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Japan Investment in Burma

by Dawn Matus and Donald Macintyre, Bloomberg Business News
Asahi Evening News, Saturday, August 26

     While President Bill Clinton and much of Congress dislike Burma's human
rights record, more U.S. companies do business there than Japanese.
     Worried that they will miss out on Asia's last economic frontier,
Japanese concerns are starting to return, however.
     Japan has even resumed doling out small amounts for foreign aid to the
generals who run Burma.
     Marubeni Corp. and other big trading companies have led the charge to
do business in Burma.  Now manufacturers such as Mitsubishi Motors Corp. and
banks are going.
     With potentially vast gas and oil reserves, lush forests and farmland
and rich mineral deposits, Burma is a treasure trove of largely untapped
     Also, the 43 million Burmese earn some of the lowest wages in Asia.
     In 1988 the military overthrew a civilian government and -- when
students protested -- killed hundreds, perhaps thousands.  The military
junta's State Law and Order Restoration Council now rules with an iron hand.
     Human rights groups allege that the regime has used slave labor to
build a railroad through the jungle.
     After the massacre, Japan and most other countries cut off foreign aid.
That dried up projects such as road building that had been an important
source of business for Japanese companies.
     In addition, without the trade and investment insurance Japan provides
its companies doing business abroad, it got too risky for them to do
business in Burma.
     Japanese companies didn't need to worry about shareholder lawsuits or a
messy scene at an annual meeting over doing business in Burma like American
companies, but they still fretted about bad press -- another reason to stay
     That put a dent in Burma's ambition to become an economic power along
the mighty Mekong River, which runs east through China's Yunnan Province and
Laos, India and its vast market is on the western border.  Although shunned
by much of the world, the junta has managed to get Burma's wrecked economy
back on track.  Burma reckons its economy grew 6.8 percent in 1994 and 5.9
percent in 1993.  Foreign investment had reached $2.57 billion (257 billion
yen) in March.
     In July, the military improved its ugly image abroad by releasing
Burma's most famous political dissident, Nobel laureate Aung San Suu Kyi.
She had spent six years under house arrest.
     Japanese companies had already been pressing the government to resume
aid, said Ikuko Ida, a Burma specialist at Japan's Institute of Developing
     Even when Suu Kyi's was only a rumor, Japan reopened the aid tap.  It
has committed to one billion yen in humanitarian aid to Burma this year. 
     Also early this year, Japan resumed writing trade and investment
insurance for companies going into Burma.
     Suu Kyi's release gave Japanese companies more ammunition to press
their government to lavish aid on Burma.
     The United States and most other industrial nations have yet to start
up aid again, saying they want to see more evidence the military is serious
about restoring democracy.  Suu Kyi has asked foreign investments to hold off.
     Japan maintains that by giving aid now it is nudging Burma toward
     Until 1988, Japan was Burma's biggest foreign aid donor.  As part of
Japan's World War II reparations, companies like Hino Motors Ltd., Mazda
Motor Corp., and Mitsubishi Electronics Industrial Co. helped build Burma
into an Asian industrial power.
     That was before Burma entered nearly three decades of isolation under
"The Burmese Way" of socialism in the 1960s, a move that left the economy in
     Even after 1988, a few adventurous Japanese companies continued to do
business in Burma.  One of the most aggressive is Marubeni, which began
selling fuel there in 1990.  The business is now selling $80 million a year.
     Marubeni recently got orders worth $70 million to upgrade two Burmese
power plants, adding to a list of projects that includes fishing, energy
drinks and building an industrial park.
     The Bank of Tokyo Ltd., which along with other foreign banks was thrown
out in 1984, has just reopened its Rangoon office -- although not a full
     Sumitomo Corp., another trading company, signed a $10 million deal to
improve Burma's telecommunications system.
     Mitsubishi Motors will set up a Burmese distributorship in October.
Still, only about 25 Japanese companies are doing business in Burma,
accounting for only about 4 percent of foreign investment.  Human Rights
Watch/Asia named more than 60 U.S. companies doing business there.
     From the sidelines, Japan has watched international rivals snap up plum
deals.  The French oil company Total S.A. and Los Angeles-based Unocal Corp.
clinched a contract to build a natural gas pipeline linking Burma and
Thailand, a project that could be worth as much as $1 billion -- and that
got Unocal in hot water with human rights-minded shareholders.
     Thailand, Singapore and Hong Kong are the leaders in the number of
business projects -- but perhaps not for long.
     More Japanese aid is on the way, which could mean more business for
Japanese companies.  Japan has decided to provide "several tens of billions
of yen" to build a nursing school, the Foreign Ministry says.
     Under consideration are $287 million expansion of the Rangoon airport
and money for improving telecommunications.
     A few U.S. companies have yielded to pressure from governments and
human rights groups and left Burma, including jeans maker Levi Strauss &
Co., women's fashion retailer Liz Claiborne Inc., and outdoorsy Eddie Bauer Inc.
     The ones who stay say they're helping restore democracy by bringing
prosperity and a middle class to Burma.  Besides, they say, if they don't
grab the opportunity, someone else will.
     "How many political prisoners are there in Indonesia?  China?  Somalia?
Human rights is not a problem limited to Burma," said Akinori Seki, a
Marubeni executive.
     "There are human rights problems all over the world."