Japan, Myanmar start investment talks
May 28 - June 3, 2012
Minister for Industry U Soe Thein delivers a speech during the 18th International Conference on the Future of Asia in Tokyo on May 25.
TOKYO