Foreign Investment Regulations in Japan

Japan’s foreign investment regulations can be broadly classified into two categories:

  1. Regulations under the Foreign Exchange and Foreign Trade Act (FEFTA), commonly known as the “Foreign Exchange Act,” and
  2. Industry-specific laws that govern certain sectors.

These regulations vary depending on factors such as the industry of investment, the investor’s country of origin, and whether the investment involves a new entity or an existing one. Given the complexity of the legal framework, providing an exhaustive explanation is challenging.

This article highlights the key points to offer a general overview. For clarity, some parts have been paraphrased, which may result in minor deviations from precise legal interpretations. For an accurate and detailed understanding, consulting a legal professional is strongly recommended.

1. Regulations Under the Foreign Exchange and Foreign Trade Act (FEFTA)
Foreign investments may require prior notification depending on the investor’s country of origin. Investments in certain designated industries, as well as investments from countries that do not have treaties related to inward direct investment require prior notification to both the Minister of Finance and the relevant competent ministers. Without submitting this notification and obtaining approval, the investment or establishment of a new entity cannot proceed.

Investors considering entry or investments in the industries listed below should take particular caution. The requirement for prior notification falls under two primary categories:

1a. Investments restricted for reasons of national security, public order, or public safety.
1b. Investments restricted to ensure the smooth operation of Japan’s economy.

The following list reflects the regulatory status as of February 14, 2025:
Ministry of Finance – Foreign Direct Investment Regulations

1a. Investments restricted for reasons of national security, public order, or public safety.

#CategoryRegulated Activities
1Weapons & Defense-related IndustriesCompanies engaged in handling:
① Weapons, transport, communication, supply, rescue, search support, and defense-related equipment
② Aircraft (including unmanned aerial vehicles)
③ Satellites, rockets, launch/tracking control systems, propellants, and raw materials
④ Nuclear reactors, nuclear turbines, power generators, nuclear raw materials, and nuclear fuel substances
⑤ Accessories, manufacturing equipment, tools, inspection devices, and testing equipment related to ①–④
2Repair of Machinery & Electrical Equipment Related to #1 (①–⑤)
3Software Industry Related to #1 (①–④)
4Other Metal MiningCompanies handling nuclear raw materials
5Export-Controlled Items Under National Security Trade (Regulated by Export Trade Control Order, 1949 Cabinet Order No. 378, Annex 1, Items 1–15)Companies handling export-controlled goods in the following fields for national security reasons:
① Weapons
② Nuclear technology
③ Chemical and biological weapons
④ Missiles
⑤ Advanced materials
⑥ Material processing
⑦ Electronics
⑧ Computers
⑨ Telecommunications
⑩ Sensors
⑪ Navigation equipment
⑫ Marine-related technologies
⑬ Propulsion systems
⑭ Miscellaneous items
⑮ Sensitive items
6Design & Manufacturing of Technologies Listed Under the Foreign Exchange Order (1980 Cabinet Order No. 260, Annex Items 1–15)Companies engaged in the design and manufacturing of technologies critical to national security in the following industries:
① Manufacturing
② Software development
③ Natural science research institutes
④ Mechanical design services
⑤ Product and non-destructive inspection services
⑥ Other technical services
7Pharmaceuticals & Advanced Medical Devices for Pathogens (Approved & Certified) and Related Components
8Mining, Refining, Manufacturing, and Related Operations for Specific Metallic Minerals & OresCompanies engaged in:
① Mining and refining of metallic and non-ferrous metals (including primary & secondary refining and alloy production)
② Manufacturing of machinery and equipment used in metal mining and refining industries
③ Repair of the machinery and equipment mentioned in ② (excluding electrical equipment)
④ Development of dedicated software for machinery and equipment in ②
⑤ Measurement certification (quality and property assessment)
9Construction, Conservation, and Management of Specific Coastal & Remote IslandsCompanies engaged in:
① Construction related to coastal conservation zones
② Port facility development on designated remote islands
10Manufacturing of Specific Electronic Components, Semiconductors, Batteries, and Communication EquipmentCompanies engaged in the manufacturing of:
① Permanent magnet materials for weapons, electric motors, generators, and medical devices
② Materials, equipment, and components specialized for semiconductor and integrated circuit manufacturing
③ Components, materials, and equipment for automotive and stationary lithium-ion batteries
④ Components, materials, and equipment for ceramic capacitors, filters, and quartz devices
⑤ Multifunction printers with data transmission and reception capabilities (excluding smartphones and similar devices)
11Manufacturing of Specific Ship Components (Engines, Navigation Equipment, Propellers)Companies engaged in the manufacturing of:
① High-power diesel engines (735 kW or more) and dedicated crankshafts
② Acoustic depth sounders for navigation safety
③ Large ship propellers (diameter over 1600 mm)
12Wholesale Import of Certain Fertilizers Exceeding 1,000 Tons Per YearCompanies engaged in the import of:
① Potassium chloride for fertilizers (regardless of purity)
② Ammonium phosphate for fertilizers (regardless of purity) and its mixtures


