Final Report Asia Africa Trade and Investment Study - Kamiya

The World Bank
STUDIES ON AFRICA-ASIA TRADE AND INVESTMENT

RELATIONS: (B) STUDIES OF SELECTED ASIAN
COUNTRIES IN DEVELOPING TRADE AND
INVESTMENT RELATIONS WITH AFRICAN COUNTRIES
Final Report
June 2004
in association with
UFJ Institute
Studies on Africa-Asia Trade and Investment Relations (B) Table of Contents
TABLE OF CONTENTS
Table of Contents ............................................................................................................. i
List of Appendices........................................................................................................... ii
List of Tables, Figures, and Boxes ................................................................................ iii
Abbreviations .................................................................................................................. v
Executive Summary ...................................................................................................... vii
1 Introduction .......................................................................................................... 1-1

A. Background and Objectives .................................................................................. 1-1
B. Proposition and Hypotheses .................................................................................. 1-3
2 Trade and Investment Between Africa and Asia................................................ 2-1
A. Trade Relations..................................................................................................... 2-1
B. Investment Relations ............................................................................................ 2-7
C. Trade and Investment Linkage in Africa Asia Region ........................................ 2-15
3 Overseas Development Assistance To Promote Trade and Investment ........... 3-1
4 Asian Countries’ and Firms’ Policies To Promote Trade and Investment in

African Countries ........................................................................................................ 4-1
A. Government Policies and Strategies...................................................................... 4-1
B. Trade and Investment Facilitation and Support Mechanism .............................. 4-16
C. Historical Relationship with African Countries ................................................. 4-21
D. Entrepreneurs Network and Business Communities .......................................... 4-26
5 Cases of Direct Investment in Africa: Strategies and Linkages ...................... 5-1
A. Backward and Forward Linkages .................................................................... 5-1
B. Firm Policies and Strategies in Africa ............................................................. 5-2
C. Accounts of Asian Private Companies in Africa ........................................... 5-17
6 Recommendations ................................................................................................. 6-1
References.................................................................................................................... R-1
i
LIST OF APPENDICES
Appendix A Classification of Industries...................................................................... 6-1

Appendix B Japanese Companies in Africa ................................................................... 1
Appendix C Asia-Africa Trade Regimes ....................................................................... 1
ii
LIST OF TABLES, FIGURES, AND BOXES
Table ES-1 Level of Development and Market/Policy Instruments ............................................. xi

Figure ES-1 Strategies and Goals............................................................................................... xiii
Figure 1-1 Hypotheses and Goals .............................................................................................. 1-7
Figure 2-1 Exports to Africa by Asian Country ......................................................................... 2-2
Figure 2-2 Export Distribution to Africa by Asian Country ....................................................... 2-2
Figure 2-3 Exports from Africa by Asian Country ..................................................................... 2-3
Figure 2-4 Export Distribution from Africa by Asian Country .................................................. 2-3
Table 2-1 Asian Countries’ Exports to Major African Countries ............................................... 2-4
Table 2-2 Asian Countries’ Top 6 Import Countries................................................................... 2-4
Table 2-3 Asian Countries’ Exports to Africa by Industry (2001*) ........................................... 2-5
Table 2-4 Asian Countries’ Imports from Africa by Industry (2001*) ....................................... 2-5
Figure 2-5 Primary Sector Comparative Advantage Index by Region ....................................... 2-6
Figure 2-6 Mining Sector Comparative Advantage Index by Region ........................................ 2-6
Figure 2-7 Manufacturing Sector Comparative Advantage Index by Region ........................... 2-7
Figure 2-8 Quantity and Total Amount of Japanese FDI to Africa ............................................ 2-8
Figure 2-9 Quantity and Total Amount of Korean FDI to Africa ............................................... 2-9
Figure 2-10 Quantity and Total Amount of Chinese FDI to Africa ............................................ 2-9
Figure 2-11 Quantity and Total Amount of Taiwanese FDI to Africa ...................................... 2-10
Table 2-5 Top 5 African Destinations for Japanese Investments.............................................. 2-10
Table 2-6 Japanese Investment Structure by Industrial Sector ................................................. 2-11
Table 2-7 Korean Investment Distribution by Country and Industry ....................................... 2-12
Table 2-8 Korea’s FDI in Manufacturing ................................................................................. 2-13
Table 2-9 Countries and Cumulative Investment for China ..................................................... 2-14
Table 2-10 China’s FDI to Africa by Industry .......................................................................... 2-14
Table 2-11 Taiwan’s FDI to Africa by Country and Industry ................................................... 2-15
Figure 2-12: Trend of Japan-Africa Trade, FDI, and ODA Flow ............................................. 2-16
Table 3-1 Levels of Development and Market/Policy Instruments ............................................ 3-1
Box 3-1 Motivations Behind Market Entry................................................................................ 3-2
Table 3-2 Main Promotion Policy and ODA by Asian Country ................................................. 3-3
Table 3-3 Korean Aid by African Country ................................................................................. 3-4
Figure 3-1 Korean ODA and FDI by African Country ............................................................... 3-4
Table 4-1 Korean Bilateral Agreements by African Country ..................................................... 4-5
Table 4-2 Taiwan’s Bilateral Agreements with African Countries ............................................. 4-9
Table 4-3 Malaysian Bilateral Agreements by African Country .............................................. 4-14
Table 4-4 Number of Japanese Subsidiaries in Africa and Japanese Companies Invested ...... 4-26
Table 4-5 Number of Japanese Residents in Africa.................................................................. 4-27
Table 4-6 Number of Korean Residents in Africa .................................................................... 4-29
Table 4-7 Taiwanese Private Companies and Residents in Africa ........................................... 4-31
Table 4-8 Indian Population in Selected African Countries ..................................................... 4-34
Figure 5-1 Linkages and Spillovers in Perspective .................................................................... 5-2
Table 5-1 Three Types of Asian Investment Projects ............................................................... 5-12
iii
Box 5-2 Types of Asian Investment to Africa – Case Studies .................................................. 5-14
Table 5-2 Samsung’s Project with EDCF (1987-1996) ............................................................ 5-19
Figure 5-2 Samsung’s Share in Korean EDCF Projects ........................................................... 5-19
Box 5-3 EDCF Projects in Ghana ............................................................................................ 5-20
Table 5-3 MK’s Local Subsidiary Companies.......................................................................... 5-22
Table 5-4 MK’s Performance Record of Engineering Projects in Africa ................................. 5-23
Table 5-5 Tex-Ray’s Garment Factory in Swaziland................................................................ 5-24
Table 5-6 Tex-Ray’s Spinning Factory in Swaziland ............................................................... 5-25
Table 6-1 Economic Zones in Africa .......................................................................................... 6-6
Figure 6-1 Strategies and Goals ................................................................................................. 6-8
iv
ABBREVIATIONS
AACC Asia Africa Chamber of Commerce

AAITPC Asia-Africa Investment Technology Promotion Center
AGOA African Growth and Opportunity Act
AHI Afrikaanse Handels Instituut
ASEAN Association of South East Asian Nations
BIS Bank for International Settlements
BITs bilateral investment treaties
BLNS Botswana, Lesotho, Namibia, and Swaziland
CAP Chemical and Allied Products
CAPEPC Chemical and Allied Products Export Promotion Council
CEMAC Central Africa Economic and Monetary Community
CII Confederation of Indian Industries
COMESA Common Market for East and Southern African States
DAC Development Assistance Committee
EBA Everything but Arms
ECGC Export Credit Guarantee Corporation
ECOWAS Economic Community of West African States
EDCF Economic Development Cooperation Fund
EEPC Engineering Export Promotion Council
ESAF Enhanced Structural Adjustment Facility
FDI Foreign Direct Investment
FEC Foreign Economic Cooperation
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDI Gross Domestic Income
GDP Gross Domestic Product
GTCs General Trading Companies
GTP Global Trader Program
GTZ Gesellschaft für Technische Zusammenarbeit
HIPC Heavily Indebted Poor Countries
IF Integrated Framework
IMF International Monetary Fund
JITAP Joint Integrated Technical Assistance Program
KEIC Korea Export Insurance Corporation
KIEP Korean Institute for International Economic Policy
KITA Korean International Trade Association
KOTRA Korea Trade-Investment Promotion Agency
LC Letter of Credit
LDCs Less Developed Countries
MASSCORP Malaysian South-South Corporation Berhad
MIGA Multilateral Investment Guarantee Agency
v
NTBs Non Tariff Barriers

OAU Organization of African Unity
ODA Overseas Development Assistance
OECD Organization for Economic Co-operation and Development
PRGF Poverty Reduction and Growth Facility
PRSC Poverty Reduction Support Credit
PRSP Poverty Reduction Strategy Papers
RTA Regional trade agreement
SACOB South African Chamber of Business
SADC Southern African Development Community
SEPC Shellac Export Promotion Council
SITC Standard International Trade Classification
SMEs Small and Medium-Sized Enterprises
TDCA Trade Development and Co-operation Agreement
TFP Total Factor Productivity
TICAD III Third Tokyo International Conference on African Development
TRADE Trade for African Development and Enterprise
TRIMs Trade Related Investment Measures
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Program
UNECA United Nations Economic Commission for Africa
UNIDO United Nations Industrial Development Organization
UR Uruguay Round
USAID The United States Agency for International Development
WTO World Trade Organization
vi
Studies on Africa-Asia Trade and Investment Relations (B) Executive Summary
EXECUTIVE SUMMARY
A. Review of Hypotheses
ES.1 This study was conducted in order to develop a full understanding of the potential
for trade and investment between Asia and Africa, as well as discovering factual
information and creating an analytical framework to identify specific sectors and
products to promote either trade or investment. The objective was to test the following
hypothesis:
Africa is becoming a more strategic production/processing location for Asian

industries. Development of global production linkages and various trade
preferences have fostered seamless linkages between trade and investment.
ES.2 This study shows that indeed Africa is becoming a more strategic location for
production and trade for Asian firms, but that it is limited to a select number of countries
and industries. The study also determined that there are linkages, but they are limited in
number and there is considerable room for improvement and development, which must be
fostered by Asian and African governments.
ES.3 To verify the hypothesis, the study was divided in eight smaller hypotheses, for
which this study findings are as follows:
Hypothesis Factual findings and fields where policies are required

1. Some Asian countries have Several types of government support and incentive
encouraged their businesses mechanisms are available for Asian countries’ enterprises
to expand in Africa through in the form of treaties, export promotion, loans, and ODA.
inter governmental But, these mechanisms appear to be applied only to
initiatives. selected countries in Africa, mainly due to lack of credit
worthiness and bilateral political linkages elsewhere on
the continent.
2. Expansion of Asian The human network in local business communities is a
businesses in Africa has powerful instrument to minimize risks (reliability in
been often accompanied by market information, business customs, and the
growing human network in government systems for maintaining business
Africa rather than the environments).
amount of capital But, both the human network in Africa and human
investment (number of resources in Asia are still limited compared to European
expatriates and number of countries and their long history in Africa.
foreign residents).
vii

3. Bilateral trade and This is especially evident in the textile industry as has
investment agreements, been observed in Kenya, Lesotho, Swaziland, and
especially with the US/EU, Mauritius as investments by companies from Malaysia,
have become one of the Singapore, Taiwan, China, and India have indicated that
major motivations for Asian the US and EU quotas are a motivating factor.
firms to diversify their This is an example of the effectiveness of the quota
production geographically. system.
4. Imports of intermediate
There is evidence of exports by Asian countries in
inputs from Asia are
intermediate goods such as industrial plants, machinery,
supporting the boost of
raw materials for textile, and chemical products.
African exports in
But, the study has not yet identified the boost of
manufactured products
manufactured product exports from African countries,
targeting developed
except in the textile sector.
countries.
5. Similarity to the Japanese Some cases support this hypothesis and are boosted by the
electronics industry’s US/EU quota provisions. However, it cannot be generally
diffusion of its production applied to all African countries, since the resource
into ASEAN countries, endowment is quite different from ASEAN, where the
which was followed with labor force was the major resource.
technology transfer, when But this research still indicates opportunities in
Japan was facing severe resource-based export-oriented industries as well as
trade friction with the U.S., domestic market oriented trade and investment
and Japan was challenged opportunities.
by high production costs as
a consequence of the
appreciation of Yen. Can
this analogy apply to textile
trade between Asia and
Africa?
6. In the past, Asian direct Some import substitution investments began by creating
investment in the import tariff protection, which enabled the companies to
manufacturing industry had sell the products to the domestic market at higher prices
been mostly the result of than international market. As the result of recent shift to
African import substitution lower tariffs and open trade in Africa, some of these
policies. These types of ventures’ cost/benefit structure collapsed.
investments have performed But, there seems to be a variety of opportunities in viable
poorly due to limited import substitution industries, due to an absolute lack of
domestic markets and local industrial supply and growing needs, though the
unfavorable business market size is often small to medium.
environments.
7. Today, investment from Asia This is partially correct. But there are still various
is more driven by the opportunities for resource-based as well as domestic
market opportunities in market oriented trade and investment (See hypotheses 3,
other countries, such as the 4, and 5).
EU, US, and Asia.
viii

8. There is a potential to create Since collaboration between Asia and Africa has been
win-win collaboration limited in terms of flow of goods, funds, and people,
between Asia and Africa compared to European examples, there are many areas to
with development of improve to smooth the flow.
seamless linkages between But more efforts to create seamless linkages must be
trade and investment. undertaken by governments in both Asia and Africa.
B. Recommendations
ES.4 In general, trade and investment strategies can be categorized as domestic-market

oriented or export-market oriented. In the case of Africa, given the fact that there is strong
competition in natural resource based trade and investment such as mining products,
energy resources, and agro-based products, a consideration for seeking further value add
is also important. On the other hand, there are also strong demands for various kinds of
consumer products in the domestic market, where individual market size is generally
small and unattractive for mass production investment. By observing target markets and
covering all potential directions, the following analysis attempts to summarize the
potential and developing strategy (Policies to promote linkages are shown in Figure 1
with corresponding hypothesis.)
ES.5 Strategies Recommended.
ES.6 African Countries. African economies, in general, have been protected by high
levels of tariff and non-tariff barriers for foreign trade and investment. However, import
tariff rates are gradually declining because of the acceptance of a free trade regime and
privatization of state-owned enterprises, in coordination with international donor
community. Consequently, an import substitution policy with a high rate of tariff
protection became an ineffective policy for industrial development and employment
generation. A key word of the trend is “open economy” in which the free flow of foreign
business in various sectors and products are able to enjoy both export-oriented and
domestic market-oriented trade and investment. The following are recommendations to
be considered by African countries.
• Environment for Small- and Medium-Sized Business: An enabling environment

for trade and investment that is able to accommodate small- and medium-scale
investment and trade. There are a variety of small- and medium-scale business
opportunities targeting the domestic market. The business infrastructure for
trade, particularly licensing, customs, and transportation, needs to be developed
so that foreign small- and medium-sized business would be better able to engage
in business. It should be noted that compared to large-scale enterprises, SMEs
are weaker in political influence with regards to their needs for a business
environment and require reliability and predictability in their business
environment. If successful, SMEs bring comparatively larger employment
opportunities against invested capital.
ix
• Credit worthiness and reliable financial transaction system. Because of the lack
of reliable financial transaction environments, Dubai is playing the trade service
role. They provide line of credit mechanisms by banks, mixed commodity
container shipping arrangements for the small-sized markets, and a meeting
place for buyers and sellers at an off-Africa location. This kind of function
should be able to be provided at hub locations in Africa with a government
commitment to provide security and fair business transactions.
• Natural resource oriented investments. Natural resource oriented investments,

such as in oil and mineral resources are the primary attractive investment
opportunity in African countries. Increases in value added are a serious issue
because the world’s commodity prices are at a low level. Natural resource based
businesses tend to be largely affected by domestic political and institutional
conditions. A competitive environment needs to be expanded for efficiency and
higher profitability.
• Credit risk. There is a limitation in providing export credit and insurance by

Asian country governments due to the poor credit rating of many of African
countries. Private capital cannot be mobilized without government support in a
high-risk environment. Efforts are needed by African countries to improve their
credit ratings.
• Economic Zones and Regional Trade Agreements. Economic Zones and

Regional Trade Agreements (RTA) are being created within Africa. Efforts by
African countries are needed to make the RTAs effective to bring about trade and
investment in the area. A strategic plan to establish regional hubs should be
initiated through regional cooperation within Africa.
ES.7 Asian Countries. Asian countries have an historical disadvantage compared to

European countries. However, by expanding their own network and utilizing comparative
advantages, particularly through small- and medium-size businesses, an elevated level of
collaboration between these two regions can be achieved. The following are
recommendations.
• For Asian firms there is a disadvantage in the human network compared to

European firms, who have an established human network from their long history
of conducting business in Africa. A human network supports developing
business relations by creating mutual trust and eliminating risks from
malpractice and misunderstanding. It is recommended that each Asian country
should have a wide range of information exchanges, movement of people,
technology transfer, and products exchange by utilizing government supported
promotion facilities.
• There is a need to improve the image of products from Asia, as they are viewed
as low cost and low quality in many African countries. European products hold
an advantage because they are viewed as high quality in some African countries.
It is recommended that Asian countries improve their images of product and
x
technology by enhancing communication and exchange.
• Investment projects in manufacturing targeted toward domestic markets need to

be adjusted for small- and medium-size markets with appropriate technology.
Once these conditions are met, there domestic production capacity is possible
because it is quite limited. This area can be a comparative advantage for Asian
business, particularly from newly industrialized economies including Korea,
Taiwan, Malaysia, and India.
• As African sub-regional RTAs are in development, region-to-region cooperation,

for example ASEAN, can be another aspect of promoting a renewed Asia-Africa
alliance.
• ODA loans can be used to attract donor country companies to work with the
recipient country, particularly if the ODA loan or grant fund is associated with
private sector investment and trade activities. Given that Asian countries are still
unfamiliar with many African countries, stages of trade and investment relations
need to be developed with government-assisted intervention. As the bilateral
economic relations between Asian and African countries develop, more
market-oriented programs to promote private sector trade and investment can be
utilized by mixing government intervention against market mechanisms.
Table ES-1 Level of Development and Market/Policy Instruments
Development
Initial Stage Developing Stage Mature Stage
Stage
- ODA grants - Tax Incentives - Promotion of inward
- ODA tied loans - Export Credit investment
Policy
- Organized Missions - Export Insurance - Trade/Investment
interventions
- Bilateral Agreements - Overseas investment Information Service
to facilitate
credit
market
- Merchandise
transaction
Exhibition
- Investment Missions
ES.8 Donor Community. The following are recommendations for international donors.
• In applying for export credit or export insurance by Asian countries, lowering

the country risk is an issue beyond the capability of individual countries. The
international donor community can play an important role to encourage
improvements in credit ratings of African countries so that more African
countries are eligible for bilateral trade and investment promotion schemes.
• Both international and bilateral donors can provide technical assistance to

improve human resources to create a sound business environment, enhance
entrepreneurship, and establish institutional framework for market mechanism.
• The framework, organization, and effectiveness of regional economic zones are
xi
currently being left to the member countries’ initiative. The international donor
community can assist in RTA development by strengthening its function through
technical assistance provided to those RTA secretariats.
• By creating a multilateral trade system under the WTO, it is recommended that

the donor communities discuss the application of the concept of special and
differential treatment of developing countries announced in the Doha
Declaration to adjust the system to a free trade regime. This is important for
African countries, particularly the least developed countries (LDC), in opening
their economy to world trade.
xii
Figure ES-1 Strategies and Goals
Policies by African countries Strategy by African Countries

- Import substitution - Business environment
- Export Promotion development
Potential for Trade and Investment Development - SME trade and investment
Among Asian and African Countries - Higher value added for
resources
- Improve credit ratings
Strategy - RTA as expanded regional
Business Environment for
Trade and Investment in Type-1: Export to Asian Market market
African countries - Natural resource based goods
- Intermediate goods
- Natural resource
- Human resource Type-3: Export to Third
- Domestic market Country Market and Supply
- Human network Chain Linkage
- Country risk - US and Europe market
- Labor Intensive model
Strategy by Asian Countries

Type-2: Domestic Market Strategy - Develop human network
- Improve image of products
- Needs for variety of consumer goods - SME investment opportunity
Policies by Asian Countries - Regional market integration
- Make use of African RTA
- Bilateral ODA - ODA as instrument to induce
trade and investment
- Human Network
xiii
Studies on Africa-Asia Trade and Investment Relations (B) Chapter1. Introduction
INTRODUCTION
A. Background and Objectives

1.1 Study Background. During 1960s and 1970s, the prevalent economic
development model applied to developing countries, including Africa, was an import
substitution strategy with high tariff and non-tariff barriers to foreign imports to protect
and promote domestic industry. However, in most African countries, the import
substitution policy has resulted in market distortions, misallocation of resources, and the
intervention of governments to private sectors. While many Asian countries changed the
focus of their development strategy in 1980s to export orientation, most countries in
Africa continued to utilize import substitution and there is now considerable evidence
that the inward-looking strategy discouraged investment and trade and negatively
affected growth and living conditions in the region. In more recent years, African
countries have been shifting to a more open economy, and there are clear results
indicating that the change in policy framework have been positive for macroeconomic
stability.
1.2 However, in terms of Foreign Direct Investment (FDI), Africa’s inflows are
below those of Asia, Latin America, and China. If investment in Africa is disaggregated
by country, South Africa and northern Africa receive most of the investments, while
Sub-Saharan Africa is practically neglected. Also, international flows of FDI to
developing countries almost doubled in the last decade in percentage terms, but FDI to
Africa has remained low. 1 Trade patterns for Africa are still dependent on natural
resources: its main exports are fossil fuels, minerals and stone, and forestry products. This
is different from the general trend for other developing countries over the last three
decades in which manufacturing has been acquiring increasing importance as an export
sector. This situation is being exacerbated because of the declining trend in non-oil
commodity prices.
1.3 In this regard, for Asian countries, Africa represents a small market, but Asia is a
large market for Africa. Total imports from Africa as a share of total Asian imports were
just over 1% in 2001. In the same year, Asia as a percentage of total African exports was
almost ten times as large. Asia is also a sustained growing market for African exports; in
1990 Africa exported US$6.4 billion to Asia, while ten years later, in 2000, Africa
exported $17.2 billion. 2 Based on these figures and increasing globalization, the
underlying hypothesis is that there are opportunities for expansion of Asian-African trade
and investment.
1
See Table 3-1 for more detail.
2
IMF Direction of Trade Statistics Yearbook.
1-1
1.4 Recognizing these circumstances, the World Bank launched two sets of studies
on trade and investment relations between Africa and Asia, one of which is entitled
Studies on Africa-Asia Trade and Investment Relations (A): Factual Study of Africa-Asia
Trade and Investment Relations Using Global Trade Data. The other is this study, entitled
Study on Africa-Asia Trade and Investment Relations (B): Study of Selected Asian
Countries in Developing Trade and Investment Relations with Africa. The outcome of
these studies will be presented in preliminary form at TICAD III (Third Tokyo
International Conference on African Development), as the intellectual basis for policy
dialogue among policymakers and business communities.
1.5 Objectives. The main objectives of the study are (i) to present factual
information and an analytical framework for potential growth of trade and investment
between Africa and Asia for policymakers and businesses in both regions and (ii) to
formulate policy options based on the identification and assessment of the information
collected and analysis provided for the benefit of African development, contributing to
the overall objectives of the TICAD III process.
1.6 Major Activities Undertaken. PADECO Co., Ltd. of Japan, in association with
the UFJ Institute, has been commissioned by the World Bank to implement this study.
The consultant team’s work is divided into three principal tasks as follows:
• Task 1: define scope and select countries for study; collect statistical data on trade
and investment activities with Africa; and document qualitative information;
• Task 2: conduct quantitative analysis; conduct institutional and policy analysis;

and analyze incentives and linkages; and
• Task 3: prepare Mid-term review and Synthesis Paper (Draft Final Report) at the
appropriate times during the execution of Tasks 1 and 2.
1.7 Field Visit and Investigation. A visit to South Korea was conducted from 27
July to 31 July 2003 to collect trade and investment related information and interview
particular cases of private companies. The consultant team held meetings with trade and
investment promotion agencies, financial institutions, governmental research institutions,
and private companies. The findings from this field visit have been reflected in Chapters
2, 3 and 5 of this report. Specific names of visited agencies and companies are as follows:
• Korean Institute for International Economic Policy (KIEP);

• Korea Trade-Investment Promotion Agency (KOTRA);
• The Export-Import Bank of Korea;
• UFJ Bank Soul Brach Office;
• Korean International Trade Association (KITA);
• Samsung Corporation;
• M. K. International Inc.; and
• United Nations Industrial Development Organization (UNIDO), Seoul Office.
1.8 The team also employed local sub-contractors to collect relevant information in
1-2
China, Taiwan, Singapore, Malaysia, and India. Specific names of hired sub-contractors
are as follows:
• UFJ Institute (Shanghai) Ltd.;

• Prof. Lu Tsong-Ming, Seijo University;
• Attisse Research & Consulting Service (Singapore);
• Federation of Malaysian Manufacturers; and
• TATA Consultancy Services (India).
1.9 Structure of Report. This Final Report summarizes the major findings of work
conducted between June 2003 and October 2003. The consultant team collected trade and
investment-related reference materials from various sources, conducted data collection
through a field visit and studies in South Korea, China, Taiwan, Singapore, Malaysia, and
India and prepared the analysis as set out in Task 2 above.
1.10 The study identified the following key issue areas:
• Trade and investment relations between Africa and Asia (Chapter 2);
• Overseas Development Assistance to Promote Trade and Development (Chapter
3);
• Policies for promoting trade and investment in Asian countries (Chapter 4); and
• Cases of Direct Investment in Africa (Chapter 5).
1.11 The following chapters elaborate on the above issues and provide potential
industrial sectors for expanding trade and investment between Africa and Asia, and
recommendations to institutional and policy improvement for African/Asian countries.
B. Proposition and Hypotheses

1.12 According to the Terms of Reference (TOR), this study is to be conducted to test
and verify based on factual data a key proposition as well as supporting hypotheses with
respect to trade and investment relations between Africa and Asia, with key proposition
below.
Africa is becoming a more strategic production/processing location for Asian industries.

Development of global production linkages and various trade preferences have fostered
seamless linkages between trade and investment.
1.13 This study is based on the expectation that dynamic Asian economies, showing
sharp increase in exports, will be able to act as investment partner as the result of
globalization of Asian enterprises, partly surpassing the activities taken by Africa’s
traditional trade and investment partners, the EU and US. The TOR presented eight
hypotheses as starting points to initiate the study. The preliminary test on these
hypotheses was conducted by the Study Team, and resulted in a flow diagram of factors
related to the starting point and goals as stated in the diagram, Hypotheses and Goals
(Figure 1-1). In this diagram starting point is defined as below.
1-3
Business Environment for Trade and Investment in African Countries, mainly consists of
natural resources, human resources, domestic markets, human networks and country risk
Then the goal has been identified as follows.
Boost in Trade and Investment through “win-win” collaboration between Asia and
Africa.
1.14 The eight hypotheses are identified within the flow diagram with some factors,
but it is recognized that there are other factors that will contribute to realizing the goal.
The preliminary test on hypotheses by the Study Team is conducted as follows.
1.15 Preliminary Test on Hypotheses. The following are brief relevant facts
obtained to test each of the eight hypotheses.
9. Some Asian countries have encouraged their businesses to expand in Africa

through inter-governmental initiatives.
Several kinds of government support and incentive mechanisms are available for the
respective Asian countries’ enterprises. For example, export credit, export insurance,
and trade promotion missions are available for trade promotion in Korea and Japan.
Overseas development assistance grants, technical assistance, and soft term loans are
provided to assist enterprises in overseas ventures by the governments of China,
Japan, and Korea. Promotional funds targeted to Africa are utilized in India and China.
Tax incentive schemes are available for Singaporean enterprises conducting studies
and visits for project formulations. Trade agreements and investment guarantee
agreements and double taxation treaties are made between selected Asian and African
countries.
These mechanisms, incentives, and bilateral treaties appear to be applied only to

selected countries in Africa, mainly due to lack of credit worthiness and bilateral
political linkages. The relevant argument with this hypothesis is being taken place in
Chapter 4-A: Government Policies and Strategies.
10. Expansion of Asian businesses in Africa has been often accompanied by growing
human network in Africa rather than the amount of capital investment (number of
expatriates, number of foreign residents, etc.).
One of difficulties for business in Africa is a lack of reliability in market information,

business customs, and the government systems for maintaining business
environments. The human network in local business communities is a powerful
instrument to minimize these risks. Although quantitative data is not available,
Indian businesses in the eastern part of Africa are considered to be strongly supported
by Indian residents. A relevant case is a Korean ex-military personnel who used to
stationed in Angola for peacekeeping operation and is now working to promote trade
and investment between Korea and Africa.
1-4
Nevertheless, both the human network in Africa and human resources in Asia are still
limited compared to European countries and their long history in Africa. (Chapter
4-B: Trade and Investment Facilitation)
11. Bilateral trade and investment agreements, especially with the US/EU, have
become one of the major motivations for Asian firms to diversify their production
geographically.
This has been observed in Kenya, Lesotho, Swaziland, and Mauritius as investments
by companies from Malaysia, Singapore, Taiwan, China, and India have indicated
that the US and EU quotas are a motivating factor. This is especially evident in the
textile industry. For example, a Korean firm is negotiating with Ghana and Senegal to
export second-hand textile machinery to be used in the export-oriented textile
industry – evidence of the effectiveness of the quota system. (Chapter 5-B: Firm
Policies and Strategies in Africa)
12. Import of intermediate inputs from Asia is supporting the boost of African exports
in manufactured products targeting developed countries.
There is evidence of exports by Asian countries in intermediate goods such as

industrial plants, machinery, raw materials for textile, and chemical products. The
export of Malaysian palm kernel crushing plants to Nigeria, Tanzania, and
Mozambique is an interesting and promising example of trade to support
resource-based industries of export-oriented agro-products. However, the study has
not yet identified the boost of manufactured product exports from African countries,
except in the textile sector. (Chapter 2-A: Trade Relations)
13. Similarity to the Japanese electronics industry’s diffusion of its production into
ASEAN countries, which was followed with technology transfer, when Japan was
facing severe trade friction with the U.S., and Japan was challenged by high
production costs as a consequence of the appreciation of Yen. Can this analogy
apply to textile trade between Asia and Africa?
Some cases support this hypothesis and are boosted by the US/EU quota provisions.
However, it cannot be generally applied to all African countries, since the resource
endowment is quite different from ASEAN, where labor force was the major resource.
Some of African countries are endowed with rich natural resources and have potential
in resource based industry development as comparative advantage, rather than
encouraging labor-intensive export-oriented industry.
The research still indicates opportunities in resource-based export-oriented industries

as well as domestic market oriented trade and investment opportunities. (Chapter 2-B:
Investment Relations)
14. In the past, Asian direct investment in the manufacturing industry had been
mostly the results of African import substitution policies. These type of
1-5
investments have performed poorly due to limited domestic markets and

unfavorable business environments.
Some import substitution investments began by creating import tariff protection,

which enabled the companies to sell the products to the domestic market at higher
prices than international market. As the result of recent shift to lower tariffs and open
trade in Africa, some of these ventures’ cost/benefit structure collapsed. One of such
example is Matsushita Battery, a Japanese investment in Tanzania established in the
1980’s, but now facing profitability problems.
On the other hand, there seems to be variety of opportunities in viable import

substitution industries, due to an absolute lack of local industrial supply and growing
needs, though the market size is often small to medium. For example, a Korean
medium-sized enterprise has been investing in various manufacturing projects in
several African countries for their supplies for the domestic market. (Chapter 2-A:
Trade Relations)
15. Today, investment from Asia is more driven by the market opportunities in other
countries, such as the EU, US, and Asia.
This is partially correct. But there are still various opportunities for resource-based as
well as domestic market oriented trade and investment, as have been argued in
hypotheses 3, 4, and 5. (Chapter 4-B)
16. There is a potential to create win-win collaboration between Asia and Africa with
development of seamless linkages between trade and investment.
Since collaboration between Asia and Africa has been limited in terms of flow of
goods, funds, and people, compared to European examples, there are many areas to
improve to smooth the flow. The efforts to create seamless linkages must be
undertaken by governments in both Asia and Africa. (See diagram).
1-6
Figure 1-1 Hypotheses and Goals

(Past & Current) (Goals)
Policies by Asian Policy Strategies by Asian

Countries Countries
- Bilateral scheme (1)
Potential for Trade and Investment Development

Among Asian and African Countries
Business Environment for Export-Oriented Strategy

Trade and Investment in
African countries Labor Intensive Model
- Natural resources - US/EU Quota Provision
- Human resources (3) Boost in Trade and Investment
- Domestic markets - Asian Intermediate goods
(4) Through “Win-win”
- Human networks (2) - Japan-ASEAN Model (5) Collaboration between Asia
- Country risk and Africa (8)
Natural Resource Based
Model
Domestic Market Strategy

- Strong needs for variety of goods
- Small and diversified market
Policies by African countries Policy Strategies by African

