By AP News Apr 12, 2013 5:11PM UTC
TOKYO (AP) — Japan’s long-deferred aspirations for a larger role in
Burma are getting a boost this coming week with a visit by Nobel Peace
Prize laureate and opposition leader Aung San Suu Kyi.
The visit by Suu Kyi, in Japan for the first time in 27 years, is
highlighting Japan’s interest in helping to craft a blueprint for
Burma’s economy and tapping its growth potential.
So far, Japan’s investments and involvement lag far behind those of
China and India. But that is fast changing, after Tokyo forgave about
half of Burma’s more than $6 billion dollars in debt, clearing the way
for renewed international lending to the impoverished Southeast Asian
country.
A high-powered delegation of business leaders, including top
executives from Toyota Motor Corp., Hitachi Ltd. and Sumitomo Chemical,
toured Burma, also known as Myanmar, in February and pledged to
cooperate in encouraging more investment.
Although Suu Kyi is not in government, she is widely respected,
especially in Japan, where she is expected to meet with Prime Minister
Shinzo Abe and other top officials and give speeches at two of Japan’s
most prestigious universities.
“Aside from being the opposition leader and an icon for democracy and
political freedom, she is a goodwill ambassador. The idea is to
encourage the Japanese government and corporate Japan to support Burma,”
said Jeff Kingston, a professor at Tokyo’s Temple University.
The handover of power by Burma’s military junta in 2011 to a
nominally civilian government ushered in sweeping political and economic
reforms, including releasing prominent political prisoners and allowing
Suu Kyi, who spend years under house arrest, to run in parliamentary
by-elections.
As of late February, Japan was the 11th largest investor in Burma,
with $270 million in overall investments, way behind the $14.2 billion
committed by China and $9.6 billion by Thailand, the top two sources
with 33 percent and 23 percent respectively of total foreign direct
investment.
Although it scaled back most business activity and cut government aid
when the U.S. and other western nations imposed sanctions in 2003 after
the previous, military regime put Suu Kyi under house arrest, Japan did
not impose sanctions on Burma.
Small-scale humanitarian assistance continued, and most major
Japanese businesses kept their offices and business registrations. The
maintenance of commercial and government relations is proving vital now
that Burma is embarking on its economic reforms.
Japan’s biggest contribution so far to Burma’s economic reform effort
has been the debt forgiveness arrangement, involving billions of
dollars in bridge loans by Japanese banks, that enabled the Asian
Development Bank and World Bank to resume lending for crucial
humanitarian and infrastructure projects.
Underscoring the government’s keenness for closer cooperation,
Finance Minister Taro Aso made Burma his first overseas destination
after taking office late last year. Although the visit had been planned
much earlier, it also reflected Tokyo’s determination to drum up
business in fast-growing Southeast Asian markets to help counterbalance
Japan’s vulnerability to problems with China over territorial and other
disputes.
Of the 35 Japanese projects under way in Burma, the biggest is one to
develop the 2,400 hectare (5,900 acre) Thilawa special economic zone
south of the capital, Yangon, which is being led by a Japanese
consortium of major trading houses, including Mitsubishi, Marubeni and
Sumitomo.
To support that project, Japan has promised long-term loans for
related infrastructure such as power plants, roads and bridges at an
interest rate of 0.01 percent.
Another major trading house, Mitsui & Co., is beginning imports
of rice and is planning to build rice mills in Burma, once the world’s
biggest rice exporter, to help it process 300,000 tons a year for
export.
In the financial sector, Daiwa Securities Group and the Tokyo Stock
Exchange are working with Burma’s financial regulators to help set up a
stock market by 2015. Meanwhile, convenience store operators such as
Family Mart and Lawson are considering opening outlets.
China’s investments, largely in energy and mining, have generated
controversy over exploitation of Burma’s rich natural resources that has
done little to resolve the country’s chronic power shortages. In
response, last year the Burma government abruptly suspended construction
of the China-backed Myitsone dam, which would displace thousands and
flood the spiritual heartland of Burma’s Kachin ethnic minority.
The Japanese focus on manufacturing, services, and infrastructure
projects such as road building has gotten a much warmer reception.
“Burma is very keen to attract investment from places other than
China. Japan in particular is very welcome because the Japanese have
shown they are interested in investing in projects that add real value,”
said Rachel Calvert, a risk expert at the IHS consultancy in Singapore.
Though Burma was one of Asia’s strongest economies in the 1950s,
conditions declined steadily after a military coup in 1962. Its market
of more than 60 million people, with average per capita income of only
about $715, offers huge potential, analysts say.
But the risks are likewise high, given the lack of many modern legal
and political institutions, endemic corruption, relatively scarce
skilled labor and crumbling infrastructure. Only a quarter of the Burma
population has access to electricity, which is intermittent at best.
“It’s not all smooth sailing. The country was under military rule
since 1960s. There’s a lot of basic building block things that have to
happen to make Burma a more effective investment environment,” said
Temple University’s Kingston.
Now that Burma is open for business, the rush of investors means
strong competition: the list of visitors to Burma’s Directorate of
Investment and Company Administration, which shows scores of photos of
visitors perched on brown leather sofas topped with white lace
antimacassars, reads like a “Who’s Who” of international commerce:
equity investors from China, Japanese logistics companies and megabanks
and big global conglomerates such as Nestle, Unilever and Dupont.
American brands Ford Motor Co., PepsiCo, Coca-Cola, GE, Caterpillar
and Danish brewer Carlsberg have all signed distribution deals in Burma.
Balancing the interests of competing foreign investors and the public
can be tricky, as Suu Kyi herself found after villages confronted her
to demand an explanation for her support of the Letpadaung copper mine
project, which is partly owned by a Chinese company.
An official panel headed by Suu Kyi that assessed the situation ruled
that the mining contract should be honored for the sake of good
relations with China, and to reassure other foreign investors.
China is not the only investor to face scrutiny over its projects: a
nongovernmental group, MekongWatch, has been lobbying on behalf of some
3,900 villagers who were ordered to vacate land to make way for the
Thilawa special economic zone.
“The Burma government says they are squatters and until recently the
Japanese government said it was the responsibility of the recipient
government to do something,” said Yuki Akimoto, a spokeswoman for the
group.
Akimoto said she was thinking hard about how to broach the issue with
Suu Kyi in a planned meeting in Tokyo, given the various complications
of the issue. As is often the case, land titles and ownership remain
unclear, and a surge in property prices in booming Yangon is prompting
speculative buying. But ultimately, it is the poor who are most likely
to lose their livelihoods.
“Despite the so-called reforms, there are few tools ordinary citizens can use to protect their rights,” she said.
source:
asian correspondent