Japan to Establish Own Version of CFIUS

Tokyo, Jan. 7 (Jiji Press)–The Japanese government will set up a Japanese version of the Committee on Foreign Investment in the United States, or CFIUS, to conduct a cross-ministerial review of foreign investments in Japanese companies. The plan to establish a Japanese CFIUS was included in a coalition agreement between the ruling Liberal Democratic Party and Japan Innovation Party. Japan’s Finance Ministry, trade ministry, the National Security Secretariat and other bodies will be part of the proposed framework, with objectives including beefing up the country’s screenings to assess potential security risks, such as leaks of important technology and intel. A related bill to revise the foreign exchange law will be submitted to the upcoming ordinary Diet session due to be convened on Jan. 23, with the government hoping to set up the committee by the end of this year. On Wednesday, a Finance Ministry council compiled a report saying that the country should beef up its cross-ministerial screening structure that involves security-related government departments. Hoping to strengthen such a structure, the ministry will aim to double the number of its employees working in investment screening operations from the current workforce of about 60. The U.S. government set up CFIUS to decide whether investments in the United States by foreign companies pose a security risk. If the committee finds any issues with such investments, it can advise the president to block or temporarily suspend the moves. Japanese steelmaker Nippon Steel Corp.’s acquisition of United States Steel Corp. underwent a screening process by the committee. Currently, the Japanese government’s list of key industry sectors for national security includes those related to weapons, aircraft and nuclear power. In principle, foreign investors looking to acquire a stake of at least 1 pct in a listed company in the designated industry sectors are required to submit an application in advance. If there is a national security-related issue found during the subsequent screening process, the government can order the investment plan to be altered or scrapped. With the planned revision to the foreign exchange law, investors in Japan will have to submit an application if they are looking to invest in companies in the designated industries at the instruction of non-Japanese governments or state-owned companies. END [Copyright The Jiji Press, Ltd.]