June 2024
No. A&S_032

Overview of Recent Policies and Measures
to Attract Foreign Direct Investment into Japan
In recent years, the government of Japan has been implementing various kind of policies and measures tofacilitate foreign direct investment (FDI) for the purpose of revitalizing the domestic economy, fostering
the country’s competitiveness in the global economy, and promoting innovation and technology
development in Japan. In 2013, the Japanese government set a KPI target of "doubling inward foreign
direct investment to 35 trillion yen by 2020". This target was achieved when FDI, at the end of December
2020, reached 39.7 trillion yen (appx. US$260 billion). In 2021, the government set a next target of
doubling FDI to 80 trillion yen (appx. US$530 billion) by 2030 and has been implementing new policies
and measures to further attract FDI.
Under these circumstances, in April 2024, Microsoft and Oracle Corporation Japan have respectively
announced that they will make significant investments for cloud computing and AI infrastructure buildingin Japan. Further, in May 2024, Carlyle Group announced that the group was raising JPY 430 billion (appx.
US$2.8 billion) for its new Japan buyout fund. In light of these new trends, we would like to provide a brief
overview of these new policies and measures for foreign businesses who are considering to invest in Japan.

1. Action Plan for Attracting Human and Financial Resources from Overseas
On April 26, 2023, the Cabinet decided on the "Action Plan for Attracting Human and Financial Resourcesfrom Overseas" 12 (hereinafter referred to as the "Action Plan") which aims to actively attract people, goods,
money, and ideas from overseas with the goals of positioning Japan as a production and research center(knowledge exchange), promoting R&D and innovation, and strengthening growth capabilities throughincreased investment in Japan.
The Action Plan includes the following five specific initiatives:(1) Stimulating investment in strategic sectors and restructuring global supply chains in light of changes
in the international environment which are based on: promoting investment and enhancing theattraction of local areas in important fields such as semiconductors, DX, GX and bio-healthcare; andexpanding nationwide human resource development consortium through a collaboration of industry,
academia and government.
(2) Strategies to form Asia’s largest startup hub by concentrating support for 8 Startup Ecosystem Base
Cities and making visas for foreign entrepreneurs more convenient.
(3) Attracting highly skilled foreign professionals and improving the system for establishing a center ofglobal knowledge exchange by establishing a new residency qualification system for highly-skilled
foreign professionals.

12

http://www.invest-japan.go.jp/committee/action_plan_en.pdf
http://www.invest-japan.go.jp/documents/pdf/action_plan__gaiyou_en.pdf
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June 2024
No. A&S_032(4) Improving the business and living environment to attract human resources and investment fromoverseas by enhancing the functions of an international financial center, promoting GX investments
and loans, improving the educational environment of international school students, building anationwide platform that provides information on hospitals with multilingual services and expanding
inbound tourism by attracting MICE (meetings, incentive travel, convention and exhibitions).
(5) Strengthening an all-Japan effort to execute the Action Plan by establishing various task forces,
executing a PDCA cycle and holding business summits with the participation of top executives fromforeign companies.
With a changing economic and social environment in Japan and abroad, the Japanese government views
this situation as an opportunity for growth and aims to achieve the FDI stock in Japan to JPY 100 trillion(appx. US$670 billion) at an early stage by accelerating efforts based on the Action Plan.

2. Policy Plan for Promoting Japan as a Leading Asset Management Center
The Policy Plan for Promoting Japan as a Leading Asset Management Center 3 outlines the strategies andinitiatives that aim to foster a conducive environment for investment, enhancement of asset management
capabilities, and promoting sustainable economic growth.
The current Cabinet, the Kishida administration, aims to encourage investment of household financial
assets into productive channels that increase corporate value and subsequently benefit the households.
Several measures have been taken to strengthen the investment chain, which include expanding tax
exemption programs for retail investors.
Following these measures, the government seeks to reform the remaining pieces of the investment chain,asset management business and asset ownership, which are responsible for managing household financial
assets, etc. The policy has five pillars, the key points being as follows:i.

Reforming the Asset Management Sector:
•
•

ii.

Reforming Asset Ownership:
•
•

iii.

Efforts will be made to enhance engagement between investors and companies to increase
medium to long term corporate value.

Strengthening Public Relations and Communications:•3

Initiatives will promote investment in startups and unlisted equities, as well as diversifying
investment opportunities through alternative and sustainable investments.

