In common with cities around the world, Yokohama’s economy took a hit when the Covid-19 pandemic struck. Its jobs-to-applicants ratio has been shrinking for more than half a year, dipping under one in recent months.
Additionally, its average hotel occupancy rate, which is normally close to 90%, fell to 20.9% in May and 36.9% in June.
The economic fallout from the pandemic has prompted local authorities to design a recovery plan able to factor in some of the major trends the crisis has only accelerated. “Demand for businesses to change is greater than ever,” Hayashi Fumiko, the city’s mayor, tells fDi.
The city’s travel sector in particular has been badly affected by the crisis.
“Out of this year’s 725 reservations at Yokohama’s primary meetings, incentives, conferencing and exhibitions (MICE) facility, PACIFICO Yokohama, 432 – approximately 60% – had been cancelled by the end of August, and many events throughout the city had also been cancelled or postponed,” says Ms Hayashi. “Additionally, cruise ship calls to the Port of Yokohama, which can hold up to seven vessels at a time at its five piers, have been halted for the foreseeable future.”
The city’s coffers have felt the impact of the pandemic, recording a 36% drop in corporate municipal tax take compared with last year, while its municipal tax income is forecast to decrease by Y46bn ($437m). “The budget deficit is forecast to reach Y97bn,” adds Ms Hayashi.
She says that she is taking a long-term view of strengthening citywide measures to prevent the spread of the virus while working towards economic revitalisation. Between May and September, Yokohama distributed Y610bn to support its citizens and the economy. Funding initiatives have included a financing scheme based on unsecured loans with no interest for three years and a five-year term of deferment; increased credit lines from Y140bn to Y500bn to support small and medium-sized enterprises (SMEs); and subsidies for SMEs to cover investment in equipment to prevent the spread of the virus.
“The city is offering support to meet the needs of different groups including local shopping arcades, artists, the MICE industry and the tourism industry through one-day tour packages and promoting overnight stays in local hotels,” says Ms Hayashi.
“Additionally, to invigorate Yokohama’s economy after the pandemic has ended, it is important to commit to initiatives that will help the city’s tourism and MICE industries recover, allowing it to receive cruise ships and host large events and international conferences once again in order to contribute to its sustainable growth and international competitiveness.”
Need for change
Yokohama is home to a high concentration of global companies’ research and development hubs, including several foreign firms. It operates two platforms with more than 800 member companies dedicated to promoting the creation of new business through open innovation in the life sciences and Internet of Things fields.
The city’s focus on innovation before the pandemic led to it declaring itself ‘Innovation City Yokohama’ in January 2019. Ms Hayashi explains: “This was to encourage large companies to engage in open innovation by using the advanced technologies and ideas of start-ups and small and medium-sized businesses.”
In October 2019, the city opened the YOXO BOX hub to support start-ups and link entrepreneurs and specialists. “Through YOXO BOX, 40 companies started a business or opened a new location in Yokohama, and up to Y3.64bn was invested in start-ups supported by this initiative,” she says. ”The effects of the pandemic mean the demand for businesses to change is greater than ever. To encourage promising companies to innovate and usher in a new era, Yokohama will back initiatives to create start-ups that will spread their wings around the world and fly the flag for Innovation City Yokohama.”
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.