Thursday, May 29, 2014

FDI from Japan: huge money at low cost

Thought for the day
“If I have seen further than others, it is by standing upon the shoulders of giants.
-          Isaac Newton (English, 1642-1727)
Word for the day
Boondoggle (v)
To do work of little or no practical value merely to keep or look busy.
To deceive or attempt to deceive
(Source: Dictionary.com)
Teaser for the day
The country has seen the skills and expertise of Harvard, Oxford and Trinity educated people for six decades.
Let’s try 12th pass for a couple of years!

FDI from Japan: huge money at low cost

Justice Radha Binod Pal’s dissenting note at the International War Tribunal remains fresh in the memories of the Japanese people.
At the time when there were absolutely no political interactions between the two countries, a plaque honoring Pal at the Yasukuni Shrine kept the image of India alive among the people of Japan and a feeling of friendship among the Japanese people towards India was already brewing. The end of Cold War paved the way for the two countries to re-establish their centuries old civilizational ties which were disrupted during the lost decades.
(Shamshad Ahmad Khan)
Indo-Japanese relation date back many centuries. It perhaps started with introduction of Buddhism to Japan via the Korean Peninsula. The Meiji era (1868-1912) saw bilateral relations developing around cotton trade. Post war relationships have strengthened materially.
Prime Minister Yoshiro Mori’s visit to India in 2000 was a stepping stone in the bilateral relationship of the two Asian nations. He envisioned global partnership between India and Japan and emphasized that the “relations between the two nations, which offer great possibilities for both parties, would be further strengthened, not just bilaterally but also by playing a role together regionally and internationally”.
The relationship were give indeed given a “strategic orientation” when Prime Minister Junichiro Koizumi and Manmohan Singh, in their joint statement confirmed, “The global partnership between India and Japan reflects a broad convergence of their long-term political, economic and strategic interests, aspirations, objectives and concerns. India and Japan view each other as partners that have responsibility for, and are capable of, responding to global and regional challenges in keeping with their global partnership. A strong, prosperous and dynamic India is, therefore, in the interest of Japan and vice versa”.
More recently, in his address to the Indian Parliament, Prime Minister Shinzo Abe mooted the idea of a “broader Asia” at the confluence of the two seas of the Indian and Pacific Oceans and urged that the democratic nations located at opposite edges of these seas deepen the friendship among their citizens at every possible level. Abe envisaged that “this ‘broader Asia’ will evolve into an immense network spanning the entirety of the Pacific Ocean, incorporating the United States of America and Australia.”
According to a recent survey conducted by the Japan Bank for International Co-operation, India is one of the most favoured investment destinations for strategic Japanese investment. However, the low trade volume between the two countries is the proverbial Achilles' heel in Indo-Japanese economic engagement. In fact, recent optimism aside, the bilateral trade between the two countries is substantially lower than the trade between Japan and China. In 2009, less than 5 per cent of total Japanese FDI came to India. These figures indicate the “conservative approach” of the Japanese, who though buoyed by the “Indian growth story” remain reticent when investing into India. The Japan Chamber of Commerce and Industry in its report to the DIPP titled “Suggestions for Government of India” dubs the Indian business environment as “tough”, with tax inefficiencies, land acquisition challenges, multiple administrative bottlenecks, difficult legal environment and labour issues consistently being named as the primary culprits.
I hope the new regime which professes to be close and friendly to Japanese administration as well as corporates, will work in right earnest to overcome the inadequacies in the investment environment and welcome Japanese investment in key areas like capital intensive large infrastructure projects and high technology industries. I believe the money that could flow in from Japan could be huge and cheaper.

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