Japan adds IT, telecoms to list of sectors with restrictions on foreign ownership

Japan has moved to add its high-tech industries to a list that contains businesses and sectors for which the government restricts foreign ownership.

Japan’s decision comes amid heightened trade tensions between the U.S. and China threatening to turn into a tech war. Washington has ramped up the pressure, saying some tech companies pose threats to national security. That was the reason behind the ban on Huawei and the expected blacklisting of video surveillance firm Hikvision.

The Japanese government’s Monday announcement has not specified which countries or companies will be hit as a result of applying the existing restrictions on foreign ownership. What it made clear, however, was that these restrictions will apply to the country’s IT and telecommunications industries.

Japan’s announcement comes on the same day Prime Minister Shinzo Abe and U.S. President Donald Trump are to hold talks in on trade among other issues.

The United States has said that China is capable of using tech companies like Huawei Technologies to spy on Western countries. But Chinese authorities, as well as Huawei, have refuted the claims.

A joint statement from three key ministries says that Japan is taking steps to prevent any potential cybersecurity risks that may threaten Japan’s national security.

The statement also adds that the restrictions are aimed at preventing situations where technology that is central to Japan’s national security can end up being leaked. Such leakages are also seen as capable of damaging the country’s technological foundation and defense output.

According to the ministries of finance, trade, and telecommunications, the new rule is set to apply to 20 sectors within the country’s information and communications industry.

Japan’s foreign capital controls law also applies to such industries as the airplanes sector, nuclear, and arms manufacturing.

Foreign investors who buy 10 percent or more in any listed company, or acquire shares of firms yet to go public, have to report these transactions to the Japanese government.

The government subjects these foreign owners to a thorough inspection and can order changes or cancellation of investments if it finds any shortcomings.