Japan’s foreign investment regulations can be broadly classified into two categories:
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.
# | Category | Regulated Activities |
---|---|---|
1 | Weapons & Defense-related Industries | Companies 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 |
2 | Repair of Machinery & Electrical Equipment Related to #1 (①–⑤) | — |
3 | Software Industry Related to #1 (①–④) | — |
4 | Other Metal Mining | Companies handling nuclear raw materials |
5 | Export-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 |
6 | Design & 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 |
7 | Pharmaceuticals & Advanced Medical Devices for Pathogens (Approved & Certified) and Related Components | — |
8 | Mining, Refining, Manufacturing, and Related Operations for Specific Metallic Minerals & Ores | Companies 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) |
9 | Construction, Conservation, and Management of Specific Coastal & Remote Islands | Companies engaged in: ① Construction related to coastal conservation zones ② Port facility development on designated remote islands |
10 | Manufacturing of Specific Electronic Components, Semiconductors, Batteries, and Communication Equipment | Companies 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) |
11 | Manufacturing 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) |
12 | Wholesale Import of Certain Fertilizers Exceeding 1,000 Tons Per Year | Companies 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 Category | Subcategory | |
---|---|---|---|
Agriculture, forestry | Arable agriculture | Rice 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 farming | Dairy 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 industry | Horticulture service | – | |
Silviculture | Silviculture | – | |
Material production industry | Material production | – | |
Special forest product production industry (excluding mushroom cultivation) | Firewood making | – | |
Other special forest product production industries (excluding mushroom cultivation) | – | ||
Forestry service industry | Forestry service | – | |
Material production service | – | ||
Forest seedling production service | – | ||
Other forestry services | – | ||
Other forestry | Other forestry | – | |
Fishery | Surface fisheries | Bottom 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 fisheries | Inland water fisheries | – | |
Marine aquaculture | Fish farming | – | |
Shellfish farming | – | ||
Algae farming | – | ||
Pearl breeding | – | ||
Seedling breeding | – | ||
Other marine aquaculture | – | ||
Inland water aquaculture industry | Inland water aquaculture | – | |
Mining, quarrying, gravel extraction | Crude oil/natural gas mining | Crude oil mining | – |
Natural gas mining | – | ||
Manufacturing | Japanese clothing products and other clothing and textile personal items manufacturing industry | Manufacture of clothing and textile personal items not elsewhere classified | However, limited to leather and leather goods. |
Inorganic chemical industrial products manufacturing | Compressed 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 industry | Biological drug manufacturing | – | |
Other chemical industry | Gelatin/adhesive manufacturing | However, this is limited to the glue and gelatin manufacturing | |
Petroleum refining industry | Petroleum refining | – | |
Lubricating oil/grease manufacturing industry (not based on petroleum refining) | Lubricating oil/grease manufacturing (not based on petroleum refining) | – | |
Paving material manufacturing industry | Paving material manufacturing | However, this is limited to the petroleum product manufacturing industry. | |
Other petroleum products/coal products manufacturing industry | Other petroleum products/coal product manufacturing | Same as above | |
Rubber/plastic footwear and accessories manufacturing industry | Rubber footwear and related accessories manufacturing | – | |
Plastic footwear and accessories manufacturing | – | ||
Tanning leather manufacturing industry | Tanning leather manufacturing | – | |
Industrial leather products manufacturing industry (excluding gloves) | Industrial leather products manufacturing (excluding gloves) | – | |
Manufacturing of leather and footwear materials and accessories | Leather footwear materials and accessories manufacturing | – | |
Leather footwear manufacturing industry | Leather footwear manufacturing | – | |
Leather handbag manufacturing | Leather handbag manufacturing | – | |
Bag manufacturing industry | Bag manufacturing | – | |
Bag manufacturing industry (excluding handbags) | – | ||
Handbag manufacturing | – | ||
Fur manufacturing | Fur manufacturing | – | |
Other tanned leather products manufacturing industry | Other tanned leather products manufacturing | – | |
Glass and related product manufacturing industry | Glass fiber and related product manufacturing | However, this is limited to the manufacturing of silica-based optical fibers. | |
Cement and related products manufacturing industry | Concrete 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 industry | Steel industry not classified elsewhere | However, 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 industry | Optical 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 industry | Non-ferrous metal manufacturing not elsewhere classified | However, 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 industry | Power 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 industry | Metal 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 industry | Robot manufacturing | However, this is limited to the manufacturing of industrial robots mainly used for manufacturing industrial products. | |
Production machinery and parts manufacturing not elsewhere classified | However, this is limited to the manufacturing of equipment for metal additive manufacturing. | ||
