U.S.-Japan
Investment Initiative
2002-2003

President Bush and Prime Minister Koizumi"Rather than seeing foreign investment as a threat, we will take measures
to present Japan as an attractive destination for foreign firms with theaim of doubling the cumulative amount of investment in five years."
Prime Minister Junichiro Koizumi, January 31, 2003
"Over the past few years, Americans have increased our investments inJapan, further binding our nations and showing confidence in your future."
President George W. Bush, February 19, 2002

What is the Investment Initiative?
President George W. Bush and Prime Minister Junichiro Koizumi established the Investment Initiativein June 2001 as part of the U.S.-Japan Economic Partnership for Growth. Under the chairmanship of AlanLarson, Under Secretary of State for Economic Affairs, and Tadakatsu Sano, Vice Minister for International
Affairs, Ministry of Economy, Trade and Industry (METI), the group met for high-level talks in March 2003
and at the working level in November 2002 and April 2003. Both governments place great importance onthese talks because they believe that foreign direct investment (FDI) is an important form of economic activityfor both the investing and receiving countries. For the investor, FDI allows rapid access to foreign markets.
For recipients, it can transform management, promote efficiencies, and encourage use of new technologies
and business models. FDI not only plays a vital role in creating jobs, generating demand, and supplying risk
capital, but also leads to deeper political and social understanding and cooperation between the two nations.
In addition to exploring policy options, the Investment Initiative has held programs to create a deeper
understanding of FDI and provide information on investment opportunities, including the Investment
Initiative Seminars held in Osaka and Sapporo in April and symposia on investment in Japan to be held inChicago on June 24 and San Francisco on June 26.

The Investment Situation in Japan and the U.S. Today
In recent years, changes in Japan have created unprecedented opportunities for foreign firms to invest
in the Japanese economy. Regulatory reforms in financial, telecommunications, and distribution sectors haveaccelerated entry into these sectors by foreign firms. In addition, revisions of the corporate, bankruptcy, andaccounting laws have facilitated M&As in Japan. Between 1997 and 2001, U.S. direct investment stocks inJapan have increased by 36 percent. Through these investments, foreign investment is creating andmaintaining employment, introducing U.S. management methods, and stimulating the revival of the Japanese
economy.
There is considerable potential for further increases. In the U.S. total FDI stocks from all sources
amount to approximately 25.1% of GDP and support roughly six million jobs. On the other hand, total FDI
stocks in Japan amount to approximately 1.2% of GDP and provide about 330,000 jobs. Furthermore, thetwo-way investment between the U.S. and Japan remains considerably lower than the levels of those between
the U.S. and the EU. The U.S.-Japan Investment Initiative expects that its work will result in increased andmore balanced investment flows between our two countries that will allow Japan and the U.S. to realize thefull benefit from robust investment.
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１

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Japan and the United States Welcome FDI
Japan sees FDI as critical for its economic revitalization. Prime Minister Koizumi committed in hisGeneral Policy Speech on January 31, 2003, to take measures to make Japan an attractive destination forforeign firms in order to double the cumulative amount of investment in five years. In response to the speech,
the Japan Investment Council (JIC) issued a report on March 2003 on measures to achieve the government'sgoal. The following chart provides a summary of the program for promoting FDI from the JIC Report.
The Program for Promoting FDI: 5 Priorities, 74 Measures•(1) Reviewing Administrative Procedures
Make the administrative procedures simpler, faster and clearer; clarify legal interpretation.

(2) Improve business environment(3) Improve employment and livingenvironments• Facilitate cross-border M&As; effectively• Meet the needs of diverse ways ofutilize debt-equity swaps responding to thenature of the target of the purchase; securetransparency and reliability of corporate
information, improve corporate governance;
Increase entry by the private sector to publicservices.

•working; improve systems related toentry and residence of foreign
nationals; make donations to qualified
international schools tax deductible.

(4) Development of local and national framework• Support local governments' autonomous efforts
to attract FDI; utilize special zones forstructural reform system; utilize the Office ofthe trade and investment Ombudsman (OTO);
provide information and support procedures byJETRO.

(5) Disseminate information within Japan and abroad
Promotion by the leaders, diplomatic missions abroad, foreign press etc; PR on the attractiveness of Japan and success stories of foreign firms
in Japan, and the "Program for the Promotion of Foreign Direct Investment in Japan"

Similarly, the United States with its open economy has traditionally taken steps to welcome allinvestment. For both nations, FDI remains a key to promoting economic growth.

Exploring Further Policy Options
Building on progress made in the past, the U.S. and Japan want to continue to improve theirenvironments for foreign direct investment. The Investment Initiative provides a forum in which the U.S. andJapanese Governments discuss how to improve the investment climate.

Topics on investment in Japanraised by the U.S. Government

Topics on investment in theU.S. raised by the Japanese Government• Remove restrictions on foreign companies' use ofmergers and acquisitions tools.
• Promote foreign investments in the education andmedical services sector.
• Continue progress in improving accounting
standards in Japan and in making due diligenceeasier for foreign investors.
• Enhance Japanese perception of FDI.
• Increase the pool of assets available for purchase.
• Increase land liquidity and promote transparent
pricing.
• Ensure that defined contribution pension plans arewidely used and provide clear guidelines fordismissal of workers.
• Increase the number of skilled attorneys andaccountants.

