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Myanmar means a lot to the Japanese



Asia Times News

Myanmar means a lot to the Japanese

Stephen Brookes, Yangon, 28th May 1997

There's not much to see yet at the sprawling Mitsui industrial development 
zone on the northern outskirts of Yangon. It's a flat expanse of virgin 
ground, broken only by a few scattered construction buildings, stacks of pipe 
waiting to be laid and cement trucks sending up clouds of dust as they lumber 
across the landscape. 

But by the end of the year, said Mike Nagai, the general manager of Mitsui's 
Yangon office, the site would be a thriving mecca for new manufacturers - part 
of the growing tide of Japanese traders and investors who are helping to 
jump-start Myanmar's economy. 

What was happening now in Myanmar, said Japanese businessmen in Yangon, was 
the next step in a process that started in the mid-1980s when Japan began 
promoting industrial development in Thailand, Malaysia and Indonesia. 

"More than half of the investment for ASEAN's [the Association of Southeast 
Asian Nations] industrialization came from Japan," said Nagai. "And it was 
mutually beneficial. We shifted our industry to ASEAN because of the cost 
difference, and it increased ASEAN's per capita GDP [gross domestic product] 
three to five times. We'd like to do the same thing in Myanmar." 

Japanese investors said Myanmar's ragged infrastructure, lack of services and 
other hurdles were outweighed by the country's low-cost, educated labor force, 
expected entry in ASEAN and long-term economic potential. 

"Our experience has been very positive," said Hiroshige Seki, general manager 
of the Yangon branch of Marubeni Corporation. "The economy is growing, and 
within five years we expect to see a lot of development." 

Japan is the ninth-largest investor in Myanmar, with some US$184 million in 
committed investment at the start of this year, most of it in real estate and 
hotel development. About 70 Japanese companies now have branches in Yangon, 
led by large trading groups like Mitsui, Marubeni and Mitsubishi - some of 
whom have been doing business in Myanmar for decades. In recent years, 
Japanese construction companies have entered the market, and small enterprises 
like service centers are now being established. 

And in Yangon, the Japanese economic profile is increasingly prominent. There 
are Nissan, Isuzu and Suzuki showrooms downtown, Japan Airlines has a tie-up 
with Myanmar International Airlines, Japanese banks crowd the prestigious 
International Business Center, and Daiwa Research is a joint partner in the 
country's fledgling stock exchange. 

And some large Japanese companies are expanding in broad areas, and have the 
resources to bring off major developments independently. "There are 27 
companies in the Mitsui group," said Nagai. "We have banking, insurance, 
petrochemicals. Once our company decides to implement a project, we can 
organize the financing." 

But at the official level, Tokyo is still cautious about Myanmar, and many 
smaller Japanese businessman are waiting until Tokyo restarts matching grants 
and assistance programs to Myanmar before investing. Official Development 
Assistance (ODA) has been on hold since 1988, and United States objections 
over human rights issues have prevented the International Monetary Fund and 
the Asian Development Bank from extending loans to Myanmar, hindering 
large-scale infrastructure development. 

Last year, pro-democracy leader Aung San Suu Kyi attacked Japanese investment 
in the Tokyo press. "If businessmen do not care that our workers are exposed 
to exploitation, they should at least be concerned that a dissatisfied labor 
force will eventually mean social unrest and economic instability," she 
warned. Large Japanese companies who come to Myanmar "to enrich themselves", 
she added, were among the "despoilers" of the nation. 

But Japanese investors said that view was inaccurate. "I don't understand why 
anyone would complain that we're creating jobs," said one Japanese businessman 
in Yangon, whose company employs more than a thousand local workers. 

"People are very happy to have jobs with Japanese companies. We pay better 
than most other employers, and we take better care of our employees. Other 
Asian investors complain that we pay our workers too much." 

"A lot of clients are careful because of the political situation," added 
Kiyoshi Nakano, general manager of the Yangon branch of the Japanese 
engineering firm Hazama, which is putting up the Royal Lake Hotel in downtown 
Yangon. "But the most important thing is to improve the infrastructure, then 
the awareness of the people will change." 

Businessmen in Yangon also expressed disappointment with the US decision in 
April to impose economic sanctions on Myanmar. "It was very sad for us," said 
one Japanese investor. "The sanctions don't help anyone. America should take 
an important role and take part in the international consortiums." 

Despite the increasingly hard line taken in the West, Japan's Foreign Ministry 
said recently that Japan is "not contemplating imposing sanctions on Myanmar 
at the present time", and some analysts believe that ODA may start again soon. 


"Japanese investment is tentative and will remain so until ODA is resumed, and 
the Japanese government can guarantee projects," said Michael Dobbs-Higginson, 
chief executive officer of Myanmar Investments Management in Yangon. 

"The Foreign Ministry is ultra-conservative and very cautious. But if ASEAN 
brings Myanmar in, this will change, and then it becomes an interesting 
equation. Japan has no real friends in Asia - the only friend it has is 
Myanmar. There's a special relationship with this country." 

The idea of a special relationship is widely shared among Japanese 
businessmen, who note that both countries have long historical ties and share 
non-confrontational cultures. "The Myanmar character is very similar to the 
Japanese character, and we communicate very easily," explained Marubeni's 
Seki. "In Japan, we say 'yes' but we don't always mean 'yes'," he said, 
laughing. "It's the same thing here." 

Moreover, said one analyst, Myanmar was looking for regional supporters to 
balance India and China, with which it shares borders. But the most important 
factor in developing ties, many have said, may be the mutually beneficial 
marriage of Japanese technology and capital with Myanmar's low-cost labor pool 
and prime geographic location. 

The Japan Development Institute (JDI), which has set up industrial zones 
throughout Southeast Asia, is looking for ways to help Myanmar develop 
infrastructure - even without aid from the international financial 
institutions. In this way Japan has a key role to play in Myanmar's 
development, according to Shoichi Kobayashi, the JDI's deputy director. 

"I use the metaphor of the bird sanctuary," he said, during a recent trip to 
Yangon. "In the mid-1980s, Japanese manufacturers began looking for new 
lower-cost manufacturing areas. But when these industrial 'birds' looked 
south, they found that the countries of Southeast Asia weren't able to support 
them, in terms of services, legal structure and infrastructure. So we began 
developing 'ponds' for these birds to settle in. We developed large-scale 
industrial zones in Thailand, Malaysia and Indonesia, and you can see that 
they have had a tremendous impact. It's really nation-building at the core." 

Kobayashi is helping develop seven special economic zones in Myanmar to draw 
in investors from Japan, South Korea and other Asian countries. He has drafted 
plans for special zones around Yangon, Mandalay and other cities, as well as 
in more remote parts of the country. 

"This kind of project is not so profitable," he said. "Normally the government 
should do it, but there's not much money. So it's volunteer work. I've tried 
to persuade the private sector in ASEAN and Japan to help, and I think I'll 
get their support." 

Myanmar's potential was so great, said Kobayashi, that it could fast outstrip 
many of its neighbors. "They have an open ear compared to Vietnam, where they 
don't know how to make a decision and are greedy with land," he said. "If 
properly guided on land and industrial policy, this country could move forward 
much better than Vietnam, China, Africa and the countries of Eastern Europe."