Effective Implementation of Stewardship Activities:•v.

Asset Owner Principles will be developed to guide asset owners in managing assets effectively
and transparently.
Efforts will focus on improving the management capabilities of corporate pension funds which
are defined benefit corporate pension plans (DBs) and defined contribution pension plans(DCs.)

Promoting Growth Financing and Diversification of Investment Opportunities:•

iv.

Emphasis is placed on enhancing asset management capabilities, improving governance, andpromoting stewardship activities among asset owners and management companies.
Measures include developing productive governance principles, promoting new entry ofdomestic and overseas firms into the sector, and establishing special zones for financial andasset management businesses.

An Asset Management Forum will be launched to facilitate dialogue among stakeholders andpromote Japan as a leading asset management center.

https://www.fsa.go.jp/en/policy/pjlamc/20231214.html
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June 2024
No. A&S_032

For those who are interested in investing in asset management industries in Japan, the first pillar,
Reforming the Asset Management Sector, will be beneficial. Currently, it is often pointed out that there areseveral unique Japanese business practices and entry barriers which have prevented new entry of financial
firms into the Japanese asset management sector. Such practices and barriers are planned for removal.
Moreover, in special zones for financial and asset management businesses, consideration will be given toboth local initiatives and national support that include tax and financial support and enhancement ofadministrative services which include greater availability of services in English.
In terms of Effective Implementation of Stewardship Activities, it is worth noting that a recent bill toamend the large shareholding reporting rule was passed by the Japanese Diet on May 15, 2024. The large
shareholding reporting rule requires shareholders whose holding ratio exceeds 5% of the issued andoutstanding shares of a listed company to disclose their positions by filing a report. Under the rule, it isclarified that shareholders may become “joint holders” of shares in a listed company from the reporting
rule perspective, if there is an agreement among them to exercise voting rights or other shareholder rights
together (e.g., if they jointly submit a formal request to the listed company to convene an EGM). In thesecircumstances, the joint holders are required to aggregate their shareholding and disclose the same on a
joint basis. It was pointed out that the unclear scope of “joint holders” under the previous large
shareholding reporting system had been an obstacle to engagement activities by institutional investors.
The government will promote effective engagement efforts by making those rules clearer.

3. Act for Promotion of Japan as an Asian Business Center
The Act for Promotion of Japan as an Asian Business Center 4 aims to encourage multinational
corporations to establish affiliated companies in Japan that conduct research and development (R&D)
and/or perform supervisory functions over other affiliated companies. The Act provides the following key
support measures to attract inbound investment:i.

Assistance for Fund Raising: The Small and Medium Business Investment & Consultation Co., Ltd.
provides fund-raising assistance for small/medium-sized companies (including companies
capitalized not less than JPY 300 million) newly established by the multinational corporation to
conduct R&D or supervisory business.

ii.

Acceleration of Patent Examination: In Japan, an ordinary patent examination takes
approximately 22 months. Instead, for the patent applicant who has developed an invention in thecourse of implementing the R&D plans certified by the relevant authorities, this measure shortens
the examination period to approximately 2 months.

iii.

Shortened Investment Procedures: Generally, foreign investors are required to give priornotification to the competent authorities and wait for 30 days after giving of such notice before
investing in Japanese entities operating in regulated industries under the Foreign Exchange andForeign Trade Act. This measure shortens the waiting period to 2 weeks instead of 30 days.

iv.

Acceleration of Residency Examinations: Foreign nationals wishing to work in Japan may receive
accelerated examinations for acquiring the status of residence (approximately 10 days instead of 1
month).

To be eligible for the support measures described above, the multinational corporation must obtaincertification by the relevant authorities for its R&D or supervisory business plan to be implemented by the
newly established entity in Japan. For further details concerning support measures and certification
procedures, please refer to the METI’s website. 5 We, A&S lawyers, are more than happy to provide
comprehensive support ranging from certification procedures, setting up new entities and regulatorycompliance (i.e., the applicable licence/permit requirements).

4. Recent notable FDI activities in Japan
Under the circumstances above, there have been various recent cases of notable FDI in Japan which
include:4
5

https://www.meti.go.jp/english/policy/external_economy/investment/act_information.html
https://www.meti.go.jp/english/policy/external_economy/investment/act_information.html

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June 2024
No. A&S_032•

May 2024: Carlyle Group, a U.S. private equity firm, announced that it had raised US$2.8 billion(JPY430 billion) for its fifth Japan buyout fund, Carlyle Japan Partners V, its largest investment
vehicle for Japan 6.

