Cash dependence reveals paradox of Japanese society

Cash dependence reveals paradox of Japanese society
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Most small shops in Japan — a country with over 200,000 ATMs — only take cash to avoid high transaction costs. (AFP)
Cash dependence reveals paradox of Japanese society
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A notice for payment via PayPay outside a Koguma restaurant in Tokyo. (AFP)
Updated 28 October 2019

Cash dependence reveals paradox of Japanese society

Cash dependence reveals paradox of Japanese society
  • YouGov pan-#Arab study finds high awareness of relative size of #Japan's economy
  • Continued reliance on cash said to reflect #Japan's combination of tradition and modernity

LONDON: Many Arabs have an accurate view of the size of Japan’s economy, a recent poll by Arab
News and YouGov has discovered, but many also underestimate the country’s reliance on cash, revealing the paradox that lies at the root of that reliance.
The wide-ranging poll, which asked residents across the MENA region for their views on a host of questions related to Japan, found that awareness of the size of Japan’s economy — the world’s third-largest — was generally high, with 63 percent of respondents identifying it as being in the top five globally.
Awareness is higher among the older generation, with 68 percent of those over the age of 40 placing the country’s economy in the top five, compared to 58 percent of those aged 16 to 24.
Interestingly, the poll’s findings suggest that Arabs who have visited Japan are more likely to misjudge the size of the country’s economy. Only 48 percent of respondents who had previously been to Japan — four percent of all those surveyed — identified the country as having one of the world’s five largest economies.
The poll found that 67 percent of respondents correctly identified Japan as a member of the G20, but only 59 percent recognized Japan as a member of the G7 — a smaller group of the world’s largest economies.
In the latter case, there was a strong divergence between age groups, with 69 percent of those aged over 40 placing Japan in the G7 compared to only 48 percent of those aged 16 to 24.
However, by far the greatest misconception that Arabs have about Japan’s economy is its reliance on cash. Cash is still the most common form of payment in Japan, accounting for four out of every five purchases, but the majority of Arabs did not know this — with only 10 percent of the poll’s respondents identifying cash as the most common form of payment in Japan. By contrast, 46 percent of respondents said credit cards were the prevalent form of payment, and more thought that cryptocurrency was most common — 12 percent — than chose cash.
In many ways, these results are unsurprising. As Anne Beade wrote recently in the Japan Times, the continued dominance of cash payments in Japan sits oddly with its “reputation as a futuristic and innovative nation,” especially given the speed with which other technologically advanced countries have adapted to the cashless society. As Beade notes, 90 percent of transactions in South Korea are now digital.
But Japan’s reliance on cash is also typical of one of the country’s central paradoxes — its combination of tradition and modernity. The reasons for the country’s continued reliance on cash are manifold — from Japan’s low crime rates to the ready availability of ATM machines. But, as Beade makes clear, a significant factor is Japan’s aging population, who are slow to adapt to change. According to data from the CIA World Factbook, almost a third of Japan’s population is over the age of 65. In Saudi Arabia, that figure is just 3.32 percent.
If Japan’s continued dependence on cash illustrates the tension that can exist between its aging population and its futuristic aspects, then there are also examples of the two forming a more harmonious relationship. At the Dubai World Congress for Self-Driving Transport on October 15, Toyota announced its intention to transform into a mobility company with an example of how new technology could help solve the challenges of Japan’s aging population.
Speaking of the island of Hokkaido, in the north of Japan, where railway services catering tothe island’s aging population have shut down, Madali Khalesi, Vice President of Automated Driving at the Toyota Research Institute for Automated Driving Development, advanced self-driving cars as a solution.
“As time goes on you become more elderly, you are feeling less comfortable to drive your own vehicle, and in Japan in many cases, you have to hand in your driving licence,” he said.
“So think about it: You don’t have a mode of transportation publicly, you can’t drive a vehicle, (but that) does not mean something has to give, right? And we believe the technology at least can help support that change.”
Arabs’ misconceptions about Japan’s relationship with cash are widespread but understandable, given the nation’s hi-tech image. But, in bringing to the fore these issues of tradition and modernity, such misconceptions unintentionally shine a light on one of Japan’s most beguiling paradoxes.


Low interest rates boosted mortgage demand by 27% through May

Low interest rates boosted mortgage demand by 27% through May
Updated 22 min 16 sec ago

Low interest rates boosted mortgage demand by 27% through May

Low interest rates boosted mortgage demand by 27% through May
  • Residential real estate financing contracts offered to individuals by local banks reached 133,006 through May, with a value of SR69.5 billion

RIYADH: Mortgage lending in Saudi Arabia increased 27 percent this year through May, as interest rates decreased to between 1 percent and 4.9 percent, compared to about 6 percent early last year.

Residential real estate financing contracts offered to individuals by local banks reached 133,006 through May, with a value of SR69.5 billion, according to data from the Saudi Central Bank (SAMA).