- Import substitution (6) Countries
1-7
Note: The number in parenthesis indicates hypothesis number.
1-8
Studies on Africa-Asia Trade and Investment Relations (B) Chapter2. Trade and Investment Relations
TRADE AND INVESTMENT BETWEEN AFRICA AND ASIA
A. Trade Relations
2.1 Initially, the trade relations between Asia and Africa were reviewed by country
and sector and an analysis was attempted to indicate different market characteristics
between Europe and the US and Asia. During the course of this research, it became
evident that trade data in African countries was not accurately collected, which presented
difficulties in assessing the situation.3 Therefore, the consultants utilized trade data from
the surveyed Asian countries, as well as the EU, US, and Canada, to obtain trade data
about Africa. 4 In addition, the consultants categorized sectoral trade data into three
groups – agriculture, forestry and fishing, and mining and manufacturing – and five
sub-categories to understand the trends of exports and imports, as well as the level of
economic and industrial development based on the concepts of product cycle as follows:
resource-intensive industries, labor-intensive industries, scale-intensive industries,
differentiated goods (industries), and science-based industries.5 This sub-categorization
is considered to be in line with the level of economic and industrial development, which
may suggest future industrial competitiveness based on the market potential of Asia as an
export destination. The following sections show the results of the analysis of general
trends, geographical and sectoral compositions of trade between selected Asian countries
and Africa, and any comparative advantages of Africa’s trade to other regions.
2.2 Trend of Export and Import Between Africa and Asia.6 Based on the export
statistics of the surveyed Asian countries, exports to Africa increased in the latter half of
the 1990s with a peak in 1998 (see Figure 2-1). The share of Japan’s exports to Africa
declined continuously through the second half of the 1990s, while China’s share
increased continuously during in the same period (see Figure 2-2).
3
“On the Recent Trade Performance of Sub-Saharan African Countries: Cause for Hope or More of the
Same?” Francis Ng and Alexander J. Yates, Trade Research Team, The World Bank, September 2000.
4
Asian countries include Japan, South Korea, China, Singapore, Malaysia and India; European countries
include United Kingdom, Germany, France and Italy; Northern American countries include United States
and Canada.
5
According to the OECD (Organization for Economic Co-operation and Development. 1987. Structural
Adjustment: Economic Performance. Paris; France.), by using ISIC classification, “manufacturing
industries” were classified by the five categories. Based on this classification, Takanaka (Takanaka, Kimio.
2000. Foreign Trade and Economic Development (in Japanese). Keiso Shobo: Tokyo, Japan) made
conversion of manufacturing goods to SITC classification. The characteristics of each industry are as
follows: resource-intensive industries (comparative advantage can be gained by the affluent natural
resources, labor-intensive industries (comparative advantage can be gained by cheap labor costs),
scale-intensive industries (comparative advantage can be gained by length of process of production),
differentiated goods industries (characterized by order production with various demands) and
science-based industries (comparative advantage can be gained by the progress of science technology).
Detailed classifications are attached in the Appendix-A.
6
In this analysis, due to the limitation of data obtained from UN Comtrade, which supplies consistent trade
data set for Asian countries, Taiwan is not included.
2-1
Figure 2-1 Exports to Africa by Asian Country

(Millions of US$) 19,374
20,000
18,106 18,200
16,918 15,504 16,566 17,135
15,000
9,133
10,000
5,000
0
1990 1995 1996 1997 1998 1999 2000 2001
Japan South Korea China Singtapore Malays ia India
Source: UN Comtrade.
Figure 2-2 Export Distribution to Africa by Asian Country
70.0
60.0
50.0 Japan
Korea
40.0 China
%
30.0 Singapore
Malaysia
20.0 India
10.0
0.0
1990 1995 1996 1997 1998 1999 2000 2001
Year
2.3 African exports to Asia gradually increased through the 1990s, with a peak in
1997, followed by a decline in 1998, and a rise thereafter (see Figure 2-3). Japan imported
the largest share of goods until 1999, when China took over (see Figure 2-4). This is
further exemplified by comparing the percentage in exports by country between 1990 and
2001 – Japan dropped from importing 64% of African goods in Asia to 30%, while both
China and India By comparing the share percentage of 1990 and 2001, Japan’s share
dropped from 64% to 30%, while India and especially China showed a large increase.
2-2
Figure 2-3 Exports from Africa by Asian Country

(Millions of US$)
20,000
16,228 17,363 16,924
13,439 15,067
15,000
11,400 12,282
10,000
5,977
5,000
0
1990 1995 1996 1997 1998 1999 2000 2001
Japan South Korea China Singtapore Malaysia India
Figure 2-4 Export Distribution from Africa by Asian Country
70.0
60.0
50.0 Japan
Korea
40.0 China
%
30.0 Singapore
Malaysia
20.0 India
10.0
0.0
1990 1995 1996 1997 1998 1999 2000 2001
Year
2.4 Trade Partner Countries. Asia’s major African export partners are limited to a
few countries – South Africa, Liberia, Egypt, and Nigeria. Mauritius, Morocco, Algeria,
and Kenya also account for small but stable shares in Asian exports (see Table 2-1). Each
of the eight Asian countries surveyed indicated that South Africa was the largest exporter.
In India, Japan, and Malaysia, South Africa accounts for more than 50% of imports and in
China, Singapore, South Korea, and Taiwan, it accounts for between 25-33% of imports.
Other import countries were spread throughout the continent, although Angola, Congo,
Egypt, Morocco, Nigeria, and Sudan all provided imports as well (see Table 2-2).
2-3
Table 2-1 Asian Countries’ Exports to Major African Countries

Rank Japan Korea China Taiwan Singapore Malaysia India
1 South Africa 34.7% Liberia 24.8% South Africa 17.6% South Africa 45.9% Liberia 23.6% South Africa 32.1% Nigeria 19.6%
2 Liberia 14.1% Angola 17.5% Nigeria 15.4% Egypt 15.6% South Africa 18.4% Egypt 26.4% Egypt 16.1%
3 Egypt 13.3% Egypt 10.8% Egypt 14.6% Nigeria 11.2% Nigeria 17.2% Nigeria 6.1% South Africa 12.3%
4 Nigeria 10.3% South Africa 10.6% Benin 8.7% Morocco 3.3% Egypt 8.9% Mauritius 4.9% Mauritius 5.7%
5 Algeria 3.8% Nigeria 10.4% Morocco 5.0% Mauritius 3.1% Mauritius 5.9% Algeria 3.9% Kenya 5.4%
6 Kenya 3.3% Libya 5.1% Cote d'Ivoire 4.3% Tunisia 2.9% Angola 2.6% Kenya 2.6% Sudan 4.2%
* 1999 for Taiwan; 2001 for the rest

Source: UN Comtrade; OECD, International Trade by Commodity Statistics
Table 2-2 Asian Countries’ Top 6 Import Countries

Rank Japan Korea China Taiwan Singapore Malaysia India
1 South Africa 61.7% South Africa 33.0% South Africa 24.5% South Africa 31.9% South Africa 31.0% South Africa 67.2% South Africa 55.3%
2 Sudan 6.5% Congo 18.6% Sudan 19.6% Congo 26.6% Morocco 24.8% Zambia 3.9% Morocco 10.2%
3 Morocco 6.4% Angola 10.5% Angola 15.1% Angola 13.9% Madagascar 11.0% Tunisia 3.4% Senegal 5.1%
Equatorial Br. Indian

4 Nigeria 6.1% Egypt 6.7% 10.6% Nigeria 8.6% 7.3% Egypt 3.0% Tunisia 4.0%
Guinea Ocean Terr.
5 Zimbabwe 2.9% Gabon 6.5% Gabon 5.4% Cameroon 5.9% Egypt 6.6% Cote d'Ivoire 2.6% Egypt 3.8%
6 Egypt 1.7% Algeria 5.5% Nigeria 4.7% Cote d’Ivoire 3.0% Congo 4.1% Kenya 2.3% Nigeria 3.3%
* 1999 for Taiwan; 2001 for the rest

Source: UN Comtrade; OECD, International Trade by Commodity Statistics
2.5 Sectoral Composition. The sectoral composition of Asian countries’ exports to

Africa differs by country. Exports from Japan and Korea are concentrated in
scale-intensive industries. The percentage of differentiated goods is also relatively high in
these two countries’ exports. Labor-intensive industries play the major role in exports
from China, India, and Taiwan and resource-intensive industries play a large role in
Malaysia’s exports (see Table 2-3). With regards to imports from Africa,
resource-intensive industries are dominant in most countries except India. In China,
Japan, Korea, and Taiwan, the percentages of those industries are greater than 60%.
Mining also captures a high percentage in those countries.7 Agriculture and forestry and
fishing occupy a reasonable percentage of exports to China, Japan, and Singapore and
scale-intensive industries have are a high percentage of exports to Malaysia and India (see
Table 2-4).
7
In the sectoral categories used in this analysis, certain commodities (petrol oils, crude, & crude oils
obtained from bituminous minerals) are categorized to both mining and resource-incentive industries.
2-4
Table 2-3 Asian Countries’ Exports to Africa by Industry

(2001*)
Export to Africa Japan Korea China Taiwan Singapore Malaysia India
Agriculture, forestry, fishing 11 0.3 % 0 0.0% 224 4.1% 20 1.9% 23 2.5% 26 4.4% 210 8.3%
Mining 1 0.0% 0 0.0% 61 1.1% 1 0.1% 2 0.2% 0 0.0% 14 0.5%
Manufacturing 3,794 99.7% 3,836 100% 5,183 94.8% 1,047 98.0% 891 97.3% 570 95.6% 2,300 91.1%
Resource-intensive industries 76 2.0% 97 2.5% 373 6.8% 27 2.5% 143 15.6% 189 31.7% 232 9.2%
Labor-intensive industries 196 5.1% 509 13.3% 2,550 46.6% 422 39.5% 206 22.5% 122 20.5% 832 33.0%
Scale-intensive industries 2,184 57.4% 2,627 68.5% 957 17.5% 271 25.3% 136 14.8% 100 16.8% 634 25.1%
Differentiated goods 920 24.2% 545 14.2% 1,031 18.9% 296 27.7% 341 37.2% 145 24.3% 248 9.8%
Science-based industries 418 11.0% 58 1.5% 272 5.0% 31 2.9% 65 7.1% 14 2.3% 354 14.0%
Note: US$ Millions. *1999 for Taiwan.

Source: UN Comtrade; OECD, International Trade by Commodity Statistics.
Table 2-4 Asian Countries’ Imports from Africa by Industry

(2001*)
Export to Africa Japan Korea China Taiwan Singapore Malaysia India
Agriculture, forestry, fishing 583 11.6% 49 1.6% 499 7.1% 20 0.6% 122 17.2% 21 6.4% 258 16.0%
Mining 909 18.2% 1,018 33.8% 3,113 44.1% 1,377 40.4% 42 5.9% 18 5.5% 199 12.3%
Manufacturing 3,516 70.2% 1,949 64.6% 3,452 48.9% 2,008 59.0% 547 76.4% 288 88.1% 1,158 71.7%
Resource-intensive industries 2,788 55.6% 1,678 55.6% 2,937 41.6% 1,687 49.5% 243 34.2% 179 54.7% 323 20.0%
Labor-intensive industries 155 3.1% 85 2.8% 168 2.4% 36 1.1% 33 4.6% 10 3.0% 76 4.7%
Scale-intensive industries 549 11.0% 145 4.8% 226 3.2% 239 7.0% 112 15.8% 78 23.9% 721 44.6%
Differentiated goods 14 0.3% 23 0.7% 108 1.5% 30 0.9% 153 21.5% 16 4.9% 24 1.5%
Science-based industries 11 0.2% 17 0.6% 13 0.2% 15 0.4% 6 0.8% 5 1.5% 14 0.8%
Note: US$ Millions. *1999 for Taiwan.
Due to the duplicated categorization of certain commodities (petrol oil, crude, and crude oils obtained from
bituminous minerals) to both mining and resource-incentive industries, total percentage is not 100%.
Source: UN Comtrade; OECD, International Trade by Commodity Statistics.
2.6 Comparative Advantage of Africa by Sector. In order to assess the

comparative advantages of Africa and countries trading with Africa by sector, the
consultants utilized the specialization index as shown below. The concept behind using
this index is related to the product cycle theory. This means that levels of generation,
growth, maturation and decline of manufacturing lead to the beginning of import,
acceleration of domestic production and promotion of exports. The index is useful to
analyze the long-term and multilayered trends, which enable reviews and comparisons of
long-term changes of industries by categorized goods.
Index = (Ei – Mi) / (Ei + Mi)
• Ei: Africa’s export of “i” product by each industry to Asia, Europe, and North
America.
• Mi: Africa’s import of “i” product by each industry from Asia, Europe, and
North America.
2-5
2.7 The index indicates a value of minus one (-1.00) if the country is totally
dependent on importing product “i.” The index indicates a value of plus one (+1.00) if the
country completely exports product “i.” The results of the calculation are shown as
follows:8
2.8 Agriculture, Forestry and Fishing. In this sector, Asian countries as well as
European countries are net importers from African countries. However, the US and
Canada are net exporters to African countries (see Figure 2-5).
Figure 2-5 Primary Sector Comparative Advantage Index by Region
Agriculture, forestry and fishing

1.00
0.50
Asia
Europe
0.00
US and Canada
T otal
-0.50
-1.00
1990 1995 1996 1997 1998 1999 2000 2001
2.9 Mining. In mining sector, Africa has a strong comparative advantage over Asia,
Europe, the US, and Canada. The results demonstrate 0.97 to 0.99 (see Figure 2-6).
Figure 2-6 Mining Sector Comparative Advantage Index by Region
Mining
1.00
0.50
Asia
Europe
0.00
US and Canada
T otal
-0.50
-1.00
1990 1995 1996 1997 1998 1999 2000 2001
2.10 Manufacturing. African countries have a comparative advantage over Europe,

the US, and Canada in resource-intensive and labor-intensive industries. However, Asian
countries possess a relatively strong comparative advantage in these industries in Africa,
as well as in scale-intensive industries, differentiated goods, and science-based industries.
8
Because of the data restriction, Taiwan has been eliminated.
2-6
Europe, the US, and Canada also have a relatively strong comparative advantage in
differentiated goods and science-based industries (see Figure 2-7).
Figure 2-7 Manufacturing Sector Comparative Advantage Index by Region
Resource-intensive industries Labor-intensive industries

1.00 1.00
0.50 0.50
Asia Asia
Europe Europe
0.00 0.00
US and Canada US and Canada
T otal T otal
-0.50 -0.50
-1.00 -1.00
1990 1995 1996 1997 1998 1999 2000 2001 1990 1995 1996 1997 1998 1999 2000 2001
Scale-intensive industries Differentiated goods

1.00 1.00
0.50 0.50
Asia Asia
Europe Europe
0.00 0.00
US and Canada US and Canada
T otal T otal
-0.50 -0.50
-1.00 -1.00
1990 1995 1996 1997 1998 1999 2000 2001 1990 1995 1996 1997 1998 1999 2000 2001
Science-based industries
1.00
0.50
Asia
Europe
0.00
US and Canada
T otal
-0.50
-1.00
1990 1995 1996 1997 1998 1999 2000 2001
B. Investment Relations
2.11 Among selected Asian countries, outward direct investment data toward African
countries at the sectoral level is available only in Japan and Korea. Singapore, Malaysia,
and India do not have such data even in aggregated form. China has outward investment
data by country and sector respectively, but this data is not aggregated by country and
sector. Taiwan has outward investment data by country for a limited number of African
countries, but does not have the data by sector. Under the limited data available, the
results of the analysis of foreign direct investment (FDI) inflows to Africa from Japan,
Korea, China, and Taiwan are indicated in the following section.
2-7
2.12 Investment Trend. Japan. During the 1990s, Japanese outward direct
investment to Africa sharply decreased although there were some fluctuations.
Investment in 2002 was only 23% compared to the level in 1991. Japan’s FDI to Africa is
heavily biased towards Liberia because ship registration is part of FDI. Removing Liberia,
the FDI trend during the 1990s is fairly stagnant with the exceptions in 1996, 1997, and
1999, when there were sizable amount of investments in South Africa and Tanzania
(Figure 2-8).
Figure 2-8 Quantity and Total Amount of Japanese FDI to Africa

Value(\100million) Cases
1,200 80
Cases
Cases(without Liberia) 70
1,000
Value
Value(without Liberia) 60
800
50
600 40
30
400
20
200
10
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: Ministry of Finance, Japan
2.13 Korea. Korea’s direct investment in Africa indicates the presence of aggressive
investment activities in the 1990s. The cumulative investment value from 1968 to 2002
amounted to $726 million for 139 projects, in which 95% of investments were made after
1990 (Figure 2-9). The expansion of Korea’s direct investment to Africa in this period
occurred in parallel to the expansion of its FDI in South East Asia to deal with the abrupt
increase of domestic labor costs and frequent strikes. The investments were not
interrupted by the Asian economic crisis in 1997-98.
2-8
Figure 2-9 Quantity and Total Amount of Korean FDI to Africa
Amount ($ million) Project

180 18
160 Project invested 16

Amount invested
140 14
120 12
100 10
80 8
60 6
40 4
20 2
0 0
1990 91 92 93 94 95 96 97 98 99 2000 01 02
Source: The Export-Import Bank of Korea
2.14 China. China’s direct investment in 49 African countries significantly increased

during the 1990’s, from 0 in 1990 to $214 million in 2000 (see Figure 2-10). Although
trade and economic relations between China and Africa grew in the 1980s with the
dramatic increase in China’s economic power, President Jiang Zemin’s visit to six
African countries in 1996 is considered to have inaugurated a new era in the relations
between China and Africa. China’s FDI to Africa in value exceeded the FDI of Japan in
2000, when the first China-Africa Co-operation Forum was held in Beijing.
Figure 2-10 Quantity and Total Amount of Chinese FDI to Africa
Value($ million) Cases

250 60
50
200
Cases
Value
40
150
30
100
20
50
10
0 0
1990 91 92 93 94 95 96 97 98 98 2000 01
Source: Ministry of Commerce, PRC
2-9
2.15 Taiwan. Taiwan’s direct investment in Africa during the 1990’s shows
fluctuations (Figure 2-11). However, the cumulative investment value from 1993 to 2002
amounted to $176.3 million, which equates to 3.7 times the $47.3 million invested from
1953 to 1992. Investments prior to 1998 had been mostly devoted to Liberia and, to a
much lesser degree, South Africa. However, since 1999, the share occupied by other
African countries has increased.
Figure 2-11 Quantity and Total Amount of Taiwanese FDI to Africa
Value ($ million) Cases

45.0 20
40.0 Cases 18
Value
35.0 16
14
30.0
12
25.0
10
20.0
8
15.0
6
10.0 4
5.0 2
0.0 0
1993 94 95 96 97 98 99 2000 01 02
Source: Ministry of Economic Affairs, Taiwan
2.16 Country and Sectoral Composition. Japan. Japanese direct investment to

Africa is concentrated in two countries, Liberia and South Africa, which accounted for
93% of the total accumulated investment from 1991-2002. However, considering that
direct investment to Liberia has been focused on obtaining flag-of-convenience ships, the
majority of FDI has been concentrated on South Africa and has ignored other countries.
Table 2-5 Top 5 African Destinations for Japanese Investments
(Cumulative Value in Each Period)
Rank 1971-80 1981-90 1991-2002

1 Liberia (57.9%) Liberia (92.3%) Liberia (74.9%)
2 Zaire (16.9%) Zambia (2.2%) South Africa (18.2%)
3 Nigeria (10.5%) Egypt (1.1%) Tanzania (2.7%)
4 Niger (5.4%) Gabon (0.9%) Mauritius (1.1%)
5 Gabon (2.3%) Zaire (0.9%) Egypt (0.9%)
Note: Figures in parentheses indicate countries’ share in total accumulated
investment in each period.
Source: Ibid.
2-10
2.17 Similar to country composition, Japanese direct investment to Africa is

concentrated on two industrial sectors, manufacturing and transportation. Within the
manufacturing sector, transportation machinery occupies the highest share. Examining
these two sectors by country, as one would expect from the country composition,
manufacturing (and above all, transport machinery) is concentrated in South Africa and
transportation service is mainly absorbed by Liberia.
2.18 Comparing investment in major industrial sectors through the 1970s and 1980s
(see Table 2-6) and the change of major recipients of Japanese FDI (Table 2-5), the
following points are noted:
• Manufacturing has increased its share in the 1990s mainly due to the increase in
transport machinery. This is mainly because of the increase in the automobile
industry in South Africa
• Within the non-manufacturing sector, a sharp contrast can be seen between
mining and transportation, which reflects the decline of Nigeria, Zaire, and
Zambia and monopoly of Liberia. A temporary rise in the service sector is
recorded in the 1980s and a steady increase in finance and insurance is notable as
well. These industries have also been concentrated in Liberia, which has an
advantage of liberal tax laws and flag-of-convenience status.
Table 2-6 Japanese Investment Structure by Industrial Sector

( u n it : % )
1 9 7 1 -8 0 1 9 8 1 -9 0 1 9 9 1 -0 2
Food 0 .2 0 .0 2 .3
T e x t il e 1 .6 0 .0 0 .1
L u m b e r & P u lp 0 .0 0 .0 0 .0
C h e m ic a l 1 .0 0 .2 0 .4
M e tal 1 .3 2 .5 1 .8
M a c h in e r y 0 .0 0 .0 0 .2
E le c t r i c a l 0 .2 0 .1 0 .1
T ra n sp o rt 0 .4 0 .2 1 0 .0
o th e rs 0 .4 0 .0 2 .7
M a n u fa c tu rin g T o ta l 5 .3 3 .1 1 7 .5
F a r m in g & F o r e s t r y 0 .4 0 .0 1 .9
F is h e r y 3 .6 1 .1 1 .0
M in in g 3 0 .5 2 .5 1 .0
C o n s t r u c t io n 1 .5 0 .1 0 .2
T ra d e 0 .1 0 .3 1 .1
F in a n c e & I n s u r a n c e 0 .0 0 .8 3 .9
S e r v ic e 1 .6 1 6 .1 1 .6
T ra n sp o rta tio n 5 6 .6 7 3 .8 7 1 .2
R e a l E state 0 .0 1 .6 0 .0
o th e rs 0 .0 0 .6 0 .5
N o n - M a n u f a c t u r in g T o t a l 9 4 .5 9 6 .9 8 2 .4
TOTAL 1 0 0 .0 1 0 0 .0 1 0 0 .0
Note: share in cumulative value in each period
2.19 Although Japanese direct investment to South Africa is concentrated in the

transportation industry, mainly automobile assembly and related parts manufacturing, it
also extends to other industries such as mining, metal manufacturing (ferrous and
non-ferrous), and various trading industries. Among other countries and industries to
which Japan’s FDI has been delivered during 1990s, food manufacturing (Tanzania),
service (Mauritius), and chemical and metal manufacturing (Egypt) are notable.
2-11
2.20 Korea. The major FDI destination countries are Algeria, Sudan, which has
received over US$100 million cumulatively, followed by South Africa, Morocco, Gabon,
and Ghana. The major sectors for investment are diversified to some extent into Hotels
and Restaurants, Manufacturing, Mining, and Retail and Trade. Looking at the major
destination countries of FDI in the above sectors, Algeria (Mining, Hotels and
Restaurants, Trade and Retail), Sudan (Manufacturing, Trade and Retail, Hotels and
Restaurants), South Africa (Manufacturing, Trade and Retail), and Morocco
(Manufacturing, Hotels and Restaurants) are marked (see Table 2-7).
Table 2-7 Korean Investment Distribution by Country and Industry

(unit: $ thousand)
Finance & Hotel & Real estate
Total Agriculture Mining Manufacturing Construction Trade & Retail Transportation Telecom. Others
Insurance Restaurant & Services
Ghana 1,857 0 24 860 0 650 0 20 0 42 261 0
Gabon 9,089 0 0 0 0 9,089 0 0 0 0 0 0
Nigeria 22,676 0 0 526 542 1,806 0 19,802 0 0 0 0
South Africa 76,084 25 322 20,127 100 55,196 0 0 0 0 314 0
Liberia 260 0 0 0 0 10 250 0 0 0 0 0
Morocco 53,166 1,348 1,050 23,993 0 2,665 0 0 0 24,110 0 0
Sudan 148,321 0 0 91,050 0 33,271 0 0 0 24,000 0 0
Algeria 214,623 0 18,714 0 0 16,191 0 0 0 179,718 0 0
Angola 125 105 0 20 0 0 0 0 0 0 0 0
Congo Republic 742 0 0 242 0 0 0 0 0 0 500 0
Note: Figures are cumulative total from 1968 to 2002
Source: The Export-Import Bank of Korea
2.21 Manufacturing is the industry in which Korean companies have most actively
undertaken FDI in Africa and involves various businesses such as textiles and apparel,
leather and footwear, wood and furniture, petroleum and chemical products (including
medical implements and pharmacies), electrical and electronic appliances, food, metals,
motors, and automobile tires. Korea is expecting further investment in labor-intensive
industries in African countries to realize continuous development.9 The service industry
is another area for Korean investment, including hotels and restaurants, casinos,
commerce, department stores, and photo studios. In particular, photo studios are the most
successful businesses for self-employed Koreans.
9
Africa Business Guide, Ministry of Foreign Affairs and Trade, Government of Korea, 2003.
2-12
Table 2-8 Korea’s FDI in Manufacturing
No.
Country Sub-sector
Project
Ghana 5 Food, Wood, Non-metal, Electronics, Motors
South Africa 8 Textile, Leather (2), Petroleum, Metals,
Machine. Electronics
Morocco 2 Textile, Electronics
Mauritius 2 Electronics, Motors
Senegal 2 Others
Sudan 4 Textile (2), Leather Petroleum
Swaziland 1 Electronics
Angola 1 Others
Egypt 4 Textile, Electronics, Motors (2)
Central Africa 1 Others
Cameroon 1 Non-metallic
Kenya 2 Textile, Petroleum
Cote d’Ivoire 1 Basic Metals
Congo Democratic Rep 2 Others (2)
Tanzania 3 Textiles (2), Metals
Togo 1 Textiles
Tunisia 2 Petroleum, Others
Total 42
Source: Overseas Direct Investment Statistics Yearbook, 2003.3, The Export-Import Bank of Korea
2.22 China. China’s direct investment destinations in Africa are quite diversified.
The top two countries in cumulative investment, Zambia and South Africa, receive 18.5%
and 15.3% respectively (see Table 2-9). It should be noted that most of the direct
investment in African countries was made during the 1990s. Manufacturing and resource
development account for a large percentage of total investments. Within manufacturing,
light industry and spinning and weaving were identified as the main targets for
investment (see Table 2-10).
2-13
Table 2-9 Countries and Cumulative Investment for China

(Cumulative Value through 2001)
Value Value
Cases Cases
($ thousand) ($ thousand)
134,12
Zambia 17 (3.8) (18.5) Gabon 11 (2.5) 17,045 (2.3)
6
110,84
South Africa 83 (18.5) (15.3) Benin 4 (0.9) 16,723 (2.3)
9
Mali 5 (1.1) 58,122 (8.0) Mauritius 20 (4.5) 16,657 (2.3)
Cote
Tanzania 14 (3.1) 39,483 (5.4) 13 (2.9) 16,033 (2.2)
D’Ivoire
Zimbabwe 11 (2.5) 33,257 (4.6) Cameroon 15 (3.3) 15,851 (2.2)
Nigeria 33 (7.4) 31,144 (4.3) Niger 3 (0.7) 14,964 (2.1)
Mozambiqu
Egypt 17 (3.8) 30,635 (4.2) 6 (1.3) 14,638 (2.0)
e
Congo,
7 (1.6) 24,242 (3.3) Guinea 5 (1.1) 11,827 (1.6)
Dem.
Ghana 17 (3.8) 19,212 (2.6) Sudan 9 (2.0) 11,675 (1.6)
Kenya 21 (4.7) 18,475 (2.5) Eq. Guinea 4 (0.9) 11,315 (1.6)
726,53
Africa total 448
2
Note: Figures in parentheses indicate shares in total cases/amount. Africa total consists of 49 countries.
Table 2-10 China’s FDI to Africa by Industry

(Cumulative Value through 2001)
Amount invested
Number of projects
($ Million)
Service 200 (40.1) 124.5 (18.3)
Manufacturing 230 (46.1) 315.27 (46.3)
Machinery 20 (4.0) 16.06 (2.4)
Electric appliances 36 (7.2) 25.4 (3.7)
Light industries 82 (16.4) 86.54 (12.7)
Spinning and weaving 58 (11.6) 101.6 (14.9)
Others 34 (6.8) 85.67 (12.6)
Agriculture 22 (4.4) 48.13 (7.1)
Resource development 44 (8.8) 187.6 (27.5)
Others 3 (0.6) 5.85 (0.9)
Total 499 681.35
Note: Figures in parentheses indicate shares in total number/amount.
2.23 Taiwan. Taiwan’s direct investment in Africa has been mostly concentrated in
Liberia because of the shipping-related opportunities. Since the end of the 1990’s,
however, Taiwan FDI started to diversify across the continent. Based on data below that
indicates countries other than Liberia receiving investments, spinning, apparel, and trade
are the major sectors in Africa receiving investments by Taiwanese companies (see Table
2-11).
2-14
2.24 Taiwan’s partners for direct investment are basically limited to a small number of
countries with which Taiwan has or had diplomatic relations. Among those countries
indicated in Table 2-10, Taiwan has no diplomatic relation with South Africa, Lesotho,
Cote D’Ivoire and Ghana, but has representative offices in South Africa and Cote
D’Ivoire. In Lesotho, about 700 immigrants from Taiwan remain key players in the
foreign business community and have made a significant contribution to Lesotho’s
economy.
Table 2-11 Taiwan’s FDI to Africa by Country and Industry

(Cumulative Value through December 2002)
(Unit: $ million)
Country Cases Value Type of business
South Africa 620 1,500 Spinning, plastic processing, shoes, trade and distribution
Lesotho 30 600 Spinning and apparel
Swaziland 20 45 Apparel, restaurant, entertainment and mold manufacturing
Hotel, apparel, shoes, food processing and pottery
Mauritius 8 20
manufacturing
Cote d’Ivoire 9 11 Steel, restaurant, trade and vegetables
Ghana 12 8 Steel, car part import, farm and trade
Senegal 4 3 Battery, fishery and trade
Malawi 9 23 Apparel, lumber processing, metal goods and trade
Africa total 712 2,209
Source: Ministry of Economic Affairs, Taiwan
C. Trade and Investment Linkage in Africa Asia Region

2.25 Previously, trade and investment relations between Africa and Asia were
described respectively based on data and facts collected through this study. The subject in
this section is whether trade and investment are connected and if so, will there be policy
implications that will lead to the promotion of trade and investment. As a general
argument, three types of investments and their possible linkages to trade are discussed in
this section.
2.26 Type-1: Export of African Resources to Asia Investment in Equipment and

Processing Industry. African exports to Asia are dominated by natural resources either as
unrefined products or processed for use in resource-intensive manufacturing products.
The statistics also indicate a high percentage of those resource-related items to Asian
countries. As being indicated by Table 2-4, the share of resource intensive industry
products is 80% for Korea, 76% for Taiwan and 61% for China and Japan. The expected
development for linkages to investments is investing in local exploitation and processing,
typically observed in mining, petroleum, and agricultural products.
2-15
2.27 Promoting Asian investment in Africa will have implications on foreign

investment policies, export promotion policies, and regulation and licensing on natural
resource exploitation. As Asian firms are relatively new to the African market compared
to European firms, they are at a disadvantage in dealing with natural resource exploitation
investments. Enhancing competition to promote foreign investments may be effective for
attracting Asian firms investment.
2.28 Type-2: Import from Asia to Africa Investment in Local Production for Local
Market. As indicated in Table 2-3, the share of manufacturing products among exports
from Asia to Africa ranges between 63% for Singapore to 96% for Korea. Among
manufacturing goods exported to Africa, labor-intensive products encompass a larger
share from countries such as China and Taiwan, while scale-intensive products are greater
from countries such as Japan and Korea. There is a greater possibility for the
labor-intensive industry to be developed for local production rather than scale-intensive
industries. This is best demonstrated by the Korean firm example that produces
household products and kitchenware.
2.29 The policy mechanisms should relax import regulations and tariffs, promote
more imports from Asia, and finally provide an environment for small- and medium-scale
investments in the manufacturing sector to target the domestic market. The domestic
trade regulations against foreign investment companies could present a barrier to foreign
partners and future investments.
2.30 Type-3: Export of African Goods Manufactured via Asia Investments Import
of Parts and Components from Asia. China and Taiwan firms have undertaken
investments in textile and labor-intensive industries to increase their exports utilizing
AGOA. Because of AGOA’s parameters, this type of investment not only creates more
exports, but also induces imports of raw materials, parts, and components from Asia.
2.31 The relevant policy instruments would be the creation of an export processing
zone with incentives and an uncomplicated environment for foreign investment.
2.32 An analysis was made using Japanese-African trade and investments over the
past 20 years. The graph can be seen below in Figure 2-12. It appears that there might be
an association between the two, but because of the varying investments, a clear linkage
could only be found with further study disaggregated by country.
Figure 2-12: Trend of Japan-Africa Trade, FDI, and ODA Flow
2-16
4.0 TotalofBilateralODA
Export
3.0 Im port
Direct Investm ent
2.0
1.0
0.0 ee
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
01
83
00
19
20
-1.0
-2.0
-3.0
2-17
Studies on Africa-Asia Trade and Investment Relations (B) Chapter3. Institutional Arrangements
OVERSEAS DEVELOPMENT ASSISTANCE TO PROMOTE TRADE

AND INVESTMENT
3.1 Trade and Investment Promotion Policies by Stage of Trade/Investment

