Foreign direct investment (FDI) to Japan - statistics & facts
Foreign direct investment (FDI) is a type of investment made with the aim of acquiring a lasting interest in a company located in another country. Contrary to Japan’s role as a leading FDI investor globally, inward FDI to the world’s fourth-largest economy has remained rather low.
Over the past decade, the government has created a range of incentives to attract investment from overseas and promote Japan as a destination for FDI. In 2021, it set the goal of reaching an inward FDI position of 80 trillion Japanese yen by 2023. This target was raised to 100 trillion yen by 2030 in 2023 as part of the Basic Policy on Economic and Fiscal Management and Reform.
According to the latest FDI Regulatory Restrictiveness Index in 2020, Japan can be considered as open towards FDI and ranks above the OECD average. Financial services, such as banking and insurance, were among the most open industries with regards to FDI regulations, while the air transportation industry was considered the most restricted industry. In recent years, Japan has followed the example of other economies in tightening the regulations on inward FDI in certain industries with an amended version of the Foreign Exchange and Foreign Trade Act.
Asia and North America were among the leading investing regions. Broken down by economy, the highest amounts of inward FDI flows came from the United States, Singapore, and the United Kingdom.
Development of inward FDI to Japan
In 2023, FDI inflows to Japan reached 21.4 billion U.S. dollars. Japan’s inward FDI position declined to 223.5 billion dollars, equal to around five percent of the GDP.Over the past decade, the government has created a range of incentives to attract investment from overseas and promote Japan as a destination for FDI. In 2021, it set the goal of reaching an inward FDI position of 80 trillion Japanese yen by 2023. This target was raised to 100 trillion yen by 2030 in 2023 as part of the Basic Policy on Economic and Fiscal Management and Reform.
According to the latest FDI Regulatory Restrictiveness Index in 2020, Japan can be considered as open towards FDI and ranks above the OECD average. Financial services, such as banking and insurance, were among the most open industries with regards to FDI regulations, while the air transportation industry was considered the most restricted industry. In recent years, Japan has followed the example of other economies in tightening the regulations on inward FDI in certain industries with an amended version of the Foreign Exchange and Foreign Trade Act.
Inward FDI by region and industry
Reinvestment of earnings represented the largest component of FDI flows to Japan in 2023, followed by equity. Inward FDI was evenly distributed among manufacturing and non-manufacturing industries, with the finance and insurance industry receiving the highest amount of FDI inflows. Electric machinery and chemicals and pharmaceuticals were other main target industries.Asia and North America were among the leading investing regions. Broken down by economy, the highest amounts of inward FDI flows came from the United States, Singapore, and the United Kingdom.