Real estate financing grew by 50 percent compared with the same period in 2020 when SR46.6 billion was lent via 104,000 contracts.

“There is great competition between banks and real estate finance companies to obtain a greater share of the housing demand, after government support and joint financing programs with the Real Estate Development Fund (REDF), which led to an increase in the volume of lending for home purchases,” Riyadh-based Menassat Reality Co. CEO Khaled Almobid told Arab news.

“I expect more lending during the last quarter of this year despite the difficulties it is facing due to the rise in some housing prices in major cities and the lack of supply,” he said.

Saudi banks are offering mortgages with interest rates as low as 1 percent at Al Rajhi Bank, 2.5 percent at the Saudi National Bank (AlAhli Bank) and up to 4.5 percent at some banks.

Residential villas made up about 80 percent of the total financing, apartments 17 percent, while the purchase of residential lands’ financing made up the remaining 3 percent.

Saudi real estate financing achieved a record growth during the past three years, amounting to about 295,590 contracts, worth SR140.7 billion in 2020, compared to 22,259 financing contracts, worth SR17 billion in 2016, local media reproted citing SAMA data.


Lebanon sells cheapest Big Mac in the world as currency collapses

Lebanon sells cheapest Big Mac in the world as currency collapses
Updated 26 July 2021

Lebanon sells cheapest Big Mac in the world as currency collapses

Lebanon sells cheapest Big Mac in the world as currency collapses
  • Lebanese pound is 70 percent undervalued according to the Big Mac Index
  • A split is emerging between those paid in Lebanese pounds and those in dollars

RIYADH: Lebanon is home to the world’s cheapest Big Mac after the pound slumped in value, leaving it more than 70 percent undervalued against the US dollar, according to the Economist Intelligence Unit.

At 29,904 Lebanese pounds, a Big Mac is not cheap for those being paid in local currency, but with an exchange rate of 17,800 to the dollar, it costs just $1.68 for tourists and those lucky enough to get paid in dollars.

The slump in the Lebanese pound is exacerbating and accelerating inflation on a basic basket of goods, such as rice, sugar and flour, on a daily basis, said Lebanese economic analyst Bassel Al-Khatib.

Most people are paid in the local currency in Lebanon, where the national minimum wage stands at 675,000 Lebanese pounds per month, which was once worth almost $450 at the official exchange rate, but today barely fetches $30 on the black market, according to the Crisis Observatory at the American University of Beirut (AUB).

The Observatory said the cost of food has soared by 700 percent over the past two years, and this increase had picked up pace to 50 percent in the past few weeks alone.

Most Lebanese people are getting poorer on a daily basis, pushing some of them to sell their gold, cars and even furniture to survive, while others wait for US dollar transfers from their relatives abroad, or wait for civil society aid, Al-Khatib told Arab News.

This is all reflected in Lebanese social media, which is flooded with donation requests for new-born baby milk and medications that are not available anymore in the markets or are sold for extremely high prices. There are also numerous donation requests for people in need of food.

At the same time, others are sharing their expensive restaurant bills, such as Babel Baher who spent 5 million Lebanese pounds on a meal and posted the cheque on Facebook.

“$250 is almost nothing for someone coming from abroad,” a Facebook user called Rania wrote under the post. “This is a very cheap bill for someone who has US dollars and this dinner is not expensive at all compared to abroad.”

Al Khatib said that those paid in US dollars are living an affordable life with only $300 out of their salaries while before they needed $3,000 to have the same quality of life.

“The patchwork policies to support some commodities is not helping as all commodities that are subsidized are smuggled, ” said Al Khatib.

The country’s mismanagement with no plan or economic vision to save Lebanon from its worsening crisis, led us here, and there are no positive prospects as long as there are no radical solutions in the country, he said.


PIF-backed Lucid Motors makes trading debut on Nasdaq

PIF-backed Lucid Motors makes trading debut on Nasdaq
Updated 26 July 2021

PIF-backed Lucid Motors makes trading debut on Nasdaq

PIF-backed Lucid Motors makes trading debut on Nasdaq
  • will make itsLucid to make trading debut on New York’s Nasdaq Global Select Market on Monday
  • Lucid merged with special purpose acquisition vehicle Churchill Capital Corp. IV

RIYADH: Lucid Motors, the Californian electric vehicle (EV) carmaker majority-owned by Saudi Arabia’s Public Investment Fund (PIF), will make its trading debut on New York’s Nasdaq Global Select Market on Monday.

Listed under the new ticker symbol “LCID”, the listing came about following the merger of Lucid and Churchill Capital Corp. IV — a special purpose acquisition company — on July 23. The EV firm will begin trading by ringing the Nasdaq opening bell on July 26.

The deal will help Lucid raise $4.4 billion, which will be used to fast track its production growth plans. The firm has over 11,000 paid reservations for its Lucid Air vehicle, which is on scheduled to start deliveries in the second half of this year.

