Provisional
Translation

Policy Package for Promoting Foreign Direct Investment into Japan
to Make Japan a Global Hub
May 20, 2016
Adopted by the Council for Promotion of Foreign Direct Investment in Japan

The Abe administration has been pushing forward its economic policy of implementing the“three arrows,” namely, aggressive monetary policy, flexible fiscal policy, and growth strategy
that motivates private sector investment, which is beginning to generate a steady virtuous cycle
for the economy. In particular, this growth strategy has helped prepare a better businessenvironment for foreign companies by, for example, cutting down effective corporate tax rates
to the 20-30% range, fundamentally reinforcing corporate governance, and executing reforms
in bedrock regulations in areas such as agriculture, regenerative medicine, and energy. Partly
as a result of these measures, Japan’s rating as an investment destination by foreign companies
has improved, leading to an increase in foreign direct investment (FDI).

Against this backdrop, 12 countries in the Asian Pacific region including Japan have reached
an agreement on the Trans-Pacific Partnership (TPP). Going forward, when the TPP is enforced,
tariffs imposed on a wide range of goods will be significantly reduced, domestic markets will
open to entrants from outside, and FDI will be appropriately protected in the participating
countries. Mid-tier enterprises and small and medium-sized enterprises (SMEs), which havehesitated to advance into global markets, are expected to have increased opportunities toundertake business overseas, including through exports. In addition, it is also believed that theTPP will stimulate trade and investment in countries other than TPP signatories, prompting therestructuring of global value chains. Given these circumstances, some domestic companies that
had previously shifted their production bases abroad are moving their bases back into Japan tocapitalize on the advantages of being located within the TPP region. Their moves are also
anticipated to make their suppliers and partners more interested in investing in Japan.

With the aim of leveraging such effects of TPP to revitalize the Japanese economy, thegovernment adopted the Comprehensive TPP-related Policy Framework in November 2015.
Under this framework, a policy to make Japan a global hub for trade and investment is upheld,
for which it is crucial to further promote foreign investment in Japan and disseminate the effectto regional areas as well as mid-tier enterprises and SMEs.

Toward the goal of turning Japan into a global hub, the Japanese government will implement
1the following measures to further encourage FDI in Japan.

1.

Measures to attract foreign companies by leveraging Japan’s strengths
For Japan to be chosen as a destination of investment by foreign companies, it is crucial toextensively publicize the marked improvement in the country’s business environment andother beneficial factors it can offer, including its R&D capacity. It is also necessary to provide
finely-tuned support to foreign companies seriously seeking to invest in Japan. At the sametime, focus should also be placed on widely conveying across the nation, including in regional
areas, the message that advancement of foreign companies into Japan will create new businessand employment opportunities and promote proliferation of new technologies, humanresources and know-how.

Furthermore, mid-tier enterprises and SMEs that have rarely come into contact with overseasmarkets will acquire opportunities to enhance their growth capacity by obtaining new sales
channels and strengthening technological expertise through partnering with foreigncompanies. TPP is thus anticipated to promote globalization of Japanese mid-tier enterprises
and SMEs, allowing their distinguished technological expertise to become widely known
throughout the world, and also raise interest in Japan among foreign companies. It is importantto capitalize on these opportunities to promote partnerships between foreign companies andmid-tier enterprises and SMEs in Japan.
(1)Communication and information dissemination(i)Strengthening PR overseasAdvertisements will be posted in five or more leading media sources outside ofJapan by the end of fiscal 2016 to publicize the improvements made in Japan’sbusiness environment.

The Japan External Trade Organization (JETRO) will host around 50 seminars by
the end of fiscal 2016, including top-level sales by key government figures toattract FDIs.

Communication and information dissemination will be strengthened by utilizing
the Contact Point for Promotion of Foreign Direct Investment in Japan, which wasestablished on Japan’s 126 diplomatic missions abroad and started the operationin April 2016.