1b. Criteria Based on the Smooth Operation of Japan’s Economy

#Main CategorySubcategory
Agriculture, forestryArable agricultureRice farming
Grain farming other than rice farming
Vegetable farming (including mushroom cultivation)
Fruit trees for agriculture
Flower farming
Craft crop farming
Potato/Kansho farming
Other cultivated agriculture
Livestock farmingDairy farming
Beef cattle production
Pig farming
Poultry farming
Related livestock farming
Sericulture agriculture
Other livestock farming
Agricultural services (excluding horticultural services)Grain farming service industry
Vegetable cultivation/fruit tree cultivation service
Cultivation service other than grain cultivation, vegetable cultivation, and fruit tree cultivation
Livestock service (excluding veterinary services)
Horticulture service industryHorticulture service
SilvicultureSilviculture
Material production industryMaterial production
Special forest product production industry (excluding mushroom cultivation)Firewood making
Other special forest product production industries (excluding mushroom cultivation)
Forestry service industryForestry service
Material production service
Forest seedling production service
Other forestry services
Other forestryOther forestry
FisherySurface fisheriesBottom trawl fishing
Purse seine fishing
Gillnet fishery
Fishing/longline fishing
Set net fishing
Seine fishing/trawl fishing
Shellfish and algae harvesting
Whaling industry
Other marine fisheries
Inland water fisheriesInland water fisheries
Marine aquacultureFish farming
Shellfish farming
Algae farming
Pearl breeding
Seedling breeding
Other marine aquaculture
Inland water aquaculture industryInland water aquaculture
Mining, quarrying, gravel extractionCrude oil/natural gas miningCrude oil mining
Natural gas mining
ManufacturingJapanese clothing products and other clothing and textile personal items manufacturing industryManufacture of clothing and textile personal items not elsewhere classifiedHowever, limited to leather and leather goods.
Inorganic chemical industrial products manufacturingCompressed gas/liquefied gas manufacturing However, this is limited to the manufacturing of helium or rare gases for semiconductor manufacturing.
Other inorganic chemical industry product manufacturing However, this is limited to the manufacturing of phosphorous compounds or hydrofluoric acid for semiconductor manufacturing.
Pharmaceutical manufacturing industryBiological drug manufacturing
Other chemical industryGelatin/adhesive manufacturing However, this is limited to the glue and gelatin manufacturing
Petroleum refining industryPetroleum refining
Lubricating oil/grease manufacturing industry (not based on petroleum refining)Lubricating oil/grease manufacturing (not based on petroleum refining)
Paving material manufacturing industryPaving material manufacturing However, this is limited to the petroleum product manufacturing industry.
Other petroleum products/coal products manufacturing industryOther petroleum products/coal product manufacturing Same as above
Rubber/plastic footwear and accessories manufacturing industryRubber footwear and related accessories manufacturing
Plastic footwear and accessories manufacturing
Tanning leather manufacturing industryTanning leather manufacturing
Industrial leather products manufacturing industry (excluding gloves)Industrial leather products manufacturing (excluding gloves)
Manufacturing of leather and footwear materials and accessoriesLeather footwear materials and accessories manufacturing
Leather footwear manufacturing industryLeather footwear manufacturing
Leather handbag manufacturingLeather handbag manufacturing
Bag manufacturing industryBag manufacturing
Bag manufacturing industry (excluding handbags)
Handbag manufacturing
Fur manufacturingFur manufacturing
Other tanned leather products manufacturing industryOther tanned leather products manufacturing
Glass and related product manufacturing industryGlass fiber and related product manufacturing However, this is limited to the manufacturing of silica-based optical fibers.
Cement and related products manufacturing industryConcrete product manufacturing However, this is limited to the manufacturing of alternative materials for castings (limited to mineral casts) used for manufacturing or repairing metal machine tools that can be numerically controlled.
Other steel industrySteel industry not classified elsewhereHowever, this is limited to the manufacturing industry of powdered metals and metal alloys specifically designed as materials for use in metal additive manufacturing equipment.
Electric wire/cable manufacturing industryOptical fiber cable manufacturing (including communication composite cables)However, this is limited to the manufacturing of silica-based optical fiber cables.
Other non-ferrous metal manufacturing industryNon-ferrous metal manufacturing not elsewhere classifiedHowever, this is limited to the manufacturing of powdered metals and metal alloys specifically designed as materials for use in metal additive manufacturing equipment.
General industrial machinery and equipment manufacturing industryPower transmission equipment manufacturing (excluding ball bearings and roller bearings)However, this is limited to the manufacturing of reduction gears used for manufacturing or repairing metal machine tools that can perform numerical control or industrial robots mainly used for manufacturing industrial products (hereinafter referred to as “NC metal machine tools, etc.”)
Metal processing machinery manufacturing industryMetal working machinery manufacturing However, this is limited to the manufacturing industry of metal machine tools that can be numerically controlled.
Manufacturing of parts and accessories for metal machine tools and metal processing machines (excluding machine tools and molds)However, this is limited to the manufacturing industry of ball screws, linear guides, or linear scales used for manufacturing or repairing metal machine tools that can be numerically controlled.
Other production machinery/parts manufacturing industryRobot manufacturing However, this is limited to the manufacturing of industrial robots mainly used for manufacturing industrial products.
Production machinery and parts manufacturing not elsewhere classifiedHowever, this is limited to the manufacturing of equipment for metal additive manufacturing.
