Japan has much to do to raise FDI

Regarding Shinji Fukukawa’s Aug. 31 commentary titled “Knock down barriers to FDIs“: I agree completely with the views on foreign direct investments expressed by Fukukawa, who is one of the most perceptive and visionary of Japan’s ex-government officials. He correctly points out three of the “structural problems” impeding inward FDI, but these have been identified and discussed since at least the 1980s, when I worked at USTR (Office of the U.S. Trade Representative) on trade negotiations with Japan. Many barriers to trade and investment have been reduced since then, but many problems persist.

One reason is that although many Japanese are impressed by the opening of their market that has taken place over the past three or four decades, the pace of change in Japan is so slow compared to the rest of the world. Whereas many Japanese are satisfied comparing Japan now to how closed it was in the 1980s, the more important comparison is between Japan and other global markets now. By this comparison, Japan’s attractiveness as a market for FDI lacks competitiveness.

To better understand how much more Japan needs to do to become truly competitive, Japanese policymakers should systematically study how Singapore, Hong Kong, and other markets create incentives to attract FDI. Only by understanding the competitiveness of other FDI markets can Japan’s policymakers make the changes necessary in Japan to expand significantly FDI into their country.

glen s. fukushima
senior fellow
center for american progress
washington

The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.