Once the world’s manufacturing hub, Japan is now a global financial powerhouse, and an investor of choice for countries across the world. It has been the world’s biggest source of foreign direct investment in the past three years, with more than US$220 billion in outflows each year.
What makes Japanese investors attractive is that they bring much more than just the money. Their technological prowess, manufacturing capabilities, long investment horizons and friendly terms make them sought-after investors.
Their meticulous approach, due diligence and focus on corporate governance add heft to their investment choices. The keiretsus, or Japanese mega conglomerates, also bring expertise and deep understanding across a wide variety of sectors and industries.
Although best known for their cars and high-tech industry, the Japanese have been keen investors in core sectors like mining, and infrastructure projects such as metros, railways and highways, and also have a great appetite for pharmaceuticals, telecoms and consumer sectors.
A world of opportunity awaits intrepid Japanese companies, but they must contend with legal and regulatory uncertainties, shifting geopolitical realities and additional challenges associated with doing business during a global pandemic.
In this context, Asia Business Law Journal has collaborated with the Japan In-house Lawyers Association and leading law firms around the world to produce the Japan Outbound Investment Guide. This fully bilingual resource features 20 expert-written articles tackling the most pressing issues, opportunities and pitfalls awaiting investors in strategic destinations.
Although primarily intended for in-house counsel and other business leaders at Japanese companies, we trust the Japan Outbound Investment Guide will be a valuable and authoritative resource for anyone with a professional interest in the opportunities and legal challenges associated with foreign direct investment.
Masako Takahata
Chair of International Arbitration Committee
Japan In-House Lawyers Association (JILA)
Trends in Japanese foreign direct investment
Japanese companies are key players in foreign direct investment. In 2020, FDI outflow from Japan was US$222.5 billion, which makes the country the largest investor in the world. Japanese investments are focused in the Europe and North America in various sectors including finance and insurance, electric machinery, transportation equipment production, chemicals and pharmaceuticals. While the government is keen on promoting imports and investments in Japan, FDI inflows to Japan remain low compared to other developed nations around the globe, reaching US$14.5billion,according to United Nations Conference on Trade and Investment’s (UNCTAD) “World Investment Report 2020”.
Due to the covid-19 pandemic, FDI flows to and from most countries are declined. Many Japanese multi-national companies are suffering from falling corporate earnings, and postpone their investment plans. Lockdown measures, suspended business operation and closed factories impacted supply chain and factories’ production, which urge the investors to rethink their investment strategies. … (Read more)
Yusuke Hatakeyama
Attorney-at-law
Mori Hamada & Matsumoto
Economic pacts key to Japanese dealmaking
Economic Partnership Agreements (EPAs) and investment treaties are very useful for Japanese companies expanding overseas, regardless of the size of the company. This is because, under these agreements, the regulations stipulated in the laws, and of the partner country, are especially relaxed for Japanese companies, a framework is established to resolve local business obstacles that are not based on laws and regulations with the Japanese government, and a special framework is established to resolve disputes with the governments of the partner country. EPAs with investment treaties and investment provisions are called investment-related agreements.Nevertheless, many companies are missing out on opportunities because they do not know how to use them. For example, according to a 2020 survey by the Japan External Trade Organisation (JETRO), a government organisation promoting mutual trade and investment, 35.5% of 966 Japanese companies with overseas bases are completely unaware of these investment-related agreements. … (Read more)
Roadmap for investing in Bangladesh
For the past three decades, Japanese brands like Toyota and Honda have dominated the Bangladeshi market, establishing the threshold of “Japanese quality” in the majority of households. Brands like Sony, Panasonic, Canon, Toshiba, Nikon, Fujifilm and Epson have been shaping the choices of more than three generations of Bangladeshi consumers… (Read more)
ASA Bari
Managing Partner
AS & Associates
Shahrima Tanjin Arni
Research Associate
AS & Associates
Investment strategies, regulations and policies in India