Electronic device manufacturing industrySemiconductor device manufacturing (excluding photoelectric conversion devices)
Integrated circuit manufacturing
Electronic parts manufacturing industryResistor/capacitor/transformer/composite parts manufacturingHowever, this is limited to the manufacturing of multilayer ceramic capacitors, film capacitors, or multilayer chip inductors.
Recording media manufacturing industrySemiconductor memory media manufacturing
Optical disk/magnetic disk/magnetic tape manufacturing
Electronic circuit manufacturingElectronic circuit substrate manufacturing
Electronic circuit mounting board manufacturing
Other electronic parts/devices/electronic circuit manufacturing industryOther electronic parts/devices/electronic circuit manufacturing However, SAW (surface acoustic wave) filters, BAW (bulk acoustic wave) filters, crystal resonators, and crystal resonators are limited to the crystal resonator manufacturing
Manufacturing of electrical machinery and equipment for power generation, power transmission, and power distributionGenerator, electric motor, and other rotating electric machinery manufacturing However, this is limited to the manufacturing of servo mechanisms used for manufacturing or repairing NC metal machine tools, etc.
Switchboard/power control equipment manufacturingHowever, this is limited to the manufacturing of numerical control devices or programmable logic controllers used for manufacturing or repairing NC metal machine tools, etc.
Battery manufacturing industryBattery manufacturing industryHowever, this is limited to the manufacturing of lithium-ion storage batteries for use in vehicles (limited to use as a drive power source) or for stationary use.
Other electrical equipment manufacturing industryOther electrical equipment manufacturing However, this is limited to the manufacturing of permanent magnets used in weapons, electric motors, generators, or medical equipment.
Communication equipment and related equipment manufacturing industryWired communication equipment manufacturing
Smartphone/mobile phone/PHS phone manufacturing
Wireless communication equipment manufacturing
Computer and accessories manufacturing industryComputer manufacturing (excluding personal computers)
Personal computer manufacturing
External memory device manufacturing
Toys and exercise equipment manufacturing industrySports equipment manufacturingHowever, limited to leather and leather products.
Electricity, gas, heat supply, water industryEstablishments engaged in management and auxiliary economic activities (Electricity industry)Head office, etc. that mainly conducts administrative work
Establishments that carry out other administrative and auxiliary economic activities
Electricity industryPower generation industry
Power transmission and distribution industry
Electrical retail industry
Electric wholesale supply industry
Establishments engaged in management and auxiliary economic activities (gas industries)Head office, etc. that mainly conducts administrative work
Establishments that carry out other administrative and auxiliary economic activities
Gas industryGas manufacturing
Gas pipeline
Gas retail
Heat supply industryHeat supply
Water supply industryWater supply
Information and communication industryFixed telecommunications industryRegional telecommunications (excluding wired broadcast telephone)
Long distance telecommunications
Wired broadcast telephone
Other fixed telecommunications
Mobile telecommunications industryMobile telecommunications
Public broadcasting industry (excluding cable broadcasting industry)Public broadcasting excluding cable broadcasting)
Commercial broadcasting industry (excluding cable broadcasting industry)Television broadcasting (excluding satellite broadcasting)
Radio broadcasting (excluding satellite broadcasting)
Satellite broadcasting
Other commercial broadcasting
Cable broadcasting industryCable television broadcasting
Cable radio broadcasting
Software industryContract development software business※1
Embedded software※1
Packaged software ※1
Information processing/providing service industryInformation processing service industry※1
Internet related servicesPortal site/server management businessHowever, this is limited to telecommunications businesses that require registration under Article 9 of the Telecommunications Business Law.
Application Service Content ProviderSame as above
Internet usage support business※2
Transportation industry, postal industryRailway industryOrdinary railway industry
Rail industry
Underground railroad business
Monorail railway (excluding underground railway)
Guide track railway (excluding underground railway)
Steel rope industry
Ropeway industry
Other railway
General passenger car transportation businessGeneral passenger car transportation business
Coastal shipping industryCoastal passenger shipping
Coastal cargo shipping
Inland water transportation industryHarbor passenger shipping
River water transport
Lake water transport
Ship rental businessDomestic vessel rental business
Air transport industryAir transport
Aircraft usage industry (excluding air transport industry)Aircraft usage (excluding air transportation)
Warehousing (excluding cold storage)Warehousing (excluding cold storage)However, this is limited to those related to the oil stockpiling.
Refrigerated warehouse businessRefrigerated warehouse businessSame as above
Transportation facility provision industryRailway facility provision Same as above
Wholesale trade, retail tradeOil and mineral wholesale tradeOil wholesale
Fuel retail industryGas station
Fuel retail industry (excluding gas stations)However, this is limited to those related to petroleum.
Financial industry, insurance industryCentral bankCentral bank
Agriculture, forestry and fisheries finance industryAgricultural cooperative
Fisheries cooperatives, seafood processing cooperatives
Complex service businessAgriculture, forestry and fisheries cooperatives (n.e.c.)Agricultural cooperatives (n.e.c.)
Fishery cooperatives (n.e.c.)
Fisheries processing cooperatives (not classified elsewhere)
Forestry associations (not classified elsewhere)
Service industry (not classified elsewhere)Security industrySecurity industry
Business services n.e.c.Other business services not classified elsewhereHowever, this is limited to businesses related to liquefied petroleum gas (LPG) filling business and liquefied petroleum gas (LPG) storage business.

