5 South Asia

(1) India

Geopolitically speaking India is an extremely important country as it faces the Indian Ocean connecting Asia and Africa and is positioned in the center of sea lanes. Moreover, India has the 3rd largest economy in Asia, with the world's 2nd largest population and a huge middle-income group. Japan and India are the two largest democratic countries in Asia, sharing common fundamental values, such as democracy and the rule of law, as well as strategic interests.

Recently, India has been implementing a variety of economic initiatives, including “Make in India,” resulting in the maintenance of a high economic growth rate of around 7%. Consumption and production have also been increasing, and foreign direct investment has been rising steadily against a backdrop of deregulation.

In diplomatic relations, the “Act East” policy has been laid down in implementing active diplomacy to promote concrete cooperation in the Asia-Pacific region, thereby enabling India to gain more influence in the international arena as a global power.

Regarding relations with Japan, Prime Minister Modi visited Japan for the third time since his inauguration and held the twelfth summit meeting with Prime Minister Abe in October 2018, as part of annual reciprocal visits between the prime ministers held since 2005. At the Summit Meeting, the prime ministers agreed to cooperate in extensive fields including holding a new Foreign and Defense Ministerial Consultation (“2+2” Ministerial Meeting), identifying specific areas of cooperation to improve connectivity, launching negotiations for the Japan-India Acquisition and Cross-Servicing Agreement (ACSA), making progress in the high speed railway project, making decisions on the seven projects related to yen loans, reaching agreement in principle on the signing of the bilateral swap arrangement between Japan and India, further cooperating on global issues and regional affairs, in order to achieve a “Free and Open Indo-Pacific.” Moreover, Prime Minister Abe invited Prime Minister Modi to his vacation home in Yamanashi Prefecture for the first time as a foreign dignitary, symbolizing the special and multi-layered partnership between Japan and India.

(2) Pakistan

Pakistan is located in a strategic position connecting Asia and the Middle East. Thus, its political stability and economic development are essential for the stability and growth of the region. Pakistan is also one of the most important countries in the context of international counter-terrorism measures. Furthermore, the country embraces a population of around 200 million, and approximately 60% of the total population is under 25 years old, thus making its economic potential high.

As for internal affairs, the term of office of the lower house members expired in May 2018, and elections of the National Assembly and Provincial Assembly were held on July 25. Pakistan Tehreek-e-Insaf (PTI), the second largest opposition party, won the elections with a lead of around 50 seats on the ruling political party, Pakistan Muslim League-Nawaz (PML-N). The leader of PTI Khan was inaugurated as prime minister, and the new Khan administration was launched in August.

In foreign affairs, the India-Pakistan relationship has remained tense even after the start of the new administration. Furthermore, under the “All-Weather Strategic Cooperative Partnership,” the relationship with China has been enhanced in a wide range of fields toward the construction of an economic corridor between China and Pakistan (CPEC), which is an important constituent element of China's “Belt and Road” initiative. Regarding the relationship with Afghanistan, there remain many issues to be addressed, including border control and refugee problems. Meanwhile, the relationship with the U.S. remains stagnant with Pakistan being criticized by name in the Trump administration's new South Asia strategy.

On the economic front, the growth rates in FY2017/2018 marked around 5.79%, making them the highest in the past 13 years. However, the Khan administration has faced a serious shortage of foreign currency reserves since its inauguration, and it is advancing initiatives to improve this situation through support from pro-Pakistan countries and negotiations on IMF programs.

Regarding the relationship with Japan, Foreign Minister Kono visited Pakistan for the first time in nine years as foreign minister of Japan in January 2018, and in August immediately after the start of the Khan administration, State Minister for Foreign Affairs Nakane visited Pakistan and held meetings with leading figures in Pakistan to exchange views on efforts to further bolster bilateral ties, and on regional affairs. Meanwhile, Advisor to Prime Minister of the Islamic Republic of Pakistan on Commerce, Textile, Industry, Production and Investment Dawood visited Japan in December to attend a public-private economic dialogue and discuss with government officials measures to enhance economic ties between Japan and Pakistan.

(3) Bangladesh

Bangladesh, in which Muslims account for around 90% of the population, is a democratic country located in the Bay of Bengal and is geopolitically very important as an intersection between India and ASEAN.

The 11^th general elections were held at the end of December in 2018, resulting in the continued rule of the Awami League administration led by Prime Minister Hasina. Furthermore, with the deterioration in peace and order in Rakhine State of Myanmar since August 2017, more than 700,000 displaced persons have flooded into the country, thus causing deterioration in humanitarian conditions. Negotiations have been taking place with the government of Myanmar to return the refugees, but this has yet to be finalized.

On the economic front, the country maintained a steady economic growth rate of around 7.24% in 2017, thanks to robust exports mainly of textile products. With a population of around 160 million people, Bangladesh has a production base with abundant low cost and high-quality labor, and the high potential of its market including considerable infrastructure demand is attracting attention. The number of Japanese-affiliated companies developing business in the country has increased from 61 in 2005 to 269 in 2016. However, the securing of a stable supply of electric power and natural gas as well as infrastructure improvement remain as challenges for foreign companies investing in the country.

Regarding the relationship with Japan, Parliamentary Vice-Minister for Foreign Affairs Iwao Horii visited Bangladesh in March, followed by a visit by Foreign Minister Kono in August. The foreign ministers of both countries confirmed to strengthen bilateral relationship and cooperation on regional and international affairs under the Japan-Bangladesh Comprehensive Partnership. In addition, Minister Kono held detailed discussions on the response to the issue of displaced persons flooded into Bangladesh from Northern Rakhine State of Myanmar. Furthermore, Foreign Minister Kono visited the Cox's Bazar refugee camp.

