JETRO Invest Japan Report 2024
Chapter2. Trends in Inward FDI to Japan Section3. Trends in Inward FDI to Japan by Industry

1. Flow

Large decline in non-manufacturing sector, especially in communications and transportation

The overall amount of inward FDI to Japan in 2023 (directional principle) was 3.0 trillion yen (down 33.0% from the previous year). By major industry sector, the manufacturing sector accounted for 1.6 trillion yen (down 2.0% from the previous year), while the non-manufacturing sector accounted for 1.4 trillion yen (down 50.4%), indicating a large decrease in the non-manufacturing sector. Looking at the decline in investment in the non-manufacturing sector at the industry level, the main factors for the decline are decreases of approximately 500 billion yen in the transportation industry (which was 700.4 billion yen in the previous year), approximately 460 billion yen in the communications industry (503.3 billion yen in the previous year), and approximately 400 billion yen in the finance and insurance industry (1,157.4 billion yen in the previous year), respectively.

Looking at the FDI amounts of top 10 industries, although the decline was large, the finance and insurance industry remained first with 700 billion yen (down 35.3% from the previous year). Precision machinery showed a remarkable increase of about 60 times.

Created from the balance of Japan's external assets and liabilities held by the Ministry of Finance and the Bank of Japan. Because amounts are recorded based on the parent-child relationship principle for industry, the amounts differ from country/region statistics, which are recorded based on the asset-liability principle.In 2023, the amount of inward direct investment in Japan on a flow basis will total 3.0 trillion yen, down 33.0% from the previous year, of which 1.4 trillion yen (down 50.4% from the previous year) in the non-manufacturing industry and 1.6 trillion yen (down 2.0%). in the manufacturing industry. This resulted in a significant decline in non-manufacturing industries. — Chart 2-7: Inward FDI amounts to Japan in 2023 (flow, by industry sector)

Note:

This is based on the directional principle and different from that of the statistics by country/region (asset and liability principle).
Source:

Based on "Balance of Payments" by MOF and BOJ

Chart 2-8: Inward FDI amounts to Japan in 2023 (top 10 industries) (100 million yen, %)
Ranking	Sector	2023	2023 Growth rate (YoY)	Share
1	Finance and insurance	7,493	-35.3	24.9
2	Electric machinery	4,935	26.7	16.4
3	Chemicals and pharmaceuticals	4,933	10.3	16.4
4	Wholesale and retail	4,394	287.0	14.6
5	Transportation equipment	2,560	-20.4	8.5
6	Precision machinery	2,427	5,542.8	8.1
7	Transportation	1,975	-71.8	6.6
8	General machinery	445	-51.4	1.5
9	Communications	426	-91.5	1.4
10	Real estate	295	*	1.0
—	Mining	-108	—	—
—	Construction	-160	—	—
—	Total	30,112	-33.0	—

Note:

Directional principle. Some industries are net withdrawal.
The marks of * in the chart show that the investment in 2022 is negative due to net withdrawal and therefore growth rate is not applicable.
Source:

Based on "Balance of Payments" by MOF and BOJ

2. Stock

Finance and insurance continues to be the largest industry, accounting for approximately 40% of the total

The total FDI stock in Japan (directional principle) at the end of 2023 was 31.7 trillion yen (up 5.3% from the previous year), and by major industry sector, the manufacturing sector accounted for 11.5 trillion yen (up 12.0%, and 36.2% of the total), while the non-manufacturing sector accounted for 20.2 trillion yen (up 1.8%, and 63.8% of the total). Looking at detailed industries, the finance and insurance industry was the largest, down 2.3% from the previous year to 11.5 trillion yen (36.3% of the total), followed by chemicals and pharmaceuticals, up 8.7% to 3.19 trillion yen (10.1% ), and transportation, up 3.5% to 3.17 trillion yen (10.0%). The notable growth rate was in wholesale and retail, at 0.6 trillion yen (up 145.0% from the previous year), with the United States seeing the largest increase.

Created from the balance of Japan's external assets and liabilities held by the Ministry of Finance and the Bank of Japan. At the end of 2023, the balance of inward direct investment in Japan based on the parent-child relationship principle will total 31.7 trillion yen, an increase of 5.3% from the previous year, of which the non-manufacturing industry will be 20.2 trillion yen (1.8% increase from the previous year, 63.8% of the total), and the manufacturing industry will be 11.5 trillion yen (12.0% increase compared to the previous year, 36.2% of the total). — Chart 2-9: FDI Stock in Japan by industry (end of 2023)

Chart 2-10: FDI Stock in Japan: Top 10 Industries (end of 2023) (100 million yen, %)
Ranking	Sector	Stock	Growth rate (YoY)	Share
1	Finance and insurance	115,213	-2.3	36.3
2	Chemicals and pharmaceuticals	31,900	8.7	10.1
3	Transportation equipment	31,744	3.5	10.0
4	Electric machinery	26,992	19.4	8.5
5	Communications	25,398	12.7	8.0
6	Services	14,534	-10.3	4.6
7	Transportation	13,658	10.2	4.3
8	Wholesale and retail	6,098	145.0	1.9
9	General machinery	5,894	2.5	1.9
10	Real estate	5,571	10.3	1.8
―	Others	40,166	10.8	12.7
―	Total	317,168	5.3	100.0

Source:

Based on "International Investment Position of Japan" by MOF and BOJ

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