In this page:
FDI in Figures |
Why You Should Choose to Invest in Japan |
Procedures Relative to Foreign Investment |
FDI in Figures
According to the 2013 UNCTAD report on world investment, during the 2013-2015 period, Japan was the 10th most attractive destination for multinational companies. Its potential appeal is very strong compared to other countries, but its performance in terms of reception of FDI is weak. After slowing down in 2009 following the global economic crisis, Japan experienced disinvestment in 2010 and 2010. Since 2012, FDI flux have returned to positive numbers. In 2013, FDI influx rose by more than 60% compared to 2012 to 2.8 billion USD.
The main asset of Japan is its position as a leader in matters of high technology, research and development. The potential hindrance to investment are of a linguistic order and business culture. The disaster that hit Japan on March 11, 2011 (the earthquake and the devastating tsunami that followed), as well as environmental and health concerns about the situation of the Fukushima Daiichi Nuclear Plant could slow down foreign investment for a short period. However, Japan remains a key market for investors. In addition, the Japanese economy should be able to finance the reconstruction of the country without too much difficulty thanks to a Surplus in Savings accumulated over recent years.
Country Comparison For the Protection of Investors
|Index of Transaction Transparency*
|Index of Manager’s Responsibility**
|Index of Shareholders’ Power***
|Index of Investor Protection****
Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Performance Index*, Ranking on 181 Economies
|Potential Index**, Ranking on 177 Economies
|Number of Greenfield Investments***
|FDI Inwards (in % of GFCF****)
|FDI Stock (in % of GDP)
- Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Why You Should Choose to Invest in Japan
- Strong Points
Japan is the world's third economic power. The purchasing power is one of the highest in the world. Technology is modern and innovative. Substantial means are devoted to education and R&D. Accessing the Japanese market gives access to the rest of Asia. The business climate is favorable. The population is ageing, which opens up a new development potential to meet the needs of the older age groups.
Click here for further arguments in favor of investing in Japan.
- Weak Points
Over-regulation in Japan continues to restrain economic growth, raise the cost of doing business, restrict competition, slow down the market entry and exit, and slow down investment.
Also Japan suffers from:
- A highly insular and consensual business culture that is resistant to hostile mergers and acquisitions (M&A) and prefers to do business, especially M&A transactions, with familiar corporate partners;
- Exclusive supplier networks and alliances between business groups that can restrict competition from foreign firms;
- Cultural and linguistic challenges;
- Labor practices that inhibit labor mobility, suppress productivity, and negatively affect skill development.
- Government Measures to Motivate or Restrict FDI
In recent years, reforms in the financial, communications, and distribution sectors have encouraged foreign investment in these industries. The government still imposes some restrictions on the penetration of the Japanese economy by foreign investors. Nevertheless, Japan’s Company Law has been re-examined in 2009, which simplified and made access to the national market easier for foreign investors.
Click here for further information about this reform.
The disasters of March 2011 interrupted consideration of new policy initiatives such as Japan's New Growth Strategy, announced in 2010, which on basic objective is to position Japan as base for international firms’ Asian operations and their research and development (R&D) functions.
- Bilateral Investment Conventions Signed By Japan
Japan is a signatory to 12 conventions.
UNCTAD allows you to visualize the list of conventions signed by Japan, and to download these conventions.
Procedures Relative to Foreign Investment
- Freedom of Establishment
- Acquisition of Holdings
- Obligation to Declare
The different obligatory declarations in Japan are :
- when a company with a capital of more than 2 billion Yen acquires 10%, 25%, or 50 % of a Japanese company.
- when a company with more than 10 billion Yen acquires business from another company with more than a billion Yen turnover.
- Competent Organization For the Declaration
Ministry of Finance
Japan Fair Trade Commission (JFTC)
- Requests For Specific Authorizations
Investment of foreign capital in the fields of agriculture, forestry, fishing, mines, oil, leather and the industries of the transformation of leather, and telecommunications is examined first by the Japanese government.
Any investment in the banking sector, insurance, energy and electricity, security, and pharmaceutical products is subject to license.
Learn more about Foreign Investment in Japan on Globaltrade.net, the Directory for International Trade Service Providers.
Learn more about Investing in Japan on Globaltrade.net, the Directory for International Trade Service Providers.
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Last Updates: October 2014