Manufacturing and Economic Security in Japan
Economic security has become an organizing principle of Japanese industrial policy: supply-chain designation, security clearance, investment screening, and subsidies tied to domestic resilience.
How Manufacturing and economic security policy is made in Japan.
The Economic Security Promotion Act created designated critical materials and infrastructure, supply-chain subsidies, and vetting for core infrastructure suppliers. The security clearance system for sensitive economic information came into force in 2025. Foreign investment in designated sectors requires FEFTA prior notification. Together they decide which companies are treated as partners in Japan’s resilience strategy and which are treated as risks.
Alongside this sits the largest industrial subsidy program in decades: semiconductors, batteries, and strategic materials under METI, the GX investment framework, and the Growth Strategy’s seventeen priority sectors. Trade policy, from US tariffs to export controls, is negotiated at the Cabinet level and implemented through METI. Labor law reform is reshaping the workforce rules manufacturers operate under.
Who decides.
METI (経済産業省)
Industrial subsidies, export controls, the Economic Security Promotion Act, and the chemical and product regulations manufacturers operate under.
Cabinet Office economic-security function and the National Security Secretariat
Designation of critical materials and infrastructure, security clearance, and the strategic direction.
Ministry of Finance
FEFTA prior notification and investment screening.
ATLA (防衛装備庁)
Defense procurement and the defense-industrial base.
MHLW
Labor law, worker dispatch, and the workforce rules under reform.
Keidanren and sector associations
Where industrial policy positions are formed before they reach METI.
What can go wrong.
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Being designated, or excluded, under economic-security criteria that were written without your input.
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Subsidy programs that favor domestic supply chains or require domestic content.
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FEFTA prior notification delays on an acquisition or expansion.
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Export controls and tariff responses that change the economics of a Japanese operation.
Engagement needs.
- 01
Engage METI and the Cabinet Office economic-security officials as a contributor to resilience, with evidence of domestic investment and supply-chain value.
- 02
Track subsidy calls, budget requests, and the Growth Strategy to time applications.
- 03
Work through Keidanren and the sector associations, and build relationships with the LDP economic-security and industry divisions.
- 04
Prepare FEFTA notification strategy early on any investment in a designated sector.
How we work in this sector.
Our published work on Manufacturing and economic security.
Request a briefing on Japan’s economic-security and industrial policy.
Tell us your sector and footprint in Japan. A principal will brief you on the designations, subsidies, and screening rules that apply.
Your inquiry will be reviewed personally by Mickey or Kelly Langley. We normally respond within one business day.