Download Why Japan?

Invest in Japan
29 September, 2005
Hiroshi Yoshikawa
(University of Tokyo)
1
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 government’s Efforts
2
Current FDI into Japan
Stock of FDI into Japan: 9.6 trillion yen (2003)
Ratio of FDI stock to nominal GDP: 2.0% (2002)
Japan’s 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.
3
(1) Stock of FDI into Japan
(by regions, trillion yen)
(Unit: trillion yen)
13.2
14
Canada
Cayman Island (2001-)
Other Latin America
12
9.4
10
8
5.8
9.6
Netherlands
France
Germany
Other Western Europe
Others
6.6
Target
4.7
6
4
Asia
United States
3.0
2
0
1998
1999
2000 2001
2002
2003
2004 2005
2006
Regional Direct Investment Position and Regional Portfolio Investment Position (Disseminated by Ministry of Finance)
4
(2) Inward FDI in Major Countries
(stock / nominal GDP)
45%
50%
40.9%
38.3%
40%
France
33.0%
35%
40.9%
38.3%
40%
U.K.
30%
25.7%
25%
33.0%
30%
25.7%
U.S.
19.2%
20%
20%
10%
10%
2.0%
19.2%
Germany
15%
5%
Australia
0.7%
1.0%
1.1%
1.2%
Japan
2.0%
1999
2000
2001
2002
0%
0%
Japan
U.S.
U.K.
Germany France Australia
1998
Source: IMF "International Financial Statistics" (2003)
by far the lowest level among industrialized countries.
Note: U.S., France and Australia: Current Price
5
(3) The number of Foreign-capital
companies in Japan, sales, profit
and employees (2001)
Foreign-capital companies
Manufacturing
Share
Share
Companies
546
1.94%
261
1.97%
Employees
514,124
4.71%
291,268
5.78%
35,079
5.95%
25,240
10.28%
1,886
11.92%
1,426
18,59%
Sales
(billion yen)
profit
(billion yen)
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
6
establishment of Manufacturing, Mining and Commerce.
(4) Increasing Foreign Shareholders
Foreign Shareholdership is rapidly getting to a higher
level, where Japanese business corporations reduce their
shares.
Foreign – owned share’s ratio
(Market Value; Sep. 2003)
TOYOTA
18.2%
HONDA
32.2%
Renault S.A.
NISSAN
63.9%
DaimlerChrysler AG
MITSUBISHI
42.3%
MAZDA
Ford Motor Co.
39.5%
General Motors Corp.
SUZUKI
43.7%
General Motors Corp.
37.6%
Fuji (SUBARU)
ISUZU
General Motors Corp.
Distribution of Shareholders (Market Value)
Govt. & Local Govt.
100
LTCB, City & Regional Banks
Trust Banks
80
Other Fin. Institutions
Business Corps.
60
Securities Companies, Individuals
Foreigners (Cos. + Indiv.)
40
17.6%
20
0
18. 61 8. 818. 317. 721. 8
10. 151. 91 3. 414. 1
7.
7
8.
1
6.
0
6.
3
4. 2 4. 7
1989
1991
Source:
1993
1995
1997
1999
2001
2003
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.
7
Goal of “Doubling the Stock of
Inward FDI”
(Prime Minister’s 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)
8
Japan Investment Council (JIC)
On July 1994, the JIC was established as a ministeriallevel 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.
9
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 FDI’s 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
10
(1) Provide Information in Japan and
Abroad
The Prime Minister welcomed
inward FDI in a television spot
commercial, broadcasted
throughout America and Europe.
DVD version in five languages
produced and distributed.
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.
11
(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).
12
(3) Review Administrative Procedures
“Invest Japan” established as
unified contact point to provide
foreign investors with
comprehensive information and
consultation on direct
investment in Japan.
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).
13
(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.
14
(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.
15
Why Japan?
1. The world's second-largest market
2. Key market to succeed in Asia
3. Abundant highly skilled human resources
4.
5.
6.
7.
Innovative technologies
Efficient infrastructure
Reformed legal framework for investment
High performance of Foreign Companies in Japan
8. Lowered business costs
9. Abundant market opportunities
10. Living environment
16
(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)
Others
Country
Nominal GDP
(million $)
Per Capital ($)
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
Italy
1,186.1
20,441
Asia
Japan
12.5%
Europe
Italy
United Kingdom
France
Germany
United States
32.6%
Canada
Central South
America
North America
Source: Cabinet Office
17
- 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”. Rep. of Korea
Hiroshima
(Hiroshima Pref.)
Fukuoka, Kitakyusyu 900km
(Fukuoka Pref. and
Yamaguchi Pref)
Comparison of GDPs of major regions in
Japan with those of selected Asian
nations (2001)
<Source>
Japanese figures; Prefectural Citizens'
Economic Accounts, 2001 (Cabinet Office)
Asian nations figures; Foreign Economic
Data (Cabinet Office)
600km
427
billion
Kansai
Metropolis
Nagoya
553
1,271
404
billion
billion
billion
Osaka, Kyoto, Kobe
(Kansai region; Osaka Pref., Nagoya
Kyoto Pref. and Hyogo Pref.) (Nagoya region;
Aichi Pref. and
Shizuoka Pref.)
900km
Sapporo
(Hokkaido)
600km
300km
Sendai
(Miyagi Pref.)