•

April 2024: Microsoft announced that it will invest US$2.9 billion (JPY400 billion) within the next
2 years to develop Japan’s cloud computing and AI infrastructure, educate Japan’s AI capability,
open its first Microsoft Research Asia lab in Tokyo, and deepen its cybersecurity collaboration withthe government of Japan 7.

•

April 2024: Oracle Corporation Japan announced that it plans to invest more than US$8 billion(JPY 1.2 trillion) over the next 10 years to meet the need for cloud computing and AI infrastructure
in Japan, and it will significantly expand its operations and support engineering teams with Japanbased personnel 8.

•

February 2024: Taiwan Semiconductor Manufacturing Co. (TSMC) celebrated the opening of its
majority-owned subsidiary Japan Advanced Semiconductor Manufacturing, Inc., which is its firstsemi-conductor plant in Kumamoto Prefecture, Japan, and has plans to construct a second plantwith a subsidy of US$4.9 billion (JPY 730 billion) by the government of Japan 910.

•

January 2024: Amazon Web Services (AWS) announced its plans to invest US$15.2 billion (JPY 2.3
trillion) in Japan by 2027 to strengthen its data center as a basis of cloud computing infrastructure,with an expectation that data processing will explosively increase due to the spread of generative
AI 11.

---------------------------------------------------------------------------------------------------------------------------THIS NEWSLETTER IS PROVIDED FOR INFORMATION PURPOSES ONLY; IT DOES NOTCONSTITUTE AND SHOULD NOT BE RELIED UPON AS LEGAL ADVICE.
----------------------------------------------------------------------------------------------------------------------------

https://www.carlyle.com/media-room/news-release-archive/carlyle-raises-jpy-430-billion-fifth-japanese-buyout-fund
https://news.microsoft.com/apac/2024/04/10/microsoft-to-invest-us2-9-billion-in-ai-and-cloud-infrastructure-injapan-while-boosting-the-nations-skills-research-andcybersecurity/#:~:text=Microsoft%20to%20invest%20US%242.9%20billion%20in%20AI%20and,to%20strengthen%20J
apan%E2%80%99s%20cybersecurity%20defenses%205%20Leadership%20statements
8 https://www.oracle.com/news/announcement/oracle-to-invest-more-than-eight-billion-in-cloud-computing-and-ai-injapan-2024-04-17/
9 https://pr.tsmc.com/english/news/3113
10 https://asia.nikkei.com/Business/Tech/Semiconductors/Japan-prepares-4.9bn-in-funds-for-TSMC-s-2nd-Kumamotochip-plant
11 https://www.reuters.com/technology/amazons-aws-invest-15-bln-expand-cloud-computing-japan-2024-01-19/
6
7

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June 2024
No. A&S_032

Authors/Contacts
Rikiya OkuharaPartner
E: rikiya.okuhara@aplaw.jp

Osamu Fujiwara
Partner
E: osamu.fujiwara@aplaw.jp

Yuka Daimon
Associate
E: yuka.daimon@aplaw.jp

Sho Tsuzuki
Associate
E: sho.tsuzuki@aplaw.jp

Shinichi Nozaki
Associate
E: shinichi.nozaki@aplaw.jp
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Back issues of our newsletters are available here.

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Atsumi & Sakai is a multi-award-winning, independent Tokyo law firm with a dynamic and innovative approach to legal
practice; it has been responsible for a number of ground-breaking financial deal structures and was the first Japanese law
firm to create a foreign law joint venture and to admit foreign lawyers as full partners. Expanding from its highly regarded
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and other businesses, offering a comprehensive range of legal expertise.
Atsumi & Sakai has an outward-looking approach to its international practice, and has several foreign lawyers with extensive
experience from leading international law firms, providing its clients with the benefit of both Japanese law expertise andreal international experience.
We are the only independent Japanese law firm with affiliated offices located in New York, London, Brussels and Frankfurt
which, together with our Tokyo office and Fukuoka affiliated office, enables us to provide real-time advice on Japanese law
to our clients globally.

Atsumi & Sakai
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5©Atsumi & Sakai 2024