Japan has written off more than 300 billion yen ($3.7 billion) of Myanmar’s debts, paving the way for the financing of new transport projects in the emerging Southeast Asian state.
Japan’s automakers see Myanmar, Southeast Asia’s fourth most populous country, as a potential location for low-cost manufacturing of parts for its factories in neighboring Thailand. Myanmar also has huge potential as a consumer market after almost five decades of military rule and economic stagnation.
The debt waiver was secured by Myanmar’s President Thein Sein, a former general, in return for continuing his democratic and economic reforms, which have seen the release of political prisoners, new media freedoms and, earlier this month, by-elections that included dissident and pro-democracy leader Aung San Suu Kyi.
Japan also agreed to publish a feasibility report later this year into the development of a new industrial estate at Thilawa, 14 miles south of the commercial capital Yangon.
Last year, foreign investment in mining, oil, gas and hydropower resources in Myanmar totaled $20 billion, according to government statistics. That figure is expected to surge further this year and next as Myanmar is accepted back into global trading community and opens up its abundant natural resources to foreign investors.
EU ministers will meet later today and are expected to agree to suspend many of the sanctions currently preventing European companies from investing in Myanmar, which many analysts believe has the potential to develop into a regional transport hub and access point to China and India. The U.S. has resumed diplomatic relations and has signaled it would ease its trade and investment restrictions on Myanmar later this year.
Japanese carrier MOL started a new twice-weekly container service with RCL between the Port of Yangon and Singapore last month using three vessels. It cited the country’s huge growth potential when it announced the new service.
“Myanmar has a lot of catching up to do, particularly its infrastructure, which has seen almost no investment for decades,” said a source close to a regional container carrier that operates another service into Yangon. “There will be more investment as sanctions are lifted and this will boost trade because it’s a big market.”
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