On Wednesday, a report from Japan’s Yomiuri newspaper stated, the government is weighing options which include tightening regulation on foreign funds which have stakes in domestic firms in important technology sectors such as defense and the nuclear industry.
With the new regulation, Tokyo aims to regulate overseas funds and companies from slapping demands on Japanese companies and weaken their competitive edge, or leak technological expertise.
The Japanese government plans on coming out with specific guidelines by the end of 2021 and is likely to draft a new legislation which encompasses these rules, said the paper.
An official from Japan’s trade ministry denied the contents of the report saying the government is not considering tightening regulations.
Japan’s ministry of finance did not immediately respond to requests for comments.
According to Yomiuri’s report, measures being considered include one that would force foreign funds that break the new rules to sell their holdings to Japanese companies.
With the proposed new legislation the Japanese government aims to stay involved and provide support to industries and sectors which it deems as being strategic for the country.
Any new measures would come after another set of government rules that imposed tighter foreign ownership rules on hundreds of firms designated as having operations core to national security across a dozen sectors took effect in May last year.
Foreign investors who aim to buy a stake of 1% or more in core sectors and industries that are deemed to be strategic to national security will face pre-screening tests; the earlier threshold for such tests was 10%.
Sectors which are deemed crucial to national security include oil, railways, utilities, defense, space, nuclear power, aviation, telecoms and cyber security.