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

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Slide 1 1 Invest in Japan 29 September, 2005 29 September, 2005 Hiroshi Yoshikawa (University of Tokyo) (University of Tokyo) 29 September, 2005 29 September, 2005 Hiroshi Yoshikawa (University of Tokyo) (University of Tokyo) Slide 2 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 Slide 3 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. 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. Slide 4 4 (1)Stock of FDI into Japan (by regions, trillion yen) Slide 5 5 by far the lowest level among industrialized countries. (2)Inward FDI in Major Countries (stock / nominal GDP) Source: IMF "International Financial Statistics" (2003) Note: U.S., France and Australia: Current Price Source: IMF "International Financial Statistics" (2003) Note: U.S., France and Australia: Current Price Slide 6 6 (3)The number of Foreign-capital companies in Japan, sales, profit and employees (2001) Companies 1.94% 1.97% 546 261 Foreign-capital companies Share Manufacturing Share Employees 4.71% 5.78% 514,124 291,268 Sales (billion yen) Sales (billion yen) 5.95% 10.28% 35,079 25,240 profit (billion yen) 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. Slide 7 7 (4)Increasing Foreign Shareholders Foreign Shareholdership is rapidly getting to a higher level, where Japanese business corporations reduce their shares. Distribution of Shareholders (Market Value) 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. 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. TOYOTA HONDA NISSAN Renault S.A. NISSAN Renault S.A. MITSUBISHI DaimlerChrysler AG MITSUBISHI DaimlerChrysler AG MAZDA Ford Motor Co. MAZDA Ford Motor Co. SUZUKI General Motors Corp. SUZUKI General Motors Corp. Fuji (SUBARU) General Motors Corp. Fuji (SUBARU) General Motors Corp. ISUZU General Motors Corp. ISUZU General Motors Corp. 18.2% 32.2% 63.9% 42.3% 39.5% 43.7% 37.6% 17.6% Foreign owned shares ratio (Market Value; Sep. 2003) Foreign owned shares ratio (Market Value; Sep. 2003) Slide 8 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) 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) Slide 9 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. 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. Slide 10 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 (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 Slide 11 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. 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. Slide 12 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). 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). Slide 13 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). 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. Slide 14 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. 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. Slide 15 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. 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. Slide 16 16 Why Japan? 1.The world's second-largest market 2.Key market to succeed in Asia 3.Abundant highly skilled human resources 4.Innovative technologies 5.Efficient infrastructure 6.Reformed legal framework for investment 7.High performance of Foreign Companies in Japan 8.Lowered business costs 9.Abundant market opportunities 10.Living environment 1.The world's second-largest market 2.Key market to succeed in Asia 3.Abundant highly skilled human resources 4.Innovative technologies 5.Efficient infrastructure 6.Reformed legal framework for investment 7.High performance of Foreign Companies in Japan 8.Lowered business costs 9.Abundant market opportunities 10.Living environment Slide 17 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) Source: Cabinet Office 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 Slide 18 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. 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) Japanese figures; Prefectural Citizens' Economic Accounts, 2001 (Cabinet Office) Asian nations figures; Foreign Economic Data (Cabinet Office) Comparison of GDPs of major regions in Japan with those of selected Asian nations (2001) Japanese figures; Prefectural Citizens' Economic Accounts, 2001 (Cabinet Office) Asian nations figures; Foreign Economic Data (Cabinet Office) Sapporo (Hokkaido) Sapporo (Hokkaido) Sendai (Miyagi Pref.) Sendai (Miyagi Pref.) Tokyo, Saitama, Kawasaki, Yokohama (Metropolis; Tokyo, Saitama Pref., Chiba Pref. and Kanagawa Pref.) Tokyo, Saitama, Kawasaki, Yokohama (Metropolis; Tokyo, Saitama Pref., Chiba Pref. and Kanagawa Pref.) Nagoya (Nagoya region; Aichi Pref. and Shizuoka Pref.) Nagoya (Nagoya region; Aichi Pref. and Shizuoka Pref.) Osaka, Kyoto, Kobe (Kansai region; Osaka Pref., Kyoto Pref. and Hyogo Pref.) Osaka, Kyoto, Kobe (Kansai region; Osaka Pref., Kyoto Pref. and Hyogo Pref.) Hiroshima (Hiroshima Pref.) Hiroshima (Hiroshima Pref.) Fukuoka, Kitakyusyu (Fukuoka Pref. and Yamaguchi Pref) Fukuoka, Kitakyusyu (Fukuoka Pref. and Yamaguchi Pref) China 1,191 billion Metropolis 1,271 billion Rep. of Korea 427 billion Kansai 553 billion Nagoya 404 billion 600km 300km 900km 600km 900km Slide 19 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. 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. Slide 20 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. 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. Slide 21 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 Number of job-searchers Source; Ministry ob Public Management, Home Affairs, Posts and Telecomunications Slide 22 22 (4)Innovative technologies 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 The Number of Patent Registrations According to Nationality (2000) Source; WIPO Statistics (thousands) Slide 23 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) Source: ITU Internet Reports 2003 Birth of Broadband International Comparison of Total Broadband Subscribers and Subscribers per 100 Inhabitants (2002) Total Broadband Subscribers (million subscribers) Broadband subscribers per 100 inhabitants Slide 24 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. 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. Slide 25 25 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 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 -Special Zones for Structural Reform Schools by Public companies Special zones allow public companies to open colleges and professional graduate schools. Schools by Public companies Special zones allow public companies to open colleges and professional graduate schools. Slide 26 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. 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 Profits / Sales (Part for Manufacturing) Source; Cabinet Office Slide 27 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 Published Land Prices (Sept. 1992 =100) the Metropolitan Areas Shown in Published Land Prices in 2002 Slide 28 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. 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) Percentage aged 65 or over (%) Source; World Population Prospects, 2002 (UN) Slide 29 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. 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 Source:WHITE PAPER Information and Communications in Japan (2004) Environmental Services Industry market size in Japan Source:Ministry of the Environment (May 2003) Slide 30 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. 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. Slide 31 31 (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) 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) 7. Invest Japan Window Slide 32 32 (3)Any inquiries and troubles We are waiting for your contact! Cabinet Office : invest-japan@mfs.cao.go.jpinvest-japan@mfs.cao.go.jp http://www5.cao.go.jp/access/english/jic_main_e.html JETRO: invest-japan@jetro.go.jpinvest-japan@jetro.go.jp http://www.jetro.go.jp/

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