How Japan Inc stole a march on competitiors to enter Myanmar

Tokyo – Japan Inc is charging into Myanmar. The rush began one night last October, when Myanmar’s new president rolled out a map after dinner to show an aging Japanese power broker a prize that could be Tokyo’s to develop - a swathe of land nearly as big as Macau.

The new president, U Thein Sein offered a deal: Japan could develop a special economic zone at Thilawa, a spot near both Myanmar’s largest city and a port on the Indian Ocean – if it came up with the money.

“I told him I would figure something out,” recalled Watanabe, a former cabinet minister and top aide to ex-Japanese Prime Minister Yasuhiro Nakasone.
Watanabe was as good as his word. A fast-track deal negotiated in less than a year has paved the way for Japan to provide at least US$18 billion in aid, investment and debt forgiveness from government and private sources.

In addition to this deal, Reuters has learned that Japan will provide up to $3.2 billion in new lending to build another special economic zone and deepsea port in Dawei, in southern Myanmar, which would be developed into Southeast Asia’s largest industrial complex.
The deals have made Japan a major player overnight in the opening of Myanmar. The part of the Thilawa package that includes debt forgiveness and refinancing adds up to nearly $5 billion, dwarfing the $76 million in aid from the United States in 2011 and 2012 and a two-year package of $200 million the European Union has pledged.

“We are lucky because the US was kind enough to introduce economic sanctions – that’s why Western financial firms have so far no presence in Myanmar,” said Shigeto Inami, who manages Myanmar operations for Daiwa Institute of Research. The think tank runs Myanmar’s tiny stock exchange and has plans to transform it into a thriving bourse by 2015.

A handful of US giants – including GE and Coca-Cola – already have returned. In Thilawa, Western power firms such as GE and Siemens and construction giants such as Bechtel and Balfour Beatty could win subcontracts from the Japanese, business analysts say.

“Many of our competitors have been in that market for many years, so we’re already late to the game,” said John Goyer, senior director of Southeast Asia for the US Chamber of Commerce. But “there’s clear interest and desire on Myanmar’s part to have US companies there”.

Myanmar has long been seen as a prize. A land mass as large as Britain and France combined, it shares borders with 40 percent of the world’s population in India, China, Bangladesh and Thailand. Its ports on the Indian Ocean and Andaman Sea sit just north of the Malacca Strait, one of the world’s busiest shipping lanes.

China remains Myanmar’s biggest patron. Led by investments in energy, China and its companies pledged more than $14 billion for Myanmar in the fiscal year ended March 2011, nearly 70pc of total foreign investment. Japanese companies invested just $212 million in Myanmar between 1988 and 2011.

Source mmtimes