CELIS Update on Investment Screening and Economic Security – May 2026
Authors: Helene Schramm with the assistance of interns Reet Sodhi and Aditi Singh
INVESTMENT SCREENING MECHANISMS
Finland – Planned Revision of FDI Screening Regime to Address Emerging Security Risks
The foreign direct investment (“FDI”) screening framework in Finland is going through a major revamp to address the risks to national security, security of supply, and undue foreign influence, more efficiently.
The new FDI Act, which is expected to be formally proposed in the fall of 2026, would replace the current Act on Screening of Foreign Corporate Acquisitions (2012). Though the main principles of the current FDI Act would sustain, the evolved version would more precisely define the sectors and activities subject to monitoring. In practice, this would (i) codify critical targets already monitored and (ii) bring certain additional industries into the regime where significant security implications may arise. The proposed Finnish FDI Act would significantly expand the sectoral scope of investment screening by covering not only defence and dual-use industries, but also businesses linked to classified information, ICT services relevant to national security, critical infrastructure, security of supply, and sectors identified in the EU FDI Screening Regulation. In addition, certain greenfield investments in sensitive sectors, such as defence, energy infrastructure, ports, airports, data centres, and strategic raw materials, would become subject to prior authorisation.
The reform would also introduce mandatory filing obligations across all covered sectors, abolishing the current distinction between EU/EFTA and non-EU/EFTA investors so that all non-Finnish acquirers would fall within the regime. Furthermore, Finnish entities under significant foreign influence, typically where foreign ownership or equivalent decision-making power exceeds 10%, would also be subject to review. The new framework would expand the ownership thresholds triggering notification requirements by adding thresholds of 66.6% and 90%, while also establishing a two-phase review process involving an initial review by the Finnish National Emergency Supply Agency followed, where necessary, by a more detailed assessment by the Ministry of Economic Affairs and Employment. Finally, the reform would introduce substantial administrative sanctions for non-compliance, including fines of up to EUR 10 million or 10% of global annual turnover, as well as the possibility of declaring non-notified acquisitions null and void.
This reform acts as a response to the evolving geopolitical environment and increasing technological developments and is expected to enter into force in early 2027.
Japan – First FDI Suspension Recommendation Under Post-2017 FEFTA Regime
In April 2026, Japan made the first suspension recommendation under its post-2017 FEFTA foreign-investment screening regime when the Advisory Council on Foreign Exchange and Foreign Trade advised MBK Partners, a South Korea-based private-equity firm, to suspend its proposed acquisition of Makino Milling Machine Co., Ltd. The recommendation was based on national-security concerns because Makino’s machinery is widely used in the production of defence-related and dual-use equipment in Japan. This became only the second suspension recommendation ever made under FEFTA, the first having taken place in 2008, which shows how rare and significant the decision was. Soon after, Makino’s board decided not to accept the proposal and referred directly to the government recommendation, demonstrating the strong practical influence of such measures.
The development also coincided with Japan’s broader effort to strengthen foreign-investment regulation through the 2026 FEFTA amendment bill, which proposes a new US-style investment-screening committee jointly led by the Ministry of Finance and the National Security Secretariat. Official reports released in 2025 and 2026 had already identified weaknesses in enforcement and monitoring under the existing framework and called for stricter oversight, including stronger post-transaction review powers. In addition, amended Cabinet Orders introduced in April 2025 expanded the range of sectors and investors requiring prior approval for inward investment. The new committee structure is expected to begin operating from July 2026, while further reforms, including expanded retroactive review powers, are planned for implementation by 2027.
Overall, the Makino case is widely viewed in official and government-linked discussions as a clear sign that Japan is moving towards a more proactive and security-focused foreign-investment screening system similar to the United States’ CFIUS model.
Malta – Streamlining FDI Screening and Enhancing EU Alignment
Malta is planning to amend the National Foreign Direct Investment Screening Office Act (Chapter 620 of the Laws of Malta) through Bill No. 172 (the “Bill”). It aims to integrate the National Foreign Direct Investment Screening Office with the Malta Business Registry, thereby establishing a single, coherent structure and to bring greater clarity and EU alignment to a system that has left investors uncertain about notification requirements.
The Bill would bring about two key changes. First, it would define what counts as a ‘portfolio investment’ exempt from screening, broadly aligning it with the definition provided by the European Court of Justice in Commission v Kingdom of the Netherlands (Judgment, 2006, para. 19). Second, it would simplify the notification trigger to match the EU FDI Regulation. Under the new rules, investors would only need to notify the National FDI Screening Office when their investment affects specific strategic activities listed in the law, not the broader and vaguer criteria that currently apply. For foreign investors eyeing Maltese opportunities, the message is clear: less ambiguity, faster decisions, and a framework that speaks the same language as the rest of Europe.
ECONOMIC SECURITY STRATEGIES
United States & Philippines – Luzon Economic Corridor to Host AI-Focused Economic Security Zone Under Pax Silica Plan
Away from Manila, inside the Luzon Economic Corridor, sits a plan taking shape, 4,000 acres transformed into an Economic Security Zone. This stretch of land, nearly 1,620 hectares, aims to anchor vital tech supply networks. Built under the US driven ‘Pax Silica’ effort, it marks the first industrial hub designed around AI from the start.
