 charged Revic, originally a vehicle for helping indebted small enterprises, with providing funds and management expertise for projects revitalizing local areas.

Economic Impact

“Tourism is one area that is changing significantly,” said Tetsuro Ii, chief executive at Commons Asset Management, which late last year started a fund with a focus on companies related to tourism. The new fund aimed at investing in 50 companies that show promise in growth industries.

There’s plenty of scope for growth. While Japan National Tourism Organization data show the country had a record 10.4 million visitors from abroad last year, that’s still one-third fewer than island-state Singapore welcomed. The top three destinations in Japan are Tokyo, Osaka and Sapporo, the biggest city on northern Hokkaido island.

“Tourism is extremely important as aging and globalization have resulted in companies shifting operations overseas,” said Hidenori Suezawa, an analyst at SMBC Nikko Securities Inc. in Tokyo. “One growth strategy is to make the regions a travel destination. Without that, there will be more rural communities that won’t survive.”

Record Tokyo Population

Almost half of the nation’s municipal districts have vanished in the past 15 years as they merged to cut costs. Shima’s population has declined 18 percent since 2004, when it was formed by the merger of five communities, according to data compiled by city hall.

Japan’s population declined by a record 244,000 in 2013, according to Health Ministry estimates, a seventh straight year of declines. Japan’s population as of March 1 was 127.1 million.

Tokyo’s population rose 0.3 percent in the year to October 2012, reaching a record 13.23 million.

Drying Bonito

Yukiaki Tenpaku, president of fish-products maker Maruten Ltd., wants to introduce traditional methods of drying bonito dating back 350 years. As part of this process, tiered baskets in which the fish are dried for up to two years are kept in a room where the climate is adjusted regularly to maintain the optimum amount of bacteria needed to absorb moisture.

“I want people to not just see our products as commercial products but feel the culture behind it, and discover something that’s not available in Tokyo,” Tenpaku says. “It’s our responsibility to show how intangible things were passed on.”

More than the fate of rural economies may be riding on the success of luring tourists. A way of life is also at stake. Neither of Yamashita’s daughters followed her by becoming ama, the term for female divers. They moved to cities after getting married.

“If the ama feel there is money to be made by diving into the sea, they will continue the profession,” says Yamashita, whose years of diving have made her so flexible she can touch the floor with her flat palms and knees straight. “If you can’t make money from your catch, there is not much incentive.”

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