09/06/2016, 15.52
ISRAEL – JAPAN
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As oil declines, Israel-Japan economic partnership develops

Lower oil prices have reduced Arab countries’ clout in Japan. In the first seven months of 2016, bilateral trade reached US$ 1.4 billion. Japan is Israel’s fourth largest market in Asia. Analysts and experts see Tokyo changing its policy in the Middle East.

Tel Aviv (AsiaNews/Agencies) – Falling oil prices and renewed nuclear power production have downgraded the influence of Arab oil producing countries on Japanese leaders for whom an economic and commercial partnership with Israel is becoming increasingly interesting.

Over the past two years, Japan and Israel have boosted business ties, signing a series of economic agreements following a visit by Prime Minister Shinzo Abe to Israel in 2015 and Benjamin Netanyahu's trip to Tokyo in 2014.

For years, trade between the two was minimal--Japan was reluctant to upset its oil suppliers, many of whom belong to the Arab League, which has long backed a boycott of Israel.

"Geopolitics is changing in the Middle East and as oil prices come down, strategically it's not as important," said Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical Holdings, when he led a delegation from Keizai Doyukai, the Japanese business lobby, to Israel in May. In his view, "Japan is changing its mind.”

Israel's successes in Internet, biotech, and automotive technologies are particularly attractive, Kobayashi noted. This is not to say Japan has given up on the Arab world.

Bilateral trade in goods in the first seven months of 2016 rose to .4 billion (145 billion yen) from .1 billion, making Japan Israel's fourth-largest market in Asia. It is part of a growing shift in focus as Asia overtakes the United States to become Israel's largest trading partner after Europe.

The turning point in relations between the two countries dates back to 2014. The deal that put Israel on Japan's business map was the 0 million acquisition of chat app Viber by Japanese e-commerce giant Rakuten Inc. in 2014.

Viber has a big user base in Asia and was approached by Rakuten while doing business there, said Michael Shmilov, Viber's chief operating officer. The biggest obstacle to closer ties, he said, is the lack of direct airline flights, something Israel wants to change.

Net investment by Japanese firms in Israel, after subtracting Israeli investment in Japan, nearly doubled in 2015 to 5.2 billion yen, according to the Japan External Trade Organization, citing Bank of Japan data.

In fact, "The last two years ... we've seen a great expansion of Japanese activities,” said Avi Hasson, Israel's chief scientist.

For Israel, Japan offers a large market and a source of capital at a time of growing calls by some activist groups in Europe and the United States for a boycott of Israel because of its policies towards the Palestinians.

An area where Japan is a particularly attractive market is in defence and cyber security, a sector that faces restrictions when it comes to China.

Health is another key area as Japan's aging population seeks affordable medication.

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