JETRO Invest Japan Report 2024

FDI stock in Japan exceeds 50 trillion yen for the first time

JETRO has compiled a comprehensive report on foreign direct investment (FDI) in Japan, JETRO Invest Japan Report 2024, with the aim of providing information for foreign and foreign-affiliated companies considering doing business in Japan, as well as reference material to assist foreign companies in their investments in Japan. The key points of the report are as follows.

1. FDI stock in Japan exceeded 50 trillion yen

• The stock of inward FDI in Japan at the end of 2023 increased by 9.3% to 50.5 trillion yen (350.6 billion US dollars), equivalent to about 8.5% of Japan’s GDP.

• By region, investments from the United States (up 23.2% from the previous year) and Taiwan (up 21.1%) increased notably, due to large-scale investment projects in Japan. Examples include the construction of a second plant in Kumamoto Prefecture by Taiwan Semiconductor Manufacturing Company (TSMC), a major Taiwanese semiconductor manufacturer, and the introduction of the latest technology into its plant in Hiroshima by Micron Technology, Inc, a major US semiconductor company.

2. Japan's greenfield investment receipts more than tripled from the previous year

• Greenfield investments increased globally by 5.4% to 1,380.4 billion US dollars. They declined in developed countries and regions, while those in emerging regions were solid, especially in Asia. Japan saw a remarkable increase, more than tripling from the previous year. It ranked 17th in the world, at 30.8 billion US dollars.

• In addition to the aforementioned large-scale semiconductor projects, greenfield projects in Japan included some investments by Singaporean and US companies related to the construction of data centers.

• Among the major inbound M&A deals, value of transactions were large in the logistics, healthcare and real estate sectors. There were cases of companies executing management buyouts (MBOs), with the support of foreign investment funds, to turn around their operations.

  
  

3. The Japanese government has set a target of 100 trillion yen in FDI stock by 2030 and set out priority programs and tax reforms

• The Council for Promotion of Foreign Direct Investment in Japan discussed in May priority issues to be addressed in the future and how to respond to them, and developed the Priority Program for Attracting Foreign Direct Investment. The program includes 10 policy measures based on 4 pillars:

  1. expanding investment opportunities in Japan,

  2. securing highly skilled human resources in Asia and other regions,

  3. promoting collaboration between domestic and foreign companies, and

  4. improving business and living environments.

• As part of the fiscal 2024 tax reforms, the government decided to establish

  (1) a tax system to promote domestic production in strategic sectors and

  (2) a tax system for innovation centers (innovation box tax system) to promote domestic investment.

  For (1), electric vehicles, semiconductors, etc. are designated as strategic sectors, and tax credits are provided according to production and sales volumes.

  For (2), a 30% income deduction is provided for income derived from intellectual property rights originating in Japan.

• Building on these and other measures, the Japanese government has set a target of 100 trillion yen in FDI stock by 2030.

For More Details:

Taniguchi (Ms.), Miyazaki (Mr.)

Strategic Planning Division, Innovation Department, JETRO

Tel: +81-3-3582-5312 E-mail: iva-research@jetro.go.jp

source: JETRO Announcements