A Japanese business enclave on 200 acres in the vicinity of Port Qasim is being planned, for which a team of Pakistan-Japan Business Forum (PJBF) is meeting the Port Qasim Authority officials today. A conceptual approval for the project was given by Dr Salman Shah, former advisor on finance, in 2005.

The negotiations are being held immediately after finalising a draft action report on Japanese investment potentials in Pakistan last week in Tokyo by a Joint Study Group of the business leaders.

Mr Abdul Kader Jaffer, Mr Kaleem Faruqi, Mr Feroze Shah and five faculty members of the Institute of Business Administration held two-day consultations with the leaders of the Japan-Pakistan Business Forum in Tokyo to finalise their draft report.

“The business forums in both Japan and Pakistan are expected to submit the final report by December or early January to their governments’’, Majyd Aziz, vice-president of the PJBF, said.

The joint study group has focused mainly on shipping, agro-based industry, textiles, infrastructure projects and agriculture. It identifies corruption as major impediment in promotion of investment.

“Three Japanese companies are coming here with specific investment proposals in next few months,’’ Mr Majyd revealed recalling a Japanese investment exploration mission was here in July.

Japanese are, of course, not comfortable with the growing lawlessness, particularly the recent phenomenal rise in street crimes in Karachi, manifested in car and motorcycle snatching. This is said to have brought down sales of two and four wheelers.

“But Japanese always take a long-term view of the situation and are not easily dismayed,’’ remarked a top executive of one of the automobile business group that assembles Japanese vehicles.

Japanese direct foreign investment in 2007-08 showed a sharp rise of 133 per cent to $131 million from $64 million in 2006-07. “Bulk of the investment was in automobiles’’, market sources say. About $300 million was invested by Japanese investors in last four years of which a considerable share went to automobiles.

“Fast improvement in growth, generous credit assistance from banks and financial institutions for auto purchases pushed up demand that lured Japanese to invest’’, a senior executive of an automobile company said.

Reports of drop in sales of automobiles and default in auto loans are certainly bad news for Japanese investors but expansion plans in many projects are still on.

In retrospect, business sources recall that Japanese showed tremendous interest in power projects after 1994 but shied away when Hubco chief executive was finally forced to leave Pakistan in 1997-98. Japanese have a small stake in Hubco and a few other private power projects.

“Japanese will still look at power sector with interest if good projects are designed’’, a Pakistani executive working in a Japanese firm said.

At present, there are 35 companies in Karachi working with Japanese investment and technical assistance. The latest to join is a small zipper manufacturing plant in the Export Processing Zone in Karachi. “It is a world reputed brand name and is sure to add premium to our garment products in international export market,’’ Mr Majyd said.

Also coming in production in next 12 to 18 months is a steel mills being set up with Japanese investment. It is a state of art technology that would produce quality steel products.

Almost 72 per cent of Japanese investment in Sindh is in automobile industry that assembles from big trucks to four wheelers and motorcycles. About 8.4 per cent investment is in metal products, more than six per cent in financial sector, 4.6 per cent in power and 9.2 per cent in other sectors.

Trade pattern between the two countries has changed considerably in the last few years. For a very long period, yarn had remained the main commodity of export. There were frequent occasions, during decades of eighties and nineties, when Japanese authorities clamped down anti-dumping duties. Japanese imported mainly textile machinery and equipment.

Apart from cotton yarn, minerals and petroleum products are also exported to Japan. Japanese are now supplying two and four wheelers in semi-knocked down kits and motor parts.

Always in favour of Japan, the two-way trade more than doubled from $722 million in 2001 to $1.8 billion in 2007. It was $1.96 billion in 2006, $1.65 billion in 2005 and $1.41 billion in 2004.

“The bilateral trade might have slowed down a bit in 2008 because of the impact of global crisis and domestic situation in Pakistan’’, an official in a Japanese company reckons as no exact figures are yet available.

On official level, Japan remained one of the big aid givers till May 1998 when Pakistan went nuclear. The official development assistance was resumed in 2001 when Japan pledged $300 million assistance. In March 2003, Japan rescheduled $4.5 billion loans. In the year 2006, Japan’s commitment was $225 million out of more than $2 billion assistance proposed for entire Asia.

Japan is also involved in many road, health, education and other social projects.

All said and done, the Japanese community has now shrunk to few hundreds in Karachi as against more than 2,000 in decade of eighties and early nineties mainly because of security reasons.