Steps of Leasing Industry

It was in 1963 that the first leasing company was established in Japan. It has been forty years since then. Japanese economy flourished so well in ‘a high-growth period’ of 1960s that capital investment intention was highly motivated. However, companies are chronically short of equipment fund. Under these circumstances, ‘Leasing Transaction’ was regarded as a new and innovative means of equipment procurement in the industrial world.

Leasing transactions gradually pervaded major banks, major trading firms and large manufacturers to enter the leasing field one after another. The core of the leasing industry as it stands today was materialized by the middle of 1970s.

The 1970s was the decade in which the infrastructure of the leasing industry was built: The Japan Leasing Association (JLA) was established in 1971; the first tax ruling was implemented clarifying the tax treatment of leases in 1978. Despite the first oil shock in 1973 had damaged to Japanese economy only to experience low growth, the leasing industry continued to mark high growth supported by corporate rationalization and laborsaving.

In the industrial world, various functions of leases came to be appreciated other than a mere alternative to provide funds. The government implemented more and more measures for leases as a profitable means of equipment procurement. In 1980s, leasing industry steadily developed, so that international leasing transactions were boosted.

In the fiscal year of 1992 after the bursting of babble economy, leasing industry marked negative growth for the first time. Continuing recession and restrained circumstances of capital investment shrunk the average rate of positive growth in 1990s to 0.9%. However, even for this period, leasing transaction volume exceeded 7,000 billion yen constantly and the ratio of leasing capital investment to private capital investment kept increasing. The role of lease as a means of equipment procurement came to be more and more important.

During the early 2000s, in the Japanese economy keeping slight underlying recovery, leasing transaction volume changes in conjunction with the movement of private capital investment. According to the survey by JLA, 94% of companies use lease at present. Leasing industry, accounting for 10% of private capital investment, is becoming essential for the development of business management and Japanese economy.