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JAPAN'S renewed effort to draw foreign investment appears to be gaining traction.
After sliding for three years, foreign investors - including those from Singapore - pumped US$5.21 billion into Japan in the first six months of this year, more than double the US$2.36 billion for the whole of last year.
The figure from Singapore firms surged to US$533.69 million after easing to US$325 million in 2013 from US$978 million in 2012.
According to latest figures compiled by Japanese government trade and investment promotion agency, Japan External Trade Organization, Asian firms in total invested US$2.15 billion in the first half, more than double the US$867 million for the 12 months of last year. But it was still lower than the US$2.89 billion for 2012.
The Taiwanese (US$806.54 million) accounted for the single biggest chunk of Asian investment inflow, followed by Singaporeans.
Singapore firms remain the biggest Asian investors in Japan to date, with net cumulative investments of US$13.36 billion as at end-2013, or over half of the Asian total.
Traditionally, these were sunk into real estate and finance. But following the inking of a free trade pact between the two countries, Singapore firms have also put their money in Japan's spa, resort, restaurant, information technology and software businesses.
Singapore net cumulative investments in the country peaked at US$16.03 billion in 2011, before falling to US$15.38 billion in 2012 and US$13.36 billion last year. This was due partly to Singapore firms realising profits on the Japanese properties they had bought.
This divestment trend was shared by all foreign investors in Japan in recent years. Overall, net cumulative foreign investments slipped from US$226.22 billion in 2011 to US$206.30 billion in 2012 and US$170.59 billion in 2013.
The Europeans' share dropped from US$101.94 billion to US$95.16 billion and US$78.95 billion. Asia's crept up from US$26.67 billion in 2011 to US$27.92 billion 2012, but fell in 2013 to US$24.51 billion.
France, which has invested heavily in the fashion business in Japan, saw its investments there tumble from US$20.50 billion to US$18.03 billion and US$14.25 billion over the same period. Even Japan's protector and close ally, the US, slashed its investments from US$70.91 billion to US$61.76 billion and US$52.40 billion.
Some Japanese observers say the issue boils down to foreign businesses' expectations of the Japanese market's growth potential - and these have fallen after repeated failed attempts to revive Japan's economy, which has been in a depressed state for two decades.
Others noted that Japan's economy is still over-regulated, its market barriers have stayed high, Japanese workers are costly and Japanese corporate tax rate remain above those in many European and Asian economies.
These drawbacks tend to overshadow Japan's attractions, which include the country's leadership in high technology, research and development as well as its huge market size.
But things may be changing with Shinzo Abe, the new Japanese prime minister who is bent on reviving the the economy. His strategy, which rests on the "three arrows" of fiscal stimulus, monetary easing and structural reforms, have shown to be promising.
The strategy, which also aims to double the current level of foreign investments by 2020, also entails the government taking the necessary policy steps to woo foreign firms to invest in Japan.