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Japan to restrict foreign investment in IT firms

This March 29, 2019 file photo shows the logo of Huawei Technologies Co. at its headquarters in Shenzhen, China. (Kyodo)

TOKYO (Kyodo) -- Japan will expand its restriction for foreign investors to acquire stocks in the country's firms for national security reasons by adding information technology-related firms from August.

The move is aimed at preventing the outflow of sensitive information and technologies to other countries, including China.

The announcement comes at a time when the U.S. government decided earlier this month to effectively ban American companies from supplying parts to Chinese tech giant Huawei Technologies Co., citing national security concerns, and put it on a list of companies that U.S. firms cannot trade with without a license.

The Japanese government will newly add 15 industry sectors, including mobile phone and computer manufacturers, to its restriction list and expand the scope of companies covered in five existing industries, such as regional and long-distance telecommunication businesses.

The arms, airline and nuclear industry sectors have been subject to the restriction in accordance with Japan's foreign exchange and foreign trade control law.

Foreign investors will be obliged to notify the government in advance when they seek to obtain more than a 10 percent stake in listed firms or buy share in unlisted companies in Japan.

The government will then screen their notifications to examine whether the stock acquisition would damage the country's safety.

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