Japan to Tighten Foreign Investment Rules as Tokyo Strengthens Economic Security Framework
5 pages · PDF · 06 November 2025 · Licensed single-user copy, watermarked to the buyer
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About this report
Japan is preparing a far-reaching reform of its foreign investment screening system , reflecting the government’s growing focus on economic security and control over strategic technologies. The revision of the Foreign Exchange and Foreign Trade Act (FEFTA) , expected to be submitted to parliament in 2026, will introduce a more selective and risk-based approach to foreign capital oversight.
It will mark the first major update to the legislation since 2019, when Tokyo drastically lowered the review threshold for foreign investors in designated sectors from 10% to 1%, triggering a fourfold increase in regulatory filings.
Key questions this report answers
- How will Japan's planned reform of the Foreign Exchange and Foreign Trade Act (FEFTA) introduce a more selective, risk-based screening approach?
- Why is this the first major update since 2019, when the review threshold was lowered from 10% to 1%?
- What does the fourfold increase in regulatory filings after 2019 reveal about the impact of the lowered threshold?
- How does tightening foreign investment rules reflect Tokyo's growing focus on economic security and control over strategic technologies?
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