The American Chamber of Commerce in Japan warned Wednesday that Japan may not be able to achieve its goal of doubling the outstanding amount of foreign direct investment within five years.
A report compiled by the ACCJ also states that the government must drastically deregulate the medical services, education and public services sectors to boost investment.
These sectors have been strongly protected, making it difficult for foreign firms to enter, the report says.
As of the end of 2002, the outstanding amount of foreign direct investment stood at about 9.4 trillion yen.
At the beginning of the year, Prime Minister Junichiro Koizumi announced the government's goal of doubling this amount.
The amount of foreign direct investment in Japan for the year to June stood at 830 billion yen.
If annual foreign direct investment remains at this level, it would total only 4.15 trillion yen in the next five years, according to Kyoji Fukao, a professor at the Hitotsubashi University Institute of Economic Research.
Fukao helped compile the report.