Thirteen nations now stand behind Pax Silica, aligning their flows of chips, AI tools, data systems and high end production gear. The Philippines stepped in during April 2026, becoming the last to join. With that move, the Luzon site became the centrepiece of this alliance’s real world presence.
Its job? Keeping supplies like rare minerals, microchips, electronic parts and precision made pieces moving without disruption. It also seeks less reliance on rivals who control too much of today’s flow paths. Rumours point toward New Clark City as the chosen ground, a state built urban node already equipped with solid roads, power sources and freight links. That foundation fits heavy industry needs well. Officials in Washington describe the zone as a tailored space where allied factories can rise. What grows there won’t follow vague ideals. Instead, demand patterns worldwide will guide choices. So will local strengths, the nation’s trained workers, mineral wealth, accessible energy, plus what partner states require.
On the domestic front, Manila is shaping fresh rules for this territory. Labeled an Economic Security Zone, it blends U.S style contract reliability, open rule setting practices, and consistent ways to settle conflicts, all paired with native assets in soil, labor, and raw materials. Joint oversight models are forming between Manila and Washington to keep operations predictable. One idea gaining traction: letting certain Filipinos qualify for U.S. E-2 investor visas, mirroring deals long held with Singapore and Israel. Such access could ease cross border business movement. Global firms eyeing shifts out of China may find appeal here. Areas like backend chip packaging, refining nickel for batteries and building racks of AI servers might take root fast.
Nestled in the Indo-Pacific arc, the archipelago lies across major shipping lanes. For both capitals, this venture signals deeper bonds not only in commerce but in military coordination too. Their shared view rests on one notion: stable economies fuel secure nations. Each strengthens the other. This belief pulses through recent joint declarations and through the core logic of Pax Silica itself.
Japan & Australia – Economic Security Cooperation Declaration on Supply Chains and Critical Technologies
The Australia–Japan Joint Declaration on Economic Security Cooperation was signed by Prime Minister Anthony Albanese and Prime Minister Sanae Takaichi during the Australia–Japan leaders’ meeting in Canberra on 3 May 2026 as a separate but connected agreement to the 2022 security cooperation declaration.
Its main aim is to strengthen economic security cooperation between the two countries by building resilient supply chains and protecting critical infrastructure, technologies, and resources across the Indo-Pacific region. The declaration focuses strongly on securing supplies of energy, food, and critical minerals such as lithium and rare earths, recognising Australia’s importance as a supplier and Japan’s dependence on reliable imports. Both countries also agreed to cooperate in protecting critical and emerging technologies, including semiconductors, advanced materials, and certain ICT systems, while improving export controls, investment-screening systems, and intellectual-property protection. The declaration further provides for consultation during economic-security crises, including trade disruptions, export restrictions, or coercive economic practices, through rapid information-sharing and coordinated responses.
It is linked to Japan’s wider economic-security reforms, including the 2026 FEFTA reforms, and complements Australia’s own critical-minerals and economic-security strategies. At the same time, both governments emphasised that stronger security cooperation would continue to support open and rules-based trade rather than protectionism. Official commentary also noted that the partnership would involve intelligence-sharing on supply-chain risks and restrictive trade practices by other states, especially in sectors linked to energy and critical minerals.
The declaration was presented as part of the next stage of Australia–Japan relations following the 50th anniversary of the 1976 Basic Treaty of Friendship and Cooperation, modernising the partnership to address new geopolitical and technological challenges. In practice, the agreement is expected to be implemented through ministerial dialogues, technical working groups, Quad-related economic-security initiatives, and future joint projects involving resilient supply chains, critical technologies, and coordinated investment-screening and export-control measures.
Japan & OECD – Launch of Economic Security Cooperation Plan on AI Governance, Supply Chains, and Critical Technologies
The Japan–OECD Cooperation Plan on Economic Security was announced on 12 May 2026 in Tokyo by Prime Minister Sanae Takaichi and OECD Secretary-General Mathias Cormann as a policy-coordination framework designed to connect Japan’s economic-security strategy with the OECD’s wider multilateral policy system.
The plan aims to strengthen economic security through resilient and rules-based supply chains and reliable governance of emerging technologies, especially in areas such as critical minerals, semiconductors, artificial intelligence, quantum-related sectors, and advanced ICT systems. A major part of the plan focuses on trustworthy AI, building on the G7 Hiroshima AI Process and the OECD AI Principles, with both sides working on international AI-governance standards, risk-classification systems, and secure digital frameworks based on democratic values and human rights. The cooperation plan further supports coordination on export controls, investment-screening systems, and standards for critical technologies while attempting to avoid unnecessary fragmentation in global markets. It also links closely with Japan’s ‘Free and Open Indo-Pacific’ strategy by encouraging cooperation with Southeast Asian and Global South economies, including the use of AI-supported analytical tools to improve education, skills, and technological resilience in countries such as Thailand and Indonesia.
Structurally, the plan is not a legally binding treaty but an OECD-style cooperation framework that will operate through committees, working groups, and ministerial dialogues. For Japan, the plan strengthens and internationalises its domestic economic-security reforms, including the 2022 economic-security legislation and FEFTA reforms, while positioning the country as a leading actor within the OECD in shaping international standards on AI governance, critical-mineral resilience, and balanced export-control practices.
