More Japanese investment depends on law and order

Overview of how Tokyo’s public and private sectors have helped Pakistan.

LAHORE: Among the advanced countries helping Pakistan’s economy, through trade, aid, technical assistance and private investment, Japan is believed to be one of the top contributors.

For the majority of people in Pakistan, Japan is known as the technology giant, which has and is inventing latest automobiles, electrical and ancillary products. Japanese companies have invested heavily in Pakistan, especially in the automobile sector.

In Pakistan’s automobile industry, Japanese companies have a controlling share due to the quality and technology-oriented nature of their two and four-wheel vehicles. These companies are looking to expand their networks mainly due to increasing demand and ideal geographical location of the country. The most recent bout of fresh investment in the sector comes from Yamaha, which is once again entering the Pakistani market, planning to invest some Rs15 billion over the next five years.



“Currently, 76 Japanese companies are working in Pakistan and more will jump in when the law and order situation stabilises,” said Toshikazu Isomura, Counsellor at the Japanese Embassy, while talking to The Express Tribune recently.

These Japanese companies are not only contributing to Pakistan’s economy by paying taxes and generating employment, they are also focusing on localisation of technologies by providing training to locals in order to meet growing demand. For this, these companies are investing in infrastructure improvement, plant/machinery imports and human resources.

Development assistance

Japan was the third largest donor to Pakistan in 2010 after the United States and the United Kingdom, and had been extending assistance to Pakistan through multilateral and bilateral institutions. Bilateral aid is extended through the Japan International Cooperation Agency (JICA) and Grant Assistance for Grassroots Human Security Projects (GGP).

Japan started the Official Development Assistance (ODA) to Pakistan in 1954 by providing technical training and the first Japanese ODA loan was extended in 1961. After Pakistan’s nuclear test in May 1998, Japan took economic measures, suspending new ODA loans and grant aid. The economic measures were discontinued in October 2001.

In April 2009, Japan co-hosted the Pakistan Donors Conference with the World Bank in Tokyo to support Pakistan in counter-terrorism measures and economic reforms. It announced assistance of up to $1 billion in two years, premised on continued steady implementation of the IMF programme.

So far, Japan has provided assistance worth 1,297.2 billion yen ($12.7 billion). Of this, 976 billion yen has been provided as soft loans, 274.8 billion yen as grants and 46.4 billion yen in the shape of technical cooperation.

Such assistance is offered on the request of the Government of Pakistan. Besides the automobile sector, Japan is helping in basic economic and social infrastructure projects like technical training programmes by establishing some high-class technology training institutes, industrial development, power sector, transportation, irrigation and agriculture and other key civic sectors.

Japanese officials are hopeful of further assistance to different sectors, plus inflows of private investment. Private investment is linked with the law and order situation, which the Japanese hope will get better.

Published in The Express Tribune, December 21^st, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.