※1 Except for businesses classified under the software industry or information processing and provision of services industry, as specified in the Ministerial Order (Cabinet Office, Ministry of Internal Affairs and Communications, Ministry of Finance, Ministry of Education, Culture, Sports, Science and Technology, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries, Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure, Transport and Tourism, and Ministry of the Environment Notification No. 4 of 2020), businesses classified under industries listed in Appendix 3 (hereinafter referred to as “Appendix 3 businesses” in this ※1 and ※2) and conducted as an ancillary activity or exclusively as an Appendix 3 business by a parent company (as defined in Article 2, Paragraph 4 of the Companies Act (Act No. 86 of 2005); hereinafter the same in ※1 and ※2) or by its subsidiary (as defined in Article 2, Paragraph 3 of the same Act; hereinafter the same in ※2), that engage solely in Appendix 3 businesses, are excluded. Additionally, software and information processing/provision of services conducted exclusively for such parent or subsidiary companies engaging solely in Appendix 3 businesses are also excluded, except when the services are commissioned by other entities (excluding affiliated companies, as defined in Article 2, Paragraph 3, Item 25 of the Company Accounting Regulations (Ministry of Justice Ordinance No. 13 of 2006), that engage exclusively in Appendix 3 businesses). This exclusion applies to software development commissioned by other companies and information processing services that handle data owned by other companies.
※2 Except for businesses classified under the internet-related services industry (limited to internet support services; hereinafter the same in this ※2), as specified in the Ministerial Order (Cabinet Office, Ministry of Internal Affairs and Communications, Ministry of Finance, Ministry of Education, Culture, Sports, Science and Technology, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries, Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure, Transport and Tourism, and Ministry of the Environment Notification No. 4 of 2020), internet-related services are excluded if they are conducted as an ancillary activity to Appendix 3 businesses or exclusively as an Appendix 3 business by a parent company (as defined in Article 2, Paragraph 4 of the Companies Act (Act No. 86 of 2005); hereinafter the same in ※1 and ※2) or by its subsidiary (as defined in Article 2, Paragraph 3 of the same Act; hereinafter the same in ※2), that engages solely in Appendix 3 businesses. Furthermore, internet-related services conducted exclusively for such parent or subsidiary companies are also excluded, except when internet-related services are provided under commission from other entities.
Remarks This table follows the classification standards established by the Ministry of Internal Affairs and Communications Notification No. 256 of July 2023, based on Article 28 of the Statistics Act.


