Taiwan Today

Japanese baby boomers are facing a cash crunch, but Taiwan is here to help.

Just do the math. The end of World War II saw a baby boom in Japan. With the nation's standard retirement age set at 60, the boomers are about to stop working. Indeed between 2007 and 2009 it is estimated that 7 million Japanese will retire. But to some, their new-found leisure poses a financial nightmare, for the simple reason that their pensions simply will not cover Japan's high cost of living. In 2004, research by the Japanese Life Insurance Cultural Center found that the average pension for a Japanese retiree couple would be ?10,000 (US$1,850) a month, while the average cost of living for such a couple in Tokyo is ?70,000 (US$3,250). Given that Japanese men have a life expectancy of 79 and women 85, the ?60,000 a month shortfall needs to be backed by substantial savings--a government report suggests ?0 million--so substantial in fact as to be more than three times the average held by most retirees. Many baby boomers are, therefore, facing a life of financial insecurity, even impoverishment.

Here Taiwan hopes to be of service. ?10,000 converts to almost NT$60,000 and in a country with an average salary of NT$36,000 a month, this can provide a comfortable lifestyle. Many other countries in the region, especially Malaysia and Thailand, have long marketed themselves as low-expense retirement destinations. Now with those 7 million Japanese retirees reaping pension payouts of ?0 trillion in the next three years, Taiwan is seeking a slice of a potentially lucrative market.

At least two central government agencies have their eyes on the Japanese retiree long-stay market, the Tourism Bureau under the Ministry of Transportation and Communications (MOTC) and the Council of Agriculture (COA). It is, surprisingly, the COA which is the more advanced in setting up a long-stay program.

"The fact is, the Tourism Bureau's usual client constituencies-- hotels, travel agents, restaurants, airlines, tour companies, appointed shops--simply don't stand to make much out of the long-stay program. So they aren't very interested," says Hu Jong-i, the chief of the COA's economics and planning department.

Hu's comments are born out by Huang Ching-hui, an MOTC official who told a newspaper in May that: "We have to consider the overall development of the tourism industry. The long-stay program only targets a small number of people who do not consume as much as those who only stay here for three or four days."

Long-stay programs are very different from the standard whirlwind package tour. They involve retirees living in a local community, on a par with locals, for extended periods. They stay in apartments, buy food locally and cook it themselves and do most of their sightseeing at a very relaxed pace utilizing local public transport. In short, they live much as they would at home.

The COA's interest in long-stay residents lies in their potential to give a fillip to rural communities. "Taiwan's joining the World Trade Organization in 2002 dealt a blow to its agricultural communities. We want to find alternative sources of income for them," Hu says. The COA has five rural areas in its sights: Nantou, Tainan, Kaohsiung, Taitung and Hualien counties.

All long-stay programs in the region have both financial and age requirements for the issuing of retirement visas. Malaysia's Malaysia My Second Home Program has no age limit but requires a bank deposit of about US$40,000. Thailand's retirement visa program is only available to those above 50 and requires a bank deposit of US$23,000. For the Philippines the age limit is 35 and the financial requirement US$50,000. Taiwan's long-stay visas will only be available to Japanese aged above 55 and require proof of US$50,000 in funds.

Given that other countries in the region have had long-stay programs for some time, have cheaper living costs and--most of them--require smaller bank deposits, what competitive advantage does Taiwan have?

According to a 2004 survey by the Japanese Long Stay Association--a non-profit organization established by the travel industry to research long-stay destinations-- found that when retirees listed their priorities for a suitable long-stay location, 77.8 percent found security to be very important and some 50.4 percent cited a low cost of living. More traditional tourist incentives were deemed less important, scenery was cited by only 22 percent, and weather 17.3 percent. Some 17.7 percent found friendliness to Japanese important.

Last year the Long Stay Association sent three experts at the behest of the COA to make a study of Taiwan's potential as a retirement destination for their compatriots. The experts were favorably impressed, concluding that Taiwan had several strong cards in its hand. First among these was proximity; Taiwan and Japan are next-door neighbors. Other advantages they cited included the high standard of medical care, the relatively low crime rate and the use of Chinese characters, which allowed Japanese to glean information even if they couldn't speak Mandarin. And Taiwan's experience as a Japanese colony for 50 years has left a legacy of Japanese influence in Taiwan's culture, as well as a great many elderly speakers of Japanese that would enable Japanese to feel at home. And unlike other former Japanese colonies such as Korea, the Taiwanese bear little resentment toward their former overlords.

Taiwan is in fact already a popular destination for Japanese short-stay tourists--1.12 million visited last year. The COA plan envisages around 70,000 long-stay Japanese annually within the next five to 10 years.

"Taiwan is certainly new in this field," says Hu, "but the Japanese experts concluded that it really has the most potential."

"We see the visitors as coming in the wintertime, say October to March, to escape the cold in Japan. During their stay they would not have to stay in one place but could live in a number of different areas, they could move around and stay as long or as short a time as they like in any particular location," Hu says.

Hu's team has put considerable work into research, and lists the secrets of making the project a success in the form of a triumvirate of acronyms--NHK, ABC, and the four Ss.

Of residential accommodation, Hu says, "we have found that what is essential is what we call NHK." By this he does not mean the Japanese TV broadcaster but an acronym for news, hospital, and kitchen. "Basically long-stayers want to be able to know what is going on back home, which means cable TV carrying Japanese channels, they want to be near a decent hospital--after all, they are elderly retirees--and they want to be able to prepare their own food." Lack of kitchen facilities has proved a problem for hotels interested in participating in the long-stay scheme. ABC refers to other essential requirements. A stands for what the COA calls an "agricultural experience," meaning that the location of long- stay accommodation should be in a rural location, while more prosaically B refers to bathtubs and C to high-tech commodes.