(ii)

Promoting understanding among SMEs in Japan

Successful case examples of investment partnerships between foreign companies
and Japanese SMEs will be compiled for communication to help Japanese SMEs
understand the significance of forming alliances with foreign companies. In2

addition, around five symposium events themed on FDI in Japan will be held inJapan by the end of fiscal 2016 to provide foreign companies and Japanese midtier enterprises and SMEs with opportunities to form partnerships and engage inexchange.

(2) Supporting matching between foreign companies and SMEs
JETRO and SME-support organizations such as the Organization for Small &Medium Enterprises and Regional Innovation, JAPAN (SME Support, JAPAN)
collaborate to help foreign companies and Japanese mid-tier enterprises and SMEs
form partnerships under an initiative named the Promotion Scheme for Global
Alliances launched in September 2015. The scheme will be reinforced through thefollowing measures.
(a) Strengthening the collaboration between JETRO and regional financial
institutions, etc.
With the aim of identifying Japanese mid-tier enterprises and SMEs seeking
to collaborate with foreign companies, collaboration between JETRO andregional financial institutions, etc. that understand the needs of local mid-tierenterprises and SMEs will be strengthened through the following initiatives,among others.
Leveraging its 43 regional offices, JETRO will collaborate with
regional financial institutions, etc. to newly host seminars aiming
to encourage partnerships between foreign companies andJapanese mid-tier enterprises and SMEs.

In collaborating with regional financial institutions, etc., JETRO
will make use of its existing contact points, including the newexporting power Consortium established in February 2016.

(b) Utilizing J-GoodTech
J-GoodTech, a website run by “SME Support, JAPAN” with the aim of
introducing distinguished technologies from domestic SMEs and matchingthem up with large companies, will be improved in the following ways toexpand use by foreign companies.


Facilitate registration of foreign companies recommended byoverseas organizations that have concluded MOUs with “SME
Support, JAPAN,” and also allow registration of foreign companies
supported by JETRO.

With the aim of encouraging information sharing among registered3

companies, develop new system functions by the end of fiscal 2016
to enable foreign companies to browse through information posted
by Japanese companies and make suggestions in response.
In addition, communication will be executed by utilizing businessnegotiation sessions which are hosted by JETRO and “SME Support,JAPAN”, and through Japan’s diplomatic missions abroad, in order toencourage partnerships between foreign companies and Japanese SMEs
through the application of J-GoodTech.

(3) Promotion of investment in Japan, including regional areas


JETRO will host ten training sessions for local government officials by the end offiscal 2016 to enhance their know-how on inviting foreign companies to invest inJapan. Measures taken by other countries to promote inward FDI will beintroduced in the program.

Local governments will be encouraged to implement initiatives to strategicallyentice FDI, disseminate information, and provide foreign companies with followup support after their advancement into Japan, etc. by utilizing regional
vitalization grants.

Toward the goal of creating global value chain hubs in Japan, JETRO’s system
will be strengthened and its sales and support capacity for individual projects will
be reinforced, for example, in terms of approaches to prospective foreigncompanies and proposing business models, in order to encourage theestablishment of R&D bases and regional headquarters by foreign companies.
(The target will be set at attracting 15 or more Specified Target Company.)

For the purpose of encouraging the establishment of R&D centers for highly
promising fields of investment in Japan (IoT and regenerative medicine), subsidies
will be granted to partially cover the expenses incurred by foreign companies forestablishing R&D centers, conducting experimental studies, and undertaking
feasibility research in collaboration with Japanese companies, universities, andresearch institutes, etc. Whether support should be strengthened in light of thesupport status, among other factors, will be examined.

2.

Measures to resolve issues hindering the foreign companies’ entrances into Japan
While improvement has been observed in Japan’s rating as an investment destination by foreigncompanies, various issues that hinder investment in Japan are still being pointed out, such as
the complexity of regulations and administrative procedures, difficulty in securing globally4competitive human resources, and the inconvenience experienced in daily living, including
language barriers.

