The Madagascar-Japan Business Forum in Tokyo

December 2017

On December 5, taking an opportunity of a visit to Japan by President Hery Martial Rakotoarimanana Rajaonarimampianina of Madagascar, JETRO held the Madagascar-Japan Business Forum in Tokyo. In the forum which was joined by approximately 230 people from the governments and companies of both countries, presentations were delivered by President and three cabinet members from the Madagascar side, and representatives from Japanese companies active in Madagascar to introduce the Malagasy business environment. A networking reception was also held for companies from both countries after the forum.

At the beginning of the forum, JETRO Chairman and CEO Hiroyuki Ishige stated in his remarks that Madagascar has been significantly changing under the leadership of the current president after a long and painful economic situation. He continued that Japanese companies have been attempting to respond to this change as seen in the world's largest-scale nickel production business, "Ambatovy Project" in which Japan’s Sumitomo Corporation is involved.

Parliamentary Vice-Minister for Foreign Affairs Manabu Horii explained that the Japanese government has an interest in providing high-quality Japanese infrastructure to Madagascar, mentioning how in March 2017 it signed an ODA loan agreement of 45.2 billion yen for the expansion of Madagascar's largest commercial port, Toamasina.

Also, Parliamentary Vice-Minister of Economy, Trade and Industry Masaki Ogushi emphasized that METI itself wishes to promote Japanese investment into Africa by the public and private sectors, touching on the establishment of the Japan-Africa Public-Private Economic Forum announced by Prime Minister Shinzo Abe at the 6th Tokyo International Conference on African Development (TICAD VI) held in August 2016.

Mentioning how while the Malagasy business environment has been in good shape and its macro economy also comparatively steady through strenuous efforts over the past years in his keynote speech, President Rajaonarimampianina expressed his determination to see improve even further.

In line with this, he stated that the Malagasy government; which has been moving forward with reforms including on company establishment procedures, land use, trade and the taxation system since 2016; would like to facilitate investment into the country through public-private partnership (PPP) with overseas investors including those from Japan. He also mentioned that numerous opportunities to invest into fields such as agriculture, tourism, information communication technology (ICT) and textiles lie in Madagascar, a beautiful island nation with 5,000 km of coastline owing to its geographical advantage as a node connecting the regions such as Asia, the Middle East and Africa. He expressed his expectations by saying that Madagascar always welcomes companies from Japan, which is a role model for the country.

In the first session focusing on the infrastructure field, Deputy Vice-Minister for Construction, Engineering and Real Estate Industry Koichi Yoshida introduced the establishment of the Japan-Africa Infrastructure Development Association (JAIDA) joined by 126 companies, mainly in the construction industry, in response to the announcement by Prime Minister Abe at TICAD VI that Japan will contribute high-quality infrastructure to Africa. He emphasized that the increase in the association’s membership to 159 reflects the greater interest Japanese companies have in the continent. Furthermore, he stressed how Japan has contributed to the development of the country by utilizing the technology and knowhow of Japanese companies within Africa, explaining how in July 2017 Madagascar become the 10th African country chosen by Japan as the venue for a public-private infrastructure conference, and that the two countries will have a policy dialogue in February 2018.

Ramarcel Benjamina Ramanantsoa, Minister to the Presidency in Charge of Presidential Projects, Territory Planning and Equipment, announced that the government will develop special economic zones (SEZs) within 12 designated growth areas in Madagascar as a whole, and mentioned the "Project on Master Plan Formulation for Economic Axis of TaToM (Tananarive-Toamasina, Madagascar)" of which assessment has been in progress under the auspices of the Japanese government. From these perspectives, he emphasized that in Moramanga City located between Antananarivo and Toamasina, there are numerous opportunities to invest in various fields including the expanding export-oriented textile processing industry. Minister of Transports and Meteorology Ralava Beboarimisa stressed that improvement and modernization of infrastructure is a critical issue for sustainable economic development, and made clear his strong hope for Japanese companies' participation in PPP projects in Madagascar in terms of improvement and renovation of roads and railways, expansion of ports and development of local airports.

In the second session where numerous business opportunities in Madagascar were introduced, Minister to the Presidency in Charge of Agriculture and Livestock Harison Edmond Randriarimanana stated that while agriculture is an important sector in which approximately 80% of its labor population are employed, low agricultural productivity, as symbolized by the fact that only 10% of all arable land for the staple food rice is utilized, is a problem for Madagascar. But, he pointed out, this problem also indicates the high potential of Malagasy agriculture, and made a call for Japanese companies to invest in the fields of agriculture, livestock and food processing.

Chief Executive Officer Eric Andriamihaja Robson of the Economic Development Board of Madagascar (EDBM) touched on the fact that Japan is the third largest investor country as well as an important trading partner for Madagascar, and explained that Madagascar is home to a substantial concentration of American and European apparel manufacturers taking advantage of the merits of a trade agreement between the US, EU, Southern African Development Community (SADC) and Madagascar in exporting raw materials to the country without tariffs. He also introduced that companies which are established in Madagascar's export processing zone will be able to receive benefits such as exemption from corporate tax and tariffs imposed on import of raw materials and equipment for five years from the start of operations, under the condition that 95% of all products are exported.

Presentations were made by representatives from the following five Japanese companies in both sessions: Daiho Corporation, Penta-Ocean Construction, Sakai Heavy Industries, Furuno Electric and Sumitomo Corporation. Managing Operating Officer Toshikazu Tamura of Daiho Corporation, which has been involved in construction in Madagascar since 1978, praised the high-quality of Madagascar’s workforce, saying that the calm and industrious nature of the Malagasy people enabled the company to finish nearly all construction projects without delay, even in the days when construction machinery was in short supply.

Nobutaka Takeda, Manager of the Nickel and New Metal Business Department of Sumitomo Corporation, spoke about the Ambatovy Project, one of the world’s largest nickel production projects which started in 2012 in cooperation with Canadian and Korean companies, and boasted that the endeavor has made nickel the top export item of Madagascar since 2015, earning approximately seven hundred million dollars annually in foreign currency. In addition to that, the project has created 7000 jobs and places great value on contribution to local communities, including through CSR activities such as planting trees and building public facilities together with international institutions.

Returning to the podium, President Rajaonarimampianina wrapped up the forum by saying that guiding the as-yet developing country down the right path for growth is his hope as well as the hope of the Malagasy nation, in particular the younger generation. He also expressed his desire for the relationship between Madagascar and Japan itself to become as solid as high-quality infrastructure.