Japan tries to attract foreign investors
TOKYO (UPI) - Japan is stepping up efforts to encourage foreign investments by targeting several specific regions of the country as destinations that would be particularly attractive to overseas investors.
The Ministry of Economy and Industry named five municipal areas to promote foreign direct investment. Each region will receive $500,000 from the government to attract investors, particularly by providing incentives and models to other local governments.
Hiroshima prefecture is one of five regions tapped to attract foreign investment. The southern Japanese region will be particularly eager to lure the transportation industry, taking advantage of the fact that Hiroshima city is home to car maker Matsuda Motors.
The latest government initiative follows up on Prime Minister Junichiro Koizumi's promise that the government will "present Japan as an attractive destination for foreign firms" and expects "the cumulative amount of investment doubled in five years."
Luring foreign investors to Japan has been difficult in recent years, as neighboring China has become the destination of choice for many overseas companies as a foothold in East Asia. Nevertheless, the Bank of Japan reported that foreign investment levels nearly doubled between 1998 and 2001. Yet, the ratio of foreign investments to gross domestic product has remained low at 1.1 percent in 2000, compared to other industrialized nations where the ratio can be more than 20 percent.
When the Japanese economy was booming in the 1980s and early 1990s, there appeared to be little need for the country to encourage foreign investment.
Moreover, Midori Tani, director of the ministry's trade and economic cooperation bureau said that Japan's huge domestic savings were ample enough at the time to finance growing economic activities.
But even though critics of foreign investment remain, the long recession has pushed government agencies to break any constraints that have hindered smooth inflow of foreign capital, know-how and experts into Japan, Tani said.