Japan’s Economic Security Promotion Act and the implications for businesses

Abstract

Japan enacted a far-reaching economic-security law in May 2022. The law has a two-year phased implementation schedule, which will give Japanese companies time to adapt to the law’s requirement that they consider economic security above market efficiency as part of their decision-making processes. This will entail securing supply chains from disruption due to geopolitical conflict by indigenising them or by relying on allies or partners rather than on China. These requirements will have the greatest effect on Japanese companies in the technology sector and on those that work on critical infrastructure.