Japan promotes foreign direct investment

JETRO to deploy sector experts in India to facilitate direct investment in Japan

geetanjali

Geetanjali Minhas | February 25, 2016


#JETRO   #Japan   #FDI  

Japan is targeting foreign direct investment (FDI) worth US$300 billion from overseas companies by 2020. In a joint statement signed by prime minister, Narendra Modi and his Japanese counterpart, Shinzo Abe, in order to promote FDI from India to Japan in Internet of Things (IoT) in December 2015,  Japan External Trade Organization (JETRO), a government related organisation, will  promote investment into Japan and  provide assistance to interested Indian companies.

“We are planning to deploy sector based experts in our offices in India to support potential direct investment to Japan” said JETRO, executive vice president, Shigeki Maeda at a press conference in Mumbai. He added that the agency will establish ‘India Desk’ with Indian staff in Tokyo headquarters for Indian companies for ease of consultation.

 After Abenomics (economic reforms initiated by Shinzo Abe, like large monetary easing, tax reforms and other deregulations), GDP of 517 trillion Yen in 2012 has increased to 529 trillion Yen in 2015 and operating profits for companies have surged from 126 trillion Yen to 152 trillion Yen in the same period. Besides, economic indicators like employment and business confidence have improved.

According to JETRO, corporate tax rate of 39.54% in fiscal year 2011 (the highest in the world) has reduced to 32.11% in fiscal year 2015 and expected to come down to 20% in fiscal year 2016. Regional monopoly of electricity production and distribution that has been prevailing for the last 60 years has been broken and electricity market will be free in April. Further, the Pharmaceutical Affairs Act has been amended and the approval procedure substantially simplified.

“All over the world tax plays a big role in business in domestic and foreign companies and inviting foreign business is very competitive which is driven by tax reduction. The government has also introduced new types of subsidies in case of IoT and R&D” added Maeda.

“In fiscal year 2015, nearly 60% of FDI in Japan came in from Asian countries like Singapore, Hong Kong, China, and Thailand. China is emerging as a big player in Japan now. India is at the stage of outward direct investment mainly towards US, Singapore and UK while investment towards Japan is very limited. Japan’s focus will be on India’s IT sector, which is considered as the most advanced in the world, and pharmaceuticals, being a major industry in Mumbai. Japan will invest in generic medicines as its government is promoting and increasing use of generic medicines to 80% by 2020” Maeda said.

JETRO has supported over 12,000 projects from across the world in the past 11 years. 1,245 foreign companies including 25 Indian companies have started their business in Japan.
 

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