Electronic device manufacturing industry | Semiconductor device manufacturing (excluding photoelectric conversion devices) | – | |
Integrated circuit manufacturing | – | ||
Electronic parts manufacturing industry | Resistor/capacitor/transformer/composite parts manufacturing | However, this is limited to the manufacturing of multilayer ceramic capacitors, film capacitors, or multilayer chip inductors. | |
Recording media manufacturing industry | Semiconductor memory media manufacturing | – | |
Optical disk/magnetic disk/magnetic tape manufacturing | – | ||
Electronic circuit manufacturing | Electronic circuit substrate manufacturing | – | |
Electronic circuit mounting board manufacturing | – | ||
Other electronic parts/devices/electronic circuit manufacturing industry | Other 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 distribution | Generator, 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 manufacturing | However, 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 industry | Battery manufacturing industry | However, 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 industry | Other 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 industry | Wired communication equipment manufacturing | – | |
Smartphone/mobile phone/PHS phone manufacturing | – | ||
Wireless communication equipment manufacturing | – | ||
Computer and accessories manufacturing industry | Computer manufacturing (excluding personal computers) | – | |
Personal computer manufacturing | – | ||
External memory device manufacturing | – | ||
Toys and exercise equipment manufacturing industry | Sports equipment manufacturing | However, limited to leather and leather products. | |
Electricity, gas, heat supply, water industry | Establishments 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 industry | Power 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 industry | Gas manufacturing | – | |
Gas pipeline | – | ||
Gas retail | – | ||
Heat supply industry | Heat supply | – | |
Water supply industry | Water supply | – | |
Information and communication industry | Fixed telecommunications industry | Regional telecommunications (excluding wired broadcast telephone) | – |
Long distance telecommunications | – | ||
Wired broadcast telephone | – | ||
Other fixed telecommunications | – | ||
Mobile telecommunications industry | Mobile 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 industry | Cable television broadcasting | – | |
Cable radio broadcasting | – | ||
Software industry | Contract development software business | ※1 | |
Embedded software | ※1 | ||
Packaged software | ※1 | ||
Information processing/providing service industry | Information processing service industry | ※1 | |
Internet related services | Portal site/server management business | However, this is limited to telecommunications businesses that require registration under Article 9 of the Telecommunications Business Law. | |
Application Service Content Provider | Same as above | ||
Internet usage support business | ※2 | ||
Transportation industry, postal industry | Railway industry | Ordinary 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 business | General passenger car transportation business | – | |
Coastal shipping industry | Coastal passenger shipping | – | |
Coastal cargo shipping | – | ||
Inland water transportation industry | Harbor passenger shipping | – | |
River water transport | – | ||
Lake water transport | – | ||
Ship rental business | Domestic vessel rental business | – | |
Air transport industry | Air 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 business | Refrigerated warehouse business | Same as above | |
Transportation facility provision industry | Railway facility provision | Same as above | |
Wholesale trade, retail trade | Oil and mineral wholesale trade | Oil wholesale | – |
Fuel retail industry | Gas station | – | |
Fuel retail industry (excluding gas stations) | However, this is limited to those related to petroleum. | ||
Financial industry, insurance industry | Central bank | Central bank | – |
Agriculture, forestry and fisheries finance industry | Agricultural cooperative | – | |
Fisheries cooperatives, seafood processing cooperatives | – | ||
Complex service business | Agriculture, 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 industry | Security industry | – |
Business services n.e.c. | Other business services not classified elsewhere | However, 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
Region | Countries |
---|---|
North America | United States, Canada |
Latin America & Caribbean | Mexico, 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 |
Europe | Iceland, 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 |
Africa | Algeria, 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 |
Asia | Afghanistan, 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 |
Oceania | Australia, Samoa, Solomon Islands, Nauru, New Zealand, Vanuatu, Papua New Guinea, Fiji, Marshall Islands, Micronesia, Tonga |
Middle East | Oman, 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
# | Sector | Regulation |
---|---|---|
1 | Communication (NTT Act) | Foreigners or foreign entities are prohibited from holding one-third or more of NTT’s voting rights. |
2 | Radio & Broadcasting (Radio Act / Broadcasting Act) | If foreigners or foreign entities hold 20% or more of the voting rights, a broadcasting license cannot be obtained. |
3 | Aviation (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. |
4 | Mining (Mining Act) | Acquisition of mining rights is limited to Japanese nationals or Japanese corporations. |
5 | Maritime (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.
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