As part of the government’s measures to address these issues, the Council for Promotion ofForeign Direct Investment in Japan adopted the Five Promises for Attracting Foreign Businessto Japan in March 2015. In addition to proceeding with the initiatives upheld in the Five
Promises, the following initiatives will also be launched.

(1) Improvements in regulations and administrative procedures(i)

Simplify regulations and administrative procedures
For the purpose of fundamentally simplifying regulations and administrative
procedures associated with FDI in Japan, the Council for Promotion of Foreign
Direct Investment in Japan will discuss and draw conclusions within one year as
to how regulations and administrative procedures that are deemed too complex forforeign companies can be reviewed and simplified. Matters on which conclusions
can be reached early on will be addressed ahead of others by deciding on concretemeasures by the end of this year and promptly implementing them.

(ii)

Expand translations of Japanese laws and regulations into foreign languages
In 2006, the government established a Japanese law and regulations translation
scheme, under which translations of a total of 508 laws and regulations,
including Civil Code, Commercial Code, and laws pertaining to finance, taxationand intellectual property were published by the end of fiscal 2015. Goingforward, under the leadership of the Liaison Conference of the Relevant
Ministries and Agencies for Developing a Foundation for Promoting Translationof Japanese Laws and Regulations into Foreign Languages, a check scheme willbe established for translations of laws and regulations, including government
ordinances, announcements and notices to maintain high quality, while at thesame time, an additional 500 laws and regulations at minimum will be translated
into foreign languages and published by fiscal 2020.

Furthermore, from the perspective of complementing the government’s
translations of laws and regulations, JETRO will prepare and post easy-tounderstand English explanations on procedures associated with establishment andoperation of companies, including application formats, on its English website.

(iii)

Ensure a one-stop procedure

For the purpose of further encouraging both Japanese and foreign nationals to startbusinesses, the Tokyo One-Stop Business Establishment Center, which opened in5April 2015, will prepare itself to support business starters by launching anelectronic application system for six administrative procedures required forlaunching a business, including company registration, tax affairs and pension
administration. In addition, the range of applications accepted over the counter,
which is currently limited to those pertaining to immigration control and others,
will be expanded to cover all administrations in order to fundamentally enhance
the convenience of using the center.
Furthermore, from the perspective of facilitating immigration procedures forforeign nationals who need to enter Japan to work for business start-ups launchedin the country, the center will expand the scope of residence status that can beapplied for by adding “engineer / specialist in humanities / international services”
to its current lineup comprising “business manager” and “intra-company
transferee.” In addition, applications for residence status, which are currently
accepted at the center for a period of six months from establishing a corporation,
will be accepted over an extended period of time.

Moreover, to promote usage of the center, services offered there will be closelyaligned with the government’s support measures for SMEs and venture businesses.
In addition, JETRO’s business establishment consultation service counter, among
others, will proactively introduce their clients to the center, and the center will be
extensively promoted among prospective business starters in Japan and overseas
as well as foreign companies.

(2) Attracting and fostering globally competitive human resources(i)

Highly-skilled foreign professionals


Necessary measures will be taken as swiftly as possible to establish a “Japaneseversion green card” system for highly-skilled foreign professionals. The residence
period requirement for highly-skilled foreign professionals to apply for permanent
residence permission will be significantly shortened from the current five years,
which will make this “green card” one of the most quickly obtainable permanent
residence permissions in the world. At the same time, the points-based system forhighly-skilled foreign professionals will be reviewed to revise requirements withthe aim of making the system more accommodating. The system will also be more
widely publicized.

Requirements for application for permanent residence permission by significant
investors and foreign nationals who contribute significantly to Japan in growthareas such as IoT and regenerative medicine will be examined to enable decisions
6

to be made as swiftly as possible.
Systems for gathering employment status of foreign nationals will be improvedby the end of next year by unifying the description methods of Notification of theEmployment Status of Foreign Nationals and Resident Card, and the residency
management of foreign nationals will be further examined to pursue
appropriateness. Necessary preparations will be undertaken to facilitate andexpedite the procedure for residence status applications starting fiscal 2018,
including accepting applications online.

