TOKYO (Reuters) - Foreigners investing in Japanese firms engaged in industries related to national security, like defense, nuclear power, public utilities and telecommunications, will have to report when their stakes reach 1%, rather than 10% currently, under a change to the law expected to be made early next year.
Confirming a report by Reuters in later August, Ministry of Finance officials said on Tuesday that Japan had decided to make the change to enable greater scrutiny of ownership in sensitive industries following similar steps taken by the United States and Europe in recent years.
The planned change comes amid growing unease among advanced economies that Chinese state-backed companies could gain access to key technology and confidential information, although the Japanese officials said it was not targeting a particular country.
The government plans to present a draft foreign exchange control law revision to the parliament in coming weeks, with the aim of bringing the tighter control into effect next year, the officials said.
Under current rules, a foreign entity is required to report ownership in a Japanese firm once it plans to take at least a 10% stake or more of shares with voting rights. The change would take that percentage down to 1%.
Under the planned revision, the government would ease rules on portfolio investments, which account for a bulk of inward direct investment, by exempting them from requirements such as advance notice and reducing frequency of retrospective reports.
"We will promote the inward direct investment that will help economy's healthy growth, while appropriately dealing with the kind of investment that will hurt national safety," a finance ministry official said.
Chinese mergers and acquisitions in Japan totaled 220 billion yen ($2.06 billion) in 2018, versus the balance of the inward direct investment at 30.7 trillion yen, according to separate data by Tokyo-based advisory firm Recof Corp and the finance ministry.