Japan passed an amendment to the Foreign Exchange and Foreign Trade Act on Monday to strengthen the screening of foreign investments [1].
The move aims to prevent the leakage of critical technologies and information to foreign entities, reflecting growing concerns over national security risks associated with overseas capital.
The legislation establishes the Committee on Foreign Investment in Japan, a body modeled after the U.S. Committee on Foreign Investment in the United States (CFIUS). The committee will be co-chaired by the Ministry of Finance and the National Security Secretariat [1].
Prime Minister Sanae Takaichi said some foreign investments in Japan carry security risks and the government will build a system to verify the implications of such investments across different ministries [1].
To ensure rigorous oversight, the committee is expected to hold meetings approximately once a month [1]. These sessions will serve as a cross-governmental mechanism to evaluate whether specific investments could compromise Japan's strategic interests.
Finance Minister Satsuki Katayama said the government is considering holding meetings with the participation of relevant cabinet ministers as needed to share information on concerning cases [1].
The law, which was approved during a plenary session of the House of Councillors on June 29 [1], marks a shift toward a more proactive security posture regarding the domestic economy. By integrating the expertise of the National Security Secretariat with financial oversight, the government intends to close loopholes that previously allowed sensitive technology to be acquired through corporate acquisitions, or equity stakes.
“Japan passed an amendment to the Foreign Exchange and Foreign Trade Act on Monday to strengthen the screening of foreign investments.”
The creation of a 'Japan-style CFIUS' signals a strategic alignment with U.S. security protocols. By institutionalizing a monthly, cross-ministerial review process, Japan is moving away from a purely economic approach to foreign direct investment and toward one where national security takes precedence over open-market access, particularly in high-tech sectors.