Restrictions based on the source country of investment
Regarding national restrictions, foreign investors are required to submit a prior notification if their “nationality” or “country of residence” (including regions) is outside the listed countries and Japan. This requirement applies regardless of the industry involved, meaning that all transactions or actions must be reported in advance. The notification must be submitted within six months prior to the transaction or activity.

Please note that the referenced list is based on information as of November 2024 (Bank of Japan).
Bank of Japan – Foreign Exchange FAQ

RegionCountries
North AmericaUnited States, Canada
Latin America & CaribbeanMexico, Argentina, Uruguay, Ecuador, El Salvador, Guyana, Costa Rica, Colombia, Suriname, Chile, Panama, Paraguay, Venezuela, Peru, Bolivia, Brazil, Honduras, Nicaragua, Antigua and Barbuda, Cuba, Grenada, Jamaica, Saint Kitts and Nevis, Saint Vincent, Saint Lucia, Dominica, Dominican Republic, Trinidad and Tobago, Haiti, Bahamas, Barbados
EuropeIceland, Ireland, Albania, Armenia, Italy, Ukraine, Estonia, Austria, Netherlands, Greece, Croatia, Switzerland, Sweden, Spain, Slovakia, Slovenia, Czech Republic, Denmark, Germany, Hungary, Finland, France, Bulgaria, Belgium, Poland, Portugal, Latvia, Lithuania, Liechtenstein, Romania, Luxembourg, North Macedonia, Monaco, Moldova, Montenegro, Russia, United Kingdom
AfricaAlgeria, Angola, Uganda, Egypt, Eswatini, Ethiopia, Ghana, Cape Verde, Gabon, Cameroon, Gambia, Guinea, Guinea-Bissau, Kenya, Côte d’Ivoire, Republic of Congo, Democratic Republic of Congo, Zambia, Sierra Leone, Djibouti, Sudan, Senegal, Tanzania, Chad, Central African Republic, Tunisia, Togo, Nigeria, Namibia, Burkina Faso, Burundi, Benin, Botswana, Madagascar, Malawi, Mali, Mauritius, Mauritania, Mozambique, Morocco, Liberia, Rwanda, Lesotho, South Africa
AsiaAfghanistan, United Arab Emirates, Israel, Iran, India, Indonesia, Kazakhstan, Qatar, Cambodia, Kyrgyzstan, Kuwait, Saudi Arabia, Syria, Singapore, Sri Lanka, Thailand, South Korea, Taiwan, Tajikistan, Turkey, Nepal, Pakistan, Bangladesh, Philippines, Bhutan, Vietnam, Macau, Malaysia, Myanmar, Maldives, Mongolia, Jordan, Laos, Lebanon, China, Hong Kong
OceaniaAustralia, Samoa, Solomon Islands, Nauru, New Zealand, Vanuatu, Papua New Guinea, Fiji, Marshall Islands, Micronesia, Tonga
Middle EastOman, Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Saudi Arabia, Syria, Turkey, United Arab Emirates, Qatar, Oman, Yemen


2. Examples of Foreign Investment Regulations Under Industry-Specific Laws

#SectorRegulation
1Communication (NTT Act)Foreigners or foreign entities are prohibited from holding one-third or more of NTT’s voting rights.
2Radio & Broadcasting (Radio Act / Broadcasting Act)If foreigners or foreign entities hold 20% or more of the voting rights, a broadcasting license cannot be obtained.
3Aviation (Aviation Act)Foreigners or foreign entities are prohibited from holding one-third or more of the voting rights in aviation carriers and their holding companies. Additionally, foreign companies require prior notification under the Foreign Exchange Act.
4Mining (Mining Act)Acquisition of mining rights is limited to Japanese nationals or Japanese corporations.
5Maritime (Ship Act)To obtain Japanese registration, the vessel’s owner must be a Japanese national or a Japanese corporation. Moreover, in the case of a Japanese corporation, at least two-thirds of the directors must be Japanese nationals. For coastal shipping, if foreign companies participate, prior notification under the Foreign Exchange Act is required.


Sources and Disclaimer
In creating this page, we referenced information from the Ministry of Finance (MOF), Bank of Japan (BOJ), Ministry of Economy, Trade and Industry (METI), JETRO (Japan External Trade Organization), and relevant laws, including the NTT Act, Radio Act & Broadcast Act, Aviation Act, Mining Act, and Ship Act.

Please note that the information presented here is based on research conducted at the time of writing and may have changed. We do not guarantee its accuracy or completeness. If you are considering investment or business operations in Japan, we strongly recommend consulting a legal expert or relevant authorities.

While we do not provide legal or attorney services, we can assist in connecting you with public agencies or professional organizations if needed. Feel free to reach out to us via our Contact page.

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