Mubasher: The Japanese government revealed that it plans to cut foreign ownership of firms in its tech and telecom sectors, CNBC reported on Monday.

The announcement took place on the same day of a visit by US President Donald Trump to Japan. Trump and Japanese Premier Shinzo Abe are holding talks in Tokyo discussing trade among other issues.

The government did not specify countries or companies that will be impacted by applying existing foreign ownership restrictions to the IT and telecoms industries.

The new rule, which will come into force starting from 1 August, comes amid heightening pressure from the US in dealing with cyber-security risks and technological transfers involving China.

Additionally, the US has pushed ahead with blocking Chinese technology worldwide, saying that China's smartphones maker Huawei Technologies could be used by Beijing to spy on the West. These allegations are forcefully rejected by China and Huawei.

In mid-May, President Donald Trump signed an executive order, declaring a national emergency over threats against US technology, according to CNBC.

The order authorises US Commerce Secretary Wilbur Ross, in consultation with other officials, to ban transactions that involve any information or communications technology that “poses an unacceptable risk to the national security” of the US.

After the order was announced, the Commerce Department announced including Huawei and its affiliates to the Bureau of Industry and Security (BIS) Entity List, toughening furthermore the conditions for the firm to carry out business with US companies.

In the same vein, Japanese ministries said in a statement: “Based on increasing importance of ensuring cybersecurity in recent years, we decided to take necessary steps, including the addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security.”

Japan, the world's third largest economy, aims at preventing a leakage of technology deemed important for national security or damage to defence output and technological foundation.

Japan’s government noted that the new rule will be applied to 20 sectors in the information and communications industries.

The new rule allows foreign investors to report to the Japanese government and undergo inspection in case they buy 10% or more of stocks in listed Japanese companies or acquire shares of unlisted firms, CNBC said.

According to the foreign exchange and foreign trade control law, Japan brings specific industries including aeroplanes, nuclear-related sectors, and arms manufacturing under foreign capital controls.