Japan has intensified its investment efforts in Myanmar in recent years in an attempt to counter China's growing influence in the region. The number of Japanese businesses in Myanmar has grown sixfold since the country's political transition in 2011, with billions of dollars invested in industrial projects and social development. Japan was well positioned during Myanmar's opening as it had maintained relations even during Western sanctions, while Myanmar also wanted to reduce dependence on China. However, Japan faces uncertainties under Myanmar's new civilian government led by Aung San Suu Kyi as some question its closeness to the previous regime.

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July 10, 2016 4:05 pm
Japan turns on the charm in Myanmar in
effort to counter China
Michael Peel and Leo Lewis
©Bloomberg
Japan has intensified its charm and investment offensive in Myanmar in a bid to
become Southeast Asia’s most powerful counterbalance to China.
In the five-year transition to Myanmar’s landmark new government, the number of
Japanese businesses in the country has grown sixfold, language courses have boomed
and billions of dollars have been pumped from Tokyo into industrial and social projects.

5. The investment spree is part of a wider Japanese push to win new markets and reduce
dependence on China by building closer ties in emerging countries to the south, such as
Vietnam.
“There are so many ‘déjà vus’ here,” says Hirokazu Yamaoka, Myanmar head of Jetro,
the Japanese trade promotion agency, referring to his previous posting in Vietnam
during its foreign investment boom. “And the real business has not yet started.”
Japan is one of several big powers jockeying for position in fast-growing Myanmar,
where political change has yielded the first civilian-led government for more than half a
century.
While Japan is competing hard in other Southeast Asian emerging markets, such as
Vietnam, it has enjoyed particular competitive advantages in Myanmar thanks to the
chemistry of the political transition.
Since Myanmar’s junta formally stepped down in 2011, the US and some other western
countries have been cautious because of lingering sanctions imposed during the most
repressive days of dictatorship.
At the same time, Myanmar signalled it wanted to reduce its dependence on China, most
notably by suspending the giant Beijing-backed Myitsone dam project in 2011.
Japan was well-placed because it had always kept a business and cultural foothold in
Myanmar, never imposing sanctions even as the western measures squeezed the junta
during the 1990s and 2000s.
Now Japanese government and corporate finance from the likes
of Mitsubishi,Marubeni and Sumitomo have powered the development of the giant
Thilawa industrial zone south-east of Yangon, where dozens of factories are complete or
under construction. Japanese development money has gone into plans ranging from an
overhaul of Yangon’s British colonial-era sewage system to the building of three radar
installations to warn of dangerous weather events.
“Japan has grown so much here in the past two years or so,” says Kyaw Naing, a 34-
year-old engineer, speaking beside the blue and white Yangon weather tower he is
helping construct. “And more is coming.”
Official loans from Tokyo to Naypyidaw almost doubled to ¥98.3bn in 2014 from the
year before, the latest figures available, while debt relief amounted to ¥300bn in 2013
alone. Membership of the Japanese Chamber of Commerce in Myanmar climbed from
53 at the end of military rule to 310 by May this year, a number that could rise higher if
big companies resolve concerns ranging from lack of power supply to restrictions on
foreign ownership. Some Myanmar state businesses have joint ventures with Japanese
companies including brewer Kirin and telecommunications company KDDI.

6. Daiwa Securities, the giant Japanese brokerage that was central to the creation of
theYangon Stock Exchange, envisages businesses emerging from the evolution in
Myanmar’s domestic business scene. “We want to try to get more companies to consider
listing on the Yangon exchange and that is going to mean more education. We want to
get more people involved in trading too,” said Atsuo Tachikawa, Daiwa’s head of
international business planning.
Japanese language courses have also flourished as young Myanmar nationals aim to
land jobs with the companies now coming in. The number of institutions in Myanmar
teaching Japanese has climbed to 200 from 44 five years ago, according to Japanese
official estimates.
Myanmar nationals have also embraced study and work in Japan as travel restrictions
have eased. One Myanmar student moonlighting illegally at a convenience store in
central Tokyo says she decided to learn Japanese not Chinese because the quality of
work offered by Japanese companies seemed “a lot better”.
“We want to make money, I want to have a family one day and the Japanese companies
seem to have real jobs,” she says.
We want to make money, I want to have a family one day and the Japanese companies
seem to have real jobs
- Myanmar student

7. Meanwhile, an increasing number of Japanese are learning Myanmar language. A
course for mature students was so popular when it debuted in 2015 that the Tokyo
University of Foreign Studies increased the numbers of classes by 75 per cent this year.
But the bilateral relationship also faces uncertainties under the new government led by
Aung San Suu Kyi’s National League for Democracy.
Gen Aung San, the assassinated Myanmar nationalist leader and Ms Aung San Suu Kyi’s
father, did a pragmatic second world war deal with occupying Japanese forces to fight
the British colonialists. But the relationship unravelled when Japanese forces
committed atrocities and it became clear Tokyo was not going to allow independence.
Some analysts question whether Japan’s standing might be damaged by perceptions it
was close to the previous government, with which Ms Aung San Suu Kyi had a tense
relationship.
Japan has also faced criticism for allegedly drawing up development plans in Myanmar
without sufficient consultation in the affected communities.
Jetro’s Mr Yamaoka insists Japan has handled local people’s concerns sensitively,
including in a dispute with villagers displaced by the Thilawa industrial area that
remains unresolved.
“We want to help Myanmar be an industrial society,” he says. “We want a win-win
relationship with our neighbours.”