WHY JAPAN? 5 Reasons to Invest in JAPAN

Reason 1: An Ever-growing Economy

Japan's investment environment is improving due to government efforts.
The Japanese economy is growing.

Japanese economy steadily recovering from deflation

Improving GDP growth rate

Before Abenomics FY2011, FY2012 After Abenomics from FY2013 to FY2017 FY2011 (Great East Japan Earthquake) FY2014 (Hike of consumption tax to 8%) Nominal growth rate, FY2011‐1.1%, FY 2012-0.2%, FY 2013-2.6%, FY 2014-2.1%, FY 2015-2.8%, FY 2016 Estimation-1.5%, FY 2017 Reference estimation-2.5 Real growth rate, FY 2011-0.5%, FY 2012-0.9%, FY 2013-2.6%, FY 2014‐0.4%, FY 2015-1.3%, FY 2016 Estimation-1.3%, FY 2017 Reference estimation-1.5%.

Source: Fiscal 2017 Economic Outlook and Basic Stance for Economic and Fiscal Management, Cabinet Office website

Business performance showing significant improvement

Corporate ordinary profits (all industries)

FY2011 45.3 trillion yen FY2012 48.5 trillion yen FY2013 59.6 trillion yen FY2014 64.6 trillion yen FY2015 68.2 trillion yen From FY2012 to FY2015 20 trillion yen increase

Source: Created from "Financial Statements Statistics of Corporations by Industry, Quarterly," Policy Research Institute, Ministry of Finance of Japan

Unemployment rate and jobs-to-applicants ratio

Unemployment rate, FY 2011-4.58%, FY 2012-4.35%, FY 2013-4.03%, FY 2014-3.59%, FY 2015-3.38%, FY 2016-3.14%. jobs-to-applicants ratio, FY 2011-0.65%, FY 2012-0.80%, FY 2013-0.93%, FY 2014-1.09%, FY 2015-1.20%, FY 2016-1.36%.

Source: Created from "Labor force survey," Ministry of internal Affairs and Communications; and "Statistics on Employment Referrals for General Workers," Ministry of Health Labor and Welfare

Effective corporate tax rate declining

Effective corporate tax rate reduced to 20% level

FY2014-34.62%, FY2015-32.11%, FY2016-29.97%, FY2018-29.74%. US (California) 40.75% France 33.33% Germany 29.66%

Note: Tax rates as of April 2016
Source: Created from "FY2016 Tax Reform (Main Points) (December 2015),"Ministry of Finance and other information on the website

Corporate governance enhanced

“Earning power” of companies increasing through corporate governance reform

  • "Japanese Stewardship Code" introduced
    • Accepted by 201 institutional investors since February 2014
  • "Corporate Governance Code" introduced
    • Applied to more than 2000 companies on June 1, 2015

Deregulation/structural reform

Progress in reform of bedrock regulations is attracting new investment into Japan.

Reform of fundamental regulations in the sectors of agriculture, medical care and energy is bringing new entries into the Japanese market.

Healthcare system

  • Speedy and efficient approval review of advanced medical products
    (regenerative medicine, medical devices)
  • Promoting practical use of regenerative medicine for medical care

Energy market

  • Implementing a drastic reform of electric power and gas system for the first time in 60 years
    • Full liberalization of retail market of electricity (April 2016)
    • Full liberalization of retail market of gas (April 2017)
    Source: Created from "Abenomics is progressing!, April 2016," Cabinet Office

Promotion of inward FDI

Government target: Increase Japan’s inward investment stock to 35 trillion yen by 2020.

The stock of Japan's inward FDI 2000-6.1 Trillion yen, 2001-6.9 Trillion yen, 2002-9.9 Trillion yen, 2003-10.3 Trillion yen, 2004-10.6 Trillion yen, 2005-12.3 Trillion yen, 2006-13.4 Trillion yen, 2007-15.7 Trillion yen, 2008-19.4 Trillion yen, 2009-19.5 Trillion yen, 2010-18.7 Trillion yen, 2011-18.8 Trillion yen, 2012-19.2 Trillion yen, 2013-19.5 Trillion yen, 2014-23.7 Trillion yen, 2015-24.3 Trillion yen, End of September 2016-27.2 Trillion yen, preliminary estimate 2020 35.0 Trillion yen (Target)

Source: Created from "Balance of Payments," Ministry of Finance

Five Promises for Attracting Foreign Businesses to Japan (March 2015)

Improving business and living environment for foreign companies and expats

  1. Removing language barriers
    (Display of information in foreign languages at shops and public spaces)
  2. Improvement of Internet access (Installment of free public wireless LAN [Wi-Fi])
  3. Acceptance of business jets at local airports
  4. Enhancement of educational environment for expatriate children (international schools)
  5. Strengthening consultation services to support foreign businesses
    (Investment Advisor Assignment System)

Government actively promoting inward FDI

Designation of the National Strategic Special Zones

To promote a wide range of international business and leading-edge industries, 12 National Strategic Special Zones have been designated to bring significant deregulation and reform.

Simplifying regulations and administrative procedures

  • Fundamentally simplifying regulations and administrative procedures associated with FDI in Japan.
  • The "Tokyo One-Stop Business Establishment Center" provides one-stop services for necessary procedures for starting up in Tokyo. (March 2015)

Attracting global talent

  • The period of residence required for Highly Skilled Professionals to apply for a permanent residence
    permit will be significantly shortened from the current five years. (“The Japanese Green Card for Highly Skilled Foreign Professionals": One of the world’s most quickly obtainable green cards)
  • An online application system related to status of residence is scheduled to begin in FY2018
    Source: Created from Cabinet office website page "Invest Japan"

Attracting visitors to Japan

Business expansion in area related to inbound tourism

  • Relaxation of visa requirements (Starting from July 2013)
  • Expansion of exemption of consumption tax for foreign tourists to cover consumables (May 2016)
  • 2020 Tokyo Olympic & Paralympic Games
'Number of international visitors to Japan and consumption created 'Target: 40 million visitors in 2020, 8 trillion yen in resulting consumption Number of international visitors to Japan, 2011-622 million people, 2012-836 million people, 2013-1,036 million people, 2014-1,341 million people, 2015-1,974 million people, 2016-2,404 million people Record high, 2020-4,000 million people (Target) Value of consumption, 2011-0.81 trillion yen, 2012-1.08 trillion yen, 2013-1.42 trillion yen, 2014-2.03 trillion yen, 2015-3.48 trillion yen, 2016-3.75 trillion yen.

Source: Created by JETRO from Japan Tourism Agency "Consumption Trend Survey for Foreigners Visiting Japan"

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