Relations. Based on observations of Asian countries’ governments’ roles in promoting
trade and investment to Africa, the role of government promotion policies can be
categorized largely by three stages of progress in trade and investment relations. (Figure
3-1) At the initial stage where many enterprises in Asian countries are not familiar with
Africa, the government’s initiative is quite effective in bringing their private sector to an
unknown business environment with rich resources and new market opportunities.
Besides the promotion measures such as publicly organized missions and bilateral trade
and investment agreements, ODA programs with equipment grants and technical and
financial assistance provide business opportunities for the private sector under tied
procurement.
3.2 At the developing stage of trade and investment business activities, export and
overseas investment credit and insurance schemes are indispensable government tools to
minimize the risk. Tax incentives are also provided to assist importers and investors.
3.3 During the mature stages, market mechanisms should occupy some of the
functions played by government support measures. Therefore, the government policy
instrument should become a market information service. However, given the fact that
operating in many African countries still involves various commercial and
non-commercial risks, government support to minimize those risks is considered to still
be indispensable.
Table 3-1 Levels of Development and Market/Policy Instruments
Development Stage Initial Stage Developing Stage Mature Stage
- ODA grants - Tax Incentives - Promotion of in-ward

- ODA tied loans - Export Credit investment
- Organized Missions - Export Insurance - Trade/Investment
Policy interventions to
- Bilateral Agreements - Overseas investment Information Service
facilitate market
credit
transaction
- Merchandise
Exhibition
- Investment Missions
3.4 Strategic Utilization of ODA. ODA is considered to be an effective instrument

to engage the private sector in opportunities to Africa for trade and investment, given
their disadvantageous geographical and historical relations with Africa, as compared to
Europe. In utilizing government intervention for trade and investment promotion, it is
effective that the application of the policy instruments and the level of bilateral economic
3-1
relationships to be closely related.
3.5 A survey conducted by the Japan External Trade Organization (JETRO) in 1999
among Japanese firms in eight African countries discovered that the existence of
Japanese ODA played a major role in Japanese companies’ establishment of operations in
Africa. The main motives for operations in the eight African countries were the future of
the potential market and Japanese ODA (Box 3-1). In southern and western Africa,
another motive was abundant natural resources.
Box 3-1 Motivations Behind Market Entry
Market Size Future Request of Abundant Japanese Profitability Others

Potential of Local Natural ODA
the Market Govern. Resources
Egypt ** *** *
Kenya * *** ** *
Tanzania *** * **
Zimbabwe * ** * ***
South ** *** *
Africa
Nigeria *** ** * *
Ghana * ** * ***
Ivory Coast *** ** *
Note: The survey allowed for multiples entries, where *** is mentioned most often, ** is mentioned second
most often, * is mentioned third most often. The survey was sent to 145 companies, from which 136 responses
were received.
Source: JETRO (2000). “Survey on Current Conditions for Investment of Japanese Companies in Africa” (Zai
Afurika Shinshutsu Nikkei Kigyo Jittai Chosa). Japan External Trade Organization. Unpublished document
March 2000. Tokyo, Japan.
3.6 Table 3-1 indicates the policies and ODA programs of the selected Asian
countries for this study. Most of these countries can be categorized in the developing
stage, beyond introductory, but not yet mature, except for China and Taiwan, which
employ stronger policy interventions to utilize ODA programs for trade and investment
promotion. A linkage between ODA and export and investment activities is also
recognized in some of the Korean investment projects.
3-2
Table 3-2 Main Promotion Policy and ODA by Asian Country
Country Promotion Policy ODA
Duty-free and quota free access to LDCs’ ODA to Africa accounts for 10% of
Japan products, export credit and insurance, trade Japanese ODA in forms of grant, technical
fair, missions assistance and loan.
Technical assistance in training and experts.
Korea Duty drawback, tax incentives, export ODA loans tied to Korean enterprises,
credit and insurance, trade fair and missions shares 11% of the entire loan
Chinese Trade and Investment Agreements on economic and technical
Development Centers in 11 African cooperation with 53 African countries. Up
China countries. Credit facility for private to 2000, nearly 800 projects, including
corporation and special fund scheme for various construction projects, have been
joint venture. completed.
Financial support for Taiwanese enterprises Technical assistance and grants in field of
Taiwan investment in African countries with agriculture for countries with or likely to
diplomatic relations. have diplomatic relations. Finance and
investment to specific projects.
Double tax deduction for costs for Technical assistance for granting training
Singapore expanding overseas market and investment, program in development experience,
international exhibition program, various particularly for export development
tax incentive schemes. (Singapore Cooperation Program).
Double tax deduction for export promotion, Economic, technical, scientific and cultural
Malaysia export credit refinancing, market cooperation agreement with 20 African
development grant. countries.
“Focus Africa Program” to increase
interactions with 7 major African partners
India for Joint Trade Committee, Joint Business Special Commonwealth African Assistance
Councils and Export Promotion. Exim Plan for technical assistance to 34 African
Bank provides equity, loans and guarantee countries.
to support Indian direct investment abroad.
Source: Results of interviews to the respective authority by PADECO/UFJI Team
3.7 In Korea, Economic Development Cooperation Fund (EDCF) provides soft loans
to African countries with tied procurement conditions to Korean firms. The African
region shares 8.4% of EDCF’s outstanding loan amount, including 6% for the Sub-Sahara
region in transportation (26%), telecommunication (18%), energy (13%), health (13%),
education (8%), and water supply (8%). Apart from the soft loans, Korea has been
providing grant and technical aid to several African countries since 1977. Observing that
the African recipients of Korean aid are also the major recipients of Korean investment, it
should be noted that Korea’s ODA programs have supported its business activities in
Africa (see Table 4-2 and 2-7), and for some countries (Nigeria, Morocco, and Gabon),
the amount of ODA and FDI demonstrate positive correlation (Figure 3-2).
3-3
Table 3-3 Korean Aid by African Country

Unit: Million Won, As of year 2002
Total
1991 92 93 94 95 96 97 98 99 2000 2001
(91-01)
Ghana 148 140 143 183 213 285 301 192 162 172 251 2,190
Gabon 41 41 0 57 73 46 45 29 26 66 66 491
Liberia 5 2 37 0 0 0 0 12 0 0 0 57
South
0 0 0 33 0 0 103 733 99 2,124 661 3,753
Africa
Angola 6 132 106 98 106 119 86 0 0 12 272 936
Algeria 0 22 82 26 65 0 11 0 0 31 97 334
Congo
160 153 141 132 120 114 0 0 38 9 42 910
Republic
Nigeria 268 197 198 177 237 190 197 271 12 0 42 1,788
Sudan 142 208 227 1,217 793 553 366 154 0 39 101 3,798
Morocco 73 86 0 139 301 253 26 21 41 44 121 1,107
Total for 3,729 4,276 4,131 4,102 4,816 4,737 4,657 4,731 2,634 4,765 4,107 46,687
Africa* (21.5) (18.5) (16.8) (13.3) (12.7) (11.0) (8.8) (8.8) (5.8) (9.3) (5.9) (10.4)
Note: Figures in parentheses indicate share in total aid to African countries. Total of grant, loan and technical
assistance.
Source: Korean International Cooperation Agency, 2002
Figure 3-1 Korean ODA and FDI by African Country

(Unit: million won)
250
Nigeria
200
FDI(1968-2002)
Morocco
150
100
Gabon
Liberia
50
Congo Rep.
Algeria Angola Ghana Sudan
S.Africa
0
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
ODA(1991-2001)
3.8 China is more aggressive than Korea in utilizing ODA programs to promote
Chinese firms’ business activities in Africa. The special fund for joint ventures is offered
to African countries that receive ODA from China, based on the bilateral agreement for
specific projects. Foreign Economic Cooperation (FEC), which provides contract
engineering, labor service cooperation, and design consultation on a fee basis, is also
associated with ODA construction programs in Africa. The Chinese government also
offers to assist in establishing the financial and insurance mechanisms to facilitate the
FEC exports and offers support to FEC enterprises, which include establishing insurance
funds to specifically serve the needs of FEC projects.
3-4
Box 3-1 China’s Official Development Aid

Since the 1950s, China has provided economic aid to developing countries. Since the
adoption of the policies of reform and opening to the outside world, China has
quickened its pace of foreign aid, involving agriculture, forestry, water conservation,
light industry, textiles, food, power, machinery, chemicals, transportation, culture,
education, public health, and public utility projects.
China began to provide aid to Africa in 1956. So far, it has provided aid to 53 African
countries. Through year 2000, nearly 800 projects in the social, economic, and other
fields have been completed, of which the Tanzania-Zambia railway is a notable
example. From 1986 to 2000, the Chinese government provided multilateral aid to 42
African countries and trained more than 660 technicians. In 2000, China announced
the forgiveness of 10 billion Yuan (US$ 1.2 billion) of loans against 32 least developed
African countries, of which 27 countries have signed the memorandum.
Recent grant aid projects in Africa include:
• Road construction in Madagascar (2001);

• Construction of the parliament building in Benin (2001);
• Construction of the Ministry of Foreign Affairs’ building in South Africa
(2001);
• Rehabilitation of People’s Hall in Guinea (2000); and
• Irrigation project in Namibia (2000).
3.9 Foreign trade and investment policy is strongly linked to Taiwan’s diplomatic
policy. In this context, ODA and business promotional activities in Africa are inevitably
linked to one another. The priority of ODA’s program delivery first lies with the country
that has diplomatic ties, second with the candidate country that will have ties in the near
future, and finally with the country that is very important in economic relations, but has
no diplomatic ties with Taiwan.
3.10 The ODA activities of Korea, China, and Taiwan are mainly motivated by their
diplomatic strategies adopted under the Cold War regime, rather than by the context of
business promotion. However, it could be said that the effectiveness of ODA as a
diplomatic tool has given a new thrust in the context of trade and investment promotion to
and with Africa. With regard to these three countries, it would not be appropriate to
simply categorize them as being in the ‘initial stage’ of trade/investment development
compared to other countries. Instead, they seem to be effectively utilizing policy
instruments used at the initial stage even after they have entered into a more mature stage
of their trade and investment relationship.
3-5
Studies on Africa-Asia Trade and Investment Relations (B) Chapter4. Promotion Policies
ASIAN COUNTRIES’ AND FIRMS’ POLICIES TO PROMOTE TRADE

AND INVESTMENT IN AFRICAN COUNTRIES
A. Government Policies and Strategies
4.1 Each of the selected Asian countries has implemented policy measures that have
provided support in areas such as financial incentives, information, and special programs
to promote trades and investments according to their interests and objectives. Among the
policies introduced in this section, the Chinese Trade and Investment Development
Centers and Focus Africa program in India directly target African countries.
4.2 Japan. The Japanese government has recently begun to place a strong emphasis
on the promotion of foreign investment in Japan. Attracting foreign investment is
considered a key strategy to stimulate domestic employment and revitalize the Japanese
economy.
4.3 When the Japan External Trade Organization (JETRO) was established in 1958
as the nation’s principal organization for the comprehensive implementation of trade
policy, it was expected to promote Japanese exports to meet the needs of the nation’s
postwar economy. However, as Japan’s trade surplus continued to grow in the 1980s, the
organization began promoting imports to Japan to help the nation achieve more balanced
foreign trade. And today, it has integrated both functions to promote trade (mainly
imports) and investment within the same organization, as it is difficult to promote trade
effectively without considering global trends in foreign direct investment and national
investment promotion activities.
4.4 Trade Promotion Policies. As noted above, Japan’s trade promotion policy
places priority on import promotion. For this purpose, the following schemes have been
initiated:
4.5 Tax Incentives. Manufacturers who have increased their imports of particular
commodities such as machinery, metal products, and chemical products to more than five
percent of the base year can gain a tax reduction on the value of the increased imports.
4.6 Guidance Policy Finance. An import loan with a preferential rate is provided by
the Development Bank of Japan (DBJ), Japan Bank of International Cooperation (JBIC),
Small Business Finance Corporation, and National Life Finance Corporation. JBIC also
provides an export loan. Export/import related insurance is provided by Nippon Export
and Investment Insurance (NEXI).
4-1
4.7 Foreign Access Zone (FAZ). Under the Import and Inward Investment
Promotion Law, Foreign Access Zones (FAZ) have been established in and around
harbors and airports to integrate import-related facilities, businesses, and activities to
facilitate imports. In addition, various measures have been taken to support the
development of import promotion infrastructure facilities by the private sector.
4.8 Support measures are also available for import distribution promotion projects,
which are considered to contribute to import promotion, in areas designated as specific
integration districts within FAZs to facilitate the integration of import-related enterprises,
such as wholesalers, retailers, and distributors.
4.9 Import Promotion Activities by JETRO. Various activities for import promotion
include: dispatching senior trade advisors to developed/developing countries; the Export
to Japan Study Program (EJSP); the Trade Tie-up Promotion Program (TTPP); operating
Business Support Centers, Import Squares, and JETRO FAZ Support Centers; accrediting
Import Business Advisors; and accepting trade missions and exhibitions.
4.10 Import Promotion Activities by MIPRO. The Manufactured Imports Promotion

Organization (MIPRO) was established in 1978 through cooperation between the
government and industry as a new body to actively promote the import of manufactured
products from countries all over the world. MIPRO’s activities include: exhibitions
(permanent and periodic), information/consulting/advisory services, and operating
import shopping centers.
4.11 Outward Investment Promotion Policies. JETRO provides information to

Japanese companies interested in or wishing to investigate the possibility of making
overseas investments. Services offered to Japanese companies are as follows:
• Investment consultations;
• Registration system for Japanese companies interested in overseas investments;
• Dispatch of overseas investment missions;
• JOIN scheme (JETRO Overseas Investment scheme). Of the direct investments
projects carried out by smaller manufacturers targeting developing countries,
JETRO selects those with high technology transfer abilities and little or no
environmental externalities and offers wide-range support from finding partners
to launching operations. Specifically, JETRO provides diverse advice and
consultations, cooperation in local surveys, and provides information; and
• Support to Japanese companies operating overseas.
4.12 JETRO also offers services to foreign governmental agencies as follows:
• Seminars to encourage investment;

• "Potential Investors from Japan" directory;
• Overseas investment promotion fairs; and
• Receiving missions aimed at inviting investment.
4.13 As guidance policy finance schemes, JBIC provides Overseas Investment Loans
4-2
and Energy and Natural Resources Finance. Overseas Investment Insurance is provided
by NEXI.
4.14 Bilateral Trade and Investment Agreement. Japan has signed trade agreements
with various countries including 20 African countries (Benin, Cameroon, the Central
African Rep., Chad, Rep. of Congo, Democratic Rep. of Congo, Cote d’Ivoire, Egypt,
Ethiopia, Ghana, Guinea, Madagascar, Malawi, Mali, Morocco, Niger, Senegal, Togo,
Tunisia, and Zambia) and investment protection agreements with 9 countries/regions
including 1 African country (Egypt).
4.15 Under the “multi-layered approach” to external economic policy, Japan is

changing its bilateral cooperation approach from dealing with individual cases of trade
friction to enhance more broad-ranging ties.
4.16 Korea. Trade Promotion Policies. The Korean government provides various
tax incentives and subsidies to promote trade. These include:
• Duty drawback scheme;
• Export credit financing;
• Export financing loan;
• Export credit insurance; and
• Tax incentives.
4.17 The details of the above promotion measures are shown in the section below.
4.18 Duty Drawback on Non-Physically Incorporated Items and Excessive Loss

Rates. Under the Korean Customs Act, Korean exporters may receive an excessive
abatement, exemption, or refund of import duties payable on raw materials used in the
production of exported goods. However, it has been found that the drawback on imported
raw materials, when the raw materials are not physically incorporated into the exported
item, sometimes results in excessive drawback duty.
4.19 If recoverable scrap is taken into account when working out the usage rate of
inputs for manufacturing of one unit of output, it sometimes results in excessive
drawbacks. The Korean government produces average raw material usage rates and these
rates are periodically revised. This is done for all products under Korea's duty drawback
scheme. Producers with stable technologies can use these rates. However, if a producer
becomes appreciably more efficient than the average, that producer must use its own rate.
If, upon inspection, a producer is found to be overcompensating in its duty drawback, it is
liable for a penalty assessment. According to the Korean government, only physically
incorporated raw materials are eligible for drawback and this rule applies to all
merchandise exported from Korea.
4.20 Export Credit Financing from Export-Import Bank of Korea. In 1973, the
Korean government established a fund called the National Investment Fund (NIF)
through which funds were given to banks for the purpose of loans. These funds are used
to finance development or to finance exports on a deferred payment basis. The
Export-Import Bank of Korea (Exim) wholly administers deferred export financing
4-3
through NIF. The Exim Bank provides two types of export credit (i) a pre-delivery loan to
cover the period of construction of the project and (ii) a deferred export credit in the form
of a post-delivery loan for ten years including a two-year grace period.
4.21 Export Financing Loan. There are two types of trade financing programs,
production financing and raw material financing. The Exim Bank provides production
financing when a company needs funds for the production of export merchandise and raw
material financing when a company needs funds for raw materials used in the production
of exported merchandise.
4.22 Export Credit Insurance. Korea Export Insurance Corporation (KEIC) is

Korea's official export credit insurance institution. KEIC is a specialized non-profit
corporation under the authority of the Ministry of Commerce, Industry, and Energy and
its operations have the sovereign guarantee of the government. KEIC helps to promote
exports by providing export insurance. In 2000, it supported 17.9% of Korea's total
exports. The Korean government provides annual contributions to the export insurance
program.
4.23 Tax Incentives. The Korean government used to give several tax incentives to
achieve specific national economic objectives under the Tax Exemption and Reduction
Control Law (TERCL) through its various Articles and the Foreign Investment
Promotion Act (FIPA). However, on 1 January 1999, it was replaced by the Special Tax
Treatment Control Law (STTCL) and from May 1999, FIPA was included in STTCL. All
tax incentives under STTCL have sunset rules whereby an incentive comes to an end after
the expiry of a certain period, unless it is extended.
4.24 Outward Investment Promotion Policies. Export-Import Bank of Korea

provides the following schemes for outward investment promotion.
4.25 Overseas Investment Credit. Overseas Investment Credit is provided to Korean

companies that invest abroad in the form of capital subscription, acquisition of stocks, or
long-term credit. This credit is extended when prospective projects are considered to be
contributing to the sound development of the national economy and promoting economic
cooperation with foreign countries concerned.
4.26 Eligible entities are Korean companies that make capital subscriptions to acquire
shares of foreign companies and/or make long-term loans to foreign companies, or
Korean companies that conduct investment projects outside Korea. The coverage ratio is
up to 80% (90% for small- and medium-size companies) of the funds required for
investment projects. The maximum repayment term is 10 years including a 3-year grace
period.
4.27 Overseas Project Credit. Overseas Project Credit is provided to Korean

companies engaged in business outside Korea. To be eligible for this credit, the
companies must procure most of the materials required for installing, expanding, and
operating the equipment or facilities abroad from Korea. Under this program, loans can
also be extended to overseas subsidiaries of Korean companies conducting projects
4-4
abroad. The terms and conditions are basically the same as those applied to Overseas
Investment Credit.
4.28 Major Resources Development Credit. Major Resources Development Credit is

provided to Korean companies to explore natural resources and acquire mining rights
abroad. This credit was initiated to contribute to stabilizing the domestic supply of natural
resources as well as strengthening economic ties with the resource exporting countries.
All projects eligible for the credit are required to follow the guidelines of the
government's resource development plan from their initial stage. The coverage ratio is up
to 70% of the required funds and the maximum repayment term is 20 years including a
3-year grace period.
4.29 Bilateral Trade and Investment Agreement. Korea places great importance on
bilateral trade and investment agreements and has signed the following bilateral
agreements with African countries (see Table 4-1).
Table 4-1 Korean Bilateral Agreements by African Country
Country Trade and investment agreement
Investment guarantee agreement（Oct. 1999）

Economic and technical cooperation agreement (Aug. 2000)
Algeria
Investment promotion and protection agreement (Sep. 2001)
Double taxation avoidance agreement（Nov. 2001）
Double taxation avoidance agreement（Jul. 1995）
Angola
Investment guarantee agreement (Jul. 1995)
Congo Double taxation avoidance agreement（Jul. 1995）

Republic Investment guarantee agreement (Jul. 1995)
Agreement on economic, technical and cultural cooperation (Jul.
Gabon 1975)
Trade agreement（Jul. 1975）
Ghana Technical cooperation and trade promotion agreement (Jul. 1997)
Technical cooperation and trade promotion agreement (Aug.
Liberia
1986)
Double taxation avoidance agreement (Oct. 1988)
Nigeria
Investment guarantee agreement（Mar. 1998）
Double taxation avoidance agreement（Jul. 1995）
South Africa
Investment guarantee agreement（Jul. 1995）
Trade and technical cooperation agreement (Dec. 1976)
Sudan
Double taxation avoidance agreement（Feb. 2001）
Source: Ministry of Foreign Affairs and Trade, Korea
4-5
4.30 China. In China, the Ministry of Commerce has the responsibility to formulate
and implement specific policies and reform plans for foreign trade, economic cooperation
and foreign investment. The Ministry analyzes international economic and trade
development and China's foreign trade situation, puts forward suggestions on items such
as macro-control measures as balance of gross foreign trade volume and structural
adjustments, determines import and export quotas, and issues licenses. To control foreign
trade and investment, the Ministry has created qualification criteria for all kinds of
Chinese enterprises to obtain foreign trade rights or engage in international forwarding
business; approve Chinese companies organization of overseas establishments (excluding
financial companies); supervise their operations; guide and supervise international
economic and trade fairs, exhibitions, business, and investment promotion activities; and
draft and execute administrative measures concerning the organization of such activities
overseas.
4.31 Trade Promotion Policies. As the largest national foreign trade and investment
promotion organization, China Council for the Promotion of International Trade (CCPIT),
which is also known as China Chamber of International Commerce (CCOIC), has long
been committed to the promotion of China's trade and economic relations with the rest of
the world, through its functions of information consultation, exhibition, and legal
assistance. Financial support schemes and other incentives to promote external trade in
this context were not identified.
4.32 The Ministry of Commerce categorizes Chinese constructors’ overseas activities

as Foreign Economic Cooperation (FEC), which covers the export of three major services,
namely contract engineering, labor service cooperation, and design consultation.10 The
government offers assistance in establishing the financing and insurance mechanisms to
facilitate the FEC exports and offers support to FEC enterprises. The procedures include
establishing insurance funds to specifically serve the needs of FEC projects and
encouraging financial institutions and insurance companies to participate in the relatively
new procurement processes such as build-operate-transfer (BOT) and private financial
initiatives (PFI).
4.33 The government is focused on promoting the export of products and services
where China has comparative advantages and continually cultivates the competitive force
of the leading FEC enterprises. Measures taken by the government include organizing
and providing market information services, facilitating technology transfer, and
strengthening professional training through collaboration between Chinese and foreign
educational organizations
4.34 Outward Investment Promotion Policies. The Chinese government encourages

Chinese enterprises to set up processing factories in Africa, especially in the sectors in
which Chinese industry has matured technology, such as machine and power generating
equipment, spinning, construction, agriculture, and natural resource development. The
aim is to utilize cheaper labor costs and use the comparative advantage of natural
resources in Africa in the global economy.
10
“China’s Foreign Economic Cooperation Development: Exporting Chinese Construction Services”, Le
Chen & S Mohamed , 2002.
4-6
4.35 The Chinese government has established Chinese Trade and Investment
Development Centers in 11 African countries: Cameroon, Cote d’Ivoire, Egypt, Gabon,
Guinea, Kenya, Mali, Mozambique, Nigeria, Tanzania, and Zambia. These centers
provide various services for Chinese enterprises considering investment in Africa.
4.36 Bilateral Trade and Investment Agreement. China has signed taxation
agreements with 68 countries/regions and investment protection agreements with 98
countries/regions in the world. In Africa, it has signed mutual investment
promotion/protection agreement with 17 countries and an avoidance of double taxation
agreement with 4 countries.
4.37 Taiwan. The Ministry of Economic Affairs is in charge of economic

policy-making and controls and supervises the trade and investment activities of firms in
Taiwan. Inside the Ministry, there are three main branches, namely the Industrial
Development and Investment Center, Investment Commission, and Board of Foreign
Trade. These provide Taiwanese firms with overseas market information and organize
trade and investment missions, as well as policy-making, operational control,
administration, approval, and licensing with regard to all the inward/outward trade and
investment activities. In addition, the following incorporated associations are in charge of
promoting trade and investment, especially the provision of relevant information for
domestic and foreign enterprises, commissioned by the Ministry of Economic Affairs:
• China External Trade Development Council;

• Chinese International Economic Cooperation Association; and
• Bodies of persons, trade organizations, and professional associate in each
industry segment.
4.38 The foreign trade and investment policy of Taiwan is strongly linked to
Taiwanese politics. The Ministry of Foreign Affairs plays a key role when coordinating
the above policy with relevant ministries and agencies. The International Cooperation
and Development Fund, which is under the guardian authority of the Ministry of Foreign
Affairs and was founded in 1996, is one of the pivotal executing agencies for overseas
investment and economic and technical cooperation.
4.39 Trade Promotion Policies.11 Taiwan's Ninth Economic Development Plan from
the mid-1980s endorsed policies of economic liberalization, globalization, and uniformity.
Since then, all branches of the government have been working to implement measures for
the realization of such policies. The main measures adopted by the government and the
results achieved thus far are as follows:
• Promoting Trade Liberalization, Reducing Tariffs, and Opening Markets;

• Actively Promoting Taiwan’s Participation in International Organizations and
Activities;
11
Trade Policy/Trade Policies and Measures, Board of Foreign Trade, Ministry of Economic Affairs.
http://www.trade.gov.tw/eng2002/content_show.asp?NO=1010&html_code=N&Rnd=0.6098749
4-7
• Strengthening Bilateral Economic and Trade Relations;

• Assisting Companies in Increasing their International Market Competitiveness;
and
• Promoting Positive Mutual Relations Across the Taiwan Strait.
4.40 Investment Promotion Policies. The diplomatic policy of the Taiwanese

government has greatly influenced the investment activities of Taiwanese private
companies. This is clearly endorsed by the fact that the investment flow to African
countries is concentrated in the countries or areas that have diplomatic relations with
Taiwan. Also, there is a governmental legal framework that promotes investment to
specific African countries friendly with Taiwan.
4.41 A decree made by the Ministry of Foreign Affairs and enacted in January 2000 is
particularly notable. The purpose of this decree was to support part of the cost of
investment projects approved by the Investment Commission. The maximum amount that
can be supported is NT$150 million and only one of three items (i.e. local worker’s salary,
loan interest, or leasing fee of factory equipment) can be financially supported. In
addition, travel expenses are supplemented up to NT$35,000 when participating in an
investment promotion mission organized by the Ministry of Foreign Affairs.
4.42 Bilateral Trade and Investment Agreement. Basically, bilateral trade or

investment agreements have been concluded with African countries that have diplomatic
ties with Taiwan. The content of an agreement includes investment protection, technical
cooperation on agriculture, and economic assistance (see Table 4-2).
4-8
Table 4-2 Taiwan’s Bilateral Agreements with African Countries

Diplomatic
Country Agreement
Ties
Angola No Peculiar Agreement
Burkina Faso Yes Investment Guarantee Agreement, Visa Agreement
Medical Cooperation Agreement, Agreement on Financial
Assistance to Prioritized Development Programs, Agreement
Chad Yes on Financial Assistance for Technical Training in Machinery
and Electronics, Agreement on Assistance for Road
Construction, etc.
Double Taxation Avoidance Agreement, Medical Cooperation
Gambia Yes Agreement, Agreement on Agriculture Technology
Cooperation
Guinea No All the agreements expired after diplomatic break
(Cooperation program with Taiwan: Rice Production Program,
Liberia Yes
Rice and Vegetables Production Increase Program, etc.)
Madagascar No Peculiar Agreement
Investment Guarantee Agreement、Medical Cooperation
Malawi Yes
Agreement
Investment Promotion and Protection Agreement expired in
Nigeria No
1972
Investment Guarantee Agreement, Agreement on Agriculture
Technology Cooperation, Agreement on Economic and
Senegal Yes Technical Cooperation, Double Taxation Avoidance
Agreement、Five-year Cooperation Agreement
Sao Tome and Medical Cooperation Agreement, Agreement on Agriculture
Yes
Principe Technology Cooperation, Postal Cooperation Agreement, etc.
Investment Guarantee Agreement, Arts and Crafts Agreement,
Swaziland Yes Agreement on Agriculture Technology Cooperation,
Agreement on Avoidance of Double Taxation and Evasion
Taxation agreement, 39 agreements which were concluded
South Africa No
before diplomatic break
Source: Prepared by the Team based on the data from Ministry of Foreign Affairs, International Economic
Cooperation Development Fund, Annual Report 2002 and Ministry of Economic Affairs.
4.43 Singapore. There has been much government agency restructuring in recent
years. Previously, various agencies were involved in trade and investment promotion,
such as the Trade Development Board (TDB), Economic Development Board (EDB), and
Productivity and Standard Board (PSB). After restructuring, International Enterprise
Singapore (IE Singapore), formerly known as TDB, took charge of trade and overseas
investment promotion. Inward investment promotion such as attracting overseas
companies’ investment in Singapore is now under EDB.
4.44 Trade Promotion Policies. IE Singapore provides various tax incentives and
subsidies to promote trade. These include the Double Tax Deduction Scheme,
Malaysia-Singapore Third Country Investment Feasibility Study (MSTC) Fund,
International Exhibition City Program, Global Trader Program (GTP), Approved Cyber
Trader Scheme (ACT), and the Approved International Shipping Enterprise Scheme. It
4-9
also facilitates trade between Singapore and abroad by dispatching and receiving trade
missions, participating in overseas trade fairs, and assisting companies in reaching out to
overseas customers using the IE Singapore’s overseas offices and others. IE Singapore
also developed a business matching website called International Business Opportunities
(IBO) to find potential business partners overseas. The following is a brief explanation of
tax incentives and subsidies.
4.45 Double Tax Deduction (DTD) Scheme. The Double Tax Deduction Scheme for
market development aims to encourage Singaporean companies to expand their overseas
markets. It allows approved companies to deduct against their taxable income twice the
eligible expenses incurred in the following activities, as covered by Section 14B of the
Income Tax Act:
• Participation in overseas trade fairs/missions either as a group or on a individual

basis;
• Participation in approved local trade exhibitions;
• Setting up of Overseas Marketing Offices;
• Master Licensing and Master Franchising;
• Advertising in Approved Local Trade Publications;
• Printing of Corporate Brochures/Catalogues for distribution in overseas
markets; and
• Engaging in market development activities, i.e. Market Survey, Feasibility
Study, Advertising Campaign, Promotional Campaign, Design of Packaging and
Product/Services Certification.
4.46 Malaysia-Singapore Third Country Investment Feasibility Study (MSTC) Fund.