Tokyo, Saitama, Kawasaki, Yokohama
(Metropolis; Tokyo, Saitama Pref.,
Chiba Pref. and Kanagawa Pref.)
China
1,191
billion
18
(2) Key market to succeed in Asia
Japan’s 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.
19
(3) Abundant highly skilled human
resources
Japan’s competitive
advantages are supported
by its highly-skilled
workforce. Even among
developed nations, Japan
has the highest rate of
advancement to higher
education.
Specialized traning College
80%
Part-time
Full-time
60%
23.1%
1.2%
12.7%
40%
49.8%
47.7%
41.0%
20%
33.2%
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.
0%
Japan United States France
(1999)
(2000)
(2003)
Germany
(2000)
20
- Changing “Lifetime Employment”
Foreign companies have
chances to hire competent
Japanese business people.
More and more Japanese
are changing their job. Socalled ”Lifetime
Employment” does not
prevail any longer.
(milion)
4
3
voluntary
non-voluntary
unemployment (after graduation)
Other
unknown
2
1
Number of job-searchers
Source; Ministry ob Public Management, Home Affairs, Posts and
Telecomunications
0
1986
1991
1996
2001
21
(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.
250
To Japan
To U.S.
200
To EPO
To Rep. of Korea
To China
150
To Oters
100
50
The Number of Patent Registrations According to
Nationality (2000)
Source; WIPO Statistics
0
From
Japan
From
U.S.
From
EPO
From
Rep. of
Korea
From
China
From
Others
22
(5) Efficient infrastructure
Japan’s high-speed telecommunications network reaches
10 million households, and offers a superb platform for
cutting-edge information-based businesses and
distribution systems.
4.42
4.0
15%
Hong Kong
Iceland
Sweden
5%
U.K.
Japan
1.0
Germany
0.0
5
10
15
20
Total Broadband Subscribers (million subscribers)
3.53
2.21
2.0
U.S.
0%
0
3.07
3.0
ar
k
Canada
Taiwan
Belgium
Netherlands
en
m
10%
International Comparison of Broadband Fees per 100
kbit/s (July 2003)
5.0
Rep. of Korea
20%
D
Broadband subscribers per 100 inhabitants
International Comparison of Total Broadband Subscribers
and Subscribers per 100 Inhabitants (2002)
25%
25
0.09
Japan
0.25
Rep. of Singapore China
U.S. Germany
Korea
Source: ITU Internet Reports 2003 “Birth of Broadband”
23
(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.
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.
Number of primary international communications licenses
foreign companies.
1998.01
1998.09
0
4
10
1999.03
18
1999.09
24
2000.03
37
2000.11
0
10
20
30
40
24
- 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
25
(7) High performance of Foreign
Companies in Japan
Foreign Companies in
Japan enjoy much higher
profits than Japanese
companies.
Japan ( 2001)
Japan ( Forei gn- capi t al com pani es, 2001)
G erm any ( 1998)
United States (2000)
0%
Germany (1998)
3%
Japan (Foreign-capital
companies, 2001)
Profits / Sales (Part for Manufacturing)
6%
Japan (2001)
Low profits in Japanese
companies are not
applicable to Foreign
companies in Japan.
9%
U ni t ed St at es ( 2000)
Source; Cabinet Office
26
(8) Lowered business costs
The costs of doing business
in Japan—land prices,
office rents, and labor costs,
among others—have
dramatically decreased.
120
Residential
Commercial
Industrial
Average for all Purposes
100
80
60
48.2
43.0
40
40.5
20
Published Land Prices (Sept. 1992 =100)
the Metropolitan Areas Shown in Published Land Prices in 2002
0
1992
23.4
1994
1996
1998
2000
2002
2004
27
(9) Abundant market opportunities
Life Science
The Market size of medicine and medical device will be 8.4
trillion yen in 2010.
40%
35%
Sweden
Japan
30%
Germany
United Kingdom
25%
36.5%
27.0%
United States
20.0%
20%
15%
10%
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.
5%
0%
1950
Percentage aged 65 or over (%)
1970
1990
2010
2030
2050
Source; “World Population Prospects, 2002” (UN)
28
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.
ICT market size and share of all industry in Japan
12.2%12.0% 13%
11.8%
120
12%
11.2%
10.9%
119
116 11%
110
115
10.1%
107
9.3%
100
10%
104
8.6%
98
130
90
9%
89
80
70
79
8%
market size (trillion yen)
share of all industry (%)
60
7%
6%
1995 1996 1997 1998 1999 2000 2001 2002
Source: WHITE PAPER Information and Communications in
Japan (2004)
Environmental Services Industry market size in Japan
140
111.9
120
100
76.9
80
47.2
60
40
58.4
29.9
market size (trillion yen)
20
0
Environment
123.6
size of employees (10 thousand)
2000
2010
2020
Source: Ministry of the Environment (May 2003)
The environment related industry is a highly-growing market,
and it is estimated to be 47.2 trillion yen (430 billion $) in 2010.
29
(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.
30
7. Invest Japan Window
(1) 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) Window’s 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)
31
(3)Any inquiries and troubles
We are waiting for your contact!
Cabinet Office: [email protected]
http://www5.cao.go.jp/access/english/jic_main_e.html
JETRO:
[email protected]
http://www.jetro.go.jp/
32