In recent years, India’s story of growth has been widely considered as a paragon for Asian economies. Much of India’s success and growth has been due to its appeal to foreign investors, who are attracted by the size of the opportunity and the demographic, low-cost manufacturing, and rule of law. Despite the covid-19 pandemic, India has emerged as an attractive and durable investment destination. The UN Conference on Trade and Development reported that foreign direct investment (FDI) into India rose by 13% in 2020, while fund flows declined most strongly in major economies such as the UK, the US and Russia.… (Read more)
Rishabh Shroff
Partner and Co-Head, Japan Desk
Cyril Amarchand Mangaldas
Patent protection for Japanese businesses in India
The covid-19 pandemic has been a catastrophe for India, but most experts believe the worst is over for India’s economy. India has already started one of the world’s biggest vaccination programmes and policymakers have started working on the recovery process. The country is likely to avoid recession, and may observe decent economic growth this year after improvement in the current pandemic situation.… (Read more)
Joginder Singh
Partner
LexOrbis
Rajeev Kumar
Partner
LexOrbis
Trends in technology investment in India
Japan and India have a long cultural relationship, which date back to 752 AD. What started as a cultural exchange has now come to a point where more than 7% of all foreign direct investment (FDI) that has come into India in the past 20 years is attributable to Japan. While steel was the predominant area of focus of investment until recently, the information technology enabled services (ITeS) sector has witnessed the highest deal value between 2015 and 2020.… (Read more)
Abhishek Malhotra
Managing Partner
TMT Law Practice
Investing in Indonesia post-Omnibus Law
With a growing market and attractive labour incentives, Indonesia should have been a popular destination for investment. However, bureaucracy and legal uncertainty mean the country is often not seen as being as business friendly as its neighbouring countries. The government addressed this challenge in 2020 with the issuance of Law No. 11 of 2020 on Job Creation (the Omnibus Law), which amended and revoked 78 prevailing laws and regulations. … (Read more)
Freddy Karyadi
Partner
Ali Budiardjo Nugroho Reksodiputro Counsellors At Law (ABNR)
Anastasia Irawati
Senior Associate
Ali Budiardjo Nugroho Reksodiputro Counsellors At Law (ABNR)
Legal developments for investors in the Philippines
The Philippines and Japan enjoy a special relationship that was born from more than a shared history and common geographical concerns. As such, while the Philippines has commonly welcomed foreign investment into the country, it has given some special incentives exclusively to Japanese investors. For example, the Japan-Philippines Economic Partnership Agreement has greatly benefitted both countries in terms of increasing Philippine exports to Japan. It is for both countries’ mutual benefit to further Japanese investment into the Philippines. … (Read more)
Jerry S Coloma III
Partner
MOSVELDTT
Rodolfo G Tuazon Jr
Partner
MOSVELDTT
Keisha Trina M Guangko
Senior Associate
MOSVELDTT
Designing a JV contract in Taiwan
When Japanese companies invest in Taiwan, they mostly establish a Taiwanese company, either by a sole proprietorship or joint venture (JV) with others, or by becoming a new shareholder of an existing Taiwanese company. In the case of a JV, whether the shares can be transferred freely between the parties, the method and ratio of capital contribution, and the allocation of management rights are all key to the design of the JV contract.… (Read more)
Lee Li-pu
CEO and Managing Partner
Formosan Brothers Attorneys-at-Law
Chen Chiu-hua
Managing Partner
Formosan Brothers Attorneys-at-Law
Teresa Pan
Partner
Formosan Brothers Attorneys-at-Law
Strategies for Japanese businesses investing in Thailand
Japan is a key investor in Thailand, particularly in key areas such as the automotive sector, as evidenced by Thailand Board of Investment (BOI) data throughout this period. Japanese investors are also key investors in the Eastern Economic Corridor, officially called the Eastern Special Development Zone, which is a special economic zone set up in three provinces on Thailand’s eastern seaboard.… (Read more)
Melisa Uremovic
Deputy Managing Partner
R&T Asia (Thailand)
Sui Lin Teoh
Deputy Managing Partner
R&T Asia (Thailand)
Litigate or arbitrate? Flexibilities for foreign disputes in Thailand
One of the most important concerns for foreign investors before they make a decision is the regulation and mechanism for disputes resolution in the country in which they want to invest. In Thailand, disputes may be settled through the typical mechanisms of litigation to alternative dispute resolution by arbitration, which can provide more flexibility to foreign investors compared with traditional proceedings.… (Read more)
