Winners & Losers

The new regulations will create a clear divide among market participants. Winners include established Japanese businesses, which may benefit from reduced competition from smaller foreign entrants and a potential influx of more substantial, high-quality foreign investment. The Japanese government also achieves its objective of attracting higher-quality foreign investment and addressing concerns about visa abuse. Well-capitalized foreign entrepreneurs capable of meeting the new requirements will find Japan a potentially more stable and serious business environment. Conversely, losers will predominantly be small and medium-sized enterprises (SMEs), particularly from regions like the Philippines, which will face significant hurdles in entering the Japanese market due to the increased capital requirement. Individual entrepreneurs relying on personal savings or smaller investment rounds may find Japan inaccessible under the new terms, and businesses in sectors typically requiring lower initial capital investment could be disproportionately affected.

Action Timeline

Immediate: Philippine companies and other foreign enterprises that can meet the new 30 million yen capital requirement and employment criteria should consider fast-tracking their entry into the Japanese market before the new rules are fully implemented in October. The public comment period closes September 24, making this a critical window.
Short-term: Businesses unable to meet the new capital threshold should explore Japan's 'Startup Visa' program, which allows up to two years for business preparation without immediate stringent capital requirements, provided there's municipal endorsement and a robust business plan. Strategic partnerships with Japanese entities or leveraging specialized support programs like those from JETRO are also crucial.
Long-term: Foreign investors must prepare for a structurally altered landscape in Japan, characterized by a focus on high-value, high-impact investments. Businesses should integrate these higher capital and employment thresholds into their long-term strategic planning for the Japanese market.

Risk Assessment

Regulatory Risk: The primary risk for foreign entrepreneurs is failing to meet the significantly higher capital and employment thresholds, which could lead to visa rejections, non-renewal, or difficulties in maintaining existing business operations in Japan.
Market Access Barrier: The six-fold increase in capital acts as a substantial barrier to entry for many SMEs and individual entrepreneurs, potentially limiting their international expansion opportunities in Japan.
Competition for Talent: As Japan seeks more substantial investment, there might be increased competition for skilled labor within the country, affecting employment costs and availability for businesses.