Deputy Minister of Foreign Affiars, Aziz Pahad to lead South African Delegation to 7th Session of South Africa - Japan Partnership Forum, Tokyo, Japan, Thursday, 30 September - Friday, 1 October 2004

Deputy Minister of Foreign Affairs, Aziz Pahad will today, Wednesday, 29 September 2004, on conclusion of official visit to China during which he accompanied Deputy President Zuma travel to Japan where he will lead the South African delegation to the 7th session of the South Africa - Japan Partnership Forum.

Issues on the agenda will include, among others:

• The South African participation in the Aichi 2005 Expo;
• The 2010 Soccer World Cup and South Africa's invitation to Japan to share 2002 World Cup experience and expertise;
• The presentation of proposals for technology transfer for development and human capital in Science and technology;
• The Japan Exchange and Teaching Programme;
• The trilateral Cooperation with SADC countries;
• Cooperation on agriculture development in South Africa; and
• Twinning of hospitals.

Japan is actively involved in strengthening democracy and contributing to economic development in South Africa. By assisting South Africa to be a stable and prosperous "hub" in the Southern African region, it is intended that the so-called "ripple effect" will spread to neighbouring states: furthering stability and peace, fostering the democratisation process (in the political as well as labour fields), good governance and market-orientated economic policies.

Other departments participating in the Partnership Forum include: Arts and Culture, Health, Science and Technology, Trade and Industry, Agriculture and Land Affairs, Education, CSIR and the South African Police Services. Bilateral Economic Relations and Japanese investments in South Africa Japan remains the world's second largest economy and a member of the G7.

For several years Japan has been South Africa's fourth most important trade partner internationally, and the most important trade partner in Asia, ie. 31% of all South African exports destined for Asia, go to Japan, whereas 37.9% of all imports from Asia are from Japan. In 1998 total trade was in the amount of R 21,0 billion, with the balance in Japan's favour (R 11.2 billion).

South African imports from Japan consist mainly of machines, mechanical appliances, vehicles and measuring and photographic equipment. Japanese imports from South Africa consist of mineral products and base metals.

Foreign Direct Investment (FDI) from Japan since 1994 was approximately US$ 500 million. A second ODA package of US$1,5 billion over five years (with a grant component of US$ 100 million) was granted by Japan to South Africa in 1999.

Direct Japanese investment in South Africa by more than 20 companies to date is in excess of US$ 400 million. The transfer of technology, which has also accompanied Japanese investment, is of long-term importance to the South African economy. In 1996, the Toyota Corporation of Japan invested US$ 100 million (R 450 million). In the last quarter of 1996, Bridgestone Japan invested US$ 66 million (R 290 million). In January 1997, Komatsu Southern Africa was launched and was capitalised at US$ 27 billion (R 124 million). More recently, the Nissan Motor Company of Japan announced that it would acquire a 50 per cent equity share, valued at R 360,75 million, in Automakers, the holding company of Nissan South Africa.

The first investments were in the mining industry in order to increase exports of processed metals to Japan. Japanese trading houses formed joint ventures with large South African companies to export processed minerals to Japan. Such as the joint venture between Itochu and Samancor to produce manganese and ferro-alloy, Mitsui and Consolidated Metallurgical Industries to produce ferro-chromium.

The second set of investments has been in the South African manufacturing sectors that produced Japanese brand products under licensing contracts in which Japanese corporations already had an established position. These included investments by Nissan, Toyota and Sanyo Electronics.

Sumitomo Chemicals has a Joint Venture with SASOL for the manufacture of chemicals used in the manufacture of integrated circuits. Mitsubishi Chemical Corporation also has a Joint Venture with SASOL to establish a plant to manufacture acrylic acid and acrylates.

The Mozal project (in Mozambique) is often sited by the Japanese as an effective way in which to minimise the risks of doing business in Africa. A consortium led by Gencor-Billiton (47.11 per cent), Mitsubishi (25 per cent), the IDC (24.04 per cent) and the Mozambique government (3.85 per cent) undertook the project.

On 5 May 1995 a US$ 100 million equivalent low interest yen loan by the Eximbank of Japan to the Development Bank of South Africa was signed. This loan was targeted at community banking, rural infrastructural development, agricultural renewal programmes and small to medium size business development projects. The JEXIM loan was part of a US$ 500 million dollar credit facility incorporated in Japan's US$1,3 billion ODA package for South Africa announced in July 1994. In early 1997, officials from JEXIM indicated that the loan had been increased to about US$ 800 million.

Issued by Ronnie Mamoepa on 082 990 4853.

C/O Department of Foreign Affairs
Private Bag X152
Pretoria
0001

29 September 2004