New review regime could affect South Korean technology firms and supply chain partnerships in Japan

Japan plans to revise its Foreign Exchange and Foreign Trade Act (FEFTA) to strengthen national security screening of foreign investment, with the Cabinet expected to approve amendments as early as next week, according to South Korean media reports citing Japan’s Yomiuri Shimbun newspaper. The revisions would establish a new government committee to review foreign investment cases involving sensitive industries, with participation from the finance ministry, the Ministry of Economy, Trade and Industry and the National Security Secretariat.

The committee would assess investments involving companies operating in sectors deemed important to Japan’s economic security and could require advance reporting or approval in certain cases. The framework is expected to operate similarly to the U.S. Committee on Foreign Investment in the United States, allowing Tokyo to review transactions involving investors potentially influenced by foreign governments. Japanese officials have cited concerns over technology leakage, particularly involving advanced industries, as a key motivation for tightening the screening regime.

Japan plans to revise its Foreign Exchange and Foreign Trade Act (FEFTA) to strengthen national security screening of foreign investment, with the Cabinet expected to approve amendments as early as next week, according to South Korean media reports citing Japan’s Yomiuri Shimbun newspaper. The revisions would establish a new government committee to review foreign investment cases involving sensitive industries, with participation from the finance ministry, the Ministry of Economy, Trade and Industry and the National Security Secretariat.

The committee would assess investments involving companies operating in sectors deemed important to Japan’s economic security and could require advance reporting or approval in certain cases. The framework is expected to operate similarly to the U.S. Committee on Foreign Investment in the United States, allowing Tokyo to review transactions involving investors potentially influenced by foreign governments. Japanese officials have cited concerns over technology leakage, particularly involving advanced industries, as a key motivation for tightening the screening regime.

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