Japan’s growing presence in Djibouti’s Free Trade Zone

Japan’s growing presence in Djibouti’s Free Trade Zone

More than 170 Japanese businessmen attended the seminar held at JETRO on December 4, 2015.

More than 170 Japanese investors and business people attended a seminar on investment opportunities in Djibouti. The event, held last December in the premises of JETRO in Tokyo, was described as a “great success” by Mr. Abubaker Omar Hadi, chairman of the Port Authority and Djibouti Free Zone. “Beside expressing interest, he said, participants are asking questions related to manpower, the costs of energy and the benefits in joining the Free Trade Zone”.

His team has put together a very impressive presentation and provided detailed information in Japanese to outline Djibouti’s President, H.E. Mr. Ismail Omar Guelleh economic vision, for a small country of one million inhabitants, which is located in an exceptional geostrategic location, in the Horn of Africa, with more than 65% of the world commercial shipping fleet using its waters.

A panel of discussion followed with Japanese business leaders sharing their views on Djibouti. Each of them, active in different sectors, recognizes the potential of increasing its activities and access to new markets in the East Africa region. In fact, Djibouti is well positioned within the 20 states sharing a free trade area in the Common Market for Easter and Southern Africa (COMESA). Having countries in the region with high growth rate, the demand for new technologies and manufacturing products is on the rise. Because of its location, Djibouti’s officials suggest that the presence of Japanese companies in the Free Trade Zone is a strategic move.

Djibouti’s innovative business approach

In order to support the rapid development of the Djibouti Free Trade Zone, the government is offering a very attractive package for investors. For instance, the zone is duty free and there is no corporate tax to pay. It permits 100% of repatriation of capital and profit with no currency restriction. It also allows 100% ownership with no limitation on foreign personnel employment.

The country is now embarked in rapid transformation with major infrastructure development projects underway and valued over US$ 12 billion. The latest was the completion of a 752-kilometre railway linking the port of Djibouti with landlocked Ethiopia’s capital Addis Ababa. Both countries benefit from economic integration, with Ethiopia gaining access to the sea and Djibouti gaining access to Ethiopia’s emerging market of 95 million people.

Japanese business presence in Djibouti

Djibouti is gaining attention on the radar screen of business leaders in Japan. According to Mr. Koji Yamaguchi, president of GJK International, who has previous business activities in Africa, “to find the right place of operations in Africa is a crucial decision.”

Last December, he flew to Djibouti with his business partners to establish a new company called “Japan New World Corporation”. From this experience, he said that “he was impressed by the efficiency and how easy it was to register a company in Djibouti’s Free Trade Zone.” He used the One Stop Service whose objective is to provide all the necessary information (procedures & fees) concerning all the administrative issues such as visas, work permits, residence permits, and conversion of driving license etc.–all of that done within 48 to 72 hours.

Welcome to Djibouti Free Trade Zone - Done Deal! Mr. Abubaker Omar Hadi, President of Djibouti Ports and Free Zones Authority and Mr. Koji Yamaguchi, President of New World Japan.
Welcome to Djibouti Free Trade Zone – Done Deal! Mr. Abubaker Omar Hadi, President of Djibouti Ports and Free Zones Authority and Mr. Koji Yamaguchi, President of New World Japan.

According to Mr. Yamaguchi, “it is just amazing to complete the whole registration process within 48 hours only, including the legal paperwork to incorporate the company in the Free Trade Zone, to open up a bank account and to conclude a leasing agreement for an office and warehouse facilities.” He mentions humorously that his business associates didn’t expect to have free time to relax before returning to Japan.

Looking for opportunities in the region

The newly created New World Japan Corp. has business relations with a major partner, Toray Corporation, a Japanese multinational that specializes in industrial products centered on technologies in organic synthetic chemistry. According to Mr. Masahiro Fujita, Toray Corp’s representative, “East Africa offers business opportunities in various sectors” For instance, his company is looking for opportunities in the filed of medical equipment and water treatment facilities.

While being the president of the latest Japanese company to join Djibouti’s Free Trade Zone, Mr. Yamaguchi is aware of the networking opportunities with government officials and business leaders to better understand the needs in the region. He sees advantages of being a local company involved international trading activities.

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