950824

Japanese mulling to

relocate their units

in subcontinent: Sakai

AMANULLAH BASHAR

KARACHI: Due to the appreciation of Japanese yen and increasing wages in Japan, most of the Japanese companies intend to relocate their industries, specially in the countries of the subcontinent which provide a lucrative base for investment. However, why Japanese companies are hesitant to invest in Pakistan, was the question posed here on Thursday by Hiroomi Sakai, Consul General of Japan to ponder upon by the Pakistan authorities.

The Japanese diplomat was speaking at a seminar on "Japan's fifty years after World War II and its prospects for the 21st century", organized by the Japan Cultural Centre at a local hotel.

The huge crystal ballroom of Hotel Marriot was packed to capacity despite the strike in the city. The seminar, conducted by Syed Javed Iqbal, was also addressed by Najmul Saqib Khan, former ambassador to Japan, Dr Maqbool Ahmed Bhatty, Vice President Islamabad Council of World Affairs, Dr Abdul Wahab, Vice Chancellor University of Karachi and Fatima Surriya Bajya.

Outlining the Japanese investment in Pakistan and trade situation between the two countries, the Japanese diplomat said that the trade has always remained imbalanced and only in favour of Japan. There are several reasons behind this phenomenon and to avoid this situation there is a need for developing and fostering export of high value-added manufactured goods or downstream products.

Sakai suggested that exports from Pakistan should be diversified more. For example, he said, earlier raw cotton was exported to Japan, later cotton yarn took over. But now the situation is different. Now diversified finished products of cotton such as fashion apparel should be exported to Japan. Pakistani exporters and manufacturers must pay attention to diversification of exports, he said.

Another important aspect is the fierce competition in markets. Several countries are exporting cotton and other products to Japan, to achieve a larger share of the Japanese market. Hence, Pakistan has to maintain the standards in quality while correct pricing is also important, he said.

The graph of trade between Japan and Pakistan had been rising steadily upto 1993. Bu in 1994 total volume of trade shrunk due to some unavoidable circumstances. According to the Japanese trade statistics, total exports from Pakistan in 1994 were worth $546 million as against the total imports from Japan of $856 million. A good aspect in 1994 was that the trade imbalance was reduced. In any case, Japan has remained as the second major destination of Pakistan's exports after the USA. On an average, 10 percent of the total exports of Pakistan go to Japan.

Japan has attained and maintained its position as the second-largest trade partner of Pakistan for the last 10 years. Pakistan's exports mainly comprised cotton, cotton yarn, cotton apparel, fish, shrimp, leather and leather goods, constituting approximately 76 percent of the total exports in 1993. But the share of manufactured or value-added goods has hardly increased. This means that exports to Japan rely mainly on agro-based goods, while Pakistan imports from Japan are composed of heavy industrial products, atuomobiles, machineries, electrical goods, synthetic fibres and chemicals which are all finished goods. In particular, machinery and chemical products constituted 76.5 percent of the total imports from Japan to Pakistan in 1994. These are the essential good which are necessary the industrial development of Pakistan.

He said the Japanese Government is adapting a policy of domestic demand expansion. As Japan's domestic market dynamics have changed, the demand for imported goods has risen immensely, Japan has opened up its markets to foreign goods. There is a very large potential to be explored.

Sakai disclosed that the quantity of sea-product exports from Pakistan to Japan is rising. On the other side, Japan has decided to import rice from the other countries. Initially, Japan will import 51 tons of rice from Pakistan. Rice from 6 countries, including Pakistan is going to be imported into Japan. Long Grain Basmati rice will only be imported from Pakistan.

As far as the direct private investment from Japan is concerned, the Japanese companies have invested $232 million in Pakistan, mostly in the transportation industry. Overall investment in transportation industry is about 30 percent of the total Japanese investments in Pakistan, Sakai said.

Pakistan is endowed with natural resources, a fertile land with abundance of manpower and tremendous potentials in Pakistan's consumer markets. After all, Pakistanis are very friendly to the Japanese people. Despite the availability of all these necessary elements we find that Japanese investment here is not upto the level where it could be. Why is this so? That is what is required to be considered very carefully, he remarked.