••
•
•
•
•
•
•

Examine how implementation of the Sarbanes-Oxley
Act can take account of Japanese corporate
governance and auditor systems.
Improve timeliness of visa decisions for foreign
investors and employees.
Improve procedures to take out driver’s licenses for
non-working visa holders.
Ensure that new security rules on cargo manifests do
not impede investment.
Resolve issues arising from the West Coast port
lockout.
Examine ways to lower legal system costs.
Minimize any overly burdensome or duplicative
reporting and data requirements for foreigncompanies in the United States.
Ensure transparency and clarity in foreign investment
review by federal authorities of acquisitions, mergers,
or takeovers by foreign firms.

Success Stories
PFIZER PHARMACEUTICALS JAPANGENERAL ELECTRIC JAPANPfizer established operations in Japan 50 years ago, andhas been one of the fastest growing pharmaceuticalcompanies in Japan. With continuous, sustained
investment, it is expected to become Japan's prescription
pharmaceutical industry leader in 2003. Pfizer is also
an industry leader in Animal Health products, and amajor producer of over-the-counter Consumer HealthCare products in Japan. Pfizer now employs over 6,000
persons locally and almost all of these highly skilledjobs are filled by Japanese. About 700 are researchscientists, many working in Aichi prefecture wherePfizer just invested an additional US$83 million (10billion yen) in a new research building. The Pfizer site
in Aichi prefecture also has a large high-tech
manufacturing and packaging facility. Pfizer has also
been investing heavily in development of its people inJapan and has one of the industry’s biggest and mostsophisticated training and educational facilities centeredin Ota-ku, Tokyo. In spite of Japan's economic
difficulties and a drug market which has been stagnant
for the past decade, Japan remains the world’s second
biggest single-country pharmaceutical market after theU.S., and has an excellent science base. Pfizer iscommitted to continuing its investment and making agrowing contribution to the Japanese economy. Based on

GE has been in Japan for more than 100 years, supplying
power generation equipment since the Meiji era. In fact,
GE’s founder Thomas Edison sourced the filament for oneof his first light bulbs from a bamboo forest near Kyoto.
GE now has over $30 billion invested in Japan and intends
to expand its businesses to fully serve its customers'
product, service and technology needs. GE’s history is
grounded on solid partnerships with some of Japan's bestcompanies, including Hitachi, Toshiba, Yokogawa, Mitsui,Nikkei, Fanuc, ANA, JAL, and IHI. Since 1995 GE’s
workforce has grown from 3,000 to 14,000+ Japaneseemployees.

a presentation by the company at an Investment Initiative
seminar

GE has made significant investments in commercial
leasing, life insurance, real estate, auto leasing, consumer
financing and restructuring non-performing loans--creating
a win/win for GE and Japan. These businesses havecreated new jobs, expanded Japan's GDP and tax base, andintroduced new global technologies, capabilities and bestpractices. A great example of a win/win business model is
our joint venture with Nissen, a leading mail-order andcatalog sales firm. GE-Nissen has benefited from thecomplementary skills of both parents and grown 40+%
annually, such that the value of each partner's fraction
alone is worth significantly more than the original
platform--clearly a win for everyone.Based on apresentation by the company at an Investment Initiative

TOYOTA MOTOR CORPORATION
Toyota Motor Corporation has expanded local production in the U.S. since starting production in 1986 at New United
Motor Manufacturing (NUMMI) in California, a Toyota/General Motors joint venture. As a result of the expansion, local
production reached 990,000 units, and North America-made vehicles accounted for 59.2% of their U.S. sales in 2002. It
contributed to the U.S. economy and employment, as well as to improvement of production efficiency in the U.S.
automobile industry through introduction of the Toyota production system, such as the concept of “Kaizen.” Theircumulative U.S. investment has reached $12 billion and they directly employ 30,000 workers.
Moreover, in February 2003 they announced a plan to construct a fourth U.S. vehicle assembly plant (for pickup trucks)
in San Antonio, Texas by 2006. After beginning operation of the plant in 2006, their production capacity in the U.S. willreach 1.35 million units, their cumulative U.S. investment will become $13 billion, and they will employ 32,000 workers.
In addition to the fact that Texas is the top U.S. truck market, an enthusiastic welcome from state and local governments
contributed to the decision to construct of the plant in Texas. The state and local governments coordinated the initiative
to assemble a package of state and local financial incentives to attract the plant. The Governor also publicly pledged toseek a budget for rail construction for the plant. Based on press releases and a presentation by the company at a Working
Group Meeting on Nov. 2002.

For more information on the Investment Initiative and to view the complete 2003
Joint Investment Initiative Report, please look at usembassy.state.gov/tokyo or
www.meti.go.jp. You may also wish to contact:

JETRO, METI, Department of State