TOKYO -- The value of new Japanese foreign direct investment in the U.S. jumped 70% in the year through April, to about $13 billion, as President Donald Trump pushes to expand employment.
The overall number of moves decreased to 142, from 159 in the previous 12 months, according to Financial Times data unit fDi Markets. This suggests companies are making bigger individual bets, enticed by a brisk U.S. economy and significant tax cuts.
Large-scale investments include an office complex development in New York's Manhattan, involving Mitsui Fudosan, along with plans by Toyota Motor group parts supplier Denso to upgrade a production site in the state of Tennessee.
Municipal and state officials from the U.S. are actively courting corporate Japan.
In May, Glenn McCullough, executive director of the Mississippi Development Authority, was in Tokyo for a seminar titled "Doing Business in Mississippi."
At the event, hosted by the Japan External Trade Organization, or Jetro, McCullough noted the proximity of his state to a joint factory Toyota and Mazda Motor intend to build in neighboring Alabama. "It takes only two hours by truck" from Mississippi, he said, inviting Japanese component suppliers to set up shop.
During the first five months of 2018 alone, representatives of U.S. cities and states paid 20 visits to Japan. They made 24 trips all of last year. At least seven more are already expected this year.
Bill Hagerty, the U.S. ambassador to Japan, appears to be setting wheels in motion. He took up his post last August with an urgent mission from Trump to cut the trade deficit with Japan.
In the past, as chief of Tennessee's development authority, Hagerty successfully attracted Japanese businesses to the state. Since becoming ambassador, he has reportedly spoken with dozens of city and state leaders in the U.S. -- either in person or by phone -- urging them to visit Japan for business talks.
On Hagerty's watch, the U.S. Embassy in Tokyo has made a list of about 300 large Japanese companies that already have stateside operations, and officers have been busy arranging appointments for visitors from the U.S. This is an expansion of their role -- they used to primarily field inquiries from small to midsize Japanese companies.
According to Japan's Finance Ministry, the balance of Japanese FDI in the U.S. came to 55 trillion yen ($498 billion) in 2017, up 4.5% from the year before. Data from the U.S. Commerce Department shows the exercised amount of Japanese investment in the country topped $43.8 billion in 2017. That was the second-highest amount after Canada, and the growth rate -- 39% -- was the quickest among major economies.
The Trump administration wants to spark a positive cycle: luring foreign investment, improving the business environment through tax breaks and deregulation, and creating jobs. Yet, despite the rising Japanese investment numbers, Jetro notes that companies still harbor concerns.
Stricter visa procedures are one worry, coupled with a shortage of human resources. A review of the rules of origin for auto components is also sowing confusion, according to Jetro.
Trump has also sent a mixed message with plans to tighten screening of foreign investment, apparently targeting China. The impact on Japanese businesses remains unclear, but some may switch to wait-and-see mode, stalling their investment plans.