Japan To End Restrictions On Acquiring Farmlands, Forests To Promote Rapid Construction Of Factories In Strategic Areas Like Semiconductor, Batteries

The Japanese government is set to ease land use restrictions in a bid to promote the construction of factories for strategically important sectors such as semiconductors, storage batteries and biotechnology, Nikkei reported.

The move is seen as an attempt by the government to alleviate land shortage that threatens to hold up factory investments, especially in the semiconductor sector.

Prime Minister Fumio Kishida is expected to announce the measures today (October 4) in a public-private forum on expanding domestic investment that he will be addressing.

Under the proposed reforms, local governments will be empowered to draw up plans and issue permits for the construction of factories in urbanization control districts (farmlands and forests), where development is currently restricted under the urban planning law. Japanese laws generally ban converting land set aside for agriculture for any other purposes.

The Japanese government is also planning to drastically reduce the approval time for development on agricultural land from a year to around four months. The government also plans to simplify lengthy and complex regulations by adopting a system of parallel approvals by land, agriculture and industry ministries for starting new factories.

By making it easier to build factories, Japan hopes to boost local production of important goods and expand domestic investment.

The reforms come amid the government's concerted effort to lure overseas semiconductor companies, including designing generous financial incentives. Japan lags behind South Korea and Taiwan in advanced chip manufacturing. It imports more than 60% of its semiconductors, much of them from Taiwan and China. 

Semiconductor fabs typically require large tracts of land as well as a supply of clean water.

TSMC (Taiwan Semiconductor Manufacturing Co), the world's leading chipmaker, is building a new chip manufacturing unit in Japan and start producing chips by 2024.

The Japanese government is providing up to $3.56 billion in subsidies for the TSMC factory in Kumamoto, on Kyushu's southernmost main Japanese island. 

Kumamoto is one of Japan's top food-growing regions. Much of Kikuyo and the surrounding area is prime farmland that would be hard to put to other uses. Kumamoto estimates that 101 hectares of industrial land are needed to support TSMC's plans.

It is also providing incentives to Kioxia and Micron Technology to build plants in Japan that manufacture semiconductors needed for data centres, artificial intelligence and other cutting-edge technologies.