Amid Trump’s visit, Japan to increase scrutiny of foreign investment in its tech and telecom industries

Several IT sectors were added to a list that spells out foreign investment limitations

By

Amid Trump’s visit, Japan to increase scrutiny of foreign investment in its tech and telecom industries

Japan will increase scrutiny of foreign investment in the country’s tech and telecom industries and limit foreign ownership of Japanese firms, Reuters reports.

The rule change, which is due to kick in this August, will add 20 sectors in the information and communications industries to a list of industries that are under the Japanese government’s foreign capital controls, according to a cross-ministry joint statement cited by Reuters.

Under the current rule, foreign investors are required to report to the Japanese government if they want to buy a 10% or higher stake in a Japanese firm, only in industries such as aeroplanes, nuclear and arms manufacturing. The Japanese government can veto a deal as they see fit.

The statement said that based on the increasing importance of ensuring cybersecurity in recent years, additional sectors such as integrated circuit manufacturing were added to the list.

Though the statement made no mention of any specific countries or companies affected, it’s very likely that Chinese companies, including Huawei, can expect more scrutiny of their future deals in Japan.

The Japanese statement comes out at a time of increasing pressures from the United States to push its allies to stand by it in its new “tech cold war” with China. The timing coincides with US President Donald Trump’s talks with Japanese Prime Minister Shinzo Abe on trade and other issues.

The US Commerce Department has blacklisted Chinese telecoms giant Huawei, effectively banning US suppliers from doing business with Huawei unless they have government approvals. Several US chipmakers, including Intel, Qualcomm, and Broadcom, have reportedly stopped working with Huawei, leaving the Chinese company scrambling to find replacement suppliers from other countries including Japan and South Korea.