Provisional Translation

Main Policy Agenda for Promoting Foreign Direct Investment in Japan– Compiled by Members of the Working Group for Creating Medium and Long-term
Strategy to Promote Foreign Direct Investment in Japan –April 20, 2022
Common Background Ideas○ Change the current stagnant situation under the COVID-19 by promoting
inward FDI: it is necessary to move away from an inward-looking attitude andexecute concrete measures to aggressively promote inward FDI that
contributes to the normalization of economic and social activities, DX 1 andGX 2, expeditiously.
○ Promote inward FDI that contributes to realizing a New Form of Capitalism:
strengthening “investment in human capital” is pursued to resolve theproblems of lacking necessary staffs faced by foreign companies that areentering or considering to enter Japan. In addition, promoting further DX, GX,and start-ups requires utilizing foreign capitals, knowledge, and technology.
○ Eliminate impediments: it is necessary to promptly improve businessenvironment that is considered to make it difficult to conduct businesses inJapan from overseas.
○ Expect spillover effects by promoting inward FDI, such as contributing to not
only creating domestic jobs, but also enhancing international competitivenessand promoting innovation. Note that there is an aspect of revitalizing theJapanese economy which would lead to attract foreign direct investment inreturn. Overall, a virtuous cycle of both is expected.
○ Based on the above, it is necessary to achieve our target of 80 trillion yen inforeign direct investment stocks in Japan by 2030 (40 trillion yen in 2020) bypromoting initiatives in priority areas based on last year’s strategy (Strategyfor Promoting Foreign Direct Investment in Japan).
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○ With regard to measures, it is necessary to examine their status, revise their
KPIs as needed, create new ones and set more aggressive ones, etc., andmanage the progress of each measure through visualization.
Current Issues○FDI stocks in Japan at the end of 2021 (preliminary estimate) was 43.5 trillion
yen, up 3.8 trillion yen from the previous year. The annual average increaseof 4 trillion yen required to reach the target of 80 trillion yen by 2030 was notachieved.
○ Compared to other countries (OECD average: 67% as of end of 2021), theinward FDI stock as a percentage of GDP is 8.0% (as of end of 2021), which
is at comparatively low level.
○ By industry, the manufacturing and finance industries accounts for more than
80% of FDI stock. Compared to other countries, shares of service and otherindustries tend to be low and unbalanced among industries.
○ In a survey of foreign companies in Japan conducted between June and July
2021, 70% responded that Japan’s border control had a significant impact on
their Japanese customers. While the gradual relaxation of border control isunder way, it is necessary to improve the procedures for entering Japan sothat cross-border business travels would become more smoothly, while
dealing well with infection. The survey also highlighted difficulty in finding
necessary staffs, the importance of introduction of the one-stop proceduralsystem and digitization of labor and tax-related procedures.
○ Predictability and transparency of the investment measures need to beimproved.
○ Significant difference in efforts of promoting FDI from region to region need to
be improved.
○ Since foreign companies tend to show strong interest in policies promoting
DX and GX in Japan, more work needs to be done to respond to it.
○ While Tokyo’s ranking as global start-up ecosystem has risen (from 15th in2020 to 9th in 2021) recently, it is seen as lacking in connectedness to foreign2

investor networks.
Pillar 1: Strengthening “investment in human capital” through inward FDI○ In order to deal with difficulties in finding necessary personnel faced by foreigncompanies, develop human resources who can play an active role globally,such as those including foreign students as well as Japanese ones studying
at universities in Japan, and also improve the matching of those students withforeign companies: e.g. measures to restore student exchange programs,
ensure that as many foreign students who are willing to work in Japan as
possible can find jobs in Japan.
○ At the same time, send a message to the world that Japan has overcome therestrictive conditions under the COVID-19 once the situation allows.
Specifically, disseminate the following information along with substantial
review of border control related to business: e.g. budgets and systems thatare available to foreign companies, our highly reliable business environment
and flexible response to global and domestic changes, and our position in theglobal value chain (GVC).
○ Enhance outreach activities through social media and other channels ofadministrative organizations, including JETRO, to inform foreign investors,relevant foreign institutions, and foreign students of various procedures andthe progress in relevant regulatory regimes in Japan.
Pillar 2: Promotion of DX, GX, and start-ups through inward FDI○ Encourage foreign investment to promote DX and GX, and foster start-ups inJapan. Specifically, strengthen support for foreign companies as well as fordomestic companies and local governments to improve the matching offoreign companies with their potential customers and business partners inJapan. Consider secondary investments by foreign companies in otherregions in Japan as needed.
○ Examine strategically important areas of inward FDI from the perspective of
our country’s industrial policy, in which proactive support by relevant3ministries/agencies is provided.
○ Provide further support for the formation of start-up ecosystem bases thatinvolves cities and universities, thereby fundamentally strengthening
entrepreneurship and accelerator functions. Provide support to connect startups of our country with foreign capitals.
○ In order to increase predictability of investments, improve the system of priorinquiries about policies to related sections of the administrative body (noaction letter system) and also promote dissemination of the case examples
that will help understand legal interpretations and administrative procedures.
○ With a strong demand from foreigners, accelerate easy-to-understand English
translation of laws and regulations (including ministerial notifications),
administrative documents such as application guidelines for subsidies, andadministrative procedures. Accelerate establishing a one-stop system anddigitization of labor and tax-related procedures.
○ In addition, examine and utilize cases where local ecosystem contributed tocreating innovation, as well as those that took in better management methodsof foreign companies leading to improving business performance, throughcooperation with foreign companies and M&As. At the same time, strengthen
our country’s corporate governance and increasingly disseminate informationinternationally.
Pillar 3: Improving living environment of foreign nationals to promote FDI in Japan○ Accelerate establishing the appropriate living environments for foreign
nationals, including in the medical care and education areas. Specifically,increase the number of medical institutions where necessary services can beprovided in foreign languages, as well as improve training programs forinstructors so that foreign students can receive proper Japanese-language
education.
○ Strengthen information dissemination that would be helpful to theestablishment of foreign nationals’ livelihood and businesses, including those4

about bank accounts, real estate, hospitals, and schools (includinginternational schools). In addition, accelerate establishing and reforming theinquiry centers where foreign languages are available and one-stop
consultations are possible in major regions of Japan.

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