"Japanese like a bathtub, Taiwanese apartments often have a shower only. And Japanese like high-tech toilets, which are not common in Taiwan," he says. Owners of private accommodation that want their property to be part of the scheme might find they have to seriously upgrade the facilities of their bathrooms. Meanwhile suitable accommodation is scarce.

"Right now the main problem with getting the program up and running is a lack of ideal accommodation," Hu says. The COA has even drawn up plans for holiday cottages, which are to be built by local agricultural associations. Currently six are being built at Taitung County's Jhihben hot springs resort and 19 in Kaohsiung County. And independently of the COA, the Japan-based OKS Corporation is currently looking for a suitable rural area in which to build a retirement village of 560 houses for Japanese retirees.

The COA also has criteria for the surrounding area involving four Ss--support, security, surprise and Skype. Support refers to having enough local speakers of Japanese on call to be able to iron out any problems the long-stayers may run into, security means a low crime rate, and surprise? "Retirees like to see and learn new things. So basically there has to be something for them to do in the area, activities in which they can participate," Hu says. As for Skype, the name check of the Internet telephony provider refers to the provision of Internet facilities in accommodation.

The COA's long-stay program is about to start. The Japanese experts returned in August to evaluate the COA's preparations and this winter some 30 Japanese couples are expected to come this winter to test the new scheme. But the COA isn't the only agency working on long stays. The local government of Puli Township in central Taiwan's Nantou County has been working on its own long-stay program for the past two years.

Puli was hard hit by an earthquake in 1999, and the long-stay program was seen as a way to boost the town's post-reconstruction economic viability. "We have a wealth of tourist assets locally," says Ma Wen-chun, the town's mayor, "Hehuan Mountain, Sun Moon Lake, Wuling Farm, as well as a lot of pleasant spots in Puli Township itself."

Ma reckons there are about 500 Japanese speakers in Puli, most of them themselves retirees who learned Japanese when Taiwan was a Japanese colony, and many of whom are happy to cooperate with the program as volunteers. The township government is also offering Japanese classes which, it says, have been well-attended.

"It's a community project," Ma says. "We in the local government can only do so much to get the project up and running, and most of that is coordination and publicity work. But it is the community itself that has to create the dynamic for the scheme to flourish, that has to create the friendly environment the reputation of which will spread back in Japan."

Puli's government has so far published a prospectus for Japanese long-stay visitors, The Heart of Taiwan, which, as well as explaining basics such as how to contact emergency services and the opening times of government offices, goes into detail about the things a long stay couple needs to know--the average price of vegetables in the market, rents of the various properties that have been approved to let under the scheme, and an estimate of a couple's living costs, including transportation and sightseeing, for a month.

"Of course a major concern is healthcare. Here we have the Puli Christian Hospital and the Veteran's Hospital, both of which have volunteers who speak Japanese," Ma says.

Locally the government has created a logo scheme featuring a colorful carp to designate shops and other facilities that are long-stay visitor friendly, for example with Japanese speaking staff.

Ma adds that there are other needs: "One thing visitors need is a meeting room or a club. They want to be able to meet others like them and socialize. And they need a place to do this," she says.

Puli's program has not been an unmitigated success, however. The first couple to try it out, named Nakamura, left after only two weeks, complaining that the town was too dirty and noisy and that the apartment they rented had not been furnished as advertised. In the face of such criticism, Puli has tried hard to raise its standards, designating the 10th of every month Public Cleaning Day. Couples have stayed in Puli since the Nakamuras without there being a repeat of their complaints, suggesting that the scheme is back on track, but it is only in the coming winter that it will be really put to the test when the town expects to play host to some 30 couples.

The COA's Hu is not unduly bothered by the Nakamura fiasco. "Long-stay visits to another country require an adventurousness and adaptability on the part of the retirees that not all can muster. Complaining that a foreign country is not just like home shows a lack of understanding and adaptability toward what is involved."

It also, he thinks, shows that Puli's pioneering efforts need to be integrated within a wider plan. "The fact is that governments below county level simply don't have the level of control that they need to be able to get an integrated program working properly. Take the police, for example. Obviously you would want to integrate the police into a program like this, but the township government does not control its own police force, the county government does. Obviously there's a need for central government coordination."

And central government money, as Ma Wen-chun readily admits. "We need a proper tourist office, giving out maps and advice and being able to make bookings, that kind of thing. But we can't do this ourselves, it is simply beyond our financial resources."

At the time of writing there were no Japanese retirees in Puli, only 22-year-old Risa Hashimoto. After staying in Puli for two months, how did she think retirees would like the area? "Well, I'm young and adaptable so I'm not perhaps the best judge. But the people are very friendly. The food is a little greasy but OK. Transportation is not all that convenient, but then this is the countryside. The library is really good--Japanese like to read a lot. Actually, Puli is fine as long as you aren't interested in shopping."

It will be some time, up to five years before the success of the long-stay program can be evaluated. Taiwan's advantages in familiarity with the Japanese, low crime rates and proximity have to compete with more exotic and cheaper locations, such as Thailand, possibly brought much closer to home as budget airlines increase their networks in the region. If Hu's goal of 70,000 long-stayers a year is realized, it could inject between US$650 million to US$800 million into Taiwan's rural economy, as well as improve Japanese-Taiwan relations. In the long run, that might be even more worthwhile than the financial gain.