Myanmar’s new old friend

Japan quietly making headway as one of the most influential investors in a country it occupied only 70 years ago.

International observers have had a field day analysing the battle for influence in Myanmar between China and the United States, as Beijing tries to shore up its ties with Nay Pyi Daw, and Washington makes up for lost time.

But it’s the Tokyo Stock Exchange that is helping establish a modern stock market in this long-isolated corner of Southeast Asia. Japanese companies will be spearheading the Thilawa “special economic zone” outside Myanmar’s commercial capital.

And when Myanmar’s airline industry saw its first foreign investors last month, it was Japan’s All Nippon Airways, which is buying a 49% share in Asian Wings, a tiny Myanmar-owned airline.

Japan has been “by far the most vigorous of the countries ‘engaging’ Myanmar since the arrival of [Myanmar president] Thein Sein”, says Sean Turnell, a Myanmar expert and economics professor at Australia’s Macquarie University.

It’s a reminder that beyond China and the United States, several regional powers have their own interests in the country — none, perhaps, more than Japan. And despite some hand-wringing over recent commercial setbacks in Myanmar, Japan’s involvement is only growing.

There is, of course, plenty of history there. Japan drove out Burma’s British colonial masters when it invaded the country in 1942, with the support of Aung San and the Burmese Independence Army. Of course, just a few years later, Aung San struck a deal with the British and helped drive the Japanese back out of Burma. But in Japan’s view, the war helped set the stage for the country’s independence after post-war negotiations with London.

Japan maintained a close relationship with General Ne Win, and was the most important foreign financial donor to the often-isolated country for decades. But as the former military junta grew close to China during the 1990s and 2000s, Japan’s influence waned somewhat, as the United States pushed Tokyo to help isolate Myanmar, and Japan focused more on humanitarian assistance.

Since Myanmar’s military regime transitioned to civilian-led rule in 2011, however, Japan has been aggressively courting Nay Pyi Daw — and countering Beijing’s influence in Myanmar.

Prime Minister Shinzo Abe, for example, swept into the capital in May bearing $1.74 billion in debt relief and promises of new aid.

In April, Aung San’s daughter and Myanmar opposition leader Aung San Suu Kyi visited Japan, to much fanfare, for the first time in 27 years. The democracy icon once studied in Japan, researching her father’s wartime connections with Japan.

“Japan certainly perceives a special relationship — a mixture of contemporary strategic and aid policies as well as historical sentiment,” says Macquarie University’s Turnell. The sentiment, he said, “relates to a widespread notion in Japan that the country acted as something of a midwife to Myanmar’s independence in light of its (temporary) ending of British rule in the Second World War”.

Japan has played a huge role in getting Myanmar’s huge international debts cancelled. And it’s a large provider of development assistance, particularly when it comes to infrastructure building and healthcare. Earlier this month, a group of Japanese parliamentarians and private sector officials toured Myanmar, focusing on Japan’s support for the Global Fund to Fight Aids, Tuberculosis and Malaria.

That may explain why it came as a shock to some in Tokyo when Japanese companies lost the bidding in Nay Pyi Daw for the rights to build the new Hanthawaddy airport 80 kilometres outside Yangon. Japan’s KDDI Corp and Sumitomo Corp also lost out in the bidding for two lucrative wireless telecom licences.

Following the failure of Japanese companies to win the recent auctions, a high-ranking Japanese government official told the Japan Times last month that “there is a need to revise [our] game plan”.

But despite the apparent angst in Tokyo, Myanmar’s recent government tenders haven’t favoured any particular country, when taken as a whole. Besides, Mitsubishi and an affiliate of Japan Airlines did win a contract to upgrade Mandalay International Airport.

Japanese companies may also end up being key players in the Dawei Special Economic Zone, originally spearheaded by Italian-Thai Development of Thailand. ITD’s inability to raise funds for the huge project promoted the governments of Thailand and Myanmar to agree on a new holding company structure with several subsidiaries, most of which would seek partners and shareholders wherever possible.

About the author

Writer: Joseph Schatz