JETRO Invest Japan Report 2025
Chapter3. Initiatives to Expand FDI into Japan Entering a New Phase Section1. Relevant Policies of the Japanese Government

Amid growing uncertainty in the global economy, the public and private sectors in Japan are working together to address challenges toward ensuring sustained economic growth, even under the condition of declining population. At present, Japan's nominal GDP has exceeded 600 trillion yen, and wage increases have surpassed 5% for two consecutive years, indicating that a virtuous cycle in the economy has begun to take shape.

Against this backdrop, the Basic Policy on Economic and Fiscal Management and Reform 2025, commonly referred to as the Basic (Honebuto) Policy 2025 was approved by the Cabinet in June 2025. In this policy, the government sets out its aim to realize "a new Japan and an enjoyable Japan," where sustainable economic growth and the well-being of people's lives are promoted, enabling citizens to truly feel that "Tomorrow will be better than today" and foster a stronger sense of attachment to their local communities. At the same time, the policy calls for thorough preparations and responses to immediate risks, such as U.S. tariff measures and rising prices, as well as efforts to realize a growth-oriented economy driven by wage increases. To this end, it has identified four key policy initiatives: (1) Spreading and keeping wage increases above price hikes, (2) Promoting Regional Revitalization 2.0 and addressing regional social issues, (3) Increasing future wages and income through "Stimulating Japan's Investment Power" and "Promoting Japan as a Leading Asset Management Center," and (4) Ensuring the safety and security of the people.

Of these, item (2) outlines initiatives consisting of five pillars, including the Local Innovation and Creation Initiative, and states that they will be promoted as part of "the Reiwa Era remodeling of the Japanese archipelago." Item (3) reaffirms the continued promotion of GX (green transformation) and DX (digital transformation), the development of new frontiers, support for startups, incorporation of overseas vitality, and realization of Japan as a "Leading Asset Management Center." As one of the measures to attract overseas vitality, the government indicated its policy to raise the target for inward foreign direct investment (FDI) stock in Japan in 2030 from 100 trillion yen to 120 trillion yen, and further to aim for 150 trillion yen as early as possible in the first half of the 2030s (Chart 3-1).

In addition, the Basic Policy 2025 sets out measures aimed at realizing a sustainable economic and social system over the medium to long term. These include promoting the Economic and Fiscal Revitalization Plan; identifying key issues and policy directions for major fields such as social security, measures to address the declining birthrate, education reform, infrastructure development, and the strengthening of local fiscal foundations; and reviewing and revising public systems in line with rising prices.

To encourage inward foreign direct investment (FDI), the Government of Japan regularly convenes meetings such as the Council for the Promotion of Foreign Direct Investment in Japan with experts to discuss and propose necessary improvements to the business environment and policy measures.

In April 2023, the Council compiled 100 measures to promote inward FDI as part of the Action Plan for Attracting Human and Financial Resources from Overseas (hereinafter referred to as the "Action Plan"). And the Task Force for Attracting Human Resources and Capital from Overseas (hereinafter referred to as the "Task Force"), established to advance the Action Plan, has been following up on each measure, while also discussing issues that require accelerated and deepened efforts. In parallel, the Cabinet Office has conducted hearings with relevant organizations. Based on these discussions and findings, the Council compiled the Priority Program for Attracting Foreign Direct Investment (hereinafter referred to as the "Priority Program") in May 2024, which outlines the key issues requiring focus efforts—selected from the 100 measures of the Action Plan as well as additional challenges that had been identified—and specific policies in response to these issues.

As of the end of 2024, Japan's inward FDI stock reached 53.3 trillion yen, more than doubling over the decade from 23.7 trillion yen at the end of 2014. To further accelerate this momentum, the Task Force has engaged in ongoing discussions on policies to enhance and strengthen the measures, while conducting follow-up reviews of the items set out in the Priority Program (Chart 3-2).

Based on these discussions, the 13th Meeting of the Council for the Promotion of Foreign Direct Investment in Japan was convened in June 2025. At the meeting, the Government set targets to increase Japan's inward FDI stock to 120 trillion yen by 2030 and to 150 trillion yen at the earliest possible time in the early 2030s and announced the Program for Promotion of Foreign Direct Investment in Japan 2025 (hereinafter referred to as the "Promotion Program"), which consists of 5 pillars and 32 measures (Chart 3-3). The Promotion Program outlines priority issues to be addressed going forward, as well as specific measures to be taken, based on discussions held within the Task Force and the results of hearings conducted with relevant organizations, primarily by the Cabinet Office.

In addition, in April 2025, a group of like-minded Liberal Democratic Party (LDP) lawmakers launched the Parliamentary League for the Expansion of Investment in Japan. The group has been examining the current status of inward investment in Japan and related institutional challenges from multiple perspectives, with the aim of advancing policy recommendations. The league's recommendations are reflected in the Promotion Program.

Amid increasing complexity in the international situation and structural changes in socio-economic conditions, the security issues are expanding into the economic sphere. In the context of inward foreign direct investment (FDI) and similar activities, concerns related to economic security—such as the risk of technology and information leakage—have been growing. To respond to these developments, in April 2025, the Cabinet approved the "Cabinet Order Partially Amending the Cabinet Order on Inward Direct Investment" under the Foreign Exchange and Foreign Trade Act (FEFTA), introducing new criteria to the inward FDI screening system.