JETRO Invest Japan Report 2022
Chapter1. FDI Trends in the World and Japan Section4. Trends in Inward FDI to Japan by Industry

1. Flow

Breaking down FDI flow to Japan in 2021 by industry based on the directional principle, FDI flow to Japan increased 136.8% year-on-year to 2.7 trillion yen, surpassing the record high marked in 2016. The manufacturing industry grew significantly to 1.4 trillion yen (50.1% of the total), while the non-manufacturing industry accounted for 1.3 trillion yen (49.9%), with an almost even split between the two sectors (Chart 1-8). By industry in detail, chemicals and pharmaceuticals increased significantly from the previous year to 1.5 trillion yen, followed by finance and insurance at 0.9 trillion yen, up 25.1% (Chart 1-9). In terms of investment in the chemicals and pharmaceuticals industry by country and region, Hong Kong marked the largest flow accounting for more than 70% of the total in the industry, at 1.1 trillion yen, a 3,642.9% jump from the previous year. In this industry, investment from Switzerland was also robust and rose 24.2% to 148.6 billion yen. In the manufacturing industry, electric machinery performed well, rose 49.1% year-on-year to 200 billion yen, but transportation equipment turned negative at -300 billion yen.

Chart 1-9: FDI to Japan in 2021: Top 10 sectors
Ranking	Sector	2021	Growth rate (YoY)
1	Chemicals and pharmaceuticals	14,713	987.7
2	Finance and insurance	9,297	25.1
3	Communications	4,246	2,981.5
4	Electric machinery	2,350	49.1
5	Service	613	-30.1
6	Transportation	487	130.6
7	General machinery	137	-34.7
8	Iron, non-ferrous, and metals	102	250.0
9	Construction	98	—
10	Lumber and pulp	88	860.4
—	Wholesale and retail	-2,403	—
—	Transportation equipment	-3,293	—

Note: (1) Directional principle. (2) Negative amount indicates net withdrawal.
Source: "Balance of Payments" (MoF, BoJ)

2. Stock

At the end of 2021, the FDI stock in Japan by industry (directional principle) was 27.2 trillion yen, up 4.8% from the previous year. The manufacturing industry accounted for 34.4%, while the non-manufacturing industry accounted for 65.6% (Chart 1-10). By sectors, finance and insurance grew by 10.4% from the previous year to 11.0 trillion yen (40.5% of the total), which was the largest (Chart1-11). Chemicals and pharmaceuticals followed this at 3.3 trillion yen (12.3% of the total), up 77.8% from the previous year, which was the highest growth rate. Meanwhile, transportation equipment saw a double-digit decrease, falling 13.2% from the previous year to 2.8 trillion yen (10.4% of the total). Electric machinery also declined to about 60% of the prior year.

Chart1-10: FDI Stock in Japan by Industry

Chart 1-11: FDI Stock in Japan: Top 10 sectors (at the end of 2021)
Rank	Sector	Stock	Share
1	Finance and insurance	110,072	40.5
2	Chemicals and pharmaceuticals	33,459	12.3
3	Transportation equipment	28,327	10.4
4	Communications	23,262	8.6
5	Electric machinery	15,563	5.7
6	Services	13,957	5.1
7	General machinery	5,971	2.2
8	Transportation	4,976	1.8
9	Real estate	4,569	1.7
10	Glass and ceramics	4,433	1.6
—	Others	26,996	9.9
—	Total	271,585	100

Source: "International Investment Position of Japan" (MoF BoJ)

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