Just when we thought Japan was on the right track toward global best-in-class capital stewardship and pro-free markets rule making, we get a rude wake-up call suggesting Japan's national interest and free capital flows may be on a collision course.
In late October, Prime Minister Shinzo Abe's Cabinet approved legislation, which is now before the Diet, that proposes to bring down from 10 percent to 1 percent the criteria for mandatory pre-reporting for foreign investment in Japanese listed companies with businesses deemed important for national security. Unfortunately, making it more difficult for foreign investors to buy Japan will not make it easier for the Japanese to buy Japan.
Of course, there is nothing surprising in politicians seeking to protect national interests; and in fact Japan is merely following the United States in legislating greater political veto power over (supposedly) unwelcome foreign influence. Politics trying to bully itself into the way of free market capitalism is one of the new mega-trends unleashed by the backlash against globalization.