The Malaysia - Singapore Third Country Investment Feasibility Study Fund (MSTC
Fund) was co-founded and co-funded by the two countries. The Fund allows Singaporean
and Malaysian companies to jointly undertake feasibility studies for joint investment or
business projects in countries outside Singapore and Malaysia. The MSTC Fund aims to
encourage Singaporean and Malaysian companies to expand their business operations in
the global arena.
4.47 The MSTC Fund covers 50% of all eligible expenses for (i) Target Specific Due
Diligence Studies for companies with a specific project in mind and is conducting a
thorough investigation on the business viability of the project, the company can receive a
maximum grant of RM200,000 and (ii) Pro-active Searches for a general search in a
specific market for potential investments or business opportunities, a company can
receive a maximum grant of RM100,000. The duration of study support cannot exceed 6
months and the companies must submit a report to IE Singapore and the Malaysian
Industrial Development Authority (MIDA) within one month of completion of the study.
The Fund is disbursed on a reimbursement basis, and claims should be submitted within 3
months of completion of the study.
4.48 International Exhibition City Program. This program was launched with the
objective of developing Singapore into an International Exhibition City. It aims to:
• Attract new international trade fairs and conferences staged in Singapore;
4-10
• Nurture credible trade fairs and trade in Singapore to become regional or

international events; and
• Raise the standards of trade fairs and conferences in Singapore. Incentives
include endorsement and marketing assistance through tax incentives and grants
offered by IE Singapore.
4.49 Global Trader Program (GTP). The aim of this program is to attract major
international companies to use Singapore as a competitive trading hub. Companies with
GTP status enjoy a concessionary tax rate of 10% on international trading activities in
approved commodities and products.
4.50 Approved Cyber Trader Scheme (ACT). Companies conducting international

business through the use of the Internet can qualify for the ACT incentive (10%
concessionary tax). Companies under the ACT incentive are expected to:
• Conduct their principal E-Commerce activities in Singapore as well as handle a

range of business activities and support functions, e.g.: - Server farms / Database
management; - Web site content hosting, design and development; - General and
administrative management; - Business development and investment planning; -
Financial control and treasury functions; - Logistics management and/or
centralized distribution function - R & D of Internet applications and technology
and
• Meet other commitments or criteria specified by the approving authority.
4.51 Approved International Shipping (AIS) Enterprise Scheme. The AIS scheme
aims to provide shipping companies with an incentive to operate from Singapore.
Approved companies can enjoy tax exemption for 10 years on income from qualifying
shipping operations.
4.52 Outward Investment Promotion Policies. There are two main policies for
outward investment promotion.
4.53 Developing Singapore-style Industrial Parks Overseas. Singapore began

encouraging overseas investment in the early 1990s. Due to its scare land, it was
inevitable that Singapore had to expand its strategy of investments to stay competitive.
The first such strategy was the “Growth Triangle”, a triangle that connects Riau province
of Indonesia, Johor state of Malaysia and Singapore. One of the key concepts of the
growth triangle concept was to establish Singapore-style industrial parks in neighboring
countries using Singapore’s knowledge. Singapore Technology Group, a government
linked company, developed a Singapore-style industrial park in Batam island in Indonesia,
which is located 40 minutes ferry ride from Singapore.12 Many multi-national companies
and Singaporean companies relocated or set up new operations in Batam in the early
1990s. With the success of Batam, Singapore government linked companies also
established industrial parks in China, India, and Vietnam.
12
Due to the restructuring of GLC, Singapore Technology Group merged with other GLC, and now called
SembCorp. Now, the overseas industrial parks are handled by SembCorp Parks, a subsidiary of SembCorp.
4-11
4.54 Tax Incentives and Grants. The Singaporean government also provides tax
incentives and grants for overseas investment. These were initially administered by
Economic Development Board (EDB), and recently handed over to IE Singapore when it
took on the responsibility of facilitating overseas business expansion. The schemes are as
follows.
4.55 Overseas Enterprise Incentive. This allows tax exemption on qualifying income
from an overseas projects and investments for a period of 10 years. The applicant must be
a Singapore-incorporated company and be at least 50% owned by local investors.
4.56 Overseas Investment Incentives. This allows tax exemption on the amount lost
at the time of liquidation or sale of shares of the overseas investment. The applicant must
be a Singapore-incorporated company and be at least 50% owned by local investors.
4.57 Double Deduction for Overseas Investment Development Expenditure. This

allows double deduction of the cost of approved feasibility studies or the maintenance of
the overseas project office from taxable income
4.58 Regionalization Finance Scheme. This scheme offers low-cost fixed-rate loans
for the acquisition of productive fixed assets for overseas operations that complement the
Singapore operations and generate economic spin-offs for Singapore. The loans are
available for Singapore companies in the manufacturing and services sectors with at least
51% local equity ownership.
4.59 There is also assistance for human resource development for overseas operations
such as the Regional Training Scheme (training grants for workers in the overseas
operation) and INTECH Regionalization Scheme (training grants for managers for
overseas operations).
4.60 Bilateral Trade and Investment Agreement. Singapore places the highest
priority on the multilateral trading system embodied by the World Trade Organization
(WTO). It also strongly promotes regional and bilateral trade agreements. Singapore has
so far concluded Free Trade Agreements (FTA) with the 5 trading partners (New Zealand,
Japan, European Free Trade Association (EFTA), Australia, and the United States), and is
in on-going discussion with 6 trading partners (Association of South East Asian Nations
(ASEAN), Canada, People’s Republic of China, India, Jordan, Mexico, and South
Korea).
4.61 Malaysia. External Trade Development Corporation (MATRADE), established

on 1 March 1993 as the external trade promotion arm of Malaysia's Ministry of
International Trade and Industry (MITI), functions as the focal point for Malaysian
exporters and foreign importers to source trade related information. By providing market
research information and relevant advice, MATRADE assists Malaysian exporters to
better position their products and services in the highly competitive global markets.
4.62 Trade Promotion Policies. Trade promotion schemes of MATRADE are
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composed of (i) trade information (Malaysia Exporters Database, online trade statistics,
and market information.); (ii) trade fairs and trade missions; (iii) trade matching; and (iv)
export development (Market Development Grants for small and medium size enterprises,
seminars and workshops, and Export Excellence Awards).
4.63 For exporters, an incentive of double deduction for the promotion of export,
duties, and sales tax exemptions is provided. The Export Credit Refinancing (ECR)
Scheme is provided by the Exim Bank to promote the exports of Malaysian manufactured
products, agricultural products, and primary commodities by offering a competitive
interest rate to Malaysian exporters via commercial banks participating in the scheme.
The companies that can enjoy ECR financing are those involved in manufacturing
activities, agricultural products producers, and trading companies.
4.64 Outward Investment Promotion Policies. The Exim Bank of Malaysia provides
the following financial facilities for overseas investment.
4.65 The Overseas Project Financing Facility. This facility is available to Malaysian
companies or Malaysian controlled joint venture companies incorporated overseas for the
purchase of Malaysian goods. Loan disbursements are generally made directly to the
Malaysian exporters / contractors. The facility supports Malaysian investors undertaking
projects overseas such as manufacturing, infrastructure, and other developmental projects.
A maximum of 85% of the project cost or contract value is financed, with a maximum of
10 years including a grace period not exceeding 2 years to pay back the loan.
4.66 Bilateral Trade and Investment Agreement. Malaysia has signed many bilateral
agreements, such as trade agreements, investment guarantee agreements, avoidance of
double taxation agreements, bilateral payment agreements, and air service agreements
with various countries in the world. Bilateral trade-investment-related agreements with
28 African countries are as follows.
4-13
Table 4-3 Malaysian Bilateral Agreements by African Country
Source: Ministry of International Trade and Industry, Malaysia
4.67 India. An important thrust of the new policy measures undertaken from 1991
was to integrate the Indian economy with the global economy with greater emphasis on
India’s external trade. A series of policy measures aimed at liberalizing the economy
included a reduction in the level of tariffs, removal of product-specific export incentives,
coupled with a two-stage devaluation of the Rupee, simplification of export-import
policies and procedures, and removal of quantitative restrictions on imports to remove an
anti-export bias.
4.68 Trade Promotion Policies. The Department of Commerce in the Ministry of

Commerce and Industry is responsible for the country’s external trade and all matters
connected with it, such as commercial relations with other countries, state trading, export
promotional measures, and the development and regulation of certain export oriented
industries and commodities. The Department of Commerce formulates policies in the
sphere of foreign trade, in particular, the import and export policy of the country. There
are export promotional measures as follows:
4-14
• Free trade in all areas not regulated by specific policy provisions;

• Financial assistance to the Export Promotion Councils (see details of EPCs
below);
• Financial assistance to industry organizations;
• Marketing studies on country/product focus, for example Focus Africa;
• Setting up of consolidated showrooms and warehousing facilities in important
locations as identified by marketing studies;
• Participation in sales promotion campaigns through international department
stores;
• Publicity campaigns for launching identified products in selected markets;
• Participation in international trade fairs, seminars, and buyers/sellers meetings;
• Promotion of select brands;
• Transport subsidies for select agriculture products;
• Reimbursement of charges for product registration abroad for pharmaceuticals,
bio-technology, and agro chemicals and testing charges for engineering
products;
• Setting up of business centers in Indian missions abroad for visiting Indian
exporters and businessmen.
4.69 The Ministry of Commerce and Industry launched the Focus Africa program in
2002-03 to increase interactions between the two regions by identifying areas of bilateral
trade and investment, and to significantly enhance India’s trade with sub-Saharan Africa.
The focus is on 7 major trading partners: Ethiopia, Ghana, Kenya, Mauritius, Nigeria,
South Africa, and Tanzania. The product focus considers the following for export
promotion cotton, yarn, fabrics and other textile items; drug and pharmaceuticals;
machinery and instruments; transport equipment; and telecom and information
technology.
4.70 An action plan was formed involving Joint Trade Committees, Joint Business
Councils, and the co-operation of Export Promotion Councils and apex chambers of
commerce. There are various trade promotional activities such as Joint Business Councils
between business organizations, trade missions, specialized and commodity specific fairs
and exhibitions, including Made in India exhibitions. Grant and credit facilities provided
by the Export Credit Guarantee Corporation (ECGC) and the Export-Import Bank of
India (Exim Bank) are expanded under this program.
4.71 Outward Investment Promotion Policies. While outward direct investment is

primarily dealt with by the Reserve Bank of India (RBI), the Exim Bank is actively
involved in the promotion of overseas investment by Indian companies through
facilitation and financing of overseas investment. Exim Bank's financing includes rupee
term loans to finance Indian promoters equity investment in overseas ventures or
promoter loans to overseas ventures. The Exim Bank can also issue guarantees on behalf
of Indian ventures abroad to enable them to raise working capital or other finances
locally.
4-15
4.72 The Exim Bank has recently been authorized by the Government of India to take
direct equity participation in the ventures of Indian companies overseas. Exim Bank's
equity contribution can be up to 25% the equity capital of the overseas venture in the case
of joint ventures and 50% in the case of wholly owned subsidiaries, subject to a maximum
of US$5 million per venture. Under this program, Exim Bank has approved equity
investments aggregating US$5.3 million in two overseas ventures in Europe and Africa.
Thus, Exim Bank is in a position to provide comprehensive financing package
comprising equity, loans and guarantees to support Indian direct investment abroad.
4.73 Cumulatively Exim Bank has supported 77 Indian companies for equity
investments in 90 ventures in 34 countries. These ventures cover manufacturing,
marketing, and trading activities and are spread over Africa, Asia, Europe, and the US.
Exim Bank also finances the acquisition of overseas companies by Indian corporations.
4.74 Bilateral Trade and Investment Agreement. India has signed trade agreements
with Bangladesh, Bhutan, Egypt, Maldives, and Nepal. India and Sri-Lanka signed a FTA
in December 1999.
4.75 The Indian government has also participated in negotiations to create Bilateral
Investment Promotion and Protection Agreements (BIPPA) and Double Taxation
Avoidance Agreements (DTAA), which are held with respect to a number of countries.
4.76 A Preferential Trade Agreement (PTA) and DTAA with Egypt are currently
being negotiated. India is also negotiating a preferential trade agreement with the South
African Customs Union, which includes Botswana, Lesotho, Namibia, South Africa, and
Swaziland. There is hope that in the future this could lead to a FTA between the two
regions.
B. Trade and Investment Facilitation and Support Mechanism

4.77 For facilitating trade and investment targeting African countries, central
governments play a significant role in most of the selected Asian countries. In Japan and
Korea, however, general trading companies (GTC) and industry associations respectively
are prominent.
4.78 Japan. In East Asia, which is the main arena for Japanese direct investment,
small-and medium-sized transnational corporations (TNCs) represent a significant part of
Japanese FDI. They enter developing countries in this region through joint ventures and
other collaborative arrangements with local firms. The reasons for this include the
labor-intensive nature of production in small enterprises, their extensive use of locally
available raw materials, and their geographical dispersion.13
13
Japanese Foreign Direct Investment in Africa, United Nations Joint ECA/UNCTAD Unit, UN, Geneva,
1997.
4-16
4.79 On the other hand, the greater portion of Japanese FDI in Africa has been made
by global trading companies (GTC), known as Sogo Shosha, and recognized as among
the world’s largest and most internationally diversified corporations.14 Although Sogo
Shosha deal with domestic and international trade, they differ from traditional trading
companies in many respects because of their (a) large scale capital, (b) exceptional
fund-raising ability, and (c) efficient global information network. In addition, they cover a
wide range of economic activities including the development of natural resources, the
processing of raw materials, the production of intermediate and finished goods,
construction, and services such as banking, insurance, and transportation. Japanese TNCs
investing directly in Sub-Saharan countries consist mainly of large industrial
conglomerates.
4.80 Korea. There are two industry associations that facilitate foreign trade and
overseas investment of Korean private companies. Korea International Trade Association
(KITA), a private association representing over 85,000 member companies, aims at
expanding trade relations and facilitating international trade between member companies.
Korea Trade Investment Promotion Agency (KOTRA), a non-profit governmental
organization, is committed to playing a key role in the implementation of government
policy such as encouraging exports and inducing foreign investment.
4.81 Korea International Trade Association (KITA). KITA is Korea's largest

economic organization and was founded in 1946 with 105 members. Since then KITA has
grown and now represents more than 85,000 companies involved in international trade.
KITA's programs and activities include supporting overseas marketing, international
trade cooperation, trade information and research services, educating international trade
specialists, membership services, and various advisory and consulting services. KITA is
often called upon to make policy recommendations to the Korean government as well as
international bodies.
4.82 KITA regards Africa as being an emerging market and a strategic source for
natural resources. In 2002, it dispatched market survey teams to Ghana and Senegal in
collaboration with the United Nations Industrial Development Organization (UNIDO). In
March 2003, investment promotion officials from both countries came to Korea and
KITA organized a meeting for providing information on trade and the investment
environment of both countries. Concluding a Memorandum of Understanding (MOU) on
mutual cooperation with Ghana’s Chamber of Commerce and Senegal’s Investment
Agency, KITA sent seven member companies to Ghana and Senegal in May 2003.
4.83 According to Mr. Bae, Deputy Team Leader of International Cooperation

Division, the next countries they are focusing on are Egypt, Ethiopia, Nigeria, and South
Africa. KITA sent a survey team to these countries last year.
4.84 Korea Trade Investment Promotion Agency (KOTRA). KOTRA, established in

1962, is a non-profit government agency. It promotes trade between Korean and foreign
companies by providing overseas market information, on-site assistance for trade
14
Ibid.
4-17
negotiation, market research services, and business matchmaking. KOTRA also

organizes trade shows in Korea and assists Korean companies in foreign trade show
participation.
4.85 In August 1995, KOTRA added cross-border investment promotion and support
for technological and industrial cooperation projects to its mandate, assuming its present
name of Korea Trade-Investment Promotion Agency. The Korea Investment Service
Center (KISC) was established within KOTRA in 1998 as the country's sole authorized
investment promotion organization, vested with the function of providing foreign
investors with one-stop service intended to cover everything from investment plan
consultation to settlement support.
4.86 KOTRA has 103 overseas branch offices and they serve as focal points for
cooperation between Korea and its trade partners and for investors. In Africa, there are
three branches, one each in Nairobi, Lagos, and Johannesburg. The main functions of
these branches are to provide (i) market research services for Korean private companies
that seek to expand into the African market, (ii) business matchmaking, and (iii) vicarious
agent services on behalf of Korean companies, which moved into these countries but
cannot maintain branch offices.
4.87 According to Mr. Hong Hee, Deputy Manager of Overseas Market Research
Team, KOTRA is not enthusiastic about promoting trade and investment with Africa and
no specific activities have been undertaken recently.
4.88 China. Investment in Africa tends to be combined with trade, construction

service (FEC), and ODA as the government strategy. The Chinese government has
provided economic and technical support to Africa for 40 years. Recently, the
government has begun to revive old official aid projects with participation from private
corporations, providing credit depending on the situation. This mechanism is typically
observed in the special fund scheme for joint ventures. It is also noteworthy that
participation in international organizations’ development projects in construction,
environmental protection, irrigation, and water management in Africa often promotes
investment by Chinese companies.
4.89 Taiwan. It is said that the top executives of Taiwanese private companies
directly conduct negotiations with local governments or local business people when
expanding their business overseas. However, with regard to moving into the African
market, the Taiwanese government plays a key role as noted in the previous section.
Taiwanese companies tend to first participate in a trade and investment mission organized
by governmental bodies in order to obtain basic information and then follow up with their
own actions for business negotiations.
4.90 For example, the Chinese International Economic Cooperation Association

(CIECA) dispatched a trade mission to Egypt, Morocco, and Nigeria for two weeks in
December 2002, commissioned by the International Trade Bureau, Ministry of Economic
Affairs. The main objective of this mission was to expand the opportunities for trade
between Taiwanese private companies and those three countries. Twenty-nine companies
4-18
participated in the mission, comprised of executive officers and marketing/promotion

directors. According to CIECA, participant companies have achieved some positive
results.
4.91 Singapore. The Singaporean government takes the lead in facilitating the
overseas investments by Singaporean local companies. Such facilitation includes
establishment of overseas industrial parks, investment and trade missions, and assistance
by the Government statutory board’s overseas offices. Unlike Japan, there is no large
trading company that facilitates trade and investment. There are a few industry
associations which assist its members expand overseas. One example is the Singapore
Precision Engineering and Tooling Association (SPETA), which organizes missions
overseas with the help of IE Singapore and other government agencies. However,
generally speaking, there are not many industry associations in Singapore.
4.92 Usually, local Singaporean companies use government assistance or their

personal contacts when they venture abroad. Singaporean companies may opt to venture
independently into Africa and not seek assistance from IE Singapore or other government
agencies.
4.93 Malaysia. The Prime Minister, Dato’ Seri Mahathir Mohamed promoted greater
cooperation amongst South countries through the South-South cooperation initiative with
the formation of the Malaysian South-South Association in 1991. This promoted and
enhanced trade and investment joint ventures between Malaysia and Southern countries,
which included countries in South America, Africa, and Asia.
4.94 The Prime Minister and the Minister of International Trade And Industry, Dato’
Seri Rafidah Aziz, had led a number of trade and investment missions to various
countries prior to the 97-98 economic crisis. The countries visited were mostly
Malaysia’s traditional markets such as the US, Japan, and European countries. A number
of African countries were also included such as Ghana and Guinea in 1996, Malawi and
Botswana in 1997, and Sudan and Mozambique in 1998. Whilst there are no trade and
investment promotion activities specifically targeted at African countries, MATRADE
and MIDA have organized a number of trade and investment promotion missions to
African countries.
4.95 In 1999, the Asia-Africa Investment Technology Promotion Center (AAITPC)

was launched in Kuala Lumpur as a TICAD initiative. The program is funded by the
Government of Japan and implemented through UNIDO Headquarters in Vienna. As a
direct result of the efforts of AAITPC the following projects have been initiated or
achieved:15
• A Malaysian Business Center in Uganda (2001);

• A Zimbabwe Asia Expo Center in Kuala Lumpur to promote African products in
Asia and Asian products in Africa;
15
“The TICAD Agenda and African Challenge”, Dato’ J. Jegathesan, Senior Investment Technology
Advisor, AAITPC, presented at the Tokyo International Conference on Investment to Africa on February 26,
2003.
4-19
• A Malaysian company has secured a deal to sell steel production machinery in

Senegal (US$ 850,000);
• A joint venture option has been proposed with 30% equity from Malaysia, but
this has not proceeded further;
• An agreement for a TV / DVD assembly plant has been signed in Zimbabwe.
The Malaysian side is fully committed and awaiting a response;
• An IT College, a joint venture between a Malaysian private college and the
University of Zimbabwe, will begin initially with 200 – 300 students. It
commenced operations in Zimbabwe in early 2003;
• MOUs have also been signed with Malaysian companies for an egg production
facility and a personal computer assembly plant in Zimbabwe;
• A Zimbabwe Bank has applied for a license to start a representative office /
Merchant Bank in Malaysia;
• Recognizing the reluctance of medium sized companies to go into unknown
territory in Malaysia, a group of Malaysian companies have been motivated by
AAITPC to form a holding company that will spearhead Malaysian business
interests in Africa. The company is called UTAS Asia (United Trans Africa
Services Asia Ltd). It has formed a joint venture with Zimbabweans (70% /30%)
and is operating the Zimbabwe Asia Expo Centre. UTAS, with AAITPC support,
has organized two business missions to Zimbabwe and is a minority partner in
the proposed TV/DVD project and the IT college; and
• AAITPC is encouraging the creation of a Senegal Asia Expo Center in Malaysia
and a Senegalese businessman has been identified as a potential partner.
AAITPC has also proposed to the Ghana High Commission in Malaysia for a
similar Ghana Asia Expo Center.
4.96 In addition to the above effort by AAITPC, the promotion of trade and inward
investment in African countries is mostly undertaken by diplomatic missions of the
individual African countries in Malaysia. Regular visits by dignitaries from various
African countries, which are occasionally accompanied by a business delegation, are also
hosted by the Malaysian government. Trade and investment promotion policies and
incentives are usually disseminated by the individual diplomatic representatives through
seminars and briefings, usually with the assistance of the various industry and chamber
organizations in Malaysia. The Federation of Malaysian Manufacturers (FMM) regularly
organizes programs in collaboration or with the assistance of African diplomatic
representatives to promote bilateral trade and investment.
4.97 India. As previously noted, the Indian government has been taking a positive
role in trade and investment promotion, closely collaborating with private sectors. A
typical support mechanism with government leadership could be observed in the strategic
partnership with South Africa, as well as the newly launched Focus: Africa program.
4.98 The strategic partnership that officially exists between India and South Africa
was announced by Nelson Mandela, then President of South Africa, as the Red Fort
Declaration in New Delhi in 1997.
4-20
4.99 The areas in which the two nations intend to intensify cooperation, as agreed by
the fifth meeting of the Joint Ministerial Commission, were political, defense, trade,
economic relations, technical cooperation, science and technology, culture and education,
and energy.
4.100 At the same meeting it was announced that a $10 million funding agreement
between the Exim Bank of India and South Africa’s Absa Bank had been established to
facilitate the trade of capital goods and equipment between the two countries.
4.101 In June 2003, a high level government and business delegation from India visited
South Africa. It was led by the Indian Minister of State for Commerce and Industry, and
accompanied by a trade delegation involving various apex organizations such as
Chemical and Allied Products Export Promotion Council (CAPEXCIL), Engineering
Export Promotion Council (EEPC), Shellac Export Promotion Council (SEPC).
Businessmen from engineering, chemical, and pharmaceutical sectors were also among
the members of the delegation. During this time, business meetings were held with South
African counterparts at the Consulate General of India in Johannesburg.
4.102 The Confederation of Indian Industries (CII) counts several South African
organizations as its institutional partners, including:
• The South Africa Foundation;

• The South African Chamber of Business (SACOB);
• The Afrikaanse Handels Instituut (AHI); and
• The National African Federated Chamber of Commerce and Industry.
C. Historical Relationship with African Countries

4.103 The selected Asian countries built their relationship with African countries in
various ways. They developed the relationship through ODA, longtime trades, or
immigration as introduced in this section.
4.104 Japan. While there were some Japanese who were active in Africa before
World War II, the main relationship between Japan and Africa was developed through
diplomatic relations, and in particular, through Japanese ODA in the 1970s and 19080s.
According to Mr. Yasukuni Enoki, then the Director-General of Middle Eastern and
African Affairs Bureau, Ministry of Foreign Affairs of Japan, diplomatic relations can be
divided into three phases.16
4.105 The first phase was from 1978 to 1987, when the volume of Japanese ODA to
Africa increased significantly. Bilateral ODA to Africa in 1980 amounted to $223 million,
about five times the $46 million of 1974. It has continually increased in line with
increases in total ODA volume, and reached $884 million in 1988. At that time, Japan was
the largest donor to Africa.
16
Based on his speech at Hokkaigakuen University, titled “Problems faced by Africa and Japan’s policy
toward Africa”, June 30, 2000.
4-21
4.106 The second phase started in 1988, when Japanese aid to conflict resolution areas
was initiated. After Prime Minister Takeshita’s speech on Japan’s international
contribution scheme in London, election monitors were dispatched to Namibia in 1989.
Since then, they have been sent to Angola and Liberia. In addition to this, a Japanese
Self-Defense Force was sent to Mozambique and Rwanda to cooperate with UN
Operation. Besides those contributions in human resources, financial and intellectual
support was also expanded.
4.107 The third phase was inaugurated by TICAD II in 1998. While the TICAD
process started in 1993, TICAD II marked a beginning by expressing the principles in
African development and adopting an Action Plan with Japan’s initiative. In this phase,
there were also noteworthy events in that two incumbent Prime Ministers, Mr. Mori and
Mr. Koizumi, visited Africa for the first time.
4.108 Korea. Regarding foreign relations with African countries, the first contact was
the deployment of South African troops to the Korean War in 1950. After Korea divided
into two countries, political ideology became the key element for South Korea in
developing foreign relations with African countries. By the early 1980s, South Korea
established diplomatic ties with almost all the African countries. In the post-Cold War era,
Mali, Burkina Faso, Ethiopia, Zambia, Zimbabwe, Tanzania, and Togo, which had all
adhered to policies that were friendly to North Korea during the Cold War, began turning
to policies that supported the South Korean position in the international arena.17 While
achieving progress in democratization and aiming at economic development, African
countries became interested in having practical cooperative relations with South Korea,
especially after the Seoul Olympic Games were held in 1988. They now seek investment,
economic cooperation, and instruction in Korea’s economic development experience.
4.109 Looking at the relationship with individual African countries, the following
seven countries can be highlighted.
4.110 Ghana. Following the establishment of diplomatic relations with Korea in

November 1977, Ghana carried out a foreign policy of equidistance with North and South
Korea in the international society. However, Ghana hoped for an increase in Korean
grants and economic cooperation. Since 1990, Korean Exim Bank has provided US$60
million EDCF loans for three projects, (i) petroleum product storage depots project in
1990, (ii) liquefied petroleum gas (LPG) cylinder plant project in 1994, and (iii) a
petroleum products pipeline project in 2003.
4.111 Gabon. After establishing diplomatic relations with Korea in October 1962,
Gabon firmly maintained a position of support for South Korea until establishing
relations with North Korea in 1974 and began promoting diplomatic relations of
equidistance. However, through the 1982 visit by President Chun Doo-hwan to Gabon
and three visits by President Bongo to Korea, the friendly and cooperative relationship
between the two countries has further developed. This change is visible in the mutual
17
Ministry of Foreign Affairs and Trade,
http://www.mofat.go.kr/en/rel/e_rel_view.mof?seq_no=185&b_code=~middle.
4-22
support shown by the two countries in the international arena.
4.112 Nigeria. South Korea-Nigeria relations worsened after the Korean government
agreed to the adoption of the Nigeria Human Rights Resolution at the December 1995
session of the UN General Assembly. After Nigeria’s democratic hand-over, President
Obasanjo visited South Korea, and the relations of the two countries are now rapidly
improving. On the other hand, Nigeria is becoming estranged from North Korea.
4.113 South Africa. A friendly and cooperative relationship between Korea and the
Republic of South Africa has been developing rapidly since the establishment of
diplomatic relations in 1992. This relationship is strengthening through advances such as
President Mandela’s 1995 visit to Korea, the 1998 visit to Korea by Vice President Mbeki,
who had strong prospects of becoming the next president, and former president
Mandela’s visit to Korea in 2001.
4.114 Libya. Since establishing diplomatic relations on 29 December 1980, Libya has
maintained a close relationship with South Korea. In the economic arena, for example,
Korean companies such as Dong Ah Construction have received orders for construction
projects equivalent to a total of US$22.4 billion.
4.115 Algeria. Since establishing relations with Korea on 15 January 1990, Algeria
has set up a permanent mission in the country. Trade between the two countries has
steadily increased. In 1999 exports from South Korea to Algeria reached approximately
US$250 million, and major companies such as Yookaekong, Daewoo, and Samsung are
participating in oil development.
4.116 Cote d’Ivoire. Since the establishment of relations in July 1961, Cote d’Ivoire
has been pursuing balanced diplomatic relations with North and South Korea. Recently,
however, Cote d’Ivoire and South Korea have been maintaining a close relationship as
evidenced by the support that Cote d’Ivoire expresses for South Korea on the
international stage. For example, Cote d’Ivoire supported South Korea’s reunification
policy and promotion of North-South talks. It also backed Korea’s non-permanent
membership in the UN Security Council and the bid for the position of secretary-general
of WTO. However, interchange between the two countries became inactive after the coup
de tat in Cote d’Ivoire in December 1999.
4.117 China. China and Africa have a long trade relationship, which traces as far back
as the 9th Century. It is well known that, in the 15th Century, Zheng He brought his fleet
to the east coast of Africa three times, which served as an important impetus to marine
trade between two continents. In the 19th Century, significant migration from mainland
China and other areas to some African countries such as South Africa, Mauritius, and
Madagascar took place.
4.118 Since the establishment of the People’s Republic of China, successive Chairmen
have attached importance on trade with Africa. During the 1950s to the 1970s, China
established diplomatic relations with a number of newly independent African countries
mainly for political reasons. In the 1980’s, with the dramatic increase in China’s
4-23
economic power brought about from its reform and opening up policy, trade and
economic relations between China and Africa greatly developed. President Jiang Zemin’s
visit to six African countries in 1996 is considered to have inaugurated a new era in
relations between the two continents. In his speech at the Organization of African Unity
(OAU), the President stated that China wished to establish a continuous and stable
relationship with African countries, based on its Five Principles of Peaceful Coexistence.
4.119 Taiwan. The first immigration from China to Africa took place almost two
hundred years ago. Most of the immigrants of those days were not from Taiwan but from
mainland China. Today, Chinese/Taiwanese living in Africa are predominantly located in
South Africa, Mauritius, and Madagascar.
4.120 In the late 1990s, there were growing personal contacts between Taiwan and
Africa, especially with South Africa and Lesotho. First-generation overseas Taiwanese
living in South Africa mostly operated grocery stores, restaurants, and laundries, whereas
the second and later generations, after receiving higher education, entered professions
such as medicine, accountancy, and architecture. The immigrant population in Lesotho
remains a key player in the foreign business community and has made significant
contributions to Lesotho’s economy. The firms and factories managed by overseas
Taiwanese are largely those of electronics, automobile parts, and building materials.
4.121 The Western African region is geographically far from Taiwan, but
diplomatically important for the Taiwanese government because of the considerable
number of countries that have diplomatic ties with Taiwan. Trade and investment
missions to Africa these days are also concentrated in this area.
4.122 Presently, Taiwan has diplomatic relation with eight African countries: Burkina
Faso, Chad, Gambia, Liberia, Malawi, Senegal, Sao Tome and Principe, and Swaziland.
Taiwan also has a liaison office in South Africa and is stationing a trade mission in
Nigeria.
4.123 Singapore. Since independence, Singapore maintains cordial and friendly

relations with African countries. In 1993, with the establishment of the Singapore
Cooperation Program, there were increased interactions in terms of inter-country visits.
In 1997, the Singapore government established an S$100m fund to facilitate private
investments in southern Africa.18 At the same time, various countries in Africa began to
see Singapore as a place where they could learn useful lessons. As of today, there are
fifteen foreign missions from Africa in Singapore, of which three are resident embassies
and the remainder are consular posts.
4.124 Looking at the relationship with individual African countries, the following two
countries can be highlighted.
18
www.angola.org. News October 1997. According to this news, Temasek Holdings, which is a Singapore
government’s investment arm, contributed S$50 million. The balance came from the private sector. When
checks were made with Temasek Holdings regarding the status of this fund, they stated that the fund is not
a significant investor in Africa and is currently being wound down..
4-24
4.125 Nigeria. A number of Singaporean companies have been doing business in

Nigeria over 50 years, though relations between Nigeria and Singapore were formally
established on 26 February 1985. Prior to the establishment of formal diplomatic relations,
President Obasanjo maintained close personal relations with the founder of modern
Singapore, Lee Kuan Yew.
4.126 This close relationship insured a continued exchange of visits by officials of the
two countries since the 1970s when President Obasanjo was Nigeria’s military Head of
State. The latest visit, however, was the first by a Nigerian Head of State and it was
significant in that it provided ample opportunity for the two leaders to further consolidate
relations between their countries. In a bid to broaden bilateral relations, Nigeria opened a
diplomatic mission in Singapore in 1999. Although Singapore is yet to reciprocate this
gesture, Philip Eng, a roving High Commissioner based in Singapore, is overseeing its
interests in the country.
4.127 South Africa. Relations between Singapore and South Africa are more
established compared to other Africa countries. Singapore perceives South Africa as the
gateway to Africa. Trade between the countries has been growing and was at its highest in
the year 2000, soon after the 1997 crisis, when the economies of the world recovered.
The value of trade with South Africa reached about S$1 billion in imports and exports.
4.128 A bilateral air travel agreement with South Africa was established in 1992,
diplomatic relations in 1995, and a double taxation agreement in 1996. Singaporeans can
now travel to Africa with no visas for up to thirty days.
4.129 India. During the British colonial period, from the 19th century to the beginning
of 20th century, Indian communities settled in East and South Africa, where they had
important economic positions. The Indian population in East Africa swelled from
approximately 34,000 in 1915 to 105,000 by 1939. Some Indians actively participated in
East Africa's nationalist organizations and defended African interests when, as members
of colonial legislatures, they represented Africans in the years before that group won
direct representation.
4.130 After World War II, while there was a series of official and unofficial
discriminatory policies against Indian residents throughout East Africa and political and
economic hardship was enforced by racial segregation in South Africa, Africa still
occupied a special place in Indian diplomatic interactions because of its large presence at
the United Nations.
4.131 However, in post-apartheid South Africa, as in East Africa, the economic

success of Indians has caused tension. Polls in 1994 showed that the majority of Indian
voters leaned toward the National Party. This conservative shift has been attributed to an
Indian fear of losing economic power to the growing black business class. Other analysis
indicates that it might take some time to overcome the legacy of apartheid — a system
that not only distinguished groups by race, but fostered conflict between them.
4-25
D. Entrepreneurs Network and Business Communities

4.132 Among the selected Asian countries, India has the largest number of residents in
Africa. This is an effect of the inheritance of historic ties with the East and South Africa
developed under the British colonial regime, and still functions to maintain a large Indian
population in some countries. China and Taiwan have the second largest number of
residents in Africa.
4.133 The perception of Africa as a target for trade and investment differs among the
selected countries. Korea, China, and Taiwan appear positive as they see Africa as a
potential market and advantageous due to preferential treatments from the US and some
countries in EU. On the other hand, Japanese and Singaporean business societies find
some difficulties in entering the African markets.
4.134 Japan. In 2002, there were 116 Japanese subsidiaries and 5,770 Japanese
residents in Africa (see Table 4-4 and Table 4-5). The sectoral breakdown of the
subsidiaries was reported as trade (35%), manufacturing (24%), transportation services
(19%), construction (3%), and others (13%). The geographical distribution of subsidies
and residents do not necessarily correspond except for South Africa, which has the largest
accumulation of both subsidies and residents.
Table 4-4 Number of Japanese Subsidiaries in Africa and Japanese Companies Invested
As of the end of 2002
Country No. of Japanese subsidiaries* No. of Japanese companies invested
Morocco 2 2
Algeria 1 1
Tunisia 3 3
Egypt 9 14
Senegal 1 1
Liberia 19 11
Cote d’Ivoire 2 2
Ghana 1 1
Togo 1 1
Mali 1 1
Burkina Faso 1 1
Nigeria 14 14
Niger 1 1
Cameroon 2 2
D.R. of Congo 1 1
Angola 1 1
Ethiopia 2 3
Kenya 2 2
Tanzania 4 5
Mozambique 1 1
Madagascar 2 2
Mauritius 1 1
Reunion 1 1
Zimbabwe 1 1
4-26
Country No. of Japanese subsidiaries* No. of Japanese companies invested