(4) Sri Lanka

Sri Lanka is located in a strategic position on the sea lanes in the Indian Ocean. The country is traditionally pro-Japanese and its geopolitical and economic importance is note-worthy. Since the end of the civil war in 2009, the security situation has greatly improved. Japanese tourists roughly quadrupled as compared with 2008, to over 40,000 since 2016.

In domestic politics, President Sirisena, who was elected at the presidential election in January 2015, maintained the grand coalition of the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP) established after the general election in August the same year, and is running the Government together with Prime Minister Wickremesinghe (UNP). However, President Sirisena dissolved the UNP and SLFP coalition in October 2018 and dismissed Prime Minister Wickremesinghe, while simultaneously naming former President Rajapaksa as Prime Minister and announcing the dissolving of Parliament. After that in December, the court ruled that the dissolving of Parliament by President Sirisena was unconstitutional, and Mr. Rajapaksa resigned, reinstating Mr. Wickremesinghe to the post of Prime Minister.

The Sirisena administration set up a National Reconciliation Bureau to address this important task after the end of the civil war and has been working in a variety of ways including the establishment of a mechanism consisting of a four-layer system to correspond to the investigation of the truth related to alleged human rights violations, rights for justice, rights for compensation, and prevention of recurrence of conflict.

After the end of the civil war, the economy of Sri Lanka was growing at an annual rate of 7%, and it continues to maintain steady annual growth of over 3% in recent years. Its GDP per-capita was recorded at 4,065 US dollars in 2017, and given the geopolitical importance of the country and its access to the Indian market, an even higher growth rate is expected.

Regarding the relationship with Japan, President Sirisena visited Japan in May 2016, followed by another visit in March 2018 for the second time since his inauguration as President. A Summit Meeting was held with Prime Minister Abe in which the two countries agreed on Japan's support to enhance “quality infrastructure” in various areas, such as ports, transportation and energy. The leaders also agreed to advance cooperation in defense and security-related areas through capacity building assistance, cooperation for visits by MSDF vessels to Sri Lanka, and personnel exchanges.

Furthermore, Foreign Minister Kono visited Sri Lanka for the first time in 15 years as foreign minister of Japan, in January 2018.

(5) Nepal

Nepal has geopolitical importance as an inland state between the great powers of China and India. For many years, Japan has been a major donor to Nepal and the two countries keep traditionally friendly relations through a variety of exchanges including between the imperial family and the former royal family, and through mountaineering.

In domestic affairs, local elections for the House of Representatives and Provincial Assemblies were held in 2017, and in February 2018, Prime Minister Oli was inaugurated, and the coalition government formed by the Communist Party of Nepal (Unified Marxist-Leninist) (UML) and the Communist Party of Nepal-Maoist Centre (MC) was set up. The UML and MC merged in May and the Nepal Communist Party was established.

For many years, Japan has assisted the consolidation of democracy in Nepal, and has been supporting the country's initiative to realize a “Prosperous Nepal, Happy Nepal.”

In November 2018, Foreign Minister Gyawali visited Japan and exchanged views with Japanese government officials, toured agricultural facilities, and held an investment seminar to further strengthen economic relations.

(6) Bhutan

In Bhutan, the third lower house election was held in October 2018 since the country's democratization, and it was won by the Druk Nyamrup Tshogpa (DNT) party, launching a new administration under the leadership of Prime Minister Tshering. Bhutan sets Gross National Happiness (GNH) as a guideline of the administration and is currently working on the priority issues of reducing poverty, improving the quality of healthcare and education, gender equality, the preservation of the environment, culture and traditions, stabilization of the macroeconomy, economic diversity, advancing of decentralization, etc., under the 12th Five- Year Plan (from July 2018 until June 2023).

With regard to the relationship with Japan, Prime Minister Tobgay visited Japan in April 2018 for the second time since his inauguration and held a Summit Meeting with Prime Minister Abe. The leaders agreed to further strengthen bilateral relations through promoting economic cooperation and human exchanges. Furthermore, during his stay in Japan, Prime Minister Tobgay visited Soma City in the Fukushima Prefecture. Moreover, in June, Foreign Minister Kono made Japan's first ministerial level visit to Bhutan and paid a courtesy call to His Majesty King Wangchuck. He also held meetings with various government officials of Bhutan, including Foreign Minister Dorji.

(7) The Maldives

The Maldives is an island country in the Indian Ocean and its economic growth is mainly led by fishing and tourism, which account for about 30% of GDP. The country graduated from a least developed country in 2011, and its per-capita GDP reached approximately 9,792 US dollars, marking the highest in South Asia.

In domestic affairs, the presidential election held in September 2018 saw President Yameen (at the time) running for reelection, pitted against joint opposition candidate Solih, resulting in candidate Solih's win inauguration as president in November. President Solih is promoting a foreign policy of strengthening cooperation with all countries hoping to build mutually beneficial relations through advancing cooperation with other countries in the region including India.

Regarding the relationship with Japan, 2017 marked the 50th anniversary of the establishment of diplomatic relations, and in January 2018, Foreign Minister Kono visited the Maldives for the first time as a Japanese foreign minister. On the occasion of the inaugural ceremony for President Solih held in November, Prime Minister's Special Envoy Takeshita (President of the Japan-Maldives Parliamentary Friendship League) visited the Maldives and paid a courtesy call to President Solih. In December, Foreign Minister Shahid visited Japan with Finance Minister Ameer and Economic Development Minister Ismail to hold meetings with Foreign Minister Kono. During the series of meetings, the ministers confirmed that they would strengthen bilateral relations and cooperate to achieve a “Free and Open Indo-Pacific.”