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Print

Japan concerned at ‘abrupt’ changes in Pakistan's investment procedures

Stresses need to ensure Pakistan does not fall in debt trap by developing dependency on any one country
Updated 17 Jun 2021

ISLAMABAD: Japan is reportedly unhappy with the government for what it says abrupt changes in procedures for investment, “failure to fulfil” agreed commitments and discriminatory treatment against its companies.

These concerns were recently conveyed by Senior Deputy Minister for Foreign Affairs Suzuki Heroshi, who led a 10-member team at the 7th Japan Pakistan high-level economic policy dialogue with Secretary, Economic Affairs Division-led 21-member Pakistani officials' team.

The sources said Suzuki highlighted Japan's priority areas under its "Free and Open Pacific" policy, improvement of economic infrastructure, human security and social infrastructure, peace and stability.

He stressed the need for ensuring that Pakistan does not fall in a debt trap by developing deep dependency on any one country and indicated the need for strict adherence to recognized international principles, i.e., openness, transparency, efficiency and debt sustainability agreed with the G20 countries.

He reiterated that Pakistan was the single largest recipient of Japanese grants in the world with a focus on assistance for water, sewerage system, health, education and disaster risk reduction. The Japanese Senior Deputy Minister for Economic Affairs further stated that Pakistan has a debt problem as successive governments resorted to excessive reliance on foreign loans and the IMF programmes. He remarked that Japan alleviated the burden by postponement of debt repayments under DSSI and provision of grant aid and technical assistance. Japan will consider extension of loans once fiscal health of its economy is restored.

Japan provided a funding of Rs 3.46 billion for provision of clean drinking water in Lahore, fisheries development project and rehabilitation of roads in KP; and Rs 8 billion may be utilized for financing projects in Pakistan. He asked Secretary EAD to work closely with the Embassy of Japan for selection of projects.

While talking about the issues faced by the Japanese companies, Suzuki remarked that Japanese companies are experiencing delays in processing of tax/customs duty exemptions due to cumbersome process of FBR which is a cause of concern for the Japanese companies.

The Japanese Deputy Foreign Minister highlighted that in 2018, Supreme Court of Pakistan imposed a ban on sale, purchase, manufacture, distribution and import of Agino-moto Salt and the Ministry of Commerce subsequently issued an order banning Mono Sodium Glutamate (MSG).

During a Monitoring Committee meeting with Ministry of Commerce last year, Japan requested the repeal of the ban and Secretary, Ministry of Commerce promised to request the Attorney General for Pakistan to resolve the issue.

Considering that MSG has been proved as a safe food additive by the WHO and FDA, Japan requested Pakistan to cancel/withdraw the order banning Agino-moto Salt.

He further stated that the Government of Pakistan promised provision of infrastructure as an incentive for investment within SEZs. However, Yamaha and Mitsubushi at SEZ had to develop the infrastructure themselves. Suzuki requested that the National Industrial Park be approached to fulfill its commitments.

Engineering Development Board is offering special incentives and concessions to newcomers under the next phase of the Automobile Policy without extending the same to the Japanese companies already operating within Pakistan like Toyota, Nissan, Suzuki, he stated, urging for a level-playing field for Japanese companies as well.

He further added that the details of proposals for Advanced Passenger Information System (APIS) and prevention of money laundering may be shared with the Embassy of Japan in Pakistan. Regarding a request for capacity building for Customs Administration, Akiyama Mari, Director, Country Assistance Planning Div. II, International Cooperation Bureau remarked that a short-term training course was already being offered by JICA to FBR.

The sources said concerns were also raised by Japanese investors on “sudden changes” in procedures for investment.

Regarding visa issues faced by Japanese business persons, he reiterated that visa fee, if any, should be charged on a reciprocal basis. He further highlighted that single entry visa fee of $100 is being charged which may be waived by Pakistan as Japan does not charge any visa entry fee. The procedures for issuance of completion certificates and internal procedures for getting necessary approvals also need to be improved.

The Japanese team also noted that it has extended its assistance to National Textile University of Pakistan for provision of plant, machinery and equipment and will be sending experts for imparting technical training as well.

Addressing request for unilateral tariff relief, Suzuki remarked that it was difficult to provide further tariff reductions without hurting Japan's economy. Japan maintains that Free Trade Agreement (FTA) between Japan and Pakistan will further aggravate the current trade imbalance and measures which will be mutually beneficial for expansion of economic relations should be considered.

Japan is keen to promote Eco tourism in Pakistan. In this regard, Suzuki suggested that those who write travel guides be invited to show what Pakistan offers in terms of tourism to Japanese travelers.

Sugahara Kiyoyuki, Director Southwest Asian Division, while talking about Pakistan's request for multiple entry visas remarked that due to Covid-19 Japan has suspended multiple entry visas to all countries.

Secretary EAD reassured Suzuki that the matter will be discussed with FBR to determine and resolve issues. He clarified that rather than a debt trap, Pakistan is suffering from short-term liquidity problems. Pakistan's external debt amounts to $ 80 billion of which 36 per cent is owed to multilateral and bilateral partners and is long term concessional debt spread over 30-35 years and is thus low cost. Debt servicing and retirement is not an issue, he concluded.

Copyright Business Recorder, 2021

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