Statement of the Japan Investment Council- Toward the Promotion of Foreign Direct Investment in Japan June 13, 1995
Japan Investment Council

1. SIGNIFICANT ROLE OF FOREIGN DIRECT INVESTMENT IN JAPAN
Increased foreign direct investment in Japan contributes to structural reform ofJapanese economy, such as enhancement of Japanese economic vitalization, creationof new business, reduction of the disparities between international and domestic
prices, import expansion, through introduction of the new technology, management
know-how and various kinds of competition among domestic and foreign firms. Also it
will benefit Japanese consumers, bringing a supply of less expensive and better goods
and services and greater selection. Moreover, it further opens Japan's economy,society, and culture.
Additionally, investment activities of countries throughout the world, including
foreign direct investment in Japan, contribute to a balanced development of the global
economy and to the creation of peaceful and cooperative international relations.
Toward the 21st century, the Government of Japan acknowledges that increased
foreign direct investment is essential for constructing a dynamic Japanesesocioeconomic structure open to the world.
In line with this positive attitude of the Government of Japan, the Japan
Investment Council declares at home and abroad its determination to strengthen theaction for increasing foreign direct investment in Japan.
2. POTENTIAL OF JAPAN'S MARKETThe level of foreign direct investment in Japan remains low as a whole, and alsoless than that for Japanese direct investment abroad, which, in turn, has created alarge inward-outward investment imbalance. This is due to economic factors such as
the macroeconomic climate, including the appreciation of the yen, and high business
related costs in Japan, including land prices as well as to institutional factors such as
regulations based on laws or administrative guidance. On the other hand, with theworld's second-largest economy, a high level of demand, opportunities fortechnological and other business tie-ups, a geographical location within the
fast-growing Asian region, plentiful of high-quality labor force that can take part inmanagement, and the availability of well-maintained infrastructure, Japan has
excellent potential as an investment market.
In nature of the things, decisions on investment are based on the discretion ofindependent firms, so there are limits to the scope and effect of the Government's
measures to promote foreign direct investment. But the Government does have an
important role in leading the way and the Government will play its part to themaximum extent possible to create an environment conducive to foreign direct
investment in Japan, which has the potential above described.
3. EXPECTATIONS FOR THE PRIVATE BUSINESS SECTOR
Since the business climate, in terms of transparency of business practices, is also
an important factor maintaining smooth business operations among foreign firms, theGovernment of Japan solicits the understanding and cooperation of the private
business sector in order to create a desirable investment environment. In this regard,
it is now understood that M&A, which has been pointed out to be difficult in Japan, isan common form of foreign direct investment as a free economic activity, and it isexpected that the M&A would have a positive and stimulating effect on increase offoreign direct investment and vitalization of industrial activity in Japan.
4. THE BASIC POLICY FOR EXPANDING FOREIGN DIRECT INVESTMENT INJAPANThe Government will actively take the following policy measures, including
deregulation and the providing of incentives, to expand foreign direct investment.
While implementing these measures, both transparency and the simplification ofprocedures will be assured.
(1) Promote deregulation to reduce business operating costs and to create
new businesses opportunities. In particular, regulation of direct investment
should be kept to a minimum.
(2) Provide special treatment in taxation and financial incentives, so as tofacilitate smooth business operations.
(3) Make active use of the OTO with rapid and appropriate resolution of any
complaints concerning business activities of investors.

(4) Support recruitment by providing labor-related information, job
consultation and employment exchange.
(5) Disseminate information extensively by JETRO and others concerning theJapanese investment environment.
(6) Provide comprehensive services for foreign firms by drawing on expertiseof the Foreign Investment in Japan Development Corporation (FIND).
(7) Support the setting up of Facilities to support Foreign BusinessParticipation in Japan.
(8) Approach the private business sector to help create a business climatewith more transparent business practices.
(9) Expect that local public bodies that could be closely involved in attracting
foreign businesses, to make greater efforts to attract foreign direct investment.
(10) Improve statistics-keeping, etc. to provide more accurate information on
foreign investment and business activities of foreign affiliates in Japan.
(11) Continue to promote in every way the current framework of "The Outlineof Promoting Comprehensive Land Policies" in order to achieve reasonable
land price levels, which would be beneficial to the location of foreign firms.
(12) Contribute to fostering a free international investment climate by actively
participating as a major player in multilateral discussions at the OECD, APECand WTO.
According to these basic policies, the Government of Japan will also carry out
within fiscal 1995, the investment promotion measures that have been decided upon,
including those described in the attached list.
5. ACTION OF THE JAPAN INVESTMENT COUNCIL
By utilizing the Expert Committee, the Japan Investment Council thoroughly
discusses important themes and collects opinions and requests from foreignbusinesses and others in order to have these ideas reflected in the Government
programs. The Expert Committee, in particular, will immediately begin to examine thefuture direction of the Law on Extraordinary Measures for the Promotion of Imports
and Facilitation of Inward Investment, which expires in May 1996, ways to improving
the climate for M&A, and ways to support employment in foreign firms.
The Japan Investment Council expresses its determination to continue to play amajor role in ensuring that policies reflect these opinions and requests and indisseminating information concerning policies adopted through this process in order toimprove the investment environment in Japan and it welcomes opinions and requests

to promote foreign direct investment in Japan from both domestic and foreign
concerns. At the same time, the Council addresses foreign businesses to take fulladvantage of these measures and take a positive attitude toward investing in Japan in
the years ahead.
(Omitting the List of Investment Promotion Measures in 1995)