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Shaukat Aziz sought market access from Japan and urged it to provide technology and technical know-how

Nov ,12 - 18, 2001

The 3-day official visit of Finance Minister, Shaukat Aziz, to Japan as a special envoy of President Pervez Musharraf has proved highly positive as encouraging signals are being received from this Asian Economic giant and the biggest foreign donor to Pakistan.

The first gesture of goodwill came a few days earlier of the announced official visit of Finance Minister when the Chief Cabinet Secretary of Japan government, Yasu Pakuda, announced the lifting of economic sanctions imposed on Pakistan in the aftermath of the nuclear tests conducted in May 1998. President Musharraf has sent his Finance Minister to Japan, ostensibly, to discuss with the Japanese officials matters related to financial cooperation in the now unfolding world economic scenario. It will be noted that as a sequel to the sanctions, Pakistan had been handicapped to a great extent.

Minister for Finance and Economic Affairs Shaukat Aziz, at his joint meeting with Secretaries General of the Japanese ruling coalition parties in Tokyo welcomed Japan's decision to lift economic sanctions against Pakistan and thanked the Japanese government for the economic assistance provided to Pakistan and for Afghanistan to help it offset the negative effects of the current volatile situation in the region.

In his meeting with Taku Yamazaki, Secretary General of Liberal Democratic Party, Tetsuzo Fuyushiba, Secretary General of New Komeito and Toshihiro Nikai Secretary General of Conservative Party, the Finance Minister said that the post-11 September events had hurt Pakistan's economy in the shape of reduced tax collection, falling exports and decreasing foreign investment. The Minister asked the Japanese side to give debt relief to Pakistan. The Finance Minister explained, this would provide fiscal space to the country which would be used for raising the lot of the people by initating the projects oriented towards social and economic uplift of the country. He assured them that the government was determined to carry out structural reforms for the benefit of the people and needed support from this friends.

Shaukat Aziz, who was accompanied by Ambassador Touqir Hussain, called for an active role of Japan in the rehabilitation and reconstruction of Afghanistan, a requirement which, he said, was essential for peace and stability of the region. He took the opportunity to assure the Japanese authorities that Pakistan was fully alive to the sensitivities of the Japanese government towards the nuclear proliferation and reassured them of the safety and security of Pakistan's nuclear related materials. He said that Pakistan would continue to observe unilateral moratorium on nuclear test.

In his meeting with Minister of Economy, Trade and Industry (METI) Japan, Shaukat Aziz sought market access from Japan and urged it to provide technology and technical know-how for Pakistan's medium and small scale industries to improve the productivity and production base and resumption of export credit and insurance. The Japanese Minister informed him that Japan was willing to extend this facility to Pakistan for viable projects. The METI minister assured the Pakistani team that they would send experts to Pakistan for helping the small and medium enterprises.

The Japanese Prime Minister, while receiving the special envoy of the Pakistani President, promised further economic assistance to Pakistan. In the meeting at the Prime Minister's official residence, Aziz requested Koizumi to consider new economic aid to Islamabad including the rescheduling of Pakistani debts to Japan. Koizumi was quoted as replying: "We want to consider seriously what we can do in view of Pakistan's international effort at present and its role with regard to the future of Afghanistan."

In view of the past record of Japan as our highest donor and encouraging response to our recent request in the wake of lifting of the sanctions, we can safely expect Japan to reexamine specific plans of Official Development Assistance (ODA) for Pakistan. At the end of fiscal 1999, the year the sanctions were imposed, the cumulative ODA loan commitment for Pakistan stood at 644.7 billion Japanese yen. The fact that ODA has played a major role in the long-term macroeconomic improvement in Pakistan should be evident from a reference to its commitments. For out of the total commitment of 644.7 billion yen, 3.2 per cent was for irrigation and flood control, 2.7 per cent for telecommunication, 5 per cent for social services, 2.2 per cent for agriculture, forestry and fisheries, 5.3 per cent for mining and manufacturing, 24.3 per cent for transportation, 25.4 per cent for electric power and gas and 31.9 per cent for commodity loans. These figures should also fully bear out the extent of setback to Pakistan's economy from the impact of the sanctions. Now that prospects of lessening of the serious problems have brightened from this extremely accommodative gesture, one can hope that Japan will also give serious thought to the need of write-off of its accumulated loan, to make the going really smooth and purposeful for this country. If complete write-off may not be advisable for such a huge amount, part relief may be possible from restructuring or similar other initiatives. Again keeping in view the mutuality of gains accruing from an increased economic cooperation between the two countries, it may be in the fitness of things to increase Japanese investment in Pakistan which is largely concentrated in the automobile industry at present. As Japan is pursuing the policy of relocation of its industries in other countries, it may also be worthwhile to extend the relocation programme to Pakistan, preferably initiating from the fast developing electronics sector.