Pursuant to the law amendment in July 2015, an employment project for foreign
housekeeping support workers has been authorized to be carried out in theNational Strategic Special Zones, including Kanagawa Prefecture and Osaka City,
which have been certified to undertake the project. Tokyo and other areas will also
implement the project in response to demand.

(ii)

Employment support for international studentsThe proportion of international students employed in Japan after graduation (witha bachelor’s, master’s and / or doctoral degree) should be increased to 50% by
fiscal year 2020, up from approximately 30% by fiscal year 2013. Toward thisgoal, the following measures will be taken.
The number of courses on Japanese corporate culture, business Japanese
language and etc. at universities and other educational institutions will bedoubled, and the number of international students who have participatedinternship programs will be increased. To this end, international students who
have completed specified programs certificated by the government, withJapanese language education, Japanese business culture education atuniversities and internships, with the appropriate involvement of thecompetitive ministry supervising the programs, will be given preferentialtreatment, including simplifying the application procedures in acquiring orchanging their status of residence with less documentation requirement andless processing time. In addition, support will be provided for universities indeveloping and implementing such programs starting next fiscal year. At thesame time, interview counseling sessions for international students will takeplace in suburban areas, and internship programs and awareness raisingseminars on employment for international students at the Tokyo Employment
Service Center for Foreigners will be further improved.

In order to encourage the business community to offer more employment andinternship opportunities to foreign students. Furthermore Communication
7

will be strengthened by making use of the Career Support Network forInternational Students in Japan. Furthermore, job fairs will be held incooperation with Japan’s diplomatic missions abroad, JETRO, the Japan
International Cooperation Agency (JICA), and other relevant organizations.
Under the appropriate involvement of authorities concerned, those who havecompleted human resources development projects with public funds,
including Official Development Assistance (ODA), will be given preferential
treatment in acquiring and changing their status of residence.

(iii)

Strengthening English language education for Japanese nationals

The following initiatives will be implemented to ensure that all schoolchildren
receive high quality English language instruction within their curriculum and thatthey have the opportunity to encounter high quality English outside the curriculum
as well.
Deploy a total of 20,000 or more external human resources including
assistant language teachers (ALTs) and those fluent in English at allelementary schools by the 2019 fiscal year.

Promote the utilization of external human resources with sufficient English
skills at junior and senior high schools, including increasing the number ofALTs, employing special part-time instructors fluent in English, and granting
special teaching certificates to eligible instructors.

Develop a core curriculum necessary for fostering teachers and reinforce
their practical training.

Set English achievement goals specifying “what can actually be done inEnglish” by the end of the 2020 fiscal year with the aim of ensuring thatstudents at all junior and senior high schools are equipped with practicalEnglish communication skills.

(3) Improvement of the living environment for foreign nationals(i)

Educational support for foreign schoolchildren
Japanese language support will be made available by 2020 to all elementary andjunior high schoolchildren who require it. (It is currently available toapproximately 80% of such schoolchildren as of the 2014 fiscal year.)Increase the proportion of elementary and junior high schools that introduce theJapanese as a Second Language (JSL) curriculum in areas where a large numberof schoolchildren require Japanese language support, with a view to ensuring theJapanese language support under the JSL curriculum in such areas. (Concrete8

policy targets will be set based on the results of a survey to be conducted thissummer.)Promote initiatives such as “Super Global High Schools” where foreignschoolchildren can learn alongside Japanese schoolchildren.

(ii)

Offering procedures associated with daily life in foreign languages
Increase the number of medical institutions to around 40 in Japan that are equippedwith the capabilities to accept foreign patients by the end of fiscal 2016.

Relevant authorities will encourage medical institutions, banks, mobile phone
operators, and electricity / gas suppliers to provide foreign nationals with easy-tounderstand information on bases / contacts that offer services in foreign languages.
Such information will be posted on JETRO’s website in an integrated manner by
the end of 2016.

9