Pisut Attakamol
Partner
Baker McKenzie
Post-covid challenges for labour relations in Germany
Covid-19 has dramatically changed all aspects of labour relations globally. The German consensus model, as it has often been referred, seeks harmonious relations between regulatory bodies and affected parties, and has widely shown its long-term stability. But will it be good enough to cope with the challenges of a post-covid world?… (Read more)
Burkard Göpfert
Partner
KLIEMT.Arbeitsrecht
Establishing an investment fund in Israel
Israel has encouraged and attracted inbound foreign investment for many years. Japanese investors in particular have shown increased interest and investment activity in Israeli companies, several of which have formed an Israeli corporate venture capital (CVC) fund. … (Read more)
Anat Shavit
Partner and Head of Tax Practice
Fischer Behar Chen Well Orion & Co
Ron Lehmann
Partner
Fischer Behar Chen Well Orion & Co
Ron Sitton
Partner
Fischer Behar Chen Well Orion & Co
Investment opportunities in the UAE
The United Arab Emirates (UAE) is the second-largest economy in the Middle East. In the past two decades, it has emerged as the preferred destination for foreign investors to establish a presence to undertake business in the region. It has consistently outperformed several countries in the Ease of Doing Business rankings by the World Bank, and is currently ranked 16th out of 190 countries.… (Read more)
Rohit Kochhar
Chairman
Kochhar & Co
Anjuli Sivaramakrishnan
Managing Partner
Kochhar & Co
Investment risks and opportunities in Angola
The decision to invest in a new market by a foreign investor is often framed by the pursuit of a predictable legal framework, which among other things respects the sanctity of contracts and facilitates a level playing field. Regardless of the industry, careful planning is the rule of thumb for those who wish to invest in a market with the characteristics of Angola. … (Read more)
Catarina Levy Osório
Partner
ALC Advogados
João Francisco Cunha
Consultant
ALC Advogados
Frederico de Távora Pedro
Consultant
ALC Advogados
Legislation, incentives to invest in Nigeria
Nigeria is regarded as a viable and attractive destination for foreign investment, mainly because of its abundant mineral resources and large population. The country also has a plethora of legislation, platforms and incentives for foreign investments. This article discusses strategies, principal legislation and incentives relating to foreign investment in Nigeria.… (Read more)
Fidelis Adewole
Partner
G Elias & Co
Marian Asuenimhen
Senior Associate
G Elias & Co
IP, immigration and regulations for foreign innovators in Nigeria
Nigeria is regarded as a viable and attractive destination for foreign investment, mainly because of its abundant mineral resources and large population. The country also has a plethora of legislation, platforms and incentives for foreign investments. This article discusses strategies, principal legislation and incentives relating to foreign investment in Nigeria. … (Read more)
Afolasade Olowe
Partner
Jackson Etti & Edu
Yeye Nwidaa
Senior Associate
Jackson Etti & Edu
Tolu Olaloye
Senior Associate
Jackson Etti & Edu
Regional perspective of Senegal and Ivory Coast
Senegal and Ivory Coast belong to two major regional entities – the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU). They are also members of the Organisation pour l’harmonisation en Afrique du droit des affaires (OHADA), which translates as the Organisation for the Harmonisation of Corporate Law in Africa. … (Read more)
Mouhamed Kebe
Managing Partner
Geni & Kebe
Mohamed A Dieng
Partner
Geni & Kebe
Annick Kobenan
Counsel
Geni & Kebe
Outbound investment strategies into the US
The US remains a leading destination for foreign direct investment (FDI) in many forms, including providing additional capital to existing US operations, purchasing the entirety of a US company, forming a joint venture or any such combination.… (Read more)
I Bobby Majumder
Partner
Reed Smith
Lynwood E Reinhardt
Partner
Reed Smith
Brooke C Dorris
Associate
Reed Smith
Compliance challenges for foreign investment in the US
While the US remains a top destination for foreign investment, certain laws and regulations create challenges for foreigners seeking to conduct business there. Failure to comply with these laws and regulations can lead to civil and criminal penalties, substantial administrative burdens, legal expense, and unsatisfied business objectives. This article discusses some of the key challenges companies face when investing in the US, and certain antitrust compliance risks that Japanese investors in particular may face. … (Read more)
Jeffrey L Kessler
Co-Executive Chairman
Winston & Strawn
Eva W Cole
Co-Chair of the Antitrust/Competition Practice
Winston & Strawn
Heather P Lamberg
Partner
Winston & Strawn