South Africa 39 34
Zambia 2 2
Swaziland 1 1
Total Africa 116 －
Note: * Subsidiaries with less than 10 percent of Japanese equities are not included.
Source: Kaigai Kigyou Shinsyutsu Souran (Directory of Overseas Japanese Subsidiaries), Toyo Keizai, 2003.
Table 4-5 Number of Japanese Residents in Africa

Total Long-term residents Permanent residents
Algeria 102 89 13
Angola 20 20 0
Benin 11 11 0
Botswana 44 39 5
Burkina Faso 68 68 0
Burundi 0 0 0
Cameroon 35 34 1
Cape Verde 16 16 0
Chad 9 9 0
Comoros 0 0 0
Cote d'Ivoire 163 163 0
Democratic Republic of the
Congo 26 21 5
Djibouti 19 19 0
Egypt 862 700 162
Equatorial Guinea 1 1 0
Eritrea 4 4 0
Ethiopia 120 120 0
Gabon 26 25 1
Gambia 8 8 0
Ghana 203 194 9
Guinea 28 28 0
Guinea-Bissau 0 0 0
Kenya 702 702 0
Lesotho 3 3 0
Liberia 4 4 0
Libya 58 46 12
Madagascar 87 83 4
Malawi 102 102 0
Mali 12 12 0
Mauritania 8 8 0
Mauritius 41 13 28
Morocco 252 252 0
Mozambique 93 93 0
Namibia 12 7 5
Niger 76 76 0
Nigeria 148 113 35
Republic of Congo 1 1 0
4-27
Total Long-term residents Permanent residents

Reunion 17 0 17
Rwanda 4 4 0
Sao Tome and Principe 0 0 0
Senegal 175 175 0
Seychelles 2 2 0
Sierra Leone 5 5 0
Somalia 1 1 0
South Africa 1,179 1,008 171
Sudan 27 17 10
Swaziland 13 10 3
Tanzania 291 289 2
The Central African Republic 29 25 4
Togo 2 2 0
Tunisia 172 172 0
Uganda 99 96 3
Western Sahara 0 0 0
Zambia 253 253 0
Zimbabwe 137 137 0
Total Africa 5,770 5,280 490
Note: As of October 2002
Source: Ministry of Foreign Affairs, Japan
4.135 As previously noted, Sogo Shosha, or GTCs, play a key role in promoting
investment in Africa by Japanese trade and the industrial society. Although the network
function among those Japanese subsidiaries and residents in Africa is not explicitly
recognized, a large array of GTCs’ subsidiary companies is considered to be functioning
as a catalyst for investment activity by coordinating a world-wide supply of goods and
services, as well as information.
4.136 There are several Japanese business communities or organizations that promote
interchange between Africa and Japan, or among Japanese entities. Keidanren (Japan
Business Federation) has three committees on Africa: Regional Committee on
Sub-Sahara, Regional Committee on the Middle East and North Africa, and
Japan-Algeria Economic Committee. Each committee has held various business meetings
and forums. The Africa Society of Japan, established in 1960 as an incorporated body
under the jurisdiction of the Ministry of Foreign Affairs, has a long history of personnel
interchange, seminars/exhibitions, publishing, and other related activities to promote
Japanese understanding on Africa.
4.137 General Perception of Africa as a Target for Trade and Investment. According
to Mr. Satoru Anzaki, Chairman of Committee on Sub-Sahara, Keidanren, the Japanese
business society has less interest in Africa than other areas of the world, due to a large
geographical distance between the two regions and the lack of information on Africa.
However, to balance against an overheated investment movement toward China,
investment to Africa should be more promoted.19
19
Based on his speech at the Tokyo International Conference on Investment to Africa on February 26,
4-28
4.138 The obstacles to promoting economic activities in Africa are recognized as low
economic growth rate, small market, lack of skilled labor, delay of privatization, spread
of HIV, and deteriorating security. Having said this, the critical factors that need to be
improved for Japanese entrepreneurs to invest in Africa are as follows:
• Stabilization of political situation and security improvement;

• Development of social infrastructure, including basic living infrastructure, laws
and institutions;
• Improvement in quality of labor, which is achieved through elementary and
secondary education to inculcate diligence and entrepreneurship; and
• Expansion of market size, for which the present effort of market integration is
welcome.
4.139 Positive aspects of Africa are rich mineral resources, cheap energy, vast spread
of land, and good access to the world market. In addition to these, a high potential for
tourism is probable. To make use of these advantages and to make the whole of Africa
become an attractive market for foreign investors, African countries are advised to
strengthen their solidarity and develop their self-help efforts, breaking away from a
foreign aid dependent constitution.
4.140 Korea. According to the Overseas Korean Foundation, 5.6 million Korean
people live abroad, but that only 5,280 of them are long-term residents of Africa (see
Table 4-6). There is no public data collected on the Korean business community in Africa.
Table 4-6 Number of Korean Residents in Africa

Unit: Person
Country of residence 1992 1995 1997 1999 2001
South Africa 377 3,316 658 1,061 1,356
Ghana 337 0 589 488 586
Nigeria 248 492 114 115 456
Gabon 209 283 134 175 117
Liberia 24 28 6 15 26
Morocco 628 499 288 337 418
Sudan 124 140 131 130 91
Algeria 88 113 7 11 43
Angola 0 32 23 35 29
Congo Republic 57 63 68 82 69
Total in Africa 2,693 3,316 3,410 4,215 5,280
Total in the world 4,943,590 5,228,573 5,544,229 5,644,558 5,653,809
Source: Overseas Korean Foundation, 2003
2003.
4-29
4.141 General Perception of Africa as a Target for Trade and Investment. Since the
1990s, Korean-African relationships have grown stronger. Many African countries
became interested in the similarity of its history (colonization by imperialism, civil war,
and ethnic conflicts) and now pay attention to Korean economic development known as
the East Asian Miracle. At the same time, the South Korean government regards the
African market as being an important untapped market and a strategic source of energy
resources, such as natural gas. The Ministry of Foreign Affairs and Trade indicated
“Africa’s importance permanently exists as it gains force as an enormous natural resource,
as an emerging market and investment region with 700 million people, and as the target of
multilateral diplomatic efforts such as the UN.” 20 It seems that the government will
maintain and strengthen friendly and cooperative relations with African nations by
playing a role that fits South Korea’s international status.
4.142 China. By the end of 2001, 549 Chinese invested enterprises have been
established in Africa, with a contractual value of US$1.1 billion, of which China invested
US$756 million. As Chinese labor is continuously mobilized to projects in Africa, 46,800
Chinese labors were stationed in Africa at the end of 2001.
4.143 General Perception of Africa as a Target for Trade and Investment. According
to the Chinese Ministry of Commerce, it is an urgent task for China to identify and utilize
the potential of Africa through economic cooperation, because most African countries
enjoy the merits of quota and preferential trade schemes provided by the US and EU,
which China can utilize to boost its export under the WTO.
4.144 At the same time, entailing risks are also recognized. Market sizes for each
commodity are rather small, as well as having received significant western capital over
many years. This might cause harsh market competition. There are also risks in currency,
production facilities, and labor relations. Therefore, it is suggested that development of
the African market needs to be conducted without pursuing short-term profit, gradually
expanding market share, and avoiding various risks by one’s own effort.
4.145 Taiwan. The following table shows the distribution of overseas

Chinese/Taiwanese and Taiwanese private companies in Africa. The business activities of
Taiwanese companies seem to be relatively dynamic in South Africa and Swaziland. In
some countries such as Egypt, trade volume with Taiwan is relatively high but investment
from Taiwan is very low.
20
Ministry of Foreign Affairs and Trade,
www.mofat.go.kr/en/rel/e_rel_view.mof?seq_no=185&b_code=~middle.
4-30
Table 4-7 Taiwanese Private Companies and Residents in Africa
Population
Main associations of
No. of Main business areas of of overseas
Country Overseas
firms Taiwanese firms Chinese
Chinese/Taiwanese
/Taiwanese
Shoe making, Trade,
Cote Approx. Taiwanese Chamber of
N.A. General merchandise,
d’Ivoire 100 Commerce of Cote d’Ivoire
Apparel
Restaurant and catering, Approx.
Egypt 4 N.A.
Trade, Apparel 2,000
Taiwanese Chamber of
Ghana N.A. N.A. Approx. 50
Commerce of Ghana
Gambia N.A. Motorbike, Garment N.A. N.A.
Liberia N.A. Retailing N.A. N.A.
Taiwanese Chamber of
Approx.
Lesotho N.A. N.A. Commerce of Lesotho,
700
Lesotho Chinese School
General merchandise,
Hotel, Trade, Restaurant
Approx.
Madagascar N.A. and catering, Food N.A.
20,000
processing, Electronics,
Minerals processing
Fishery, Pottery
Mauritius Chinese Secondary
manufacturing, Apparel,
Approx. School, Taiwanese
Mauritius N.A. Distributive trade,
30,000 Association, Chinese
Consumer electronics
Association
retailing
Apparel, Construction,
Architecture, Cooking
Approx. Taiwanese Chamber of
Malawi 8 oil making, Livestock
100 Commerce of Malawi
feed production, Plastic
production
Approx.
Nigeria N.A. Trade N.A.
300
Senegal 1 Restaurant and catering N.A. N.A.
General merchandise, Taiwanese Chamber of
Trade, Apparel, Commerce of Swaziland,
About Approx.
Swaziland Restaurant and catering, Taiwanese Apparel Export
60 400
Serrurerie, Hotel, Video Association of Swaziland,
rental Swaziland Chinese School
4-31
Population
Main associations of
No. of Main business areas of of overseas
Country Overseas
firms Taiwanese firms Chinese
Chinese/Taiwanese
/Taiwanese
Spinning, Plastic, Taiwanese Chamber of
Electronics, Electronic Commerce of South Africa,
equipment, Shoe Taiwanese Association of
making, Log processing, Africa, Taiwanese
Metal manufacturing, Association of Southern
Approx.
South Africa 620 Jewel cutting, Ornament Africa, Taiwanese Women’s
45,000
processing, Minerals Federation of South Africa,
processing, Rubber, Buddha's Light International
Leather manufacture, Association, Tzu Chi
Food processing, foundation, Overseas Chinese
Chemicals Service Center, etc.
Note: As of 2002
Source: Prepared by the Team based on the data from Ministry of Foreign Affairs, International Economic
Cooperation Development Fund, Annual Report 2002 and Ministry of Economic Affairs.
4.146 General Perception of Africa as a Target for Trade and Investment. The main
body of Taiwanese private companies that have achieved major results on the
international stage is comprised of small- and medium-sized firms, with the business area
dominated by the international trade and service sectors. However, in Africa, the main
business areas of Taiwanese firms are the apparel and textile industries, which are
labor-intensive. Because of AGOA and its preferential treatment, these firms are mainly
exporting their products to the US and EU.
4.147 According to the results of a questionnaire survey aimed at 50 Taiwanese firms

in the African region, which was conducted by the Overseas Chinese Affairs Commission
in the year 2001, most firms arrived and expanded their business into Africa after the
1980s. They indicated that the strong incentives to locate in Africa, in addition to
preferential treatment were attractiveness as a growing market, low-cost labor, and
requests by overseas customers.
4.148 The general perceptions of the African market by Taiwanese firms in Africa are
as follows (i) poor quality labor force; (ii) fluctuation risks in the local currency; (iii) poor
security; and (iv) frequent labor strikes.
4.149 Given the above, Taiwanese firms in Africa have requested the following
support from the Government of Taiwan:
• Financial support, for example branches of Taiwanese banks in Africa;

• Provision of investment related information, especially local information on
investment activities and legal requirements;
• Guarantees and protection of investor’s interest through bilateral taxation and
investment agreements, which have been undertaken with a very limited number
of African countries (see Chapter 3A.); and
• Deregulation and simplification of procedures on overseas investment.
4-32
4.150 Singapore. There is no public data collected on companies and businesses

investing in African countries, or on the number of expatriates sent to Africa, or the
Singapore business community in Africa. Nor is there any public data on the number of
Singaporeans living in Africa. There seems to be no Economic & Cultural Exchange
Association between Singapore and Africa.
4.151 Based on information gathered from interviews with companies and government
officials, first, trade in consumer electronics and edible oil concentrate the interest from
Singaporean companies; second, significant Singapore business in Africa are in textile
and garment manufacturing, where several companies have shifted manufacturing
facilities to take advantage of cheap labour costs, duty incentives, quotas and other
incentives.
4.152 Malaysia. There is no public or available data collected on this subject. Nor is
there public data collected on the number of Malaysians living in Africa. But based on
interviews and research, this consultancy team found that:
4.153 The assistance suggested or sought by the respondents was mainly on:
• Availability of market information on specific industries;

• Trade leads, access to importers for their products;
• Participation in trade missions; and
• Assistance from Malaysian trade promotion organizations.
4.154 In terms of projected value of business dealings / investments which the

respondents intend to make with Africa, eight companies indicated that they expect to
establish up to RM10 million (US$2.6 million) while two indicated between RM11
million to RM50 million (US$3 million to US$13 million) worth of export business
individually with Africa.
4.155 India. The most evolved Indian business community can be found in South
Africa, as it has the largest Indian population in Africa with 1.2 million people (see Table
4-8). Although no formal network exists to promote interaction between members of the
Indian business community, the most prominent Indian businessmen in South Africa have
cooperated on a number of political issues.
4.156 Non-Resident Indian (NRI) Associations as can be found in the US and UK do

not seem to have been established in Africa. Such events, which were organized by CII
(Confederation of Chambers of Indian Industry) and FICCI (Federation of Indian
Chambers of Commerce and Industry), would benefit from the involvement of such
associations. Encouraging such associations and their interaction with Indian Chambers
of Commerce is considered to be a useful way of promoting trade with Africa in the
future.
4-33
Table 4-8 Indian Population in Selected African Countries
NRI - Indian citizens not residing in India

PIO - Persons of Indian Origin who have acquired the citizenship of some other country
Source: High Level Committee on the Indian Diaspora 2002
4-34
Studies on Africa-Asia Trade and Investment Relations (B) Chapter5. Cases of Direct Investment
CASES OF DIRECT INVESTMENT IN AFRICA:

STRATEGIES AND LINKAGES
A. Backward and Forward Linkages
5.1 Linkages and Spillovers. One of the primary motivations for governments to
attract FDI to their economies is the potential for productivity spillovers that can take
place through contacts between foreign affiliates and their local suppliers in upstream
sectors. These spillovers can take place between either domestic-market-oriented
companies or export-oriented foreign ones. The impact of foreign affiliates on the
activities of domestic firms can be direct, through the establishment of backward linkages
with local firms by foreign affiliates, or they can be indirect, through new technologies
and know-how that the foreign affiliates bring to domestic firms. Economic policy
measures that encourage and deepen those linkages can therefore strengthen the
capabilities and competitiveness of domestic firms, which can subsequently positively
impact the overall welfare of countries. Open economies, for example, are more likely to
induce foreign affiliates to invest in upgrading the technological capabilities of domestic
suppliers. The investment of an international consortium of the Steel Plant “Mozal” in
Mozambique by BHP Billiton, Mitsubishi Corporation of Japan, the Industrial
Development Corporation of South Africa and the Government of Mozambique is one of
the recent stories of success in the last years (Box 5-1). The presence of a Japanese
conglomerate as a member of a joint venture is considered a case study of an investment
in Africa with better chances of success by reducing risks through coordination.
5.2 Foreign affiliates can generate local spillovers. Foreign companies based in host
economies can generate multiplier effects in local development through production
linkages and spillovers. Companies can decide to outsource from imports or produce
inputs in house, the former does not generate local linkages and the effects of in-house
production on linkages is limited depending on the degree of using of local resources
(Figure 1). However, experience demonstrated that producing and outsourcing from
domestic producers led to trickle-down effects via training local workers, leads to
competition between local suppliers, technology transfer of quality, packaging, and
distribution by demonstration effects
5.3 Backward linkages between foreign affiliates of transnationals and domestic

suppliers can create productivity spillovers and improve the competitiveness of those
suppliers, but policies to promote those linkages need to promote FDI flows in such a way
as to ensure economy-wide gains for host countries. Informal evidence based primarily
on the successful use of FDI promotion policies by Southeast Asian countries as part of
their industrialization program suggests that the African countries can benefit from
backward linkages with local firms by foreign affiliates, and the transfer of new
5-1
technologies and know-how that the foreign affiliates bring to domestic firms. FDI flows
directed at narrowly defined sectors with few opportunities for backward linkages are
unlikely to benefit the African region. Government policies that deepen linkages with
foreign affiliates of transnationals are most successful when a combination of measures
are adopted that target the promotion of linkage information for those foreign affiliates
and domestic suppliers, as well as the regulatory and macroeconomic policy environment
of the country.
Figure 5-1 Linkages and Spillovers in Perspective
F o re ig n F irm in
H o s t C o u n try
Im p o rts o r lo c a l
In -h o u s e p ro d u c tio n L o c a l s o u rc in g fro m
s o u rc in g fro m
w ith lo c a l s o u rc in g d o m e s tic p ro d u c e rs
fo re ig n a ffilia te s
L im ite d o r n o
L in k a g e s
P ro d u c tio n L in k a g e s ’ S p illo v e rs
F o s te rin g o f lo c a l D e m o n s tra tio n Local R & D

T ra in in g
c o m p e titio n e ffe c ts tric k le -d o w n
Source: Prepared based on UNCTAD (2001)21
B. Firm Policies and Strategies in Africa

B.1 Japan
5.4 General Perception of Africa and Investment Activities by firms. According to the
Japanese Federation of Economic Group (Keidanren), the Japanese business society has
demonstrated less interest in Africa than other areas of the world, due to a large
geographical distance and lack of information on Africa in various aspects.22 However,
to balance against an overheated investment movement toward China, investment to
other areas including Africa is considered to be important for further promotion.23
5.5 Attractiveness in the African market has been expressed because the continent
has a wealth of mineral and natural resources, low-cost in energy, vast quantities of land,
and access to the world and neighboring markets. In addition to these, a high potential for
tourism has been identified. To maximize these advantages and make the whole of Africa
become an attractive market for foreign investors, they suggested that African countries
21
UNCTAD (2001). World Investment Report: Promoting Linkages”.
22
Mr. Satoru Anzaki, Chairman of Committee on Sub-Sahara, Keidanren
23
Based on his speech at the Tokyo International Conference on Investment to Africa on February 26,
2003.
5-2
strengthen their solidarity and develop their own regional self-help efforts, breaking away
from a foreign aid dependency.
5.6 Four success cases of Japanese private investment in Africa are introduced as
follows:
Kenya Nut Established in 1974 in Kenya by one Japanese entrepreneur to collect and
process macadamia nuts produced in Kenya. Initially, all the products were exported to
Japanese market, the firm eventually expanded its market to include Europe and US,
along with diversifying its products into cashew nuts and coffee. The firm now employs
4,000 workers, and contracts with 160,000 nut and coffee farmers.
Matsushita Electric (East Africa) Established in 1966 in Tanzania by Matsushita Battery

Industrial and other Matsushita group companies. Matsushita Electric has produced dry
batteries and torch lights mainly for the Tanzanian domestic market and neighboring
country markets, competing with illegally imported cheap products. Having survived
severe competition, with the support of Tanzanian government and Matsushita Battery,
although limited, it has increased its production capacity to expand to markets throughout
the East-and-South Africa.
Maruha Taiyo Fishery, then renamed as Maruha, established joint enterprises for shrimp
fishing and culture in Madagascar in 1963, and Mozambique in 1973, with equity
participation of the respective governments. The company employs 1,900 workers in both
countries, and exports 5,600 tons of shrimp to Japan and Europe. These exports account
for 3% of Madagascar’s trade balances and 6% in Mozambique.
Mitsubishi Corporation Mitsubishi Corp. has participated in the world’s biggest

aluminum refining project called MOZAL, together with Billiton (UK), Industrial
Development of South Africa (IDC), and the Government of Mozambique since 1998.
The project imports major material (alumina) from Australia, utilizes inexpensive
electricity provided by South Africa (ESCOM), and exports all the product (primary
aluminum) to the EU and Japan. Mitsubishi indicated that the major factors for
participating in the project was (i) a steady supply of inexpensive electricity with a
long-term contract with ESCOM, (ii) finanical assistance for the project from various
Multilateral/Bilateral Development Banks and financial institutions, (iii) reliable
business partners (Billiton and IDC), and (iv) a strong commitment by the Mozambique
government.
5.7 These four cases indicate some variations on business strategies on product,
market and government involvement. Kenya Nut and Maruha had both utilized
indigenous primary products to sell mainly to Japanese market, with expansion to the EU
market. In both cases, which are different from mining and energy resource extractive
businesses, local labor was an important factor of production, presupposing technology or
knowledge transfer by the investors. On the contrary, the MOZAL project, while targeting
the Japanese and EU markets, did not depend on the indigenous resources in
Mozambique, but relied on the inexpensive energy provided by South Africa. The project
has been realized by the huge amount of capital investment ($520 million), introduction
5-3
of the latest refining technologies, and related infrastructure development. Thus the
project has needed international alliances, financial support from various international
financial institutions, and a strong commitment by the host government. The first two
cases could be categorized as traditional natural resource-based investment projects and
the fourth case can be considered as a model for a large-scale energy resource project.
Box 5-1 MOZAL in Mozambique
MOZAL, one of the largest aluminum smelters in the world is located near
Maputo, the capital of Mozambique. MOZAL was constructed in two phases with
approximately US$2 billion in funding and US$1.1 billion in non-recourse project
funding from international enterprises. Shareholders are BHP Billiton (47% and the
smelter operator), Mitsubishi Corporation of Japan (25%), the Industrial
Development Corporation of South Africa (IDC, 24%) and the Government of
Mozambique (4%).
Phase 1, was the first major project to be implemented in Mozambique in the

past 50 years and took 31 months to complete after approval in May 1998. MOZAL
1 began production in June 2000 and reached its full output rate in 2001.The
investment of US$1.34 billion in MOZAL 1 boosted the economy of Mozambique
and also boosted the economies of Mozambique’s major trading partners, South
Africa, Swaziland, and Australia. Phase 2, an expansion project, took 26 months to
complete and was finished in August 2003. In August 2003, first metal was
produced six months ahead of schedule and at a final cost of US$665 million, some
US$195 million under the original budget. The expansion has doubled the smelters
capacity to produce 506,000 tons of primary aluminum per annum. This will have
significant economic benefit for Mozambique.
The foreign investments in MOZAL have led to improved economic and social
benefits in Mozambique, due to linkages with various resources and environments.
MOZAL’s factors that led to its success include a competitive and inexpensive
power supply, efficient labor, good raw materials supply, and investment incentives.
The project fit well within the economic transition in Mozambique, which started in
the early 90’s.
Economic Effect: MOZAL doubled Mozambique’s exports, providing for in excess

of US$400 million in foreign exchange earnings per annum and adding more than
7% to the gross domestic product.
Creating Jobs: One of MOZAL’s visions is to recruit staff directly from the local
community. Direct manual labor on the project will peak late in 2002 at
approximately 4,500 people - with total personnel involved, including contractors
and management staff, expected to peak at 6,000 people. More than 65% of the
labor force will be Mozambican.
5-4
Capacity building: In an effort to empower the local Mozambican people and

companies, an empowerment program has been undertaken. A training facility has
been commissioned to train local labor, allowing semi-skilled workers who worked
on MOZAL 1 to upgrade their skills and thus work in more highly skilled positions,
whereas new labor is trained for entry-level positions.
Health, Safety, and the Environment: Another important activity is the company's
role in health, safety, environment, and the community. Disease awareness
campaigns (malaria and HIV/AIDS) and safety awareness campaigns are developed
and run continuously. Public awareness meetings are also held every six months at
the plant to inform interested and affected parties of the plant's environment
management plans and progress.
Supporting the Community: The MOZAL Smelter project supports the

community surrounding the site. MOZAL works on waste collection, fire training,
and mosquito fumigation at the local market (built by MOZAL). MOZAL also
donates packing timber and scrap paper generated from the project to local schools.
They also provide medicine to clinics.
5.8 The case of Matsushita Electric presents a different business strategy, which
produces simple manufactured goods for the domestic market. In this type of business,
investors were usually protected by the high tariffs under the import substitution policies
by the governments, therefore, recent tendency of import liberalization and regional
economic integration have placed such investment in an uncompetitive position against
imported products. This situation has actually forced many foreign investors to withdraw
from the African market, including Matsushita Electric in Cote d’Ivoire and Sanyo
Electric in Kenya. Matsushita in Tanzania shows a successful case of surviving such
situation with the effort to strengthen competitiveness and utilizing regional economic
integration to expand its market.
B.2 South Korea
5.9 Facilitated by positive information disseminated throughout governmental

agencies, Korean businesses began to consider Africa as a prospective destination for
trade and investment. In 2001, the Korea-Africa Association (KOAFA) and UNDP jointly
organized local preparatory workshops for the second Asia Africa Business Forum
(AABF), aimed at facilitating Korean direct investment in Africa.24 Dr. Jung Hae-jung,
director general of KOAFA and President of M.K. International, Inc. said, “At the
workshop, Korean business executives interested in the African market were able to have
an opportunity to build up their network with marketing specialists and governmental
officers.” In fact, some of companies that attended the workshops were invited to the
second AABF held in South Africa in order to make on-the-spot arrangements with
African companies.
24
AABF is targeting countries which include China, India, Malaysia, Pakistan, South Korea, and Thailand
in Asia and Botswana, Cameroon, Cote d'lvoire, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria,
Senegal, South Africa, Tanzania, Uganda and Zambia in Africa.
5-5
5.10 During the 1980’s, large Korean enterprise groups, especially Daewoo,
undertook very aggressive investment activities. This is no longer common today due to
changes in the political and economic environment in Korea. Some of those projects that
were invested in during the 1980s or 90s were either sold or operations ceased. Among
large enterprise groups, Samsung Group is still maintaining its positive stance in overseas
investment. They have four offices in Sub-Saharan Africa – Angola, Ghana, Nigeria, and
South Africa. The group’s interest in Africa is in oil, telecommunications, electronics,
mobile phones, and construction sectors. Angola is being considered as especially
promising given its oil-related resources and businesses.
5.11 Another interesting case that made an aggressive approach in Africa is MK

International, which is a medium size engineering and trading firm. MKI has six local
subsidiary companies in Africa in Senegal, Ghana, Nigeria, Malawi, Namibia, and
Madagascar. They deal in medium and small-scale trade and investment activities. Its
strength lies in investing in various manufacturing that targets the daily needs of the
domestic market. The president of MKI has unique philosophy in approaching the
African market with a wide circle of acquaintances in African diplomatic circles due to
his activity in KOAFA.
5.12 Details on the above two cases are introduced in the next section. These cases
show the two types of business strategies or approaches toward Africa. One type is, as
demonstrated by the Samsung case, natural resource (oil) focused, undertaken by a large
company and supported by government of the investors’ countries due to possible energy
security. Another strategy is investment by medium size companies, targeting Africa’s
domestic market for manufactured goods for Africans’ daily needs. MKI case suggests
the importance and effectiveness of human network in Africa, rather than government
support or involvement for this scale of business.
B.3 China
5.13 The perception of business in Africa by China’s private sector can be perceived
as consistent with its government. According to the Chinese Ministry of Commerce, it is
an urgent task for China to find and utilize the potential of Africa through economic
cooperation, because Africa has abundant natural resources, business opportunities with
the potential for high rates of return, and most importantly, most African countries enjoy
the merits of quotas and preferential trade schemes provided by the US and EU, which
China can utilize to boost its exports under the WTO regime.
5.14 Under the support of ODA programs and other promotion schemes mentioned in
the previous section, Chinese direct investment has been in areas of manufacturing,
resource development, construction, and other service sectors. In manufacturing, electric
appliances, spinning, and apparel are the main products of Chinese investments and are
sold throughout Africa’s domestic market. Investment in the textile industry targets the
US market under the AGOA program. Recent Chinese investment in Cote d’Ivoire,
Mauritius, Rwanda, and Swaziland are recognized as major AGOA-related investments.
5-6
25
Investments in natural resource development are government-lead projects and include
oil development and mining in Cote d’Ivoire and Sudan and fisheries in Gabon, Ghana,
and Morocco.
B.4 Taiwan
5.15 The main business areas of Taiwanese firms in Africa are the apparel and textile
industries, which are labor-intensive. Because of the preferential treatment from the US
and the EU due to AGOA, these firms are mainly exporting their products to the US and
EU while importing raw materials from Taiwan or a third country, instead of undertaking
local procurement.
5.16 In 2001, the Overseas Chinese Affairs Commission According undertook a

survey that questioned 50 Taiwanese firms with investments in Africa. The majority of
these firms arrived and significantly expanded their business in Africa in the 1990s.
Reasons for entering the African market were (1) preferential treatment, mentioned
above; (2) perceived attraction of a growing market; (3) low-cost labor; and (4) requests
from overseas customers.
5.17 Although the AGOA program has had a strong influence on the business strategy
of these apparel and textile firms, Taiwanese manufacturers that have been doing business
in Africa appear to have been taking root in African economies, as shown in the case of
Tex-Ray Industrial described further in Box 5-3.
5.18 With regard to the non-manufacturing sector, the main focus of Taiwanese firms
in Africa is retail trade and tourism. Due to hyperinflation and currency turmoil as a result
of the immaturity and limited functional capacity of the financial sector in Africa, most
private companies are managed by their own capital, rather than forming joint-stock or
limited partnership companies.
B.5 Singapore
5.19 Trade in consumer electronics and edible oils forms the majority of business
interests from Singapore-based companies.26 The other significant Singapore venture in
Africa is in textile and garment manufacturing, where several local companies have
shifted manufacturing facilities to Africa to take advantage of inexpensive labor costs,
duty exempt incentives, quota concessions, due to AGOA, and other incentives.
5.20 There seems to be more business interaction between Singapore and South Africa
and Nigeria compared to other countries in Africa. For example, in March 2003, the
Trade, Tourism and Investment Seminar was jointly organized by the South Africa High
Commission, Omega International Research in Cape Town, and the South
Africa-Singapore Business Association (SASBA) in Singapore. However, Singaporean
25
USTR, 2003 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa
and Implementation of the African Growth and Opportunity Act.
26
Based on the analysis obtained from interview survey conducted by subcontractors in Singapore,
ATTISE Research & Consulting Service and Converging Knowledge specially conducted for this study.
5-7
business leaders do not appear to focus on Africa, preferring geographically closer Asian
countries because of their similarities in working culture and language. They also
consider it to be a “hardship” to enter African markets.
5.21 Some cases of Singaporean companies’ businesses in Africa could be outlined as

follows:27
“A” Textiles Industries is a Singapore-based company with textile

manufacturing capabilities in South Africa, Lesotho, and Cambodia. Its
manufacturing facilities in Africa are purely export-driven, targeting the United
States and Europe markets. “A” Textiles first moved its manufacturing
capabilities to South Africa in 1997. The reasons were relatively lower labor
costs, duty exemptions, and a pre-existing factory. “A” Textiles selected South
Africa over the other African regions due to its comparatively better
infrastructure, similarity in legal system as a former Commonwealth country,
and English language fluency. However, due to rising problems presented by
strong unions in South Africa and attractive incentives offered by Lesotho, the
company opened its second factory in Lesotho a year later. As an incentive, the
Lesotho government secured funding from the World Bank to build the factory
in exchange for Singapore technology and skills in manufacturing.
“B” Tires, a Singapore public-listed company, retails and distributes tires for
passenger, commercial, industrial, and agricultural vehicles. The company also
provides tire-retreading services and trades wheels, batteries, industrial rubber
products, and automotive equipment. “B” Tyres first ventured into South Africa
in the mid-1990s. Initially they started with a branch office although this has
been downscaled to a liaison office. Some reasons for downscaling included
under-estimation of market demand, working culture, and product knowledge.
However, the company has plans to extend business relations with Zimbabwe,
Ethiopia, and Congo. Factors determining potential markets are its buying power,
demographics, and competition.
“C” Corporation is a Singapore-based investment holding company whose

group of companies has been doing business in Africa for almost 30 years.
Principal activities include trading (paper, sundry items, electronics, and other
consumer goods) and manufacturing (chemicals, textiles, and noodles). At
present they have key business interests in eight African countries such as
Nigeria, Ghana, Congo, Kenya, South Africa, Mozambique, and Zimbabwe.
They also have manufacturing facilities in Nigeria and South Africa that cater to
the local domestic market. They plan to further increase their presence in the
West African countries. The company is confident of Africa’s potential and
believes that Singaporean companies need to have a more involved approach to
doing business in Africa. That is, they should not only depend on local partners,
but should also set up local offices to do business.
27
Individual company names are not disclosed
5-8
“D” Corporation provides engineering services in the petrochemical industry. It

has established subsidiary companies in Nigeria to implement a UOP/Hydro
methanol-to-olefins (MTO) process unit. According to a director of the firm,
Nigeria has ingredients for a successful investment that is specific to “D”
Corporation’s nature of business. First, it has abundant resources of oil and
natural gas at highly competitive prices. Second, Nigeria’s sizeable population
also presents a substantial market for orders in petrochemicals. Third, the
industry is still relatively undeveloped, thus investing in Nigeria is equivalent to
investing in an emerging market.
B.6 Malaysia
5.22 According to a survey conducted by the Federation of Malaysian Manufacturers

