The condition of investing in Japan has already been approved as fully secure and that is the main reason to attract outside investors. The other reasons are, provide investors to invest in an open market with lots of facilities to expand business, positive growth rate in the labor market, measure corporate tax effectively, conduct corporate governance strictly. All these commitments are done by the government to the foreign investors.

Japan has considered the most attractive country for multinational companies taken in 8th place around the world in 2016 period. Comparing with the other countries, Foreign Direct Investment (FDI) has been increased in recent years in Japan. Although Japan has faced some unusual situations which sloth the growth rate like earthquake, tsunami, Fukushima Daiichi nuclear power plant disaster in 2011. Besides, FDI faced slowdown in Japan because of the global financial crisis in 2009. Moreover, the two consecutive years 2015-16 have been considered as disinvestment years. But, Japan has been able to overcome the unusual situations positively and get back the FDI rate in a higher position which reflects the World Bank’s Business Report in 2017 where Japan positioned 34th place out of 190 countries around the world.

Advanced technology of Japan has been considered mostly as strength of attracting Foreign Direct Investment in Japan. Though it seems that business, organizational culture, and variation of languages between two countries are the barriers, the investment rate is increasing day by day has already gained the recognition of a key market for outside investors. Prime Minister Shinzo Abe has expressed a blueprint for reconstructing Japan aiming double-digit growth rate of FDI in 2020. The foreign direct investment stock was 3.7% of GDP in 2014 which increased to 4.1% in 2015. The major investing countries are United States, Singapore, Netherlands, Hong Kong, France, South Korea, and China, and so on remaining 36%, 13%, 12%, 9%, 8%, 6%, and 4% respectively.

Bilateral signatory agreement has been made among Australia, European Union, the Republic of Korea with Japan. The protection of companies according to country basis, Japan gets 7.0%in terms of index transaction transparency. On the other hand, in the segment of shareholder’s power, Japan gets 8.0 where USA gets 9.0. Moreover, Japan gets 7.0 in the investor protection segment where USA gets 8.3. It is noted earlier that foreign investors get all the privileges to establish their business which is guaranteed by Japan government, acquisition holding is also possible there. Most importantly, the investors should bear in mind that, access of 2 billion yen is sufficient to acquire 10%, 25% and 50% of a company in Japan. On the other hand, 10 billion yen is necessary to acquire business from other company.

The most attractive investment sectors right now are pharmaceutical and medical industry, agriculture, aviation technology, tourism, oil, leather, and telecommunication. Japan Government has taken some initiatives to promote imports so that foreign investors will be interested to invest such as reduction on taxes, assistance on every foreign exporter, establishes highly valuable business in operating sector. Some of the initiatives have already been fruitful with the establishment of 910 economic zones in Japan. Authorities and government both are trying to decentralize the finance sector to promote Foreign Direct Investment. Besides, government has a concern to develop 22 zones that will facilitate import and export directly.

Internally, the companies are changing their policy to attract foreign investment. Already, those companies have been enlisted in Japan Stock Exchange; the directors of three-quarters of those companies are outsiders. An amendment has been approved (Act of Japan 2006) that either the stock exchange’s listed companies appoint minimum an outside director in the organization. The degree of independence will be ensured and measured positively. In recent days, it is seen that call options are required to go with private sector following some technical steps. Under this method, a shareholder can purchase shares directly will be totally approved by board of directors. This new structure will help the companies to increase foreign investments in the upcoming days.

Now, this is the burning question why do foreign investors invest in Japan? The core reason behind that is ever-growing economies. In fiscal year 2011, nominal growth rate was negative (-1.1) which reached in positive (0.2) just after the year (2012). At the same time, real growth was 0.5 in 2011 and reached 0.9 in 2012. The data of recent years show that both nominal and real growth rates are increasing. From the data of 2017, nominal growth rate is 2.5 and real growth rate is 1.5. If we just take a look on the corporate ordinary profits, we can see from fiscal year 2011 to fiscal year 2015, 20 trillion yen have been increased. On the other hand, Unemployment rate is declining found 3.14% in 2016 where it was 4.58% in 2011. Tax has also been declined to 20%which is really effective. Corporate governance reform is another big achievement for the government of Japan.