Tokyo: Myanmar's President Thein Sein won a debt forgiveness deal from Japan on his first visit as head of state that opens the way for the Southeast Asian nation's biggest creditor to resume financing ports, bridges and roads.
Japan will forgive 303.5 billion yen (Dh13.65 billion) in loans and interest to Myanmar, according to a statement distributed to reporters before Prime Minister Yoshihiko Noda met Thein Sein yesterday. Japan will also roll over 198.9 billion yen of debt with a new loan, while vowing to resume aid.
Investment pitch
Thein Sein is courting investment from Japan amid a shift toward democracy over the past year that's encouraged re-engagement with developed nations after five decades of military dictatorship. Honda Motor is among companies expressing interest in Myanmar.
Japan will extend econ-omic cooperation to "support Myanmar's efforts for reforms in various areas towards its democratisation, national reconciliation and sustainable development", Noda said in the statement.
Japan agreed to complete a feasibility study by year's end to develop a port and industrial estate at Thilawa, 25 kilometres south of Yangon, Myanmar's biggest city, according to a statement.
The industrial zone would promote Japanese investment and help grow Myanmar's economy, the statement said.
The world's third-largest economy pledged 403 billion yen in loans to Myanmar between 1967 and 1987, according to foreign ministry data. Japan attached conditions to parts of the debt deal announced today, such as cancelling 176.1 billion yen of overdue charges after "monitoring the continuation of Myanmar's reform efforts in a one-year period", according to the statement.
As part of the agreement with Japan, Myanmar agreed to discuss settling arrears with the World Bank and the Asian Development Bank, it said.
Policy compulsions
Cheap wages, natural resources, historical ties and concern over China's influence in Myanmar make the nation important for Japan, said Kei Nemoto, a professor specialising in Myanmar at Sophia University in Tokyo. Policymakers "are now thinking that the time is right to deepen engagement with Myanmar, otherwise Japan may lose in the competition with other countries," he said, noting that China, India and South Korea have increased ties with the Southeast Asian nation.
European Union (EU) envoys will tomorrow reassess sanctions on Myanmar following by-elections this month that included dissident Aung San Suu Kyi.
EU governments will probably suspend most sanctions against Myanmar to reward the country for progressing from military rule toward democracy, an EU official told reporters in Brussels yesterday on condition of anonymity.
The US has announced that it will ease trade and financial restrictions on certain sectors, without providing details.
Thein Sein met Noda after a regional summit involving leaders from Cambodia, Vietnam, Thailand and Laos.
Thein Sein is expected to visit power plants run by Tokyo Electric Power and Electric Power Development, also known as J-Power, according to Japan's Foreign Ministry.
Business advantage
Yangon had the cheapest wages among 31 cities in Asia, according to a Jetro survey last year. Workers in Myanmar's former capital earned less than $2 per day on average, compared with $4 in Cambodia, $5 in Vietnam and $14 in Thailand, the report showed.
Italian-Thai Development, Thailand's biggest construction company, is pushing Japan to provide financing for an $8.6 billion (Dh31.58 billion) deep-sea port and industrial estate in Dawei, a Myanmar coastal town less than 300 kilometres from Bangkok. The company has named Mitsubishi and Mitsui as potential investors.
Honda is interested in building a motorcycle plant in Myanmar, Hiroshi Kobayashi, president and chief executive officer of Asian Honda Motor, told reporters in Thailand recently. NTT Data, the Tokyo-based provider of network-system services, said last week that it plans to form a subsidiary in September that will have as many as 500 employees by 2017.
