Japan has the potential to become an important trading partner of Pakistan. In 2015, Japan emerged as the 8th largest trading partner of Pakistan amongst the developed countries. The total value of trade between the two countries has remained around US$ 2078 billion.
This trend, however, needs to be further increased as the two countries have lot of potentials to increase their bilateral trade. The Belt and Road Initiative (BRI), and bilateral arrangements between the two countries could drive them to enhance their trading ties to a large extent, perhaps next only to China where the bilateral trade has jumped to US$ 20 billion mark.
The reinvigoration of diplomatic, economic and security ties between Pakistan and Japan looks essential at this point in time. This was confirmed during the Foreign Minister Taro Kono’s visit in January this year. Both countries have celebrated the 65th anniversary of diplomatic ties with one another. However, Kono’s visit to Pakistan was nine-years after the last visit from a Japanese Foreign Minister to Pakistan. This momentum, however, needs to be changed and much closer ties with a relatively better frequency should be maintained between the two countries to discuss the Afghan issue, India-Pakistan ties, and other bilateral issue between the two countries.
Japan has shown that it wants to become a larger part of the CPEC. The offer was turned down by Pakistan unfortunately. Japan wanted to pour capital into a tunnel being built as part of CPEC, but China resisted the move, leading Pakistan to refuse the offer to the latter creditor. Japan’s offer was cheaper that the London Interbank rate. Pakistan asked Japan to invest in the country rather than providing a cheaper rate for CPEC projects.
Such type of an attitude would discourage prospective third-party investors to invest in the CPEC project, which is contrary to the aims of the economic corridor. With the spirit of CPEC, Pakistan should encourage investment from all sources including the Japanese. Negotiations with prospective Japanese investors in power and other sector should be encouraged rather than discouraged for reasons.
Under the improved security situation in Pakistan, there is much more room available to expand their bilateral ties in many sectors. Pakistan follows the most liberal investment and de-regulatory regime in the region.The Japanese needs to take into account the potentiality of such policies and move further towards Pakistan.
Kono’s visit to Pakistan was nine-years after the last visit from a Japanese Foreign Minister to Pakistan. This momentum, however, needs to be changed and much closer ties with a relatively better frequency should be maintained between the two countries to discuss the Afghan issue, India-Pakistan ties, and other bilateral matters between the two countries
Pakistan has the potential to become one of the most lucrative markets for Japanese investors and businessmen. For future Japanese investments, the emerging sectors of automobile, auto parts, electric cars, electronics, solar panels, chemicals,plastics, human resource management and science and technology besides many other sectors of economy and trade, are rapidly developing in Pakistan.
In the BRI process, Pakistan must undertake the services offered by Japan to train the Pakistan workforce to handle large scale projects. According to the Japan External Trade Organisation (JETRO), Pakistan is rated as the top Asian country for Japanese companies for expected profits in 2018, which has encouraged Japanese plans for expansion of operations and hiring of the local labour force. Given Pakistan’s low labour cost and large youth population, it represents an attractive environment for Japanese investors.
The cooperation between Pakistan and Japan would open up new avenues for industrial change in Pakistan. This type of cooperation is essential to give a better look to the BRI project by truly making it a regional project of utmost importance where Japanese and other companies can play a greater role.
Given the respect for the growing Indo-Japanese alliance in the region, Pakistan should improve its relations with the Japanese, instead of tackling the Indo-Japanese alliance in the region. The Indo-Japanese alliance in the region is too large to be stopped by Pakistan.
Pakistan would be diverting from utilising all the benefits that come with good trade relations with Japan. This task would be good for Pakistan. Pakistan should also provide help to Japan in entering Afghanistan and to play its due role to bring peace in the war-torn country.
There is no bar in discussing the Kashmir dispute with our Japanese counterparts, although we understand the response of our Japanese friends towards Kashmir. Japan has been adopting such a response toward Kashmir for quite some time during the Cold War, which has now become the consolidated Japanese policy, regarding the issue. Without upsetting the Japanese policy on Kashmir, all avenues of cooperation are open with Japan and there is a dire need to invest in all such options.
The writer is Director of the China-Pakistan Study Centre at the Institute of Strategic Studies Islamabad. He writes on East Asian affairs
Published in Daily Times, August 13th 2018.