Japan

Japan's amended foreign investment screening law (FEFTA), promulgated on 5 June, has moved screening onto a cross-ministry basis, and a new Japan Foreign Investment Committee has been set up. The remaining provisions tighten scrutiny of higher-risk investments and must take effect within one year of promulgation. Foreign acquirers, especially in sensitive sectors, should allow for longer and more coordinated reviews; the government already blocked a deal by an Asia-based private equity fund in April 2026.

Freshfields · 2026-10-06

Prime Minister Takaichi has told ministries to prepare expanded support for her chosen growth sectors: semiconductors, AI, defence-related industry and rare earths, with projects such as Rapidus in Hokkaido and the Taiwanese chip plant in Kumamoto as models. Her meeting with President Trump in New York did not advance Japan's US$550 billion US investment pledge. For entrants, the policy points to state-backed demand, and possible partnerships, in these sectors.

Langley Esquire, Japanese Politics Updates · 2026-10-04

A Congressional Research Service update on 22 September confirms that the US 15% tariff on most Japanese imports under the 2025 framework still applies. Separately, the US Trade Representative imposed a 12.5% tariff on Japan in July 2026 under Section 301, in a case about enforcing forced-labour import bans, and a second Section 301 investigation into manufacturing overcapacity is still open. Firms using Japan as a base for exports to the US face more than one layer of tariffs and further risk from that open investigation.

Congressional Research Service · 2026-09-22

On 18 September the Bank of Japan raised its policy rate by 25 basis points to 1.25%, citing the risk that inflation would overshoot its 2% target. It was the second hike in three months, and two board members dissented. Yen borrowing costs and debt service on floating-rate financing in Japan are rising faster than in earlier stages of normalisation, which affects how entrants fund local operations and acquisitions.

CNBC; Bank of Japan policy statement · 2026-09-18

Core consumer inflation in Tokyo, a lead indicator for the national figure, rose to 2.7% in September, above the 2.4% forecast, partly because government subsidies ended. On 2 October the yen traded around ¥157.8 per US dollar, and markets put the chance of another rate hike in December at about 82%. Entrants should expect more cost pass-through and continued currency weakness to shape local pricing and the value of yen earnings.

The Japan Times · 2026-10-02

The Bank of Japan's quarterly Tankan survey, released on 1 October, showed sentiment among large manufacturers rising to +24 from +22, the highest in eight years. Mid-sized and small firms also improved sharply. Reuters read the survey as a sign that the economy is absorbing the shock from the Middle East conflict, which points to steady corporate demand for business-to-business entrants.

Bank of Japan Tankan; The Japan Times / Reuters · 2026-10-01

The Diet's extraordinary session opened on 5 October and runs until 12 December, with 21 government bills planned. Its central issues are Prime Minister Takaichi's two-year cut in the consumption tax on food from 8% to 1%, which leaves a funding gap of about ¥10 trillion, and a cut of about 45 Lower House seats, and support for neither is secure within her own LDP. Consumer-facing entrants should watch the tax cut because it would change retail pricing, while the unresolved funding question adds fiscal and bond-market risk.

Langley Esquire, Japanese Politics Updates · 2026-10-04

US officials, including Treasury Secretary Bessent in talks with Finance Minister Katayama, have pressed Tokyo on the weak yen, after a rare joint US-Japan intervention to support the currency at the end of July. The risk of further intervention means sudden yen swings are possible, so entrants with yen exposure should review their hedging.

Newsquawk; Langley Esquire · 2026-10-04