“We are on track to meet our projected deliveries for the next two years, and we look forward to delighting our customers around the world with the best electric vehicles ever created,” Peter Rawlinson, CEO and CTO of Lucid Group, said in a press statement.

Michael S. Klein, chairman and CEO of Churchill Capital Corp. IV, said ahead of the merger: “Lucid has industry-leading technology, clear demand for its products, and is on track to deliver revenue-generating cars to customers in the second half of this year. We are excited to support Lucid’s transition into a public company and confident in its ability to address unmet needs in the automotive industry, which is moving toward electrification at a rapid pace and on a global scale.”

PIF announced its investment in Lucid Motors in Sept. 2018. The Lucid Motors CEO told Arab News in January that his team were scrutinizing possible locations in Saudi Arabia to open retail outlets — what Lucid calls “studios” — for their luxury EVs.

“We are already looking,” he said. “My retail team just returned from a scouting trip in the Kingdom, and that is very much on the road there. Hopefully, we can get a retail outlet there right at the tail end of 2021, probably early 2022.”

Earlier this month, the Wall Street Journal reported that Saudi Arabia stands to record a profit of nearly $20 billion on the back of its investment in Lucid.

PIF will own over 60 percent of the company, which is expected to have a market capitalization of about $36 billion.

Lucid’s expected market capitalization is nearly twice the valuation of Nissan Motor Co. and about two-thirds that of Ford Motor Co., which delivered more than 4 million cars last year. Lucid has yet to sell any cars.

Looking at the market for EVs, a report by the Pew Research Center found that 7 percent of respondents said they currently owned an electric or hybrid vehicle, and 39 percent said they were very or somewhat likely to buy an EV when they next came to purchase.

Interest has grown, with 1.8 million EVs registered in the US in 2020, more than three times as many as four years ago, according to the International Energy Agency.

While the US accounts for 17 percent of the world’s 10.2 million EVs, China is the biggest market, with 44 percent of all cars and Europe following with 31 percent.


Saudi Arabia to introduce insurance on domestic labor contracts in 2022

Saudi Arabia to introduce insurance on domestic labor contracts in 2022
Updated 26 July 2021

Saudi Arabia to introduce insurance on domestic labor contracts in 2022

Saudi Arabia to introduce insurance on domestic labor contracts in 2022
  • Move aims to increase attractiveness of Saudi labor market
  • Recruiters must carry the cost of insuring contracts for first two years

RIYADH: Saudi Ministry of Human Resource and Social Development is expected to start implementing insurance on the domestic labor contract early in 2022 in cooperation with the Saudi Central Bank (SAMA), Al Eqtisadia paper reported.

This decision guarantees the rights and benefits of the employer and the worker, including compensating the employer for the expense of bringing in a replacement domestic worker in the event of death, inability to work, or suffering from chronic or critical diseases, according to the ministry.

The move aims to increase the attractiveness of the Saudi labor market, improve the contractual relationship between workers and employers, and reduce risks in the domestic labor recruitment market, helping to cut costs.

“Recruitment companies and agencies used to provide a 3-month trial period for the worker, compensating families for any potential damage, but once the trial period ends, the two parties are not protected, causing lot of losses to Saudi families,” Saudi development and localization specialist Saleh Al-Anzi told Arab news.

“The insurance contract protects both the worker and the employer,” he said.

The insurance will be technically linked to the mediation contract for the recruitment of domestic workers through the Musaned platform, and the ministry will issue the implementation mechanism later in cooperation with the relevant authorities, including SAMA and the Ministry of Interior, sources familiar with the matter told the paper.

Recruitment companies must carry the cost of insuring the contracts of domestic workers they bring into the country for the first two years, the Saudi Council of Ministers decreed in May.


Saudi car rental facilities to issue e-contracts starting July 25

Saudi car rental facilities to issue e-contracts starting July 25
Updated 26 July 2021

Saudi car rental facilities to issue e-contracts starting July 25

Saudi car rental facilities to issue e-contracts starting July 25
  • Car rental facilities to issue all car rental contracts on the Naql portal

RIYADH: The Saudi Transport General Authority (TGA) started implementing the first phase of the unified electronic contract for car rental starting July 25, TGA announced on its Twitter account.
The unified electronic contract obliges car rental facilities to issue all car rental contracts on the Naql portal through the rental contracts service.
This service will enable the licensed establishments to issue a unified contract with complete statutory requirements and clauses, and will contribute to preserving the rights of the lessor and the lessee, enhancing the confidence in the services provided, and raising the level of quality of services, TGA said.
The unified electronic car contract will reduce disputes and the burden on the relevant authorities and will stimulate investment in the sector, according to the TGA.
TGA launched its Distinguished Transport Partner program in May to strengthen public-private partnerships in the sector.