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Invest in Japan

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Goal of 'Doubling the Stock of Inward FDI' Japan Investment Council (JIC) ... Facilitate Ingenious Approaches at Regional Levels. 11 ... – PowerPoint PPT presentation

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Title: Invest in Japan


1
Invest in Japan
  • 29 September, 2005
  • Hiroshi Yoshikawa
  • (University of Tokyo)

2
INDEX
  • Current FDI into Japan
  • Goal of Doubling the Stock of Inward FDI
  • Japan Investment Council (JIC)
  • The Program for the Promotion of FDI into Japan
  • Why Japan?
  • Examples of Active Companies in Japan
  • Local governments Efforts

3
Current FDI into Japan
  • Stock of FDI into Japan 9.6 trillion yen (2003)
  • Ratio of FDI stock to nominal GDP 2.0 (2002)
  • Japans ratio of inward Foreign Direct Investment
    (FDI) stock to nominal GDP is by far at a lower
    level than those of US and European countries.
  • According to IMF statistics, the ratio in 2002
    was only 2.0 in Japan, while it was 19.2 in the
    US, 40.9 in the UK, and 25.7 in Germany.

4
(1) Stock of FDI into Japan(by regions, trillion
yen)
5
(2) Inward FDI in Major Countries(stock /
nominal GDP)
Source IMF "International Financial Statistics"
(2003) Note U.S., France and Australia Current
Price
by far the lowest level among industrialized
countries.
6
(3) The number of Foreign-capital companies in
Japan, sales, profit and employees (2001)
Foreign-capital companies
Manufacturing
Share
Share
Companies
1.94
1.97
546
261
Employees
4.71
5.78
514,124
291,268
Sales (billion yen)
5.95
10.28
35,079
25,240
profit (billion yen)
11.92
18,59
1,886
1,426
Source Trial calculation of the Cabinet Office
based on a report Results of the basic survey of
business structure and activity Note An object
is companies, which are 50 or more employees and
capital of 30 million yen or more, with business
establishment of Manufacturing, Mining and
Commerce.
7
(4) Increasing Foreign Shareholders
  • Foreign Shareholdership is rapidly getting to a
    higher level, where Japanese business
    corporations reduce their shares.

Foreign owned shares ratio (Market Value Sep.
2003)
Distribution of Shareholders (Market Value)
TOYOTA
18.2
HONDA
32.2
NISSAN Renault S.A.
63.9
MITSUBISHI DaimlerChrysler AG
42.3
MAZDA Ford Motor Co.
39.5
SUZUKI General Motors Corp.
43.7
Fuji (SUBARU) General Motors Corp.
37.6
Source 2003 Shareownership Survey (All domestic
stock exchanges(Tokyo, Osaka, Nagoya, Fukuoka and
Sapporo)in Japan) Notes 1. Survey has been
conducted on a "Unit-of-Share" basis since 1985
Survey. 2. The market value of
Financial Institutions excludes that of
Investment Trusts and Annuity Trusts.
ISUZU General Motors Corp.
17.6
8
Goal of Doubling the Stock of Inward FDI(Prime
Ministers initiative)
  • General Policy Speech by Prime Minister Junichiro
    Koizumi to the 156th Session of the Diet (January
    31, 2003)
  • Foreign direct investment in Japan will bring new
    technology and renovative management methods, and
    will also lead to greater employment
    opportunities. Rather than seeing foreign
    investment as a threat, we will take measures to
    present Japan as an attractive destination for
    foreign firms in the aim of doubling the
    cumulative amount of investment in five years.
  • 6.6 trillion yen 13.2 trillion yen (by
    the end of 2006)

9
Japan Investment Council (JIC)
  • On July 1994, the JIC was established as a
    ministerial-level council, chaired by Prime
    Minister.
  • View-point of promoting foreign direct investment
    into Japan.
  • The Expert Committee operates under the JIC.
  • On March 27, 2003, the JIC decided The Program
    for the Promotion of Foreign Direct Investment
    into Japan.
  • The Program asks for the implementation of 74
    measures under the five categories.

