Cap on foreign holdings in airports to be dropped

Fears of stifled investment doom clause


The government will scrap a clause aimed at capping foreign ownership of operators of the country’s major airports from its draft bill to revise the airport law and submit it to the current Diet session, government sources said Thursday.

The move comes amid heavy criticism that such regulation would stifle overall foreign investment in Japan.

The bill’s revision also reflects fierce debate among lawmakers over whether to limit the stake held by overseas investors to less than one-third in the operators of Narita, Kansai and Chubu international airports and the Haneda airport terminal buildings.

Such regulation faced criticism that it runs counter to Prime Minister Yasuo Fukuda’s pledge in January at the World Economic Forum in Davos, Switzerland, that Japan would make more efforts to open up its market.

Although the bill was initially expected to be submitted to the Diet earlier this month, it was delayed by opposition from lawmakers.

“It (the planned cap) struck foreign investors that the government will be defensive against foreign investment in the future,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc.

The attempt may have a negative impact on the planned floating of Narita International Airport shares next year, he said.

“The government needs to explain how much impact it would have on national security by letting in foreign investment,” he said.

Supporters of the bill say a lack of any cap on foreign investment on infrastructure such as airports and ports would threaten national security.

Dai-ichi Life’s Kumano also said a lack of clear policies by the government was one of the reasons why foreign investors heavily sold Japanese stocks in recent months.

Asked if the government is considering deleting the clause from the bill, Chief Cabinet Secretary Nobutaka Machimura told reporters: “We are adjusting the content of the bill with people who the issue concerns.”

Machimura also said he hopes the Cabinet will approve the bill by the end of next week.

The move to restrict foreign ownership of Japanese airports was triggered in October, when Macquarie Airports Management Ltd., an Australian fund, increased its stake in Japan Airport Terminal, the operator of Haneda’s main building, to 19.9 percent. Haneda is the main domestic airport in Tokyo.