(FMM), which currently represents around 2,000 manufacturing companies in Malaysia
covering all industries, approximately 21% of the respondents had business dealings with
43 African countries. Of the 21 total respondents to the survey, 12 indicated that they
were currently exporting to the African market, of which four had their own distribution
network, while eight supplied distributors or middlemen in Africa. One respondent
indicated that it was directly sourcing supplies from African markets using its own
network. The other seven respondents did not have any dealings in the African market,
but were exploring Africa as a future market for their products.
5.23 In the above survey, responses received highlighted the following aspects of
Malaysian manufacturing companies:
• Growth or increasing their market share in African countries;

• Viewed Africa as potential market;
• Using African countries as a “gateway” to other markets or customers; and
• Being contacted by buyers from Africa.
Key problems faced by the respondents in doing business in African countries were
generally
• Weak financial systems;

• Lack of legislation and infrastructure;
• Lack of security;
• High logistics costs; and
• Difficulty in identifying potential buyers
5.24 Regarding Malaysian companies’ businesses in Africa, two types of approaches

were observed. One is conducted by mainly large, state owned or private conglomerate
companies that enter into resource development, privatization of African state owned
telecommunication companies, and resort development. A typical example is the case of
Petroliam Nasional Berhad (Petronas), the Malaysian national oil company. Petronas
acquired 30% equity of Engen, a major oil refining company in South Africa in 1996, and
wholly subsidized it by acquiring the remaining equity in 1998. Through this acquisition,
Petronas has obtained all the facilities of Engen throughout South Africa, including oil
5-9
refineries with the production capacity of 5,250 kt/year and 1,300 service centers, as well
as its offices in 25 African countries including Namibia, Botswana, Swaziland, Lesotho,
and Kenya. It has also acquired Engen’s subsidiary, Energy Africa, which mines and
refines oil and natural gas throughout Africa.
5.25 Although Petronas is not involved in Malaysia’s government-lead South-South

cooperation scheme (MASSCORP/MASSA), it is obvious that Petronas’s business
development in Africa is fully supported by the Malaysian government. A similar
approach could be observed in Telecom Malaysia’s participation in the privatizations of
telecommunications in South Africa, Ghana, Guinea, and Malawi.
5.26 Another approach is the consortium method, in which several companies

organize a consortium to share risk, information, and knowledge in making investments.
MASSCORP is placed as a nationwide model. UTAS Asia is a much smaller scale
consortium, organized under the initiative of AAITPC and is a joint contribution of about
20 companies and investors in Malaysia. It has been involved in such projects as the
establishment of an information technology college with Zimbabwe University, the
assembly of TVs and DVDs, and the establishment of a cotton ginning factory in
Zimbabwe. Its aim is to promote transfer of Asian technology to Africa and function as a
‘one stop center’ for Asia-Africa business.
B.7 India
5.27 According to the Indian Ministry of Commerce, an opportunity for enhancing

trade with Sub-Saharan African region exists because of:
• The liberalized and growing economy;

• India’s exports to Sub-Saharan Africa constitute a mere 4% of total exports in
the region. Similarly, imports from Sub-Saharan African region constitute about
3% of India’s total imports during 2000-2001;
• Direct shipping lines to South Africa, which were not available previously; and
• Language problems can be overcome with the help of software available for
quick translations of business correspondences between English and prominent
African languages.
5.28 Many representatives of India and African countries assert that mutual goodwill
exists between India and Africa due to similarities in their colonial struggles, ethnic
diversity, geo-political situation, and India’s firm opposition to the apartheid regime in
South Africa. In July 2002, the Confederation of Indian Industry (CII), jointly with the
High Commission of India in South Africa, organized a “Made in India” show in
Johannesburg. Over 70 Indian companies participated in the show. The CII also organized
an “Enterprise India” exhibition of Indian small and medium enterprises, products, and
services in Durban.
5.29 Indian companies’ direct investment activity in Africa varies by country, industry,
and company size, although it does include private companies and state owned companies.
Here, cases in South Africa and Nigeria are highlighted. Although it is difficult to find
5-10
strategic patterns, the following cases indicate that Indian businesses have broadly
permeated the African domestic market.
5.30 Indian FDI in South Africa.
UB Group of India, the largest Indian investor in South Africa initially invested
US$20 million in a local-owned brewery (National Sorghum Breweries) and has
invested US$6 million in a tourism project (Mabula Game Lodge). They have
since expanded their operations and investments in South Africa.
TATA Group’s operations in South Africa include three companies. The first one
- TATA Africa Holdings is responsible for bringing investments to South Africa
in viable areas. They are exploring various investment projects in South Africa,
particularly in mining. The second company TATA Automobiles imports,
assembles, distributes, and sells TATA trucks and buses. For marketing of TATA
trucks, the group entered into a joint venture agreement with ERF Ltd., a
subsidiary of DORBYL of South Africa. The third company, Concilience
Technologies, is an IT joint venture between the TATA Consultancy and J&J
Group of South Africa established in February 2001. TATA International – the
international business gateway of the TATA Group – has subsidiaries in Ghana,
Mozambique, Namibia, Tanzania, Uganda, Zambia, and Zimbabwe.
Ranbaxy, India’s largest pharmaceutical company, has had wholly owned

domestic subsidiaries in South Africa since 1993. It also has had wholly owned
domestic subsidiaries in Nigeria since 1987 and Egypt since 1996, and has
distributional agreements with domestic pharmaceutical suppliers in Mauritius,
Zimbabwe, and Zambia. Other Indian pharmaceutical companies such as Cipla,
Millennium Pharma, Eicher International, NIIT, Aptech, and Allied Chemicals
also have operations in South Africa.
5.31 Public sector enterprises based in South Africa include State Bank of India,
Export Import Bank, Bank of Baroda, National Small Scale Industries Corporation, and
the Government of India Tourist Office.
5.32 Indian FDI in Nigeria. India has assisted Nigeria in the transfer of technology,
machinery, and expertise in the form of joint ventures and consultancy services. The
Metallurgical and Engineering Consultants India (MECON), in association with
Panafrican Consultancy Services, has been undertaking project management and
consultancy services for Ajaokuta Steel Company (Kogi State) since 1981. MECON were
also consultants to Delta Steel Plant in Warri (Delta State) and were involved in
commissioning a plant, as well as training engineers in India.
5.33 A joint venture company between India and Nigeria, The Best and Crompton
Engineering (Nigeria) Ltd. built the 132 KVA DC transmission line between Benin and
Vaghelli in 1963. It is now manufacturing carbon brushes for automobile and industrial
sectors. Other joint ventures like the Nigerian Engineering Works, Indo-Nigerian
Merchant Bank (INMB), and Prestige Assurance Company (Nigeria) Ltd. have been
5-11
extensively involved in light engineering goods, merchant banking, and insurance

services.
• RITES (Rail India Technical and Economic Services) was given a 3-year
(1980-82) management contract by the Nigerian Railway Corporation to
manage and repair the rolling stock. A 3-member RITES delegation visited
Nigeria in September 1999 to renew contacts with the present civilian
administration.
• Petroleum India International (PII) has been involved in the maintenance of

Port Harcourt and Warri oil refineries through the provision of technical
manpower and training of Nigerian engineers.
• TCIL (Telecommunications Consultants India Ltd.) has executed a US$ 12

million World Bank project in the telecom sector. A TCIL/C-DOT delegation
visited Nigeria in October 1999 to promote C-DOT technology in the
country. Computer software companies like NIIT, Aptech, and Magic India
Ltd have signed agreements with local companies to set up training institutes
in the country.
5.34 Three Types of Asian Investment to Africa. As has been indicated by cases
introduced in the previous chapters, there are three types of Asian investments in Africa.
First, there are natural resource-led investment projects, such as mining products, energy
resources, and agro-based products. Second, there are investments in labor-intensive
industry products such as textiles and light industry products due to the AGOA initiative.
Third, some Asian companies’ indicated that there are also investment opportunities for
various kinds of consumer products in the domestic market, where individual market size
is generally small and unattractive for mass production investment. The table below
indicates the various types of investments and examples of companies that have invested
in each type.
Table 5-1 Three Types of Asian Investment Projects

Investment Project (Country)
Type-1: Kenya Nuts (JP), Maruha (JP), MOZAL (JP), Samsung (KO),
Natural Resource “D” Corp (SP), PETRONAS (MA)
Matsushita (JP), MKI (KO), Non-manufacturing (TA), “B” Tires
Type-2 (SP), “C” Corporation (SP), Telecom Malaysia (MA), UB Group
Domestic Market (IN), TATA (IN), Ranbazy (IN), Mecon (IN), RITES (IN), TCIL
(IN)
Type-3 Textile projects in Cote d’Ivoire, Mauritius, Rwanda, Swaziland
Global Supply (CH), Tax-Ray Industrial (TA), “A” Textile Industries (SP)
5.35 Investment in Africa can be framed into three different types if categorized by the
targeted market of the goods produced by the invested industries. The first type (Type-1)
is investment targeted toward producing goods to be sold in investors’ own countries.
Typical examples of such investment include natural resource extraction industries as
well as food processing projects such as fish cannery plants. Investment in extractive
5-12
industries is large scale, based on initial governmental agreements followed by private

sector engagement including some degree of technical transfer. Although unpredictable
changes in local government policies along with macro-instability have often hampered
the flow of investment of this kind to Africa, Asian firms still have interests in such
projects.
5-13
Box 5-2 Types of Asian Investment to Africa – Case Studies
Type 1: Samsung Corporation (Korea) – A Case in Angola
With economic reforms underway in Angola, foreign investors have found increasing
business opportunities in the energy, mining, telecommunications, manufacturing,
agriculture, and fishing industries. Angola is ranked third in the world for new oil
discoveries and is Sub-Saharan Africa’s second largest oil producer, so new business
ventures are expected to accelerate.28 Angola is now Korea's second largest trading partner
in Africa and its 7th largest supplier of crude oil. In 2000, Korea imported US$654 million
of oil from Angola and exported US$17 million in cars and auto parts.29
In 2000, Samsung won a US$4.4 billion contract in Angola to build an oil refinery and
offshore exploration platforms. 30 The US$2.7 billion oil refinery will produce 200,000
barrels per day, mainly for export markets. Samsung has also contracted to build oil and gas
production platforms and storage facilities worth US$1.7 billion. This contract was
facilitated by a bilateral agreement between Multilateral Investment Guarantee Agency
(MIGA) and the Korea Export Insurance Corporation (KEIC), where both agencies will
cooperate in re-insuring and co-insuring projects in order to share risks and increase the
availability of insurance for Korean investors.31
It should be noted that the above agreement originated from the desire of Samsung to seek
coverage for its intended resource-based projects in Central and West Africa and
specifically its oil projects in Angola. Moo-young Lee, Director, International Relations,
KEIC said that one of the reasons for the agreement between MIGA and KEIC was the need
for additional coverage and risk sharing in view of the large-scale project.
Type 2: M.K. International Inc. (Korea) – Cases in Nigeria and Malawi
M.K. International Inc. (MKI) is a medium size engineering and trading firm. It was
established in 1983 as the parent company to the present M.K Group. The company
diversified into industrial engineering for small- and medium-scale projects. New additions
to its business were international trading for general import and export, manufacturing of
industrial equipment and machinery, and consulting for various engineering projects
domestically, as well as in developing countries.
28
Angola-trade and investment guide, Embassy of Angola in USA, 2001,
www.angola.org/business/Angola_Trade_Brochure_00.pdf
29
COMTRADE, United Nations.
30
Source: www.angola.org/news/NewsDetail.cfm?NID=2690
31
“Spurring Korean Investment Overseas- MIGA’s Korean Connection”, Korea Trade and Investment,
Vol.19, No.4, July-August 2001, pp17.
5-14
MKI has six local subsidiary companies in Sub-Sahara Africa located in Ghana,
Madagascar, Malawi, Namibia, Nigeria, and Senegal. They focus on small and
medium-scale trade and investment activities. Its main strength lies in investing in the
manufacturing of a variety of daily product needs, which target the domestic market. For
instance, in 1986, they established M.K. Nigeria Ltd., which was aimed at dealing with
trading, engineering, and consulting. In Malawi, M.K. Malawi Ltd. was founded in 1994 to
manufacturing tableware. According to Dr. Hae-Jung Jung, the President of MKI, around
40% of its annual sales is generated by the African market.
The success of these businesses in Africa is partly the result of the president’s far-reaching
connections to African diplomatic circles. Starting as the Representative of Korea-Nigeria
Businessmen Association in 1988, he was successively appointed as the Chairman of
Korea-Madagascar Business Association (1994), Director General of Korea-Africa
Association (1995), Organizer of Asia-Africa Business Forum in Seoul (1999), and
Honorary Consul of Sierra Leone (2001). Recently, he was also elected as Vice President
of the Asia Africa Chamber of Commerce (AACC) during the U.N. High Level Meeting
held in Morocco in April 2003.
Type 3: Tex-Ray Industrial Co., Ltd. (Taiwan) – A Case in Swaziland
Tex-Ray Industrial Co., Ltd. is a powerful apparel company in Taipei, founded in 1978 and
was listed on the Taiwan Stock Exchange in December 1998. Recently, Tex-Ray has been
focusing on research and development of cotton products. Its product, Ultra Mercerized
Cotton Color Yarn, won the products competition held by the Taiwanese government.
Sales subsidiaries have been established in Los Angeles and New York and the raw
material procurement company was recently founded in China, in addition to a number of
production factories abroad.
Tex-Ray Industrial Co., Ltd. founded three factories in Swaziland. Proton Investment
Swaziland, Ltd. and Tex-Ray Investment Swaziland, Ltd. were founded in 2001 and 2002
respectively. The products of this factory are exported to the US. The main reason for
investing in Swaziland was to obtain benefits from AGOA. Taitex Investment Swaziland,
Ltd. was established in March 2002. Since the local procurement of raw materials will
become compulsory by AGOA after October 2004, Tex-Ray decided to set up a spinning
factory in Swaziland as well. The products are sold domestically and will be sold to
Tex-Ray’s factory in South Africa.
About sixty Taiwanese companies that operating in Swaziland, mainly in the apparel
industry, have organized a corporate union and the President of Tex-Ray was appointed as
the Chairman. The union is able to negotiate with the Government of Swaziland on behalf
of the textile industry of Swaziland.
5.36 The basic motivation for Type-1 investments is the desire to obtain locally
available resources for consumption a home country. The resource must be processed in
order to be shipped and marketed in the destination country. The potential investors are
trading houses, resource suppliers, and groups of plant construction companies. Korean
5-15
investment in Angola is a typical case for oil resources that requires a substantial amount
of investment for the processing plant. ODA loan and export credit are powerful policy
instruments that support this investment cum trade project (see Box 5-2). Japanese
investment in Mozambique with international partners is another example. Investment
projects for processing food and agro-based products require a smaller amount of
investment, compared to mining and energy resource projects, while the specification of
the products can be carefully controlled to meet the market’s quality needs. Trading
companies frequently become investors with their interest in expanding both export and
import trade. Type-1 can be called import-lead investment where the investors are
required to have significant domestic market in their home country. In this sense, the
potential Asian countries would be: China, India, Japan, and Korea with Singapore as a
regional hub.
5.37 The second type of investment, Type-2, is targeted towards Africa’s domestic
markets. Examples include home electronic appliances and textile plants that were
invested in by Japanese entrepreneurs in the 1980’s and were aimed at Africa’s local
markets that were protected by the high tariffs under import substitution policies.
However, regional economic integration and government import liberalization have
placed such investments in uncompetitive positions against imported products. As such,
accessing an even more competitive global market has been out of reach for those
protected industries in most cases. In various ways, such investments have been bound by
the constraints of low local demand and high transaction costs.
5.38 Although domestic market oriented investment appears to have fewer advantages
under the current lower tariff regime, feasible investment for local production of
industrial products is still needed domestically. Because of the small size of the domestic
market, a mass production business model, common in industrialized countries, is not
suitable. However, there are cases in which small- and medium-sized production is
feasible, as exhibited by the Korean investment in Nigeria and Malawi. The investor in
this case is a trade and industrial engineering firm which uses a human network from the
respective African countries to minimize risk, rather than government support as seen in
Type-1. Type-2 is export-lead investment in which exports of certain products turned out
to be feasible because of the proven market size and production cost advantages. An
investor for Type-2 is likely to be found in Asian countries where small- and
medium-sized enterprises (SMEs) are active, such as Korea, Taiwan, and India.
5.39 Acquisition and privatization of existing businesses in Africa, such as the case of
Malaysian national companies, are variations of this type, since they also targeted the
African domestic or regional market. However, those businesses are in natural resource
development, telecommunication, and/or transportation, are highly capital-intensive, and
need government initiatives, thus the potential Asian investors are limited to large scale
and government supported firms in countries such as China, Korea, Malaysia, and India.
5.40 The third type of investment, Type-3, is targeted to tertiary countries, especially
countries in other industrialized regions, such as North America and the EU.
Multinational corporations with a global supply chain often conduct investments of this
type. Type-3 can be divided further according to other characteristics. First, there are
5-16
industries in the textile and apparel sectors or in service sectors, such as outsourced data
services and telemarketing that are largely motivated by low labor costs in Africa as well
as existing trade policies in the tertiary countries, where their products and services are
destined. The size of an investment is limited, but these investments have effectively
generated employment in local economies. Second, there is also a more forward-looking
investment that is genuinely attracted to potential productivity increases within Africa.
Major automobile companies have established plants in South Africa, which is growing
rapidly and is the key economic hub in Africa, in order to seize future potential in the
region.
5.41 Type-3 investments occur from manufacturing enterprises with marketing

capabilities in the world market, particularly to the US and EU. Its purpose is to relocate
production facilities to the Africa because of the comparatively advantageous conditions
including labor, other production inputs, and tax incentives both at host and destination
countries. The Taiwanese enterprise investment in Swaziland is one such case that has
been successful. It occurred because of AGOA. This kind of supply chain type investment
can be of interest to enterprises with strong export competitiveness in labor intensive
manufacturing. Among Asian countries, China, Korea, Taiwan, and Malaysia can be
potential sources of such investments.
C. Accounts of Asian Private Companies in Africa

5.42 The following are selected anecdotal accounts of Asian private companies that
have invested in Africa. These unique stories provide insight as to future expansion of
trade and investment in Africa.
C.1 SAMSUNG CORPORATION (KOREA)
5.43 Overview. Samsung Corporation is one of the Korea’s leading conglomerates in

the field of overseas trading, engineering, construction, and housing development. Their
annual sales of US$25 billion in FY 2001 exceeded the GDP of most countries in
Sub-Saharan Africa, except South Africa and Nigeria.32
5.44 The company was established in 1938 and was designated by the Korean
government as the country's first General Trading Company (GTC) in 1975. In 1996, just
before the Asian financial crisis, the company merged with Samsung Engineering &
Construction and now has three major business groups: trading, construction, and
housing development. Trading is the backbone of the company’s business. Its main export
items include semiconductors, plants, chemicals, and textiles while they import energy,
chemicals, and machinery. In addition to international trade, the company also undertakes
project organizing business and natural resources development and invests in
privatization projects in developing countries.
5.45 Business in Africa. Among the four large conglomerates in Korea, Samsung
Group is maintaining a positive position in overseas investment. Samsung Corporation
32
Corporate Brochure 2001, www.samsungcorp.com/investor/index.html
5-17
has four branches in Sub-Saharan Africa, which are in Angola, Ghana, Nigeria, and South
Africa. According to Mr. Carlos Kim, Manager of Plant Division in the Trading Group,
the company’s interest in Sub-Sahara Africa is focused on oil, electronics,
telecommunication, mobile phones, and engineering and construction. In particular, for
the oil sector, Mr. Kim said that Samsung perceives the countries around the Gulf of
Guinea and Angola as being a promising area for its oil-related business. In fact, the
company has made a sizable investment in Angola and details are elaborated in the next
section.
5.46 Angola and Samsung. With economic reforms underway in Angola, foreign
investors have found greater business opportunities in the energy, mining,
telecommunications, manufacturing, agriculture, and fishing industries. The fact that
Angola is ranked third in the world for new oil discoveries and is Sub-Saharan Africa’s
second largest oil producer will accelerate new business ventures. 33 Angola is now
Korea's second largest trading partner in Africa and its seventh largest supplier of crude
oil. In 2000, Korea imported US$654 million of oil from Angola and exported US$17
million in cars and auto parts.34
5.47 As indicated before, Samsung won contract in Angola to build an oil refinery and
offshore exploration platforms. 35 This was brought about by a bilateral agreement
between Multilateral Investment Guarantee Agency (MIGA) and the Korea Export
Insurance Corporation (KEIC) The US$2.7 billion oil refinery will produce 200,000
barrels per day, mainly for export markets. Samsung has also contracted to build oil and
gas production platforms and storage facilities worth US$1.7 billion. According to a
published article in Korea Trade and Investment, this contract was facilitated, where both
agencies will cooperate in re-insuring and co-insuring projects in order to share risks and
increase the availability of insurance for Korean investors.36
5.48 The article also indicated that the agreement originated from the desire of
Samsung to seek coverage for its intended resource-based projects in Central and West
Africa, mainly for oil projects in Angola. Moo-young Lee, Director, International
Relations, KEIC said in the article, “MIGA approached KEIC about a Memorandum of
Understanding (the agreement) earlier in 2001, but there was no pressing need to have
such an arrangement between our organizations. However, in April Samsung approached
both of our institutions about their projects in Sub-Saharan Africa, which resulted in an
accelerated conclusion of the MOU.” Mr. Lee also added that one of the reasons for a
conclusion of the MOU was the need for additional coverage and risk sharing in view of
the large-scale project.
5.49 In terms of mitigation of political risks, Mr. Kee-jung Kim indicated in the article,
“As capital investments of this sort are typically vulnerable to political risks, we must
33
Angola -trade and investment guide, Embassy of Angola in USA, 2001,
www.angola.org/business/Angola_Trade_Brochure_00.pdf
34
COMTRADE, United Nations.
35
Source: www.angola.org/news/NewsDetail.cfm?NID=2690
36
“Spurring Korean Investment Overseas- MIGA’s Korean Connection”, Korea Trade and Investment,
Vol.19, No.4, July-August 2001, pp17.
5-18
seek ways to mitigate them to the fullest possible extent, which of course, includes
coverage by MIGA and KEIC.”
5.50 In addition to the export insurance scheme in the above, the Korean ODA loan
was historically used to promote investment in developing countries. The Economic
Development Cooperation Fund (EDCF), under the management of the Ministry of
Finance and Economy with Korean Export-Import Bank, provides soft loans to
developing countries under the conditions of a 1-5% interest rate, 10-30 years maturity,
and the Won denominated and tied to Korean firms for procurement. Although data is
limited, it appears that Samsung Corporation has made a continued effort to utilize this
loan, according to the following table.
Table 5-2 Samsung’s Project with EDCF (1987-1996)

Amount
Project Country Year
(Million US$)
Supply of Passenger Coaches Nigeria 1987/91 25
Petroleum Product Storage Depots Ghana 1990 13
Telecom Expansion & Modernization Philippines 1990/94 16
Telecom Expansion & Modernization Poland 1992/96 70
Syringe Plant Mongolia 1992 26
Greater Khulna Power Distribution Bangladesh 1993 13
LPG Cylinder Plant Ghana 1994 8
Mindanano Power Transmission Philippines 1994 10
Container Depots Myanmar 1994 15
Steel Mill Modernization Hungary 1995 25
Rural Telephone System Ecuador 1995 15
Telephone Exchange System Sri Lanka 1996 30
Source: merchant.samsungcorp.com/project/
5.51 Figure 5-1 shows the share of contract amount (US$ Million) of Samsung’s
EDCF projects, compared to all EDCF projects pledged by Korean Export Import Bank.
For details on Samsung’s recent project in Ghana, see Box 5-1.
Figure 5-2 Samsung’s Share in Korean EDCF Projects
5-19
US$ Million
450 397 405
400 Samsung's EDCF Project

Total EDCF Project
350
300
250 194
200
127 130 130
150
100 39
21
50
0
1994 1995 1996 1997 Year
Source: merchant.samsungcorp.com/project/
Box 5-3 EDCF Projects in Ghana
The Korea Export Import (Exim) Bank recently signed a US$38.2

million EDCF loan agreement with the Ministry of Finance and
Economic Planning of Ghana in relation to the Buipe-Bolgatanga
Petroleum Products Pipeline Project. Along with the EDCF loan,
the Exim Bank decided to issue a US$11.9 million advance
payment guarantee and US$4.0 million performance guarantee in
favor of the Ministry of Energy (MOE), the project-executing
agency. The objective of the project is to provide a reliable
transportation and distribution system of petroleum products from
the south to the north by constructing a 265 km petroleum
products pipeline from Buipe to Bolgatanga, which is expected to
improve the socio-economic lives of the rural and agricultural
population in these areas. Samsung Corporation received the order
for the construction and will create the pipeline design, procure
equipment and materials, install and commission the pipeline,
supervise and inspect the development, and provide consulting
services. The project should be completed in August 2005.
Source: Korea Exim Bank website, June 2003, www.koreaexim.go.kr/web/eng/exim/M01/main.html
C.2 M.K. INTERNATIONAL INC. (KOREA)
5.52 Overview. M.K. International Inc. is a medium-sized engineering and trading

firm. It was established in 1983 as the parent company of the present M.K Group. The
company diversified into industrial engineering for small and medium scale projects.
New additions to its business were undertaken including international import and export,
5-20
manufacturing of industrial equipment and machinery, and consulting services for

various engineering projects domestically and in developing countries. Of these, the
primary concern of M.K is the provision of engineering services including feasibility
studies, manufacturing, commissioning, and maintenance.37
5.53 M.K expanded its business territory worldwide in the latter half of the 1980s. The
expansion included Bolivia, Brazil, China, France, Ghana, Japan, Madagascar, Malaysia,
Mongolia, Morocco, Nigeria, Russia, Singapore, South Africa, Taiwan, United Kingdom,
and the US.
5.54 Business in Africa. Focusing on the business activities in Sub-Saharan Africa,

M.K has six local subsidiary companies in Ghana, Madagascar, Malawi, Namibia,
Nigeria, and Senegal that focus mainly on small- and medium-scale trade and investment
activities (see Table 5-2 and Table 5-3).
5.55 The company’s main strength lies in the investments it made to manufacture a
variety of daily product needs for domestic market. For example, in 1986 M.K.
established M.K. Nigeria Ltd., which is focused on trading, engineering, and consulting.
In Malawi, M.K. Malawi Ltd. was founded in 1994 for manufacturing tableware.
According to Dr. Hae-Jung Jung, the President of M.K. International Inc., about 40% of
the company’s annual sales are generated by the African market.
5.56 The success of company in Africa is partly the result of the president’s large
circle of contacts in African diplomatic circles. Starting as Representative of
Korea-Nigeria Businessmen Association in 1988, he was successively appointed as
Chairman of Korea-Madagascar Business Association (1994), Director General of
Korea-Africa Association (1995), Organizer of Asia-Africa Business Forum in Seoul
(1999), and Honorary Consul of Sierra Leone (2001). Recently, he was also elected as the
Vice President of the Asia Africa Chamber of Commerce (AACC) during the U.N. High
Level Meeting held in Morocco in April 2003.38
5.57 Unique Philosophy for Marketing in Africa. The president of M.K has a unique
philosophy in approaching the African market. His believes that there are two critical
points to achieving success in Africa (i) maintain patience and (ii) never be too proud of
your own status. He also believes that compromise is necessary on both sides with
regards to business standards and practices and that an outsider should never try to
impose his/her systems and/or technology on the domestic market, but instead they
should respect the domestic market and understand its needs. He recommended the
following procedure for success: (i) convert advanced technology into adaptable
technology that will be suitable to the domestic market and (ii) prepare the investment
plan according to the market size.
5.58 He also indicated that human networks support development of business relations
by creating mutual trust and eliminating risks in malpractice and misunderstanding,
which may present a disadvantage for Asian firms vis-à-vis European firms who have
37
Company brochure 2000, MK International, Inc.
38
Source: http://news.empas.com/show.tsp/20030423n03987/
5-21
already established human networks through their long business histories.
5.59 In terms of product quality, he indicated that Asian products are still believed to
have lower quality as compared to European products and that there is a need to improve
the image of products from Asia from low-cost and low-quality to high quality. European
products still have advantages in their perception in the domestic market.
Table 5-3 MK’s Local Subsidiary Companies
Branch located Year established

1 Seoul, Korea (HQ) 1983
2 Nigeria 1986
3 Malawi 1994
4 Namibia 1994
5 United States 1995
6 Madagascar 1996
7 Bangladesh 1996
8 Sri Lanka 1996
9 Spain 1997
10 Ghana 1998
11 Malaysia 1999
12 Senegal 1999
13 Mongolia 1999
14 China 2000
15 United Kingdom 2001
Source: At Your Service Worldwide, MK International Inc. 2000
5-22
Table 5-4 MK’s Performance Record of Engineering Projects in Africa
Building design and construction supervision
Year Project description Country

2000 Accra Millennium Tower (AMT) Project Ghana
Equipment and machinery

Year Project description Country
Plastic (PVC) Pipe Manufacturing Plant Nigeria
Blow Molding Plant for Jerry Can Nigeria
Injection Molding Plant Nigeria
1994
Corn Flakes and Corn Chip Making Plant Nigeria
L.P.G Storage Tanks and Filling Plant Ghana
Vegetable (Palm) Oil Refinery Plant Nigeria
Plastic Film and Shopping Bag Making Plant Malawi
1995 Textile Fabrics Manufacturing Plant Nigeria
Palm Oil Refinery Plant Nigeria
Melamine Tableware Making Plant Madagascar
1996 Plastic Film and Shopping Bag Making Plant Madagascar
Plastic Bottle (PE/PVC/PET/PC) Manufacturing Plant Nigeria
Exercise and Note Book Making Plant Nigeria
Envelope (Document, Letter & Airmail) Making Plant Ghana
1997
Disposable Paper Cup/Dish Manufacturing Plant Nigeria
PVC Profile Extrusion and PVC Window Mfg Plant Nigeria
Recycled Plastic Container Manufacturing Plant Nigeria
1998
Aluminum Window Manufacturing Plant Nigeria
Soybean Milk/Bean Curd/Source Manufacturing Plant Nigeria
1999
Plastic Foam Sheet Mfg/Vacuum Foaming Plant Nigeria
Aluminum Cookware Manufacturing Plant Mali
2000
Carton Box Manufacturing Plant Mali
Industrial Park Project for 16-Factories Mozambique
2001 Roll Forming Roofing Sheet Forming Plant South Africa
Vegetable Oil Extraction Plant Nigeria
Computer Assembly Plant South Africa
2002
Industrial Parks South Africa
Source: mkintl.co.kr
C.3 TEX-RAY INDUSTRIAL CO., LTD. (TAIWAN)
5.60 Company Profile. Tex-Ray Industrial Co., Ltd. is a powerful apparel company in
Taipei. This company was founded in 1978 and was listed on the Taiwan Stock Exchange
in December 1998. Recently, Tex-Ray has been focusing on research and development of
cotton products. Its product, Ultra Mercerized Cotton Color Yarn, won the products
competition held by the Taiwanese government. The capital stock of the company was
5-23
NT$ 1.3 billion (US$40, million) and there are 4,500 employees.39 The company’s annual
sales were NT$ 5.1 billion (US$150 million). Sales subsidiaries have been established in
Los Angeles and New York and the raw material procurement company was recently
created in China, in addition to a number of production factories abroad.
5.61 Overview of Investment Activities in Swaziland. Tex-Ray Industrial Co., Ltd.

founded three factories in Swaziland (see Table 5-4 and Table 5-5). Each is described
below.
5.62 Garment Factory in Swaziland. Proton Investment Swaziland, Ltd. and Tex-Ray
Investment Swaziland, Ltd. were founded in 2001 and 2002 respectively. Among the
employees, there are six Taiwanese executive officers and fifty-six employees from
China. The products of this factory are exported to the United States. The main reason for
investing in Swaziland was to obtain benefits from AGOA.
Table 5-5 Tex-Ray’s Garment Factory in Swaziland
PROTON INVESTMENT SWAZILAND (PTY)., LTD.

Established Oct. 2001 (Joint Venture)
Facility 5,000SM
Employees 800
Main Items T-Shirts, Polo Shirts, Turtleneck Shirts, Pants
Maximum Capacity (Pcs/Month) T-Shirts 600,000; Polo 400,000; Turtleneck 500,000
TEX-RAY INVESTMENT SWAZILAND (PTY)., LTD.

Established Oct. 2002
Facility 11,000SM
Employees 1,500
Main Items T-Shirts, Polo Shirts, Turtleneck Shirts, Pants
Maximum Capacity (Pcs/Month) T-Shirts 1,200,000; Polo 700,000; Turtleneck 1,000,000
5.63 Spinning Factory in Swaziland. Taitex Investment Swaziland, Ltd. was

established in March 2002. Since local procurement of raw materials is a requirement of
AGOA (October 2004), Tex-Ray decided to open a spinning factory in Swaziland. There
are three Taiwanese executive officers and nineteen from China. The products are sold
domestically and will be sold to Tex-Ray’s factory in South Africa.
39
Taiwan New Dollar. NT$1 = US$0.03 as May 2004.
5-24
Table 5-6 Tex-Ray’s Spinning Factory in Swaziland
TAITEX INVESTMENT SWAZILAND (PTY)., LTD.

