Vietnamese worker Ho Anh Duc could provide health insurance to his family back home in Vietnam thanks to a Japanese insurance company and Yamanashi prefectural officials. 

Duc, 26, works for Kofu Building Service, a provider of cleaning and equipment maintenance services based in the Yamanashi prefectural capital of Kofu.

His father working at a coffee plantation in Vietnam is now insured, much to Duc’s relief.

“Foreigners working in Japan are all concerned about the health of their family members they left behind,” Duc said. “I greatly appreciate the coverage because medical fees are expensive in Vietnam.”

Yamanashi Prefecture’s accident and health insurance policy was drafted by Tokio Marine Insurance Vietnam, a Vietnamese arm of a leading Japanese insurer, at prefectural officials’ request. The prefecture subsidizes part of the costs. 

Tetsuji Sakamoto, chairman of Kofu Building Service, said the program benefits local employers as well.

“It is not necessarily a big burden for our company to help his (Duc's) insurance premium payment,” said Sakamoto, 81. “Rather, prospective Vietnamese workers may choose Yamanashi Prefecture because of the availability of such an arrangement.”

But the health insurance program has created local controversy.

PHONES RINGING OFF THE HOOK

The Yamanashi prefectural government was flooded with angry phone calls last year when it announced the initiative for Vietnamese nationals working in the prefecture to insure their relatives back home.

The novel measure is intended by Yamanashi officials to compete in the battle to lure overseas workers to their communities, which is becoming only fiercer not just between Japan, South Korea and Taiwan, but also within Japan.

Vietnamese workers, as well as other foreign workers, are covered by the national health insurance program in Japan.

But Tokio Marine Insurance Vietnam’s plan insures their relatives in their home country while Vietnamese workers on the payroll of businesses in the prefecture sign as the policy holder.

The annual premium is 26,000 yen ($173) per relative.

The insurance will cover effectively 90 percent of medical costs the insured person will have to pay.

Under the insurance policy, an employer needs to contribute to the cost of premiums for at least 75 percent.

The threshold will make the employer qualified to receive subsidies amounting to half of the contribution from the prefectural government.

This was a private insurance policy, different from Japan’s public health insurance.

But the plan to use taxpayer money for relatives in Vietnam set off a torrent of criticism in and outside of Yamanashi Prefecture.

More than 400 phone calls flooded the prefectural government over the two weeks after the project was announced in May, disrupting daily operations of prefectural employees.

“We could not perform our regular duties,” recalled an official involved in the implementation of the program.

The topic also went viral.

Many members of the public considered the setup as “preferential treatment” of foreign workers, getting the mistaken impression that Japanese taxpayers would be covering 90 percent of the health care costs for Vietnamese worker’s family living far from Japan.

They argued that instead, the authorities should prioritize reducing out-of-pocket medical fees for older Japanese adults to 10 percent or bolster assistance to help Japanese in need.

There were fewer calls currently lambasting the program, but they still come in occasionally, according to the prefectural government.

Still, Masanori Sakamoto, a deputy chief of the prefectural government’s section to promote measures for international workers, is adamant about the initiative.

“We are living in an age where a growing number of foreigners seeking jobs are tending to pass up Japan,” he said. “Under these circumstances, it will be impossible to attract them if our prefecture, whose wage and recognition levels trail our urban rivals, just sits still and does nothing.”

The use of public funds for the premiums will help local businesses struggling to secure manpower for survival, according to the prefectural government.

As of October 2023, about 11,000 foreigners worked in Yamanashi Prefecture, located immediately west of Tokyo.

Vietnamese account for about 30 percent of the total, making them the largest foreign nationality and a reflection of the trend at national level.

According to the prefectural government, four Vietnamese workers, including Duc, had signed up for the insurance policy by the end of December.

Some companies are said to be considering joining the program from fiscal 2025, which starts in April.

CASH BONUSES ALSO BEING OFFERED

Yamanashi Prefecture’s “unique” offer of insurance for Vietnamese relatives is part of steps that local governments are pushing across Japan to court international students and workers and retain their services longer, an Asahi Shimbun survey showed.

The survey, involving the nation’s 47 prefectures, including Tokyo, as well as 20 ordinance-designated cities with a population of 500,000 or more, was taken in October.

Local governments in rural regions, which have been hit hard by decades of depopulation, are growing anxious as the nation makes a pivotal shift in the policy involving blue-collar foreign workers.

The existing technical intern training system, which was introduced in 1993 and basically prohibits workers under this visa status from changing jobs during their stay in Japan, is scheduled to be scrapped by June 2027.

Under a new system that will replace it, trainees will be allowed to move on to a new job if they work for a certain period of time.

The shift means that even if small businesses can successfully bring in foreign workers in collaboration with local governments, they may lose them to employers in other prefectures or in large cities that offer better pay and working conditions.

Many rural regions are painfully aware that they are being put at an enormous disadvantage against municipalities in urban centers.

The shift comes as Japan is becoming less attractive as a destination to prospective workers from Southeast Asia and South Asia.

Paying cash bonuses is another attempt to earn the loyalty of foreign workers.

Kochi Prefecture, in western Japan, started a program in 2024 that offers an incentive to workers from Vietnam and India who came as technical intern trainees or specified skilled workers.

They will be eligible to receive 300,000 yen if they work for three years in the prefecture after learning Japanese cultural traditions and the Kochi Prefecture dialect at dispatching organizations in their home country that are certified by the prefectural authorities.

A sum of 24 million yen was set aside for 80 slots for the incentive in the prefecture's fiscal 2024 budget.

Some local governments provide subsidies to businesses to help cover their foreign employees’ housing costs and expenses for attending Japanese language schools.

But Kochi Prefecture is the only local government that offers cash benefits directly to foreign workers among those covered by the Asahi survey.

The prefecture’s minimum wage is 952 yen, compared with the national average of 1,055 yen, which ranked the 42nd in the nation.

“Given the prefecture’s salary level, we face an enormous hurdle in attracting foreign workers and keeping them here,” said an official handling measures for foreign workers. “We need to offer an incentive, and the 300,000 yen is the incentive.”

But there is a local government that offered a larger payout to retain them when the Asahi contacted other local governments not covered by its survey.

The Tottori municipal government, also in western Japan, offers up to a 400,000 yen bonus to foreign workers.

In the Tottori case, the incentive was made available in 2024 to those working at facilities for the elderly in the city after taking a designated one-year Japanese language course.

The workers can receive 100,000 yen after working for six months and an additional 100,000 yen after a year, two years and three years, respectively.

“Foreign caregivers may eventually switch jobs, but we are hoping that the cash reward will discourage them from doing so at an early date,” a city official said.

But other local leaders view the development as concerning.

Soichi Kataoka, mayor of Soja, Okayama Prefecture, said support to foreign workers to enable a stable living such as teaching Japanese and Japanese customs should be rigorously expanded by municipalities that have direct jurisdiction over them.

But Kataoka, who also chairs a group of 11 municipalities across Japan with a large share of foreign residents, said local governments should not compete monetarily. 

“If you say, ‘Come to our community and then we will give you 300,000 yen,’ it would devolve into a ‘negative race’ that would end up depleting our limited resources,” he said.

As of the end of 2024, about 3.77 million foreigners lived in Japan, an increase of 10.5 percent from the previous year, according to the Immigration Services Agency.

One estimate predicts that the share of foreigners in Japan might account for 10 percent of the total population in around 2050 if the current pace of the growth continued, coupled with a sharp drop in the number of Japanese residents.

The predicted year of 2050 is 20 years earlier than the central government’s projection.

(This article was written by Saori Kuroda and Makoto Oda.)