Japan will step up efforts to attract inward FDI

Significance

Overseas investors' interest in Japan is being driven by global supply chain realignment and falling production costs due to yen depreciation. This promises to invigorate domestic industries, especially high-tech sectors, and speed up technological innovation in an economy struggling with shrinking population and sluggish consumption.

Impacts

• Although national security-related FDI regulations will tighten, foreign firms will spur economic growth and technological innovation.
• Japan’s role in global supply chains will increase, with Japanese suppliers of tech products increasingly substituting Chinese counterparts.
• Japan will revive its standing as a leading chipmaking nation, raising competition between Japanese and South Korean manufacturers.
• Large-scale FDI projects will support Japan’s struggling regional economies.
• Japan will vie for FDI with other countries, with China a notable rival for investment in high-tech sectors.