Established March 2002
Facility 25,000SM
Employees 400
Main Items 100% Cotton Combed Yarn, 100% Cotton Carded Yarn,
100% Spun Polyester Yam, Top Dyeing Yarn, T/R
Polyester / Rayon Blend Yarn, R/C Rayon / Cotton
Blend Yarn, T/C Polyester / Cotton Blend Yarn, CVC
Polyester / Cotton Blend Yarn
Maximum Capacity (Pcs/Month) 1.0M LB/ Month
5.64 Networking with Taiwanese Entrepreneurs and Local Enterprises. As of

2002, there were sixty Taiwanese companies operating in Swaziland. Most of these
companies are in the textile industry and hence, have organized a union, with the
president of Tex-Ray as the chairman. The union can negotiate with the Government of
Swaziland on behalf of the textile industry in Swaziland.
5.65 Current Problems. With an average monthly salary of US$120, labor unions are
requesting annual wage increases for the labor. This may result in a loss of cost
competitiveness. The local exchange rate is unstable, which has a serious impact on the
export competitiveness of Swaziland’s products. For example, in 2002 an exchange rate
appreciation occurred where US$1 was initially equivalent to 12.0 Lilangeni, but
increased to 7.5 Lilangeni. Swaziland also experiences a severe lack of middle
management and skilled labor. According to a Tex-Ray officer, three-months of training
is necessary for new labor, which negatively impacts on the production efficiency and
cost effectiveness of each factory. More importantly, there are few Tex-Ray factories in
Swaziland that can produce raw materials. Therefore, the majority of raw materials must
be imported from other countries and Tex-Ray’s local companies will no longer be
favored by AGOA after 2004.
5.66 Desirable Institutional Improvements for Tex-Ray. Tex-Ray indicated that the
government needs to increase its leadership with regards to the labor unions and that an
intervention by the government may be necessary to bring things under control. They
used the example of Mexico and its subsidizing scheme for labor training as a possibility
for the government.
5.67 Future Prospects. The textile industry of Swaziland is strongly influenced by

American preferential treatment. Tex-Ray’s factories in Swaziland must continue to
undertake raw material production so that they can be favored by AGOA in the future.
Tex-Ray established its own labor union in each factory and forced employees not to
participate in national unions in order to avoid conflicts and time-consuming negotiations
with employees.
5-25
C.4 INDIAN INVESTMENT IN SOUTH AFRICA
5.68 Bilateral Relations.40 A strategic partnership is the basis for India’s bilateral
relations with South Africa. While there has been a steady increase in the volume of trade
and commerce between the two countries, long-term cooperation in important areas such
as defense, health, mining, and housing and public works have continued to the mutual
benefit of both the countries. The South African Ministers of Public Works, Health, and
Mines visited New Delhi in May, July, and November (2001) respectively.
5.69 There has been an ongoing dialogue between India and South Africa to establish
projects focused on technology transfer and joint production, mostly aimed at long-term
defense industrial production. There has also been consistency in the exchange of training
programs between the countries’ defense forces. Major Indian pharmaceutical companies
manufacturing anti-retroviral drugs to fight HIV/AIDS have registered their products in
South Africa. This will enable these companies supply their formulas to other
Sub-Saharan African countries.
5.70 The Confederation of Indian Industry (CII), jointly with the High Commission of
India in South Africa, organized a Made in India Show in Johannesburg (18-21 July
2001). Over 70 Indian companies participated in the show. CII also organized an
Enterprise India Exhibition of Indian small and medium sized enterprises, products, and
services in Durban (19-21 September 2001).
5.71 Investment Cases. UB Group of India, the largest Indian investor in South
Africa initially invested US$20 million in a local-owned brewery, National Sorghum
Brewery, and has invested US$6 million in Mabula Game Lodge, a tourism project. They
have since expanded their operations and investments in South Africa.
5.72 Tata’s operations in South Africa include three companies. First, Tata Africa
Holdings is responsible for bringing FDI to South Africa for viable projects. They are
exploring various investment projects in South Africa, particularly in mining. Second,
Tata Automobile Imports assembles, distributes, and sells Tata trucks and buses. For
marketing of Tata trucks, the group entered into a joint venture agreement with ERF Ltd.,
a subsidiary of DORBYL of South Africa. Third, Concilience Technologies was
undertaken as a joint venture between Tata Consulting Services and J&J Group South
Africa to provide IT services. Tata International, the international business gateway for
the Tata Group, has subsidiaries in Ghana, Mozambique, Namibia, Tanzania, Uganda,
Zambia, and Zimbabwe.
5.73 Ranbaxy, India’s largest pharmaceutical company, has operated a wholly owned
domestic subsidiary in South Africa since 1993. It also has had a wholly owned domestic
subsidiary in Nigeria since 1987 and in Egypt since 1996 and has distributional
agreements with domestic pharmaceutical suppliers in Mauritius, Zambia, and Zimbabwe.
Other Indian pharmaceutical companies such as Cipla, Millennium Pharma, Eicher
International, NIIT, Aptech, and Allied Chemicals also have operations in South Africa.
40
Annual Report 2001-2002, Ministry of External Affairs, Government of India
5-26
5.74 Shriram Industrial Enterprises Ltd. has invested US$7 million in a car
air-conditioner manufacturing unit near Durban.
5.75 Public sector enterprises based in South Africa include the State Bank of India,
Exim Bank, Bank of Baroda, National Small Scale Industries Corporation, and the
Government of India Tourist Office.
C.5 SINGAPORE’S INVESTMENT IN AFRICA
5.76 Lekim Textiles Industries Pvt Ltd. Lekim Textiles is a Singapore-based

company with textile manufacturing capabilities in South Africa and Lesotho. Its
manufacturing facilities in Africa are purely export-driven and target the United States
and European markets.
5.77 The company first moved its manufacturing capabilities to South Africa in 1997.
The draw to Africa was inexpensive labor costs, duty exemptions, and a pre-existing
factory. They selected South Africa over the other Africa regions because of its
comparatively better infrastructure, similarity in the legal system, and the use of the
English language. Attractive incentives offered by Lesotho trade officials encouraged the
company to open a second factory in 1998. The Lesotho government secured funding
from the World Bank to build the factory in exchange for technology transfer and
manufacturing skills from Singapore. As of now, Lekim Textiles remains the only
Singapore factory in Lesotho, although other garment and textile firms from Taiwan have
opened factories there as well.
5.78 Tolaram Corporation Limited and Eurochem Technologies Corporate Pte.

Ltd. Tolaram Corp is a Singapore-based investment holding company whose group of
companies have been doing business in Africa for almost 30 years. Principal activities
include trading in paper, sundry items, electronics, and other consumer goods and
manufacturing products such as chemicals, textiles, and noodles.
5.79 At present they have key business interests in eight Africa countries – Congo,
Ghana, Kenya, Mozambique, Nigeria, South Africa, and Zimbabwe. They also have
manufacturing facilities in Nigeria and South Africa that cater to the domestic market.
They plan to further expand their presence in West African countries.
5.80 The Managing Director of Tolaram Corp is confident of Africa’s potential and
believes that Singaporean companies need to have a more hands-on approach to doing
business in Africa. That is, they should not depend on finding local partners, but should
set up local offices to do business. He indicated that Singaporean businessmen tend to
associate hardship with entering Africa markets, which is a misleading perception.
5.81 Eurochem Technologies, a sister company of Tolaram Corp, provides

engineering services in the petrochemical industries. It has established subsidiary
companies in Nigeria, Lekki EPZ, Vivia Methanol, and Azinova Polyolefins, to
implement UOP/Hydro methanol-to-olefins (MTO) process units. According to the
5-27
Director of Eurochem, Nigeria has the ingredients for a successful investment that is
specific to Eurochem’s nature of business. First, it has abundant resources of oil and
natural gas at highly competitive prices. Second, Nigeria’s sizeable population presents a
substantial market for orders in petrochemicals. Third, the industry is still relatively
undeveloped, thus investing in Nigeria is equivalent to investing in an emerging market.
5-28
Studies on Africa-Asia Trade and Investment Relations (B) Chapter 6. Recommendations
RECOMMENDATIONS
6.1 Strategies Recommended. The target is to boost trade and investment activities
through win-win collaboration between the countries in Africa and Asia. Three types of
potential development for export-oriented and domestic market oriented investment to
boost trade have been identified as potential paths to reach the goal. In line with one or
more of these types of scenarios, strategies must be taken by African countries, Asian
countries, and also by the international donor community, as summarized below (see
Figure 6-1: Strategies and Goal).
6.2 Asian Market. For Asian countries as well as others, Africa is still an attractive
origin of natural resources that are traded as a primary commodity. For a large-scale
resource exploration project, government based financial cooperation is frequently
mobilized, accompanied by private sector investment to provide processing facilities,
technical assistance, and trading business. A Korean investment case in Angola is an
example of an energy resource-led ODA and FDI mobilization. Agro-products such as
agriculture and marine products, processed by drying or canning, are popularly traded
items occasionally associated with direct investment for processing. On the other hand,
labor-intensive products such as textiles and apparel are not likely to be competitive in the
Asian market while there are still a number of competitors in China and South Asia. This
is in contrast to the US and European markets.
6.3 US/European Market. The strategy taken by the US and the EU in granting
non-tariff import status to African countries is showing success in several countries by
inducing Asian direct investment. This is true in countries such as South Africa, Lesotho,
Swaziland, Mauritius, and Malawi in textile and apparel industries funded by investments
from Taiwan, India, and Singapore. Because of Africa’s historical background with major
European countries that have had a long history of trade and human networks, European
countries appear to have a comparative advantage in the business network within
respective African countries. A reliable business network is often a lacking factor for
Asian countries which are rather new to business in Africa, except for Indians, who have
a lengthy history in some East African countries. Labor-intensive and export-oriented
investments are relatively easy to organize, if the host country provides a bond-free
export processing zone (EPZ), allowing the import of all necessary supplies free of tariff
including second-hand machinery. With this, the host country benefits by employment
generation and foreign exchange earnings.
6.4 Domestic Market. A conventional type of Japanese investment in electric home

appliances and textile investments accompanied with technical transfer and employment
generation, used to be feasible under the protected tariff regime. With the lowering of
tariffs and a loss in price competitiveness, this type of investment seems to have lost its
feasibility. Nevertheless, there seems to be abundant opportunities in small and medium
6-1
scale investments in consumer products, due to the fact that a large portion of industrial
consumer goods relies on imports. The consumers’ general preference and image of
imported goods favors European made products, while Asian products are unfamiliar and
tend to be considered of low quality. Some cases of Asian direct investment, from Korean
and India for example, are targeting the niche domestic market by locally producing daily
necessities for local consumers. This was not possible by the large scale or mass
production business model, which was the typical investment approach of industrialized
countries like the US, EU, and Japan.
6.5 African Regional Market. The African domestic market size could become
sufficiently large if regional integration is realized in the form of a common tariff zone or
regional trade agreement (RTA). There are four notable economic zones being established
in Africa: The Economic Community Of West African States (ECOWAS), Communauté
Économique et Monétaire de l'Afrique Centrale (CEMAC), Common Market of Eastern
and Southern Africa (COMESA), and Southern African Development Community
(SADC). The population size for each exceeds 100 million, except for CEMAC, while
COMESA is the largest with 356 million people. (Table 4-6) Several major automobile
plants already operate in South Africa, including BMW, Mercedes, and Toyota, targeting
neighboring markets in addition to South Africa. In 2002, two Japanese electrical
appliance manufacturers, Toshiba and Sharp, established assembly factories in Egypt, as
an entry point into the market of COMESA. While there are still remaining issues in the
practical effectiveness of those economic zones, the global trend suggests the importance
of regional integration. One of the strategies would be to develop a regional hub with
sufficient infrastructure for accommodating FDI with concentration of services in trade,
finance, transportation, communication, and other service infrastructure. South Africa
plays the role of the hub for Southern Africa, as Egypt does in Northern Africa. The
United States Agency for International Development (USAID) is assisting in its program,
Trade for African Development and Enterprises (TRADE), to develop so-called Regional
Hubs for Global Competitiveness in three regional missions of USAID: Acra (Ghana),
Nairobi (Kenya) and Gaborone (Botswana).
6.6 As has been reviewed, there are varied and mixed potential directions for trade
and investment development in Africa, not only in labor-intensive and/or export-oriented
projects. The recommended approach is to provide a wide variety of potential strategies
to be selected by each African country based on its resource endowment and other
competitive factors for trade and investment. Further studies on African countries’
endowment are needed in order to formulate individual trade and investment
development strategies for individual African countries.
6.7 Strategies for Trade and Investment Development. The target is to boost trade
and investment activities through win-win collaboration between Africa and Asia. Three
types of potential development for export-oriented and domestic market oriented
investment to boost trade have been identified as prospective paths to reach the goal. In
line with one or more of these types of scenario, strategies must be taken by African
countries, Asian countries, and the international donor community, as summarized in the
following (see Figure 6-1: Strategies and Goal).
6-2
6.8 African Countries. African economies, in general, have been protected by high
levels of tariff and non-tariff barriers for foreign trade and investment. However, import
tariff rates are gradually declining because of the acceptance of a free trade regime and
privatization of state-owned enterprises, in coordination with international donor
community. Consequently, an import substitution policy with a high rate of tariff
protection became an ineffective policy for industrial development and employment
generation. A key word of the trend is “open economy” in which the free flow of foreign
business in various sectors and products are able to enjoy both export-oriented and
domestic market-oriented trade and investment. The following are recommendations to
be considered by African countries.
• Environment for Small- and Medium-Sized Business: An enabling environment

for trade and investment that is able to accommodate small- and medium-scale
investment and trade. There are a variety of small- and medium-scale business
opportunities targeting the domestic market. The business infrastructure for
trade, particularly licensing, customs, and transportation, needs to be developed
so that foreign small- and medium-sized business would be better able to engage
in business. It should be noted that compared to large-scale enterprises, SMEs
are weaker in political influence with regards to their needs for a business
environment and require reliability and predictability in their business
environment. If successful, SMEs bring comparatively larger employment
opportunities against invested capital.
• Credit worthiness and reliable financial transaction system. Because of the lack
of reliable financial transaction environments, Dubai is playing the trade service
role. They provide line of credit mechanisms by banks, mixed commodity
container shipping arrangements for the small-sized markets, and a meeting
place for buyers and sellers at an off-Africa location. This kind of function
should be able to be provided at hub locations in Africa with a government
commitment to provide security and fair business transactions.
• Natural resource oriented investments. Natural resource oriented investments,

such as in oil and mineral resources are the primary attractive investment
opportunity in African countries. Increases in value added are a serious issue
because the world’s commodity prices are at a low level. Natural resource based
businesses tend to be largely affected by domestic political and institutional
conditions. A competitive environment needs to be expanded for efficiency and
higher profitability.
• Credit risk. There is a limitation in providing export credit and insurance by

Asian country governments due to the poor credit rating of many of African
countries. Private capital cannot be mobilized without government support in a
high-risk environment. Efforts are needed by African countries to improve their
credit ratings.
• Economic Zones and Regional Trade Agreements. Economic Zones and

Regional Trade Agreements (RTA) are being created within Africa. Efforts by
6-3
African countries are needed to make the RTAs effective to bring about trade and
investment in the area. A strategic plan to establish regional hubs should be
initiated through regional cooperation within Africa.
6.9 Asian Countries. Asian countries have an historical disadvantage compared to

European countries. However, by expanding their own network and utilizing comparative
advantages, particularly through small- and medium-size businesses, an elevated level of
collaboration between these two regions can be achieved. The following are
recommendations.
• For Asian firms there is a disadvantage in the human network compared to

European firms, who have an established human network from their long history
of conducting business in Africa. A human network supports developing
business relations by creating mutual trust and eliminating risks from
malpractice and misunderstanding. It is recommended that each Asian country
should have a wide range of information exchanges, movement of people,
technology transfer, and products exchange by utilizing government supported
promotion facilities.
• There is a need to improve the image of products from Asia, as they are viewed
as low cost and low quality in many African countries. European products hold
an advantage because they are viewed as high quality in some African countries.
It is recommended that Asian countries improve their images of product and
technology by enhancing communication and exchange.
• Investment projects in manufacturing targeted toward domestic markets need to

be adjusted for small- and medium-size markets with appropriate technology.
Once these conditions are met, there domestic production capacity is possible
because it is quite limited. This area can be a comparative advantage for Asian
business, particularly from newly industrialized economies including Korea,
Taiwan, Malaysia, and India.
• As African sub-regional RTAs are in development, region-to-region cooperation,

for example ASEAN, can be another aspect of promoting a renewed Asia-Africa
alliance.
• ODA loans can be used to attract donor country companies to work with the
recipient country, particularly if the ODA loan or grant fund is associated with
private sector investment and trade activities. Given that Asian countries are still
unfamiliar with many African countries, stages of trade and investment relations
need to be developed with government-assisted intervention. As the bilateral
economic relations between Asian and African countries develop, more
market-oriented programs to promote private sector trade and investment can be
utilized by mixing government intervention against market mechanisms.
6.10 Donor Community. The following are recommendations for international donors.
6-4
• In applying for export credit or export insurance by Asian countries, lowering

the country risk is an issue beyond the capability of individual countries. The
international donor community can play an important role to encourage
improvements in credit ratings of African countries so that more African
countries are eligible for bilateral trade and investment promotion schemes.
• Both international and bilateral donors can provide technical assistance to

improve human resources to create a sound business environment, enhance
entrepreneurship, and establish institutional framework for market mechanism.
• The framework, organization, and effectiveness of regional economic zones are

currently being left to the member countries’ initiative. The international donor
community can assist in RTA development by strengthening its function through
technical assistance provided to those RTA secretariats.
• By creating a multilateral trade system under the WTO, it is recommended that

the donor communities discuss the application of the concept of special and
differential treatment of developing countries announced in the Doha
Declaration to adjust the system to a free trade regime. This is important for
African countries, particularly the least developed countries (LDC), in opening
their economy to world trade.
6-5
Table 6-1 Economic Zones in Africa
Total
Establis
Name Member Countries Populatio Note
hed
n*
Benin, Burkina Faso, 1975.5 239.7 ♦ To establish common tariff and market
Cote d’Ivoire, Gambia, million area among West African nations.
ECOWAS (Economic Ghana, Guinea, Guinea ♦ Establishment of common currency
Community of West Bissau, Liberia, Mali, unit was agreed in 2000.
African States) Niger, Nigeria, Senegal,
Sierra Leone, Togo, Cape
Verde (16 countries)
Cameroon, Gabon, 1966.1 31.7 ♦ Common currency unit, CFA, is in use
CEMAC (Central Africa Congo, Central Africa, million ♦ Correspond to ECOWAS
Economic and Monetary
Chad, Equatorial Guinea
Community)
(7)
Eritrea, Djibouti, 1994.12 356.9 ♦ Free Trade Agreement was signed
Ethiopia, Kenya, million among 9 countries of the members.
Uganda, Rwanda, ♦ Common tariff has been agreed to be
Burundi, Mauritius, set up by 2004
COMESA (Common Malawi, Zambia, ♦ The goal is to liberalize all movement of
Market for East and
Zimbabwe, Swaziland, goods, capital and labor, to form a
Southern African States)
Namibia, Angola, Sudan, common market.
Seychelles, Comoro,
Madagascar, Egypt,
Congo DR (20)
6-6
Angola, Botswana, 1992.8 168.2 ♦ Formed by member countries of former

Lesotho, Malawi, million SADCC
Mozambique, Namibia, ♦ The goal is to abolish all tariff and
SADC (Southern Swaziland, Tanzania, non-tariff barriers within the region
African Development
Zambia, Zimbabwe, ♦ To establish Southern African Free
Community)
South Africa, Mauritius, Trade Area by 2012
Seychelles, Congo DR
(14)
Note: Population data from the World Bank Publication
Source: JCIF Market Data Sheet “World Economic Zone” (February 2003)
6-7
Figure 6-1 Strategies and Goals

(Past & Current) (Goal)
Policies by African countries Strategy by African Countries

- Import substitution - Business environment
- Export Promotion development
Potential for Trade and Investment Development - SME trade and investment
Among Asian and African Countries - Higher value added for
resources
- Improve credit ratings
Strategy - RTA as expanded regional
Business Environment for
Trade and Investment in Type-1: Export to Asian Market market
African countries - Natural resource based goods
- Intermediate goods
- Natural resource
- Human resource Type-3: Export to Third
- Domestic market Country Market and Supply
- Human network Chain Linkage
- Country risk - US and Europe market
- Labor Intensive model
Strategy by Asian Countries

Type-2: Domestic Market Strategy - Develop human network
- Improve image of products
- Needs for variety of consumer goods - SME investment opportunity
Policies by Asian Countries - Regional market integration
- Make use of African RTA
- ODA as instrument to induce
- Bilateral ODA
trade and investment
- Human Network
6-8
6-9
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• UN Comtrade
• World Bank. World Development Indicators
• World Trade Organizations
R-5
Studies on Africa-Asia Trade and Investment Relations (B) Appendix A
Appendix A
Classification of Industries
Industries SITC Commodities
001 Live animals chiefly for food
041 Wheat (including spelt) and meslin, unmilled
042 Rice
043 Barley, unmilled
044 Maize (corn), unmilled
045 Cereals, unmilled ( no wheat, rice, barley or maize)
054 Vegetables, fresh, chilled, frozen/preserved; roots, tubers
057 Fruit & nuts (not including oil nuts), fresh or dried
075 Spices
121 Tobacco, unmanufactured; tobacco refuse
222 Oil seeds and oleaginous fruit, whole or broken
Agriculture, forestry, fishing
223 Oils seeds and oleaginous fruit, whole or broken
232 Natural rubber latex; natural rubber and sim.nat. gums
244 Cork, natural, raw & waste (including in blocks/sheets)
245 Fuel wood (excluding wood waste) and wood charcoal
246 Pulpwood (including chips and wood waste)
247 Other wood in the rough or roughly squared
261 Silk
264 Jute & other textile bast fibers, nes, raw/processed
265 Vegetable textile fibers and waste of such fibers
292 Crude vegetable materials, n.e.s.
941 Animals, live, n.e.s., including zoo-animals
271 Fertilizers, crude
273 Stone, sand and gravel
274 Sulphur and unroasted iron pyrites
278 Other crude minerals
281 Iron ore and concentrates
Mining 286 Ores and concentrates of uranium and thorium
287 Ores and concentrates of base metals, n.e.s.
289 Ores & concentrates of precious metals; waste, scrap
322 Coal, lignite and peat
323 Briquettes; coke and semi-coke of coal, lignite/peat
Petrol oils, crude, & crude oils obtained from bituminous
333
minerals
Manufacturing
011 Meat, edible meat offals, fresh, chilled or frozen
Resource-intensive industries 012 Meat & edible offals, salted, in brine, dried/smoked
022 Milk and cream
A-6-1
Manufacturing
024 Cheese and curd
025 Eggs and yolks, fresh, dried or otherwise preserved
034 Fish, fresh (live or dead), chilled or frozen
035 Fish, dried, salted or in brine smoked fish
036 Crustaceans and molluscs, fresh, chilled, frozen etc.
037 Fish, crustaceans and molluscs, prepared or preserved
046 Meal and flour of wheat and flour of meslin
047 Other cereal meals and flours
Cereal preparations & preparations of flour of fruits or
048
vegetables
056 Vegetables, roots & tubers, prepared/preserved, n.e.s.
058 Fruit, preserved, and fruit preparations
061 Sugar and honey
062 Sugar confectionery and other sugar preparations
071 Coffee and coffee substitutes
072 Cocoa
073 Chocolate & other food preptions containing cocoa
074 Tea and mate
081 Feed.stuff for animals (not including unmilled cereals)
091 Margarine and shortening
098 Edible products and preparations n.e.s.
111 Non alcoholic beverages, n.e.s.
Resource-intensive industries 112 Alcoholic beverages
122 Tobacco manufactured
211 Hides and skins (except furskins), raw
212 Furskins, raw (including astrakhan, caracul, etc.)
248 Wood, simply worked, and railway sleepers of wood
251 Pulp and waste paper
263 Cotton
291 Crude animal materials, n.e.s.
Petrol.oils, crude, & crude oils obtained from bituminous
333
minerals
334 Petroleum products, refined
335 Residual petroleum products, nes.& related materials
341 Gas, natural and manufactured
411 Animal oils and fats
423 Fixed vegetable oils, soft, crude, refined/purified
431 Animal & vegetable oils and fats, processed & waxes
611 Leather
612 Manufactures of leather/of composition leather nes
613 Furskins, tanned/dressed, pieces/cuttings of furskin
633 Cork manufactures
634 Veneers, plywood, improved or reconstituted wood
635 Wood manufactures, n.e.s.
641 Paper and paperboard
A-6-2
661 Lime, cement, and fabricated construction materials

662 Clay construct.materials & refractory constr.mater
663 Mineral manufactures, n.e.s
681 Silver, platinum & oth.metals of the platinum group
682 Copper
Resource-intensive industries
683 Nickel
continued
684 Aluminium
685 Lead
686 Zinc
687 Tin
689 Miscell.non-ferrous base metals employ.in metallgy
268 Wool and other animal hair (excluding wool tops)
277 Natural abrasives, n.e.s (including industrial diamonds)
278 Other crude minerals
288 Non-ferrous base metal waste and scrap, n.e.s.
651 Textile yarn
652 Cotton fabrics, woven
653 Fabrics, woven, of man-made fibres
654 Textile fabrics, woven, oth.than cotton/man-made fibr
655 Knitted or crocheted fabrics
656 Tulle, lace, embroidery, ribbons, & other small wares
657 Special textile fabrics and related products
658 Made-up articles, wholly/chiefly of text.materials
659 Floor coverings, etc.
667 Pearls, precious& semi-prec.stones, unwork./worked
691 Structures & parts of struc.; iron, steel, aluminium
692 Metal containers for storage and transport
693 Wire products and fencing grills
Labor-intensive industries
694 Nails, screws, nuts, bolts etc.of iron, steel, copper
696 Cutlery
763 Gramophones, dictating, sound recorders etc
764 Telecommunications equipment and parts
812 Sanitary, plumbing, heating, lighting fixtures
821 Furniture and parts thereof
831 Travel goods, handbags, brief-cases, purses, sheaths
842 Outer garments, men's, of textile fabrics
843 Outer garments, women's, of textile fabrics
844 Under garments of textile fabrics
845 Outer garments and other articles, knitted
846 Under garments, knitted or crocheted
847 Clothing accessories of textile fabrics
848 Art of apparel & clothing accessories, no textile
851 Footwear
894 Baby carriages, toys, games and sporting goods
895 Office and stationery supplies, n.e.s.
A-6-3
896 Works of art, collectors pieces & antiques

897 Jewelry, goldsmiths and other art. of precious m.
Labor-intensive industries
899 Other miscellaneous manufactured articles
951 Armored fighting vehicles, arms of war and ammo.
232 Natural rubber latex; natural rubber and sim. nat. gums
266 Synthetic fibers suitable for spinning
267 Other man-made fibers suitable for spinning & waste
269 Old clothing and other old textile articles; rags
282 Waste and scrap metal of iron or steel
511 Hydrocarbons nes, & their halogen and etc. derivatives
512 Alcohols, phenols, phenol-alcohols, and their derivatives.
513 Carboxylic acids, & their anhydrides, halides, etc.
514 Nitrogen-function compounds
515 Organic-inorganic and heterocyclic compounds
516 Other organic chemicals
522 Inorganic chemical elements, oxides & halogen salts
523 Other inorganic chemicals
524 Radio-active and associated materials
553 Perfumery, cosmetics and toilet preparations
554 Soap, cleansing and polishing preparations
562 Fertilizers, manufactured
572 Explosives and pyrotechnic products
582 Condensation, polycondensation & polyaddition products
583 Polymerization and copolymerization products
Scale-intensive industries 584 Regenerated cellulose; cellulose nitrate, etc.
585 Other artificial resins and plastic materials
621 Materials of rubber (e.g., pastes, plates, sheets, etc)
625 Rubber tires, tire cases, etc. for wheels
628 Articles of rubber, n.e.s.
642 Paper and paperboard, cut to size or shape
664 Glass
665 Glassware
666 Pottery
671 Pig iron, spiegeleisen, sponge iron, iron or steel
672 Ingots and other primary forms, of iron or steel
673 Iron and steel bars, rods, angles, shapes & sections
674 Universals, plates and sheets, of iron or steel
675 Hoop & strip, of iron/steel, hot-rolled/cold-rolled
676 Rails and railway track construction material
677 Iron/steel wire, wheth/not coated, but not insulated
678 Tubes, pipes and fittings, of iron or steel
679 Iron & steel castings, forgings & stampings; rough
773 Equipment for distributing electricity
781 Passenger motor cars, for transport of pass.& goods
782 Motor vehicles for transport of goods/materials
A-6-4
785 Motorcycles, motor scooters, invalid carriages

786 Trailers & other vehicles, not motorized
791 Railway vehicles & associated equipment
Scale-intensive industries 793 Ships, boats and floating structures
882 Photographic & cinematographic supplies
892 Printed matter
893 Articles of materials described in division 58
695 Tools for use in hand or in machines
711 Steam & other vapor generating boilers & parts
712 Steam & other vapor power units, steam engines
714 Engines & motors, non-electric
718 Other power generating machinery and parts
721 Agricultural machinery and parts
722 Tractors fitted or not with power take-offs, etc.
723 Civil engineering & contractors plant and parts
724 Textile and leather machinery and parts
725 Paper and pulp mill mach., mach for manufacturing .of paper
726 Printing & bookbinding machines and parts
727 Food processing machines and parts
728 Machine and equipment specialized for particular ind.
736 Mach. tools for working metal or met. carb., parts
737 Metal working machinery and parts
741 Heating & cooling equipment and parts
742 Pumps for liquids, liquid elevators and parts
Differentiated goods
743 Pumps & compressors, fans & blowers, centrifuges
744 Mechanical handling equip and parts
745 Other non-electrical mach tools, apparatus & parts
749 Non-electric parts and accessories of machines
763 Gramophones, dictating, sound recorders etc
764 Telecommunications equipment and parts
772 Elect. app such as switches, relays, fuses, plugs etc.
775 Household type, elect.& non-electrical equipment
776 Thermionic, cold & photo-cathode valves, tubes, parts
778 Electrical machinery and apparatus, n.e.s.
871 Optical instruments and apparatus
872 Medical instruments and appliances
873 Meters and counters, n.e.s.
874 Measuring, checking, analyzing instruments
885 Watches and clocks
898 Musical instruments, parts and accessories
951 Armored fighting vehicles, arms of war & ammunit.
531 Synthetic organic dyestuffs, etc. natural indigo & color lakes
532 Dyeing & tanning extracts; synthetic tanning materials
533 Pigments, paints, varnishes & related materials
Science-based industries
541 Medicinal and pharmaceutical products
551 Essential oils, perfume and flavor materials
591 Disinfectants, insecticides, fungicides, weed killers
Science-based industries 592 Starches, insulin & wheat gluten; albuminoidal subst.
A-6-5
598 Miscellaneous chemical products, n.e.s.

