Japan puts Toyota, Sony and 516 other firms on ‘national security’ list to counter China risk, foreign raiders

Foreigners buying 1 per cent or more in core firms face tighter investment scrutiny, versus previous threshold of 10 per cent

Japan takes step in line with measures adopted by US, Europe and others to counter China security risk

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Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe (left) visit a Toyota Motor group factory in Tomakomai on Japan's northernmost main island of Hokkaido in May 2018. Photo: Kyodo

Published: 6:14pm, 10 May 2020Updated: 9:32pm, 10 May 2020

Japan has put out a list of companies subject to tighter foreign ownership rules, including majors such as Toyota Motor Corp and Sony Corp, joining the US, Europe and elsewhere in stepping up scrutiny of industries considered key to national security.

Japan identified 518 of its roughly 3,800 listed firms on its US$5.4 trillion stock market as having operations core to national security, making them targets for stringent regulations, according to a list released by the Ministry of Finance.

The tighter rules covering foreign investment in a dozen sectors crucial to national security, such as oil, railways, utilities, arms, space, nuclear power, aviation, telecoms and cybersecurity, take effect from Friday.

Sony Corp's new President and Chief Executive Officer Kenichiro Yoshida attends a news conference on their business plan at the company's headquarters in Tokyo in 2018. Photo: Reuters

Foreign investors buying a stake of 1 per cent or more in Japanese firms in the 12 areas now face pre-screening in principle, compared with the previous threshold of 10 per cent, according to the announcement. Toyota has dropped almost 15 per cent this year in line with the Nikkei 225 Index, while Sony has declined 6.4 per cent.

“The revised law is aimed at accelerating foreign direct investment in Japan,” said Finance Minister Taro Aso, referring to a law passed in November, and adding that technology and patents needed protection from a national security standpoint.

“As we have explained our intention overseas, misdirected criticism such as that we may limit foreign investment in Japan has disappeared.”