hopes of increasing
Pacific centre lifts region’s hopes of increasing Japanese investment
By the time you are reading this col umn, the Pacific Islands Centre located in the heart of Tokyo would have opened its doors for business.
The official opening of the centre on October 14 signaled the beginning of a new era in the Japan-Forum Island Countries (FICs) partnership on which many on both sides hope for enormous
economic spin-offs.
It’s a marriage of sorts. As in many lasting marriages, the period of courtship was long. But once both sides had reached an agreement for a feasibility study in mid-1994, like a proposed marriage, everything else after the engagement was a mere formality.
At least for the next six months it will be an interesting wait-and-see period as the three Japanese staff of the Pacific Islands Centre launch a massive publicity
awareness campaign targeting the
Japanese business community. The idea is to “self FICs as a potential investment and tourism destination for the Japanese
business community.
For FICs, their interest in the set-up has been confirmed in a number of studies conducted into the viability of the partner ship. According to one study, FICs can expect “considerable flow of Foreign Direct Investment (FDI)” as a direct result of the Pacific Islands Centre in Japan.
The centre opened its doors for busi ness on October 1, with the official open ing two weeks later by the chairman of the South Pacific Forum and president of the Republic of Marshall Islands Amata Kabua.
Secretary-general leremia Tabai and senior officials from both sides also attended the ceremony held on the ground floor of the Akasaka Twin Tower complex - the premises of the centre.
Funding for the centre was provided by the Japanese government following a fea
sibility study which found that there were scopes for and mutual spin-offs from expanding FICs-Japan links. This is espe cially in the area of trade, investment and tourism. The study has found that “the FICs, while facing a range of constraints in relation to FDI, nonetheless have con siderable prospects for expanding FDI inflows”.
According to published figures, Japan
is the largest Asian investor in FICs, injecting some SUS62O million in 450 investment portfolios in the South Pacific since 1951.
These are mainly wood chips, forestry, fisheries, retail/wholesale, real estate (tourism), service industries, oil and Liquidified Natural Gas (LNG).
It says that because FICs “are well endowed with natural resources” which are in high international demand, there are potentials for expansion in these areas.
The study also said that the Pacific region has ‘’governments which are increasingly focused on improving invest
ment regimes”.
“The establishment of permanent rep resentation for the South Pacific region in Japan is the most effective conduit to increase Fiji-Japan trade, investment and tourism linkages which would contribute
substantially to private-sector expansion
and sustainable economic development in the South Pacific,” the study found.
Japan’s overseas development assis tance or aid to the Pacific Island Countries
is huge by anyone’s standard.
For instance, in 1992 Japan’s ODA to Island member countries of the South Pacific Forum accounted for 22 per cent, or SUS 159.55 million, of the total aid flow to the region. That year, the region received $U5838.7 million in total over seas aid. Much of this was at bilateral level with the multilateral component accounting for $U5116.2 million. Based
on these figures, Japan now ranks second after Australia on the donor table of the
Fics.
Prospects for increased trade with Japan are high. For instance, already the two-way trade between the FICs and Japan is valued at SUSI. 4 billion.
At present Japan is the largest market for Island exports, accounting for 30 per cent of total FIC exports. FICs export more than 400 products, but the study found that taking the FICs as a group, “there are a further 320 products which have the potential to be developed as export industries - an average of 27 prod ucts per FIC.
The study found that “considerable potential exists for the further develop ment of natural resources for export- inte grated with sustainable development prin
ciples”.
At the same time, it said that there are
considerable opportunities to improve
trade performance - “the challenge is to ensure opportunities are identified and
exploited in a truly competitive fashion”.
Trade between Japan and FICs is dom inated almost entirely by commodities such as wood, sugar, non-ferrous ores, oil, fish, vegetables and coconut products.
“Considerable potential exists for pro cessing and value adding in which Japan
could play a major role, particularly
through joint ventures.”
In tourism, the findings were the same.
Average annual tourism growth rate is projected around 5.7 per cent with over one million arrivals in the region by 2000.
It says that Japan is among the new tourism market that is already making substantial contribution “but real potential is considerable and still to be exploited”.
The study has concluded that “prospects for continued growth of tourist arrival from Europe and Japan in the medium term are excellent”. ■