711 Steam & other vapor generating boilers & parts
712 Steam & other vapor power units, steam engines
713 Internal combustion piston engines & parts
751 Office machines
774 Electric apparatus for medical purposes, (radiolog)
792 Aircraft & associated equipment and parts
881 Photographic apparatus and equipment, n.e.s.
883 Cinematograph film, exposed-developed, neg.or pos.
884 Optical goods, n.e.s.
A-6-6
Studies on Africa-Asia Trade and Investment Relations (B) Appendix B
Appendix B
Japanese Companies in Africa

The following list of Japanese companies in Africa has been taken from Teikoku
Databank “Kaigai Kigyou Shinsyutsu Souran, KKSS (2003) (Directory of Overseas
Japanese Subsidiaries), Toyo Keizai, 2003, Japan.
Algeria Currency: AD
$1=72.5346AD
Name Year Founded Number of Sales Local share
Employees
Socitété Algéro Japonaise 1998.12 39 217million Sidem30%
d'Engineering et de Construction
Angola Currency: Kz $1=78.833Kz

Name Year Founded Number of Sales Local Share
Employees
Toyota de Angola, SARL 1994.6 Lonrho Int'l Ltd. Other
50%
Burkina Faso Currency: CFAF $1=520.05CFAF

Employees
Saphyto 1989 Sofitex 35%
Cameroon Currency: CFAF $1=520.05CFAF

Employees
ITOCHU Cameroon SARL 1982.1 7
Summit Motors (Cameroon) 1983.8 85 1.243billion
S.A.
Cote d'lvoire Currency: CFAF $1=520.05CFAF

Employees
Callivoire 1986
Toles Ivoire S.A. 1970.10 23 965million IPS.Group 53.37%
local25.53%
B-1
Egypt Currency: £E $1=6.17£E

Employees
Aricon Japan S.A.E. 2000.11
Egypt Otsuka Pharmaceutical 1995.4 319 50.48million local 25%
Co. S.A.E.
Fujitec Egypt Co., Ltd 1998.9 34 (1) 3.48million
General Motors Egypt S.A.E. 1985.7 700 local 49%, General
Motors Corp. 31
Melco-Mec Egypt for Elevators 1999.6 368 MEC 60%

& Escalators
Misr Japan-Allied Co., for 1996.7 404 329million IEDCO 25%
Rolling Stock Maintenance & Re
NM Agro Egypt Ltd. 1998.2
ORIX Leasing Egypt S.A.E. 1997.11 26 National Bank of Egypt
24% Commercial Int'l
Investment Co. 15
YKK Egypt S.A.E. 1996.7 97 (1)
Ethiopia Currency: Birr $1=8.55Birr

Employees
Ethio-Japanese Synthetic 1966.9 3,340 local 65%
Textiles Share Co.
Mitsubishi Ethiopia Trading Pte. 1967.8
Ltd., Co.
Ghana Currency: C $1=8.850C

Employees
TOYOTA Ghana Co., Ltd. 1998.1 100 114.473billion
Kenya Currency: Ksh $1=76.2413Ksh

Employees
Sanyo Armco (Kenya) Ltd. 1973.1 49 P.sapani, other 57.34%
YKK Kenya Epz Ltd.
B-2
Liberia Currency: L$ $1=1L$

Employees
Amber Ocean Corp. 1988.4
Amur Shipping Inc.
Andromeda Ocean Corp.
Aquarius Shipping Inc.
Bamboo Shipping Corp. 1986.6 327million
Beaufort Sea Inc.
Bougainvillea Marine Corp. 1991.5
Bulkstar Enterprise Co., Ltd.
Capricorn Transport Inc.
Cassiopeia Maritime Ltd.
Cobre Maritime, Inc.
Cosmos Marine Crop. 1988.9 106million
Dia Maritime Inc. 1989.9 2.436billion
Estisle Navigation Ltd.
Four Seasons Maritime, Ltd. 12million
Gas Asia Shipping Inc. 1989.9 815million
Gas Diana Transport Inc. 1976.9 8.166billion
Hercules Ocean Corp. 2.847billion
KS Ocean Corp. 739million
Laurel Trankers Inc. 1991.11
Lavender Tankers Inc.
Liberian Paramount Inc. 1974.5 243million
Majuro Ship Finance Co. 62million
Modec Liberia, Inc. 1986.4
MoI-Nic Transport Ltd. 1989.6
Monc Liberia, Inc. 1996.3
Noisette Shipping Corp.
Parana Ship Finance Co. 340million
Patrinia Corp. 1990.11 10million
Pearl Ship Finance Co.
Polestar Carriers Ltd.
Puncak Shipping Corp.
STB Ship Finance Ltd. 1987.1 10million
Salt Marine Inc. 1978.11
Scorpa Pranedya Maritime, Inc. 1979.5 2.30million P.T.Scorpa Pranedya
25% Scorpa Shipping
Holdings S.A.25
Scorpa Pranedya Tanker, Inc. 1979.5 2.66million P.T.Scorpa Pranedya
25% Scorpa Shipping
Holdings S.A.25
Scorpio Carries, Ltd. 795million
Seabreeze Maritime Corp. 2000.8 980million
Silky Ocean Corp.
Solar Ace Corp. 1996.6 3.96million
Solar Global Maritime Corp. 2002.2 7.33million
Solar Shipholding Corp. 1992.1 6.63million
B-3
T.S. Cenatral Shipping Co., Ltd. 1978.5 2 (2) 7.55million

Taurus Carriers Ltd. 4billion
Vega Ocean Corp.
YSH Shipping Co., Ltd 1million
Madagascar Currency: FMG $1= 5,700FMG

Employees
Madagascar Daiho Corp.S.A. 1996.2 3 (2) 2.274billion local 30%
Société Malgache de Pécherie 1966.9 809 (23) local,other 30.93%
Madagascar government
30.11
Mali Currency: CFAF $1=520.05CFAF

Employees
Mali Protection Des Cultures 1998.6
SARL
Mauritius Currency: MauRs $1=26.2MauRs

Employees
Automobile Investment 1996.12 2.145billion
(Mauritius) Ltd.
Morocco Currency: DH
$1=8.7822DH
Employees
Calimaroc S.A. 1984.2
Disco Hi-Tec Morocco SARL 2003.5 1
Hitachi Productions Maroc 1979.8 32 (1) local 49%
Electroniques Domestiques S.A.
Niger Currency: CFAF $1=520.05CFAF

Employees
La Compagnie Minière d'Akouta 1978.8 1,046 NFC company of France
34% local government
31 Spanish government
10
B-4
Nigeria Currency: N $1=139.55N

Employees
Chiyoda Nigeria Ltd. 1983.6 27 (1)
Honda Manufacturing (Nigeria) 1981.1
Ltd.
ITOCHU Nigeria Ltd. 1978.10 11 (1)
JGC Nigeria Ltd. 1991.3 13 549million
MBK Nigeria Ltd. 1969.5 8 (1) Chief E.A.O. Shonekan
5.4%
Marubeni Nigeria Ltd. 1970.3 9 (1)
Meisei Nigeria Ltd. 1 (1) 368million
Mitsubishi Shoji 1969.7
Kaisha,(Nigeria) Ltd.
Nishizawa (Nigeria) Ltd. 1969.4 8 (3) local personal 50%
Nissho Iwai (Nigeria) Ltd. 1979.1 11 (2) 53.92million local 3.3%
SEI Nigeria Ltd. 1978.5 1 local 60%
Taisei (West Africa) Ltd. 1979.4 7 32.74million Howas Services 35%
Bells Holding 25
West African Seasoning Co., 1991.5
Ltd.
Yamaha Manufacturing 1981.2 25 104million local and other 40%
(Nigeria) Ltd. John Holt PLC25
Reunion (France) Currency: Eur $1=0.7987Eur 1Eur=6.5596F

Employees
Betal Reunion S.A. 1995.8
Senegal Currency: CFAF $1=520.05CFAF

Employees
S.P.I.A. 1979.9
South Africa Currency: R $1=6.675R

Employees
Advalloy (Pty.) Ltd. 1996.6 88 252million Samancor Ltd. 50%
Bridgestone South Africa 1997.1
Holdings Pty. Ltd.
CSSA (Pty.) Ltd. 1997.5 SJM 49%
Calsonic Kansei South Africa 2003.1
(Pty.) Ltd.
Canon South Africa Pty. Ltd. 1999.9 77
Cataler South Africa (Pty.) Ltd. 2001.7 66 (2) 163million
Cato Ridge Alloys (Pty.) Ltd. 1998.4 24 (1) 295million Asman 50%
Daikin Airconditioning South 1998.3 42
Africa Pty. Ltd.
FANUC SOUTH AFRICA 1983.9
(Pty.) Ltd.
B-5
Hitachi Construction Machinery 1998.8 239 329million

Southern Africa Co., Ltd.
ILITHA Holdings (Pty.) Ltd. 1999.9 137million Hernic Ferrochrome Pty.
Ltd.60%
ITOCHU Auto Africa (Pty.) Ltd. 1997.4 31 (2) 2.077billion
Kintetsu World Express South 1996.5 148 FTI Investment 25%
Africa (Pty.) Ltd.
Komatsu Southern Africa (Pty.) 1997.1 592 17.93billion
Ltd
Kyocera Mita South Africa 1997.12 20
(Pty.) Ltd.
Marpless Communication 1993.7 38 406million Plessey (Pty.) Ltd. 49%
Technologies (Pty.) Ltd.
MayFord Holdings (Pty.) Ltd. 1999.10
MayFord Seeds (Pty.) Ltd. 1999.10 76
Melco Elevator (South Africa) 1999.6 94 (2)
Pty. Ltd.
Mentholatum South Africa (Pty.) 1988.7
Ltd.
Mitsui & Co. Southern Africa 2001.9 46 (8) 232million
(Pty.) Ltd.
Mitsui Minerals Development 1995.4 1 113million
South Africa Pty. Ltd.
NGK Ceramic South Africa 2001.2 95 (3)
(Pty.) Ltd.
NST Ferrochrome (Pty.) Ltd. 1993.10 70 (1) 162million Samankor 50％
National Auto Glass Pty. Ltd. 1997.5 105 The Nominee & PG
Group (Pty.)Ltd. 30%
Nippon-SC Tree Farm S.A. 1996.6 18.47million
(Pty.) Ltd.
Nissan Diesel South Africa 2002.7
(Pty.) Ltd.
Nissan Motor Co. South Africa 1995.9 2,360
(Pty.) Ltd.
Nissan South Africa (Pty.) Ltd. 1963.12
Philagro South Africa (Pty.) Ltd. 1999.3 10 87.16million
Pilot Pen South Africa (Pty.) Ltd.
Riso Africa (Pty.) Ltd. 1995.2
Sony South Africa (Pty.) Ltd. 1996.3 Local 24.9%
South Africa Japan Vanadium 2002.3 Highveld 50%
Sumika-Merisol RSA 2001.2 64.69million Merisol 20％
Summit Auto Holding South 2002.2 382 6.74billion
Africa (pty.) Ltd.
Sun Ace South Africa (Pty.) Ltd. 1996.10 Local 35%
Takasago International Corp. 1995.8
South Africa (Pty.) Ltd.
Toyota South Africa Motors 1996.10 6,948
(Pty.) Ltd.
Toyota South Africa Pty. Ltd 1961 Wesco 25.1%
Toyota Tsusho (Africa) Co., Ltd. 2000.3
Yokogawa South Africa (Pty.) 1997.12 57 6.80million
B-6
Ltd.
Swaziland Currency: E $1=6,675E

Employees
YKK Southern Africa (Pty.) Ltd. 1976.6 281 (6)
Tanzania Currency: TSh $1=1,057.54TSh

Employees
Konoike Tanzania Ltd. 1995.8 50 565million
Matsushita Electric Co. (East 1966.11 186
Africa) Ltd.
Togo Currency: CFAF $1=520.05CFAF

Employees
Callitogo S.A. 2000.2
Tunisia Currency: TD $1=1.2139TD

Employees
Charthage Power Company 1999.6 30 129million PSEG Global Inc. 60%
SARL
ITOCHU Tunisia SARL 1996.3 8 (1)
YKK Trading Tunisia S.A. 1997.11 13
Zambia Currency: ZK $1=4,550ZK

Employees
Marunouchi Motors Ltd. 1974.5 130 (2) 1.42bilion
Toyota Zambia Ltd. 1963 Lonrho Motors Zambia
Ltd. 75%
Zimbabwe Currency: Z$ $1=824Z$

Employees
Motec Holdings (Pvt.) Ltd. 1989.1 8 (1) 2.347billion Industrial Development
Corp.75%
B-7
Studies on Africa-Asia Trade and Investment Relations (B) Appendix C
Appendix C
Asia-Africa Trade Regimes
The following table was compiled by the PADECO/UFJ team based on information from
JETRO available in Japanese.
C-1
India South Korea Singapore Taiwan China Malaysia Japan
Affiliation to the (1) WTO: (1) WTO: Member (1) WTO, APEC, (1) WTO: Member (1) WTO (1) WTO, APEC, (1) WTO
WTO and/or other Affiliation on since January 1, and ASEAN: since January 1, (2) APEC and ASEAN: (2)
Agreements January 1, 1995 1995 (GATT: Singapore has been 2002 Malaysia has been Japan-Singapore
(GATT: Affiliation Member since member from the (2) APEC: member from the Free Trade
on July 8, 1948) April 14, 1967) inauguration. Member since inauguration. Agreement
(2) South Asian (2) Bangkok (2) Singapore November 12, (2) Malaysia is
Preferential Trade Agreement: Effect actively works for 1991 as member of two
Agreement in 1975 conclusion of Chinese-Taipei. other
(SAPTA), South (3) Japan-South bilateral Free (3) Working Group agreements/counci
Asian Association Korea Investment Trade Agreement of the CSCAP: ls.
for Regional Pact: Effective on (FTA). Participating as an
Cooperation January 1, 2003 observer
(SAARC): Signed
in April of 1993
and effective in
December of 1995
System for Trade Control
Competent Ministry of Korea Trade & International Bureau of Foreign (1) State Economic (1) Ministry of Ministry of
Authorities Commerce and Investment Enterprise Trade and Trade International Trade Economy, Trade
Industry Promotion Singapore Commission and Industry and Industry
Agency, (Competent (2) Ministry of (2) Customs House
Ministry of Authorities are Commerce (3) Administration
Commerce, different for each (3) State Bureau on the
Industry, and item requiring Administration of Washington
Energy import/export Taxation Convention
license.) (4) General (4) Competent
Administration of Authorities on
Customs. each item
(5) Malaysian
Industrial
Development
Authority (MIDA)
Import Item Import item (1) There are (1) Prohibited Import control is (1) Prohibited (1) Prohibited (1) Control by the
Regulation regulation consists import products Import Item: six based on a import item import item: 14 Foreign Exchange
of: restricted by the items (chewing "negative list". (2) Limited import items and Foreign Trade
(1) free import law of foreign gum, handgun, item (divided into (2) License item: Control Law:
item, trade. lighter revolver, import quota 40 fields Import quota item,
(2) prohibited (2) There are fire crackers, etc.) permit and import (3) Preservation Import approval
import item, safeguards for (2) Import Control permit) item: 15 fields item, and import
(3) limited import fabric and Item: 53 items (3) Free import (4) Conditioned affirmant item.
item, and clothing. (require advanced item (divided into item: 46 items (2) Control by the
(4) designated registration or automatic import customs tariff law:
import trader item. import license.) permit and free prohibited import
import) item
C-2
(4) Governmental (3) Control by

trade control item other domestic
(5) Items of laws: prohibited,
designated import regulated, and test
trader needed item.
Importing Country Trade with Iraq is Although Imports from Iraq (1) Importing (1) Pork and beef (1) Prohibited area (1) Import Quota
Regulation regulated by U.N. regulation on are prohibited. prohibited area from Netherlands on prohibited Item (silk drapery,
resolution importing Rough diamond (2) Import control (2) Pork from imports: Indonesia, etc)
countries does not from Sierra Leone by areas Germany etc. (2) Import
exist, but there are and Liberia, and (3) Import from (3) Hoofed animals (2) Prohibited area Approval Item
special measures beef from 16 China from Taiwan on license items: (whale and
based on the European countries (4) Birds from Israel etc. products of whale
Foreign Trade Act. including Japan are Connecticut and from nonmember
also prohibited. Pennsylvania nations of the
(5) Pork and wild International
boar from Spain Convention for the
(6) Hoofed animals Regulation
from South Korea of Whaling, etc)
(3) Import
Affirmant Item
(silk drapery from
EU and United
States, etc)
Import-Related Law The Ministry of (1) Foreign Trade (1) Customs Act, Foreign Trade Act, Foreign Trade Act, Customs act, Foreign Exchange
Commerce and Act, (2) Import/export Enforcement Rules administrative customs and Foreign Trade
Industry (2) Enforcement regulation Act, and of the Foreign instructions for regulation, and Control Law,
announces the order for the (3) Related law Trade Act, the import control import control law. Export and Import
export and import Foreign Trade Act, and regulation. Regulations from foreign Trading Law,
policy for next (3) Administrative Governing Import investors, etc Tariff Act,
fiscal year every provision of of Commodities, Customs Tariff
March based on foreign trade, the Regulations Law, Temporary
the Foreign Trade (4) Advertisement Governing Export Tariff Measures
(Development and for import/export, and Import of Law, etc.
Regulation) Act. (5) customs law Strategic
and others, etc. High-Tech
Commodities, and
the Regulations
Governing
Permission of
Trade Between
C-3
Taiwan area and

Mainland Area.
Import Control Importers are Importer should As for items based on tests or Import operation refer to Exceptional Import
required to obtain show a "Land of subject to medical inspection certification, conditioned items
the origin" document import/export related regulation. import trader on the detailed
Importer-Exporter for products control, advanced license, product information of
Code (IEC). subject to the registration or test, medical regulation by item
article 23 of the export license are inspection,
law of foreign required by each antidumping duty
trade. competent and safeguard may
authorities or be required.
government
institution.
Export Item Export system There are export (1) Prohibited Export control is Prohibited exports, (1) prohibited (1) Foreign
Regulation consists of the free products restricted Export Item: one conducted by a limited exports imports: three Exchange and
export item, the by the law of item (born negative list items Foreign Trade
prohibited export foreign trade. rhinoceros and its (2) license items: Control Law
item, the limited powder) 45 items (2) Control by the
export item, and (2) Export Control (3) conditioned Export and Import
the item of Item: 21 items items: 19 items Trading Law
designated export (These require (3) Control by
trader advanced other domestic
registration or laws
export license) (4) Control by
treaties and
international
agreements
Exporting Country Trade with Iraq is Although Export to Iraq is China, Iraq, and a No exporting area Prohibited area on Exporting country
Regulation regulated by the regulation on prohibited. Export part of high-tech regulation license items: regulation based
U.N. resolution exporting country of special items, product Israel on the U.N.
doesn't generally mainly military resolution
exist, special aircraft, to
measures exist by Afghanistan,
such as the law of Angola, Liberia,
foreign trade Libya, Rwanda,
Sierra Leone, and
Somalia is
C-4
prohibited.
Export-Related Law The Ministry of Foreign Trade Act, Customs Act, Foreign Trade Act, Foreign Trade Act, Customs law, Foreign Exchange
Commerce and enforcement order import/export Enforcement Rules provisional law of customs and Foreign Trade
Industry for the Foreign regulation act, and of the Foreign export goods regulation, export Control Law,
announces the Trade Act, related law and Trade Act, the control, and export control law, the Export and Import
export and import administrative regulation. Regulations permit regulation. Washington Trading Law,
policy for next provision of Governing Export Convention, and Tariff Act,
fiscal year in every foreign trade, law of Commodities, the animal Customs Tariff
March based on for the designation and the protection statute. Law, Temporary
the Foreign Trade of the free trade Regulations Tariff Measures
(Development and area, Governing Export Law, etc.
Regulation) Act. advertisement for and Import of
import/ export, Strategic
customs law, etc. High-Tech
Commodities.
Export Control N/A Tests before N/A Exports from Regulation of Refer to Exceptional Export
shipping by the Taiwan should be origin, export conditioned items
law of foreign showed as "Made operation on the detailed
trade. in China", "Made certification, and information of
in Chinese Taipei", export trader regulation by item
or "Made in license
Taiwan".
Custom duty Policy
Competent Ministry of National Tax Customs and Directorate State Customs House, Customs Bureau,
Authorities Finance Administration, Excise General of Administration of Ministry of Ministry of
Ministry of Department, Customs, Ministry Taxation, and Finance, Ministry Finance
Finance and Ministry of of Finance General of International
Economy Finance Administration of Trade and Industry
Customs. (MITI), and
Malaysian
Industrial
Development
Authority (MIDA).
C-5
Custom Tariff Central Board of Korea Customs Customs and Statistics Unit, State Customs House Customs House
Inquiry Excise & Customs, Service Excise Directorate Administration of and offices of the
Ministry of Department, General of Taxation, General Malaysia External
Finance Ministry of Customs Administration of Trade
Finance Customs, and State Development
Administration of Corporation.
Import and Export
Commodity
Inspection
Custom Duty Custom duty There are Dual Custom Duty Dual tariff system Dual Custom Dual Custom Duty There are
System system consists of fixed-rate custom System (1) First Column: Tariff of a general System of a fixed-rate custom
the basic tariff, the duty (basic tariff, (1) General Duty: General countries custom Tariff and a general tariff and duty (basic tariff,
additional tariff, provision tariff, only four articles and areas most-favored-natio AFTA Common provision tariff,
and the special and elastic tariff) are imposed (2) Second n treatment tariff, Effective and preferential
additional tariff, and international (Number of HS is Column: antidumping duty, Preferential Tariff tariff) and
based on The cooperation nine digits). Reciprocal tariff special duty, low Scheme conventional tariff.
Customs Act custom duty. (2) Preferential (172 countries tariff articles, and
(1975). Duty: There are WTO members high tariff articles.
ASEAN Common such as Japan and
Effective United States, and
Preferential Tariff the other countries
Scheme, and ratified reciprocal
Agreement on tariff.
closer economic
ties between
Singapore and
New Zealand.
Classification by Classification by HS classification HS classification. HS classification HS classification SITC and HS
Articles items has followed This is shown with classification
the HS nine figures
Classification
since 1998
Type of Custom ad valorem duty as An ad valorem An ad valorem ad valorem duty, ad valorem duty, ad duty and An ad valorem
Duty a general rule duty and a specific duty, an specific specific duty, and specific duty, and specific duty (most duty and a specific
duty (The ad duty, and a multiple duty multiple duty part is as ad duty) duty (Items of an
valorem duty multiple duty (The ad valorem duty
comprise a large ad valorem duty are more than that
percentage.) comprise a large of an specific duty.
percentage.) As for alcoholic
beverage, an
specific duty is
applied.)
C-6
Basis for Custom Custom duty is CIF or quantity of (1) Ad valorem CIF price Import: CIF price Transaction Value CIF price
Duty imposed on an import products duty: This imposes Export: FOB price
assessable value. (The article 15 of on the sum of CIF
The assessable the law of foreign price, handling
value is a sum of trade). charge of goods,
CIF price and a and the other costs
landing charge of such as sales and
1% of the CIF shipment.
price. (2) specific duty:
This is based on
the standard
amount, prescribed
for each product
Applicable Custom The same custom General custom Due to the Mutual Benefit Custom tariff for General custom
Tariff on Import tariff as the other tariff is applied. As Japan-Singapore Tariff favorable countries tariff
Products from affiliate countries for some products, Free Trade is applied.
Japan to the WTO is lower custom tariff Agreement.
applied is applied.
Special Measures Special measures Special custom (1) AFTA N/A Preferential tariff (1) AFTA There are
such as Preferential are applied to duty is applied to Preferential Tariff and special Common Effective preference
Tariff specific import the products whose Scheme (CEPT) measures applied Preferential Tariff treatment tariff,
products from lands of origin are (2) Singapore-New to a bilateral and (CEPT) tariff quota,
Mauritius, Tonga, designated Zealand Closer multilateral FTA. (2) ASEAN simplified tariff
and Seychelles. developing Economic Industrial rate, special tariff,
As for the rest, countries. Partnership Cooperation seasonal duties,
they apply to some (3) ASEAN (3) Partial import differential cost
products based on Industrial from British tariff, sliding duty,
the Bangkok Cooperation Commonwealth etc.
Agreement, (4) Japan (processed fruit
SAARC Singapore product and
Import/Export Economic leather)
tariff by-law Partnership
(SAPTA), and the Agreement for a
Free Trade New Age
Agreement Partnership.
between India and
Pakistan.
Relevant Law (1) Customs Act in Customs act, Customs Act (1) Customs Act (1) Customs (1) Customs Act (1) Tariff Act
1966 enforcement orders (2) Enforcement regulations (2) Customs Tariff (2) Customs Tariff
(2) Custom Tariff for customs act, Regulations for (2) Import/Export Act Law
Act in 1975 enforcement Customs Act tariff by-law (3) Temporary
(3) Custom regulations for (3) Import/Export Tariff Measures
Valuation Rules in customs act, Act tariff regulation Law
C-7
1988 on Designation and

(4) Custom Tariff Management of
Rules in 1995 Customs Free
(5) Custom Tariff Zones, law on
Rules in 1997 promotion of
foreigner's
investment, etc.
Taxes Except There are products (1) Value Added (1) Commodity (1) Trade (1) Importing Sales Tax (1) Domestic
Custom Duty on which an Tax Tax: 96 items such Developing Additional Price Consumption Tax
antidumping tax (2) Special as alcoholic Service Charge Tax (2) Domestic
and a safeguard are Consumption Tax beverage, tobacco, (2) Goods Tax (2) Consumption Indirect Tax
imposed. (3) Local Tax, etc. cigar, gasoline, (3) Business Tax Tax
auto, and (3) Shipping Tax
motorcycle.
(2) Goods and
Service Tax (GST)
Others There is an Reduction and General Duty, N/A There is an There is an (1) Simple
institution, which exemption, refund, Commodity Tax, exemption of exemption of Declaration
imposes custom and installment and Goods and custom duty and an custom duty. System
tariff on import of payment of custom Service Tax are additional price (2) Comprehensive
capital goods duty. exempted with: tax. Preliminary
(1) Storage in Free Review System
Trade Zone (FTZ) (3) Reduction
and border facility, System of Custom
(2) Re-export or Duty
reshipment,
(3) Temporary
import for fixing,
and
(4) Import of
sample products
Regulations for Exchange Control
Competent Reserve Bank of (1) Korea Institute Central Bank does Central Bank of (1) State Bank Negara (1) Bank of Japan
Authorities/Central India for International not exist. The China Administration of Malaysia (2) Ministry of
Bank Economic Policy, Monetary Foreign Exchange Finance
Ministry of Authority of (2) People's Bank (3) Ministry of
Finance and Singapore (MAS), of China Economy, Trade
Economy which had been in (3) Bank of China. and Industry
(2) Bank of Korea charge of broad
monetary and
financial policies,
absorbed the roles
of the Board of
C-8
Commissioners of
Currency (BCCS)
in October 1, 2002.
Exchange Rate Floating Exchange Floating Exchange (1) Floating Making the shift to (1) Fixed exchange Floating Exchange
Control Rate System Rate System Exchange Rate the Floating Foreign-currency rate system from Rate System
System based on Exchange Rate Trading market September 2, 1998.
the Basket System System on between banks (1 US$=3.8
(2) No December of 1978. (2) Retail market Ringgit)
internationalizatio between bank and
n of Singapore customer
Dollar (3) Open market
operation,
(4) Basic rate of
exchange
Merchandise Trade (1) Exchange Without Limit Without Limit (1) Merchandise (1) Account for (1) Clearance by Economic
dealing for current Trade by artificial foreign currency assurance and restrictions to
account is person is free. clearance letter of credit Libya, Iraq, and
deregulated as a (2) As for (2) Payment of (L/C) by a foreign Iran.
rule individual, it is free foreign currency exchange bank
(2) US dollar is as less than US$ 1 (3) Balance (2) Notification to
used for trade with million for one limitation of an customs is required
Japan time or US$ 5 account for foreign depending on the
(3) As for trade million for the currency clearance account.
with Nepal and year. Designated
Bhutan, Indian currencies are all
Rupee must be except Ringgit and
used Shekel (Israel).
External As for acquisition Without Limit Without Limit (1) Payment for (1) Shipping There is no Without Limit
transactions of foreign currency service transaction charge regulation except
Excluding Trade of more than and acceptance of (2) Insurance cost Israel and
US$ 5,000 for the foreign currency (3) Payment of Yugoslavia (Serbia
year due to by artificial person foreign currency and Montenegro)
overseas travel and are free. (4) Balance But documents for
more than (2) As for limitation of exchange control
US$ 25,000 for individual, it is free account for foreign are required in case
business as less than US$ 1 exchange of more than
engagement, a million for one settlement 100,000 Ringgit.
prior permission is time or US$ 5
necessary million for the
year.
C-9
Capital Transaction Domestic share There are The usage of There are an (1) Capital account (1) Investment by As for economic
trading is notification and Singapore Dollar is approval system (2) Exclusive no manufacturing sanction, certain
permitted only to permitting items under certain and a declaration account for business: direct equity
the registered based on the limitations due to system. These borrowing of permission of the investment, and
Foreign Foreign Exchange the Singapore depend on an foreign currency Foreign partial foreign
Institutional Operation Act. Dollar amount of money (3) Exclusive Investment technology
Investors (FII). Non-internationali and contents. account for Committee is introduction,
External zation Policy. refunding of required. permission or
Commercial foreign currency (2) Domestic notification are
Borrowing (ECB) borrowing: It is required.
is controlled by the free as less than 50
ECB guideline of million Ringgit. As
the Ministry of for surplus,
Finance. amount of three
times of
accounting capital
is permitted with
notification to the
Bank Negara
Malaysia.
Relevant Law Foreign Exchange (1) Foreign (1) Banking Act Directions (1) Regulation for (1) Foreign Law of Foreign
Management Act Exchange (2) Notification Governing Foreign Currency Exchange Exchange and
(FEMA) (1999) Transaction Act from the Monetary Designated Control, Management Act Foreign Trade.
(2) Enforcement Authority of Dealers for Open (2) Regulation for (FEMA)
order of the Singapore (MAS). Market Operations Foreign Exchange (2) New FEMA
Foreign Exchange Settlement
Transaction Act Control, and
(3) Regulation. of (3) Regulation for
the Foreign Foreign Currency
Exchange Remittance
Transaction Act Control.
Others N/A Notification to the N/A Private citizen can The other rules Government Notification is
commissioner of exchange currency regarding foreign introduced a policy required at foreign
customs is basically, currency. on September 1, trade and foreign
necessary in case non-resident have 1998, which currency trading
of: (1) residents or limits. imposes a ban on between residents.
non-residents get the usage of
in an instrument of Ringgit outside
payment of more Malaysia.
than US$ 10,000,
and (2) national
residents carry out
an instrument of
payment of more
than US$ 10,000.
C-10
Export and Import Procedures

License Application (1) As for license Import/Export is Notification and Application to the Trade activities
of Import/Export acquisition of the deregulated, and enabling Bureau of Foreign division, economic
Importer-Exporter license is not acknowledgment Trade. and trade
Code and export necessary. But regarding committee of each
restriction specific number import/export and ministry, and tax
products, trader for foreign trade reshipment, and office.
should apply to the business received payment
Regional from the trade procedures of
Licensing association is custom duty and
Authority under necessary. charge are
the Ministry of automatically
Commerce and treated due to the
Industry. Electronic Data
(2) Companies in Interchange (EDI)
an export system called as
processing zone "Trade Net".
and a special
economic zone
need to apply to
commissioner in
the zone.
Documents Import/Export Documents for an Prior permission of Permit card is Materials required (1) Invoice in
Required traders are required application of import is required. required. for passing foreign currency
to obtain the opening L/C, and And the followings customs are set up (2) Packing list
Importer-Exporter entry papers. are needed. by multiple (3) Application
Code (IEC). "The (1) Custom release legislation. form for customs.
Handbook of permission of
Procedures" of goods
Ministry of (2) Invoice
Commerce and (3) Packing list,
Industry shows the B/L, or AWB
details. (4) Other
documents
required
C-11

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The World Bank

STUDIES ON AFRICA-ASIA TRADE AND INVESTMENT

List of Tables, Figures, and Boxes ................................................................................ iii

Executive Summary ...................................................................................................... vii

1 Introduction .......................................................................................................... 1-1

4 Asian Countries’ and Firms’ Policies To Promote Trade and Investment in

Appendix A Classification of Industries...................................................................... 6-1

LIST OF TABLES, FIGURES, AND BOXES

Table ES-1 Level of Development and Market/Policy Instruments ............................................. xi

AACC Asia Africa Chamber of Commerce

NTBs Non Tariff Barriers

Africa is becoming a more strategic production/processing location for Asian

Hypothesis Factual findings and fields where policies are required

Hypothesis Factual findings and fields where policies are required

Hypothesis Factual findings and fields where policies are required

ES.4 In general, trade and investment strategies can be categorized as domestic-market

ES.5 Strategies Recommended.

• Environment for Small- and Medium-Sized Business: An enabling environment

• Natural resource oriented investments. Natural resource oriented investments,

• Credit risk. There is a limitation in providing export credit and insurance by

• Economic Zones and Regional Trade Agreements. Economic Zones and

ES.7 Asian Countries. Asian countries have an historical disadvantage compared to

• For Asian firms there is a disadvantage in the human network compared to

technology by enhancing communication and exchange.

• Investment projects in manufacturing targeted toward domestic markets need to

• As African sub-regional RTAs are in development, region-to-region cooperation,

Table ES-1 Level of Development and Market/Policy Instruments

• In applying for export credit or export insurance by Asian countries, lowering

• Both international and bilateral donors can provide technical assistance to

• The framework, organization, and effectiveness of regional economic zones are

• By creating a multilateral trade system under the WTO, it is recommended that

Figure ES-1 Strategies and Goals

Policies by African countries Strategy by African Countries

Strategy by Asian Countries

A. Background and Objectives

• Task 2: conduct quantitative analysis; conduct institutional and policy analysis;

• Korean Institute for International Economic Policy (KIEP);

• UFJ Institute (Shanghai) Ltd.;

1.10 The study identified the following key issue areas:

B. Proposition and Hypotheses

Africa is becoming a more strategic production/processing location for Asian industries.

Then the goal has been identified as follows.

9. Some Asian countries have encouraged their businesses to expand in Africa

These mechanisms, incentives, and bilateral treaties appear to be applied only to

One of difficulties for business in Africa is a lack of reliability in market information,

There is evidence of exports by Asian countries in intermediate goods such as

The research still indicates opportunities in resource-based export-oriented industries

investments have performed poorly due to limited domestic markets and

Some import substitution investments began by creating import tariff protection,

On the other hand, there seems to be variety of opportunities in viable import

Figure 1-1 Hypotheses and Goals

Policies by Asian Policy Strategies by Asian

Potential for Trade and Investment Development

Business Environment for Export-Oriented Strategy

Domestic Market Strategy

Policies by African countries Policy Strategies by African

Note: The number in parenthesis indicates hypothesis number.

TRADE AND INVESTMENT BETWEEN AFRICA AND ASIA

Figure 2-1 Exports to Africa by Asian Country

Japan South Korea China Singtapore Malays ia India

Figure 2-2 Export Distribution to Africa by Asian Country

Figure 2-3 Exports from Africa by Asian Country

Japan South Korea China Singtapore Malaysia India

Figure 2-4 Export Distribution from Africa by Asian Country

Ivory Coast * *