Foreign Direct Investment in Japan

Junichiro Koizumi, Japan's prime minister, dropped a pledge to quadruple foreign direct investment into Japan by 2011 from his annual policy speech last month to avoid being too closely associated with the politically sensitive topic of aggressive merger and acquisition activity.

His speech was originally written to say that his government would aim to increase FDI to Y26,400bn ($225bn) by promoting the acquisition of Japanese businesses. But the pledge was omitted after the scandal over aggressive takeover tactics used by Livedoor, the internet company.

It is a setback for efforts by foreign business groups, along with reform-minded Japanese politicians and bureaucrats, to promote foreign investment at a time when rival Asian countries such as China and India are attracting record FDI flows.

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