JETRO Invest Japan Report 2023
Chapter2. Trends in Inward FDI in Japan Section 3. Trends in Inward FDI to Japan by Industry

1. Flow

According to the statistics for FDI in Japan by industry based on the directional principle in 2022, FDI flow to Japan in total increased by 14.8% from the previous year to 4.3 trillion yen and marked a record high. In the manufacturing sector, the growth slowed slightly to 1.6 trillion yen (down 8.7% from 2021, or 38.5% of the total) due to the reversal of the sharp increase in 2021 (up 597.4% from 2020), while the non-manufacturing sector showed remarkable growth, reaching 2.6 trillion yen (up 36.8% from 2021, or 61.5% of the total) (Chart 2-7). Looking at the detailed industry sectors, the finance and insurance sector was the largest at 1.2 trillion yen despite a 2.2% decrease from the previous year, followed by the transportation sector at 0.7 trillion yen, up 232.0% from the previous year. Also, in the electrical machinery and equipment sector (up 80.9% from the previous year), which ranked third, there was a project to establish a Japanese subsidiary of a Korean EV battery material manufacturer (Chart 2-8).

Compiled based on Japan's foreign asset and liability balances of the Ministry of Finance and the Bank of Japan. The amounts are recorded in accordance with the principle of parent-subsidiary relations. Therefore, the amounts differ from the statistics for each country and region accounted for under the asset and liability principle. In 2022, on a flow basis, FDI in Japan was 4.3 trillion yen, of which 2.6 trillion yen was 61.5% of the total in non-manufacturing, and 1.6 trillion yen in manufacturing, accounting for 38.5% of the total. — Chart 2-7: FDI to Japan in 2022(Flow, by industry)

Chart 2-8: FDI to Japan in 2022: Top 10 sectors (100 million Yen, %)
Ranking	Sector	2022	2022 Growth rate (YoY)
1	Finance and insurance	11,649	-2.2
2	Transportation	7,305	232.0
3	Electric machinery	5,049	80.9
4	Iron, non-ferrous, and metals	3,699	4,592.7
5	Chemicals and pharmaceuticals	3,533	-77.7
6	Communications	3,193	2.5
7	Transportation equipment	3,100	＊
8	Services	1,675	118.1
9	General machinery	734	＊
10	Wholesale and retail	624	＊
—	Construction	-52	—
—	Petroleum	-186	—

Note: (1) Directional principle (2) Negative amount indicates net withdrawal.
The marks of * in the chart show that the investment in 2021 is negative due to net withdrawal and therefore growth rate is not applicable.
Source: "Balance of Payments" (MOF, BOJ)

2. Stock

At the end of 2022, the FDI stock in Japan by industry (directional principle) was 29.9 trillion yen in total, up 8.6% from the previous year. Looking at the stock by Industry, the manufacturing industry accounted for 10.2 trillion yen (up 9.2% year-on-year, 34.1% of the total), while the non-manufacturing industry accounted for 19.7 trillion yen (up 8.2% year-on-year, 65.9% of the total) (Chart 2-9). As for the detailed industry sectors, the finance and insurance sector was the largest, increasing 7.0% from the previous year to 11.8 trillion yen (39.4% of the total). This was followed by transportation equipment at 3.1 trillion yen (10.3% of the total), up 8.5% from the previous year. Notable year-on-year growth rates were 358.2% for Iron, non-ferrous and metals, with a value of 0.5trillion yen and 1.2 trillion yen for transportation (up 148.7% year-on-year) (Chart 2-10). On the other hand, the wholesale trade/retail trade fell 76.3% year-on-year to 0.1 trillion yen (0.4% of the total).

Compiled based on Japan's foreign assets and liabilities balances of the Ministry of Finance and the Bank of Japan. At the end of 2022, in principle, the amount outstanding of FDI in Japan was 29.9 trillion yen, of which 19.7 trillion yen was accounted for 65.9% of the total in non-manufacturing, and 10.2 trillion yen was accounted for 34.1% of the total in manufacturing. — Chart 2-9: FDI Stock in Japan by Industry

Chart 2-10: FDI Stock in Japan: Top 10 sectors（at the end of 2022) (100 million yen, %)
Ranking	Sector	Stock	Growth rate (YoY）	Ratio
1	Finance and insurance	117,784	7.0	39.4
2	Transportation equipment	30,730	8.5	10.3
3	Chemicals and pharmaceuticals	29,020	-10.2	9.7
4	Communications	22,816	-2.7	7.6
5	Electric machinery	22,305	34.3	7.5
6	Services	16,366	17.0	5.5
7	Transportation	12,391	148.7	4.1
8	General machinery	5,849	-1.9	2.0
9	Real estate	4,752	4.0	1.6
10	Iron, non-ferrous and metals	4,623	358.2	1.5
—	Others	32,312	-5.3	10.8
—	Total	298,950	8.6	100.0

Source: "International Investment Position of Japan" (MOF, BOJ)

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