Japan

Investing

FDI in figures

Despite the increase in FDI since the mid-1990s, Japan continues to have the smallest amount of inward foreign investment. The current ratio of FDI to GDP in Japan is 2.2 per cent, compared to 13.0 per cent in the United States, 37.1 per cent in the United Kingdom, 18.0 per cent in Germany, and 28.5 per cent in France.
According to the World Investment Report 2006 of the UNCTAD, the potential attractiveness for foreign investment in Japan is very strong compared with other countries in the world, but performance is poor in terms of the reception of the FDI made. Indeed, of the 141 countries studied, Japan is ranked as the 22nd country in the world with the strongest potential attractiveness for FDI. Nevertheless, in terms of performance, it drops to 131st place.

Foreign Direct Investment	2004	2005	2006
FDI of inward flow (millions USD)	7,816	2,775	-6,506
FDI inward stock (millions USD)	n.c.	n.c.	107,633.0
Performance Index*, world ranking	137	136	137
Potential Index**, world ranking	23	24	n.c.
Number of Greenfield investments	157	121	146
FDI inwards (in % of GFCF)	0.7	0.3	-0.6
FDI stock (in % of GDP)	n.c.	n.c.	2.5

Source: UNCTAD, World Investment Report

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.

Why you should choose Japan

Strong points: Japan is the second world economic power. Purchasing power is one of the highest of the world. Technologies are modern and innovative. Substantial means are devoted to education and R&D. Access to the Japanese market is an opening towards the rest of Asia. The business climate is favorable. The population is ageing, which opens up 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, impede market entry and exit, and impede investment.
Government measures to motivate or restrict FDI: The government still imposes some restrictions on the penetration of the Japanese economy by foreign investors. Nevertheless, Japan’s Company Law was re-examined in 2005, which simplified and made access to the national market easier for foreign investors.
Click here for further information about this reform..
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.

Administrative procedures relative to foreign investment

Freedom of establishment: Guaranteed.
Acquisition of holdings: Possible.
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, security, and pharmaceutical products is subject to license.