JETRO Invest Japan Report 2022


JETRO has compiled a comprehensive report on foreign direct investment (FDI) in Japan, “JETRO Invest Japan Report 2022,” 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 investment in Japan.The key points of the report are as follows.

1.In 2021, the amount of FDI flow to Japan decreased by 55.0% from the previous year to 3.0 trillion yen, while the stock increased 0.8% from the previous year to 40.5 trillion yen

  • FDI flow to Japan in 2021 was 3.0 trillion yen, down 55.0% from the previous year. By forms of capital, equity capital, which represents the trend of new investments and capital increases in Japan, increased 425.0% from the previous year to 2.6 trillion yen, a significant turnaround from 2020 and a record high. By region, Asia accounted for the largest amount at 2.2 trillion yen, up 98.5% from the previous year, followed by North America at 1.0 trillion yen, down 41.4% from the previous year. Europe saw a net withdrawal of 1.1 trillion yen.
  • The FDI stock in Japan at the end of 2021 was 40.5 trillion yen, up 0.8% from the previous year and marking a historical high. It stood at 7.5% of GDP. Investment from Asia expanded, surpassing that from North America for the first time.

2.More than half of foreign-affiliated companies plan to strengthen/expand their business in Japan.

  • According to the “Survey on Business Operations of Foreign-affiliated Companies in Japan” conducted by JETRO from September to October 2021, a majority (52.6%) of companies answered that they would “strengthen/expand” their future business development in Japan, reflecting solid intention for expansion. Regarding the most important factor to consider when strengthening existing sites or establishing a new site, the most common response overall was "potential to acquire new customers." In manufacturing, "low business costs“ was a significant factor.
  • Regarding notable government policy areas (multiple responses given), the "one-stop system and digitization of labor and tax-related procedures" was the most popular overall at 39.2%. "Promotion of digital transformation (DX)" was of interest in the service and other industries, and "policies for a carbon neutral society" in the manufacturing industry, both exceeding 40%.

3.Establishment of priority investment areas to activate New Form of Capitalism.

  • The Basic Policy on Economic and Fiscal Management and Reform 2022, by the Cabinet Decision on June 7, 2022, sets forth (1) Investment in and distribution to people, (2) Investment in science, technology and innovation, (3) Investment in startups, (4) Investment in green transformation (GX), and (5) Investment in digital transformation (DX) as priority investment areas to activate "New Form of Capitalism".
  • Vision for a Digital Garden City Nation aims to create a "society in which everyone can live conveniently and comfortably anywhere in Japan" by shifting from concentration in large cities to multipolar concentration in rural and regional areas, through digitalization. In June 2022, the Cabinet decision was made on " Basic Policy for the Vision for a Digital Garden City Nation," which serves as the basis for its realization.

This report is based on information as of June 2022

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