Japan played a leading role in helping Myanmar to settle its outstanding debts at a meeting of donor nations for the impoverished country held Thursday in Tokyo, aiming to support reform efforts and promote investment by Japanese firms.
As Myanmar's largest creditor country, Japan helped to clear the debt that has crippled the country's economic recovery by urging debt relief among other donors.
Moreover, it also pledged at the meeting the resumption of low-interest loans.
"It is essential to support Myanmar's reform efforts and help it rejoin the international community as soon as possible," Finance Minister Koriki Jojima said at the meeting held alongside the annual meetings of the International Monetary Fund and the World Bank Group.
Win Shein, Myanmar's finance and revenue minister, said in acknowledgement that Japan had paved the way for the settlement of the country's outstanding debts. He expressed gratitude on behalf of the people of Myanmar.
According to a senior finance ministry official, Japan served as "an agent for Myanmar," convincing major creditors such as the World Bank and Asian Development Bank to settle delinquent loans next January.
Through the resumption of loans, the government further intends to accelerate the development of infrastructure such as power grids and roads to encourage the expansion of Japanese firms.
Myanmar, for its part, "expected broad-based support, including human resource development, from Japan," said an official of a Myanmar-based business association, as the country tries to reduce dependence on China, which poses major political risks.
Known as "the last frontier in Asia" due to its rich natural resources, which include natural gas, Myanmar is also attracting foreign capital in search of cheap labor. The cost of manufacturing labor in Yangon, its largest city, is only one-eighth of that in Beijing and one-quarter of that in Bangkok.
Its gross domestic product per capita is also the lowest among members of the Association of the Southeast Asian Nations. However, if the economic reforms proceed, it is expected to achieve seven to eight percent in annual economic growth.
Little foreign capital had been invested under the junta, which had been hit by economic sanctions from the United States, European countries and others.
Japan has developed a special relationship with Myanmar. It accepted students from the country during the junta's rule, a move which had fostered strong positive sentiment toward Japan.
Whereas China accounted for 34.3 percent of total foreign direct investment during the period from 1989 to March of this year, Japan accounted for only 0.5 percent, according to the Japan External Trade Organization.
Meanwhile, Thailand and South Korea have recently expedited their direct investment.
Nagata is a Yomiuri correspondent in Bangkok.
(Oct. 13, 2012)
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