JETRO Invest Japan Report 2017 (Summary) 1. Solid Growth in Japan’s Inward FDI

End of 2016 sees new record for Japan’s inward FDI stock at 27.8 trillion yen

  • Japan’s inward FDI stock at the end of 2016 was 27.8 trillion yen (a growth of 3.07 trillion yen from the FDI stock at the end of 2015) and reached a record high for the third consecutive year.
  • The ratio against its nominal GDP was 5.2% in 2016, exceeding the 5% mark for the first time.
  • The preliminary estimate of the FDI stock at the end of June 2017 is 28.8 trillion yen (announced by MOF in Sep. 2017).

The stock of inward FDI and its portion in the nominal GDP (based on BPM6)

This is a chart showing the stock of inward FDI and its share of the nominal GDP. It covers data from 2000 to preliminary estimates at the end of June 2017. At the end of 2016, Japan’s inward FDI stock was 27.8 trillion yen, and reached a record high for the third consecutive year. The ratio of FDI in Japan to its nominal GDP was 5.2%. The preliminary estimate of the FDI stock at the end of June 2017 is 28.8 trillion yen.

[Source] "International Investment Position of Japan" (Ministry of Finance), "National Accounts of Japan" (Japan Cabinet Office)

Rapid increase in Asia’s share of inward FDI

  • By region, Europe has the largest direct investment stock in Japan at 13.6 trillion yen (48.7%) followed by North America (7.2 trillion yen, 25.9%) and Asia (5.0 trillion yen, 18.0%).
  • Inward FDI stock from Asia, the fastest growing investor region, has increased to 10 times above 2000 levels.

Share of inward FDI stock in Japan by region (as of the end of 2016)

Europe has the largest share at 48.7%, followed by North America at 25.9%, Asia at 18.0%, and all other regions at 7.4%.

[Source] “International Investment Position of Japan” (Ministry of Finance)

Inward FDI stock in Japan by country and region (as of the end of 2016) TOP 10

Rank Country/region Stock (billion yen) Ratio (%)
1 US 7,010 25.2
2 Netherlands 3,800 13.6
3 France 3,351 12.0
4 UK 2,262 8.1
5 Singapore 2,210 7.9
6 Switzerland 1,294 4.6
7 Cayman Islands 1,199 4.3
8 Hong Kong 1,099 3.9
9 Luxembourg 868 3.1
10 Germany 850 3.1

[Source]“International Investment Position of Japan” (Ministry of Finance)

Changes in inward FDI stock in Japan by region (growth ratio with the stock for year 2000 set to 100)

The ratio in 2007 was: 272 for North America, 238 for Europe, and 216 for Asia. The ratio in 2016 was: 971 for Asia, 442 for Europe, and 363 for North America. Countries in Asia have stepped up their presence.

[Note] The stocks for 2014 and after are calculated based on BPM6. The stocks before 2013 were recalculated from being BPM5-based to BPM6-based by JETRO.
[Source] “International Investment Position of Japan” (Ministry of Finance)

The net inflow of Japan’s inward FDI in 2016 marked 3.8 trillion yen, a record high

  • The net inflow of Japan’s inward FDI in 2016 marked 3.8 trillion yen (about six times that of the previous year), a record high since 1996 when comparisons could be made.
  • By region, the flow was 2.0 trillion yen from Europe, 903.7 billion yen from Asia and 629.8 billion yen from North America. Inflow exceeded outflow for all three regions.
  • The net inflow of inward FDI in Japan in January to September term of 2017 (provisional) was down from a year earlier but maintained a positive inflow of 1.24 trillion yen.

Changes in the flow (net) of inward FDI into Japan by country/region(Billion yen) (-: no data is available)

Country/region 2014 2015 2016 2017 Jan-Sep
Provisional Year-on-year growth（%）
Asia 678.2 673.7 903.7 524.7 -39.9
China 80.2 77.8 -15.1 64.7 34.5
Hong Kong 227.9 117.8 145.8 -35.4 -
Taiwan 126.4 87.6 258.9 56.5 -77.2
Korea 69.9 114.0 61.2 71.3 55.0
ASEAN 173.6 274.8 453.9 367.3 -9.2
Singapore 144.0 222.9 383.0 389.5 23.4
North America 758.6 629.7 629.8 440.1 -18.0
US 757.6 631.2 632.3 450.0 -16.1
Latin America 72.9 -248.4 180.8 159.4 6.8
Oceania 61.8 -75.9 90.8 -2.0 -
Europe 440.9 -339.0 2,012.7 111.1 -92.9
EU 375.8 -314.5 1,896.3 57.9 -96.1
World 2,074.5 667.5 3,830.7 1,237.0 -61.4

[Source] "Balance of Payments" (Ministry of Finance)

Changes in the quarterly flow (net) of inward FDI into Japan

The total of flows was 1.05 trillion yen in 2013, 2.07 trillion yen in 2014, 0.67 trillion yen in 2015, and 3.83 trillion yen in 2016. The total flow from the first quarter to the third quarter of 2017 is 1.24 trillion yen.

[Note] Q1 (Jan. - Mar.), Q2 (Apr. - Jun.), Q3 (Jul. - Sep.), Q4 (Oct. - Dec.)
[Source] "Balance of Payments" (Ministry of Finance)

Acquisition of the management rights of Kansai International Airport and Osaka International Airport was the largest M&A in Japan

  • Major inward M&A deals in 2016 include the acquisition of management rights of the Kansai International Airport and Osaka International Airport by a consortium led by VINCI Airports of France and ORIX (2.2 trillion yen), and the acquisition of Sharp by Hon Hai Precision Industry of Taiwan.
  • In addition, Chinese home appliance manufacturer Midea Group acquired a share of Toshiba Lifestyle, a company manufacturing and selling home appliances under the umbrella of Toshiba. There were also large acquisition deals by European pharmaceutical companies.

Major inward M&A deals in Japan (2016 to the first half of 2017)(-: no data is available)

Date effective Target Industry Acquirer Parent country/region Industry Value (Billion yen)
2016 Apr. New Kansai Intl-Op Concession Transportation & infrastructure An SPV formed by ORIX-VINCI Airports consortium - Transportation & infrastructure 2205.0
2016 Aug. Sharp Electronics Hon Hai Precision Industry Taiwan Electronics 388.8
2016 Feb. One M Logistics 2 Real Estate LaSalle LOGIPORT REIT US Real estate investment trust 161.4
2016 Apr. Astellas Pharma-Dermatology Pharmaceuticals LEO Pharma Denmark Pharmaceutical 89.1 (675 million euros)
2016 May Takeda Pharm-Respiratory Pharmaceuticals AstraZeneca UK Pharmaceutical 69.9 (575 million USD)
2016 Jun. Toshiba Lifestyle Products & Services Consumer electronics Midea International  China Consumer electronics 51.4
2017 May Calsonic Kansei Autoparts Kohlberg Kravis Roberts (KKR) US Investment firm 498.2
2017 Apr. USJ Leisure Comcast NBC Universal US Media 254.8
2017 Mar. Accordia Golf Leisure MBK Partners Korea Investment firm 149.0
2017 Jul. Hitachi Koki Machinery Kohlberg Kravis Roberts (KKR) US Investment firm 79.3

[Note] (1) As of September 2017. (2) Ranking according to single transaction amount. (3) “Acquirer” refers to the final acquirer (including corporate group)
[Source] Thomson Reuters

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