10
The Program for the Promotion of FDI into Japan
  • (1) Provide Information in Japan and Abroad
  • Communicating Japan's Appeal and Welcoming Stance
    to abroad
  • Enhancing recognition of FDIs importance inside
    of Japan
  • (2) Improve Corporate Business Environment
  • Environment to Facilitate Participation and
    Business Activity
  • (3) Review Administrative Procedures
  • Make Them Clearer, Simpler, Faster
  • (4) Create Favorable Employment and Living
    Environment
  • Ease Entry of Personnel and Provide More
    Comfortable Living Conditions for Foreigners
  • (5) Improve Local and National Structures and
    Systems
  • Facilitate Ingenious Approaches at Regional Levels

11
(1) Provide Information in Japan and Abroad
  • Overseas symposia and seminars are showing
    Japan's market environment, success cases, etc.
  • Through Domestic seminars, regional people come
    to understand that FDI is beneficial for both
    Japan and investing countries.
  • The Prime Minister welcomed inward FDI in a
    television spot commercial, broadcasted
    throughout America and Europe. DVD version in
    five languages produced and distributed.

12
(2) Improve in the Corporate Business Environment
  • Conclusion of the Japan-US Tax Treaty reduces tax
    burdens on Japanese and US companies.
  • Improve transparency through corporate
    information disclosure, and promote
    internationalization of accounting standards.
  • Expand opportunities for private-sector
    participation in public services and other such
    sectors by measures including amendment of the
    Local Autonomy Law (September 2003).

13
(3) Review Administrative Procedures
  • Service became significantly faster, and most
    investment-related inquiries are responded within
    three days.
  • More than 1,000 potential investor companies were
    uncovered in FY2003, largely by JETRO, and
    approximately 100 of them made a decision to
    invest (twice of the previous fiscal year).
  • Invest Japan established as unified contact
    point to provide foreign investors with
    comprehensive information and consultation on
    direct investment in Japan.

14
(4) Create Favorable Employment and Living
Environment
  • Extend the upper limit on period of stay from
    three to five years for qualified foreign
    researchers and other personnel by utilizing
    special zones for structural reform.
  • Japanese universities accept international school
    graduates under certain conditions.
  • Foreign students are allowed to extend their stay
    for a maximum 180 days following graduation in
    order to seek employment in Japan.
  • The Japan-US and Japan-Korean agreements on
    social security were signed. They will resolve
    the double payment of pension contributions.

15
(5) Improve Local and National Structures and
Systems
  • National government supports actively providing
    support to leading regions that enthusiastically
    promote inward FDI.
  • Investment environment is improved by using
    special zones for structural reform.
  • As on June 2004, 386 projects were authorized.
  • Study on nation-wide application of special
    deregulative measures in the zones.

16
Why Japan?
  • The world's second-largest market
  • Key market to succeed in Asia
  • Abundant highly skilled human resources
  • Innovative technologies
  • Efficient infrastructure
  • Reformed legal framework for investment
  • High performance of Foreign Companies in Japan
  • Lowered business costs
  • Abundant market opportunities
  • Living environment

17
(1) The world's second-largest market
  • Japanese GDP (value base) accounts for about one
    eighth (1/8) of the World GDP, and Japan
    positioned as the 2nd biggest GDP country after
    the United States.

Nominal GDP Ratio () by regions (2002)
Nominal GDP (million )
Country
Per Capital ()
United States
10,383.1
36,121
Japan
3,983.5
31,277
Germany
1,986.1
24,079
United Kingdom
1,563.1
26,401
France
1,431.2
23,374
China
1,236.7
955
1,186.1
20,441
Italy
Source Cabinet Office
18
- The adjoining major economic regions
  • Almost all the million cities are located within
    one-hour train ride (300km) from their
    neighboring major city.
  • It is almost the same as the distance from New
    York and Boston.
  • It is only 1 hour and a half by the superexpress
    Shinkansen.

Comparison of GDPs of major regions in Japan with
those of selected Asian nations
(2001) ltSourcegt Japanese figures Prefectural
Citizens' Economic Accounts, 2001 (Cabinet
Office) Asian nations figures Foreign Economic
Data (Cabinet Office)
19
(2) Key market to succeed in Asia
  • Japans economic power makes itself a hub for
    Asia, a center of trade, transport and markets.
    It is an ideal site for investment oriented to
    the entire Asian market.

Number of direct flights between Narita and major
cities in Asia roundtrips per week, as of March
2003, shortest required flight time in hours
denoted by h Source Prepared from information
on airport and airline websites.
20
(3) Abundant highly skilled human resources
  • Japans competitive advantages are supported by
    its highly-skilled workforce. Even among
    developed nations, Japan has the highest rate of
    advancement to higher education.

Advancement rate to institutions of higher
education Source International Comparison of
Educational Indicators (2004 edition), Ministry
of Education, Culture, Sports, Science and
Technology Notes Part-time in Japan is the
University of the Air and others. The rates of
France is an estimation value.
21
- Changing Lifetime Employment
  • Foreign companies have chances to hire competent
    Japanese business people. More and more Japanese
    are changing their job. So-called Lifetime
    Employment does not prevail any longer.

