What must South Africa do to attract — and keep — Japanese investment? Karen Harverson reports
The Southern African region will almost certainly get Japanese investment in the future, but it needs to learn from the experiences of Asian countries which have attracted the bulk of Japanese investment and continue to attract it.
Speaking at the Southern African Investment Summit this week, Fuji Bank MD Tatsuro Arita said although Japanese foreign investment was concentrated in the East Asian region, diversification of Japanese interests and activities to other emerging economies can be expected as the Japanese economy recovers and becomes increasingly globalised.
He said the stable political and social systems of Asian countries and confidence in their business enviroments were the main reasons for the vast capital investment by Japanese, American and European countries.
“These countries, which are now mostly free market-based economies that are well integrated into the global economy, have certain attributes that distinguish them from other developing regions such as Latin America.”
He listed fiscal discipline, export-orientated economic policies, higher private savings and educational attainment rates as important factors.
“More importantly, these Asian countries have adopted open trading and investment regimes while also encouraging productive relationships between investor and recipient.”
Deputy President FW de Klerk said South Africa’s prospects for the future were excellent, but depended on rapid and sustained economic growth.
Unless tangible benefits reached the people of South Africa, the country would pay a price in stability, law and order, and peace. “We need to grow rapidly, at least at 4,5 to six percent if we wish to make substantial progress. At the present growth of three percent, we are barely keeping pace with our population growth.”
De Klerk said the answer lay in the development of an outward-orientated economy such as Taiwan, Korea, Chile, Malaysia and Hong Kong.
To achieve this, the economy has to open up in line with Gatt undertakings. “We will have to accept the challenge of open competition, not only in international markets but in our own back yard, without the cosy protection of tariffs and subsidies.”
He added that South Africa must improve its labour productivity. “This will require a much more co-operative relationship between labour and management than we have now.”
A genuine social contract would be needed between workers, employers and the government to work as a team to produce high-quality products and services at the right price.