Japan has announced plans to increase its target for incoming foreign direct investment (FDI) to ¥120 trillion (about $840 billion) by 2030. This is a 20% rise from the previous goal of ¥100 trillion.
The government also set a longer-term target of ¥150 trillion in FDI for the early 2030s. The updated goals will be included in Japan’s new fiscal and economic policy guidelines, expected later this month.
The move reflects Japan’s effort to boost its economy by attracting more overseas capital. The country faces challenges such as shrinking regional industries and labor shortages.
These issues have slowed economic growth, causing Japan to fall behind other major economies. In 2023, Germany overtook Japan as the world’s third-largest economy, and India is expected to surpass Japan soon.
As of 2024, Japan’s total foreign direct investment reached ¥53.3 trillion, more than double the amount from ten years ago. This growth was helped by large projects like Taiwan Semiconductor Manufacturing’s plant in Kumamoto and Micron Technology’s expansion in Hiroshima.
However, FDI still makes up only 5.89% of Japan’s GDP, one of the lowest rates worldwide. Factors such as strict labor laws and concerns about corporate governance have limited foreign investment.
The government plans to review tax policies and laws to make Japan more attractive to foreign investors. It will also promote the use of unused land and improve infrastructure at potential investment sites.
Support will focus on key industries like artificial intelligence, semiconductors, and data centers. Additionally, efforts will increase to connect Japanese companies with international investors and startups.
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