Number of job-searchers Source Ministry ob
Public Management, Home Affairs, Posts and
Telecomunications
22
(4) Innovative technologies
(thousands)
  • Japan is the second largest patent registration
    country in the world. Currently the legal
    framework protecting intellectual property rights
    is being further strengthened.

The Number of Patent Registrations According to
Nationality (2000) Source WIPO Statistics
23
(5) Efficient infrastructure
  • Japans high-speed telecommunications network
    reaches 10 million households, and offers a
    superb platform for cutting-edge
    information-based businesses and distribution
    systems.

International Comparison of Broadband Fees per
100 kbit/s (July 2003)
International Comparison of Total Broadband
Subscribers and Subscribers per 100 Inhabitants
(2002)
Broadband subscribers per 100 inhabitants
Source ITU Internet Reports 2003 Birth of
Broadband
Total Broadband Subscribers (million subscribers)
24
(6) Reformed legal framework for investment
  • Japan has been reforming domestic regulations and
    legal framework in various sectors, including
    telecommunications, to attract foreign business
    and FDI.

Number of primary international communications
licenses foreign companies.
  • February 1998
  • Abolition of foreign-capital prohibition.
  • Primary international communication license to
    foreign carriers, such as Worldcom and BT.
  • November 1998
  • Abolition of communications fees permission
    system.

25
- Special Zones for Structural Reform
  • Schools by Public companies
  • Special zones allow public companies to open
    colleges and professional graduate schools.
  • Farming by Business companies
  • Business companies are allowed to farm land by
    renting the land.
  • Management of Special Nurcing Home for the Aged
    by Corporation

26
(7) High performance of Foreign Companies in Japan
  • Foreign Companies in Japan enjoy much higher
    profits than Japanese companies.
  • Low profits in Japanese companies are not
    applicable to Foreign companies in Japan.

Profits / Sales (Part for Manufacturing) Source
Cabinet Office
27
(8) Lowered business costs
  • The costs of doing business in Japanland prices,
    office rents, and labor costs, among othershave
    dramatically decreased.

Published Land Prices (Sept. 1992 100) the
Metropolitan Areas Shown in Published Land Prices
in 2002
28
(9) Abundant market opportunities
  • Life Science
  • The Market size of medicine and medical device
    will be 8.4 trillion yen in 2010.
  • Expanding market of medicines and medical devices
    reprecting advanced biotechnology.
  • Increasing awareness of health care in the going
    society promotes consumption of healthy
    functional food.
  • Growing health information services and creation
    of high-income employment.

Percentage aged 65 or over () Source World
Population Prospects, 2002 (UN)
29
  • Information and Communications Technology (ICT)
  • ICT has been a leading and fast-growing industry.
    Its market is more them 10 of that of all
    industries.
  • Environment
  • The environment related industry is a
    highly-growing market, and it is estimated to be
    47.2 trillion yen (430 billion ) in 2010.

ICT market size and share of all industry in Japan
Environmental Services Industry market size in
Japan
Source WHITE PAPER Information and
Communications in Japan (2004)
Source Ministry of the Environment (May 2003)
30
(10) Living environment
  • Those moving to Japan will find that everything
    needed to make life satisfying is already in
    place.
  • Japan has a first-rate medical system that has
    begun accepting more foreign doctors.
  • International schools are widely available for
    children.
  • Foreign-language sources of information are easy
    to find.
  • Numerous amusement parks, other leisure
    facilities, and fascinating buildings. Japan is
    rich in culture and nature.
  • Expatriates stationed in Japan will find a
    comfortable, convenient and safe living
    environment, all in a vibrant cultural setting.

31
7. Invest Japan Window
  • What Is Invest Japan Window?
  • Unified contact point to foreign investors
    (located at each ministry and JETRO, etc.)
  • Established in May 2003 (Over 1,000 contacts in
    the first year)
  • (2) Windows Functions
  • Provide comprehensive information and
    consultation on FDI into Japan
  • Inquire ministries in charge from each window
    (one-stop window)
  • Answer in ten days (ave. 3 days)

32
  • Any inquiries and troubles
  • We are waiting for your
    contact!
  • Cabinet Office invest-japan_at_mfs.cao.go.jp
  • http//www5.cao.go.jp/acces
    s/english/jic_main_e.html
  • JETRO invest-japan_at_jetro.go.jp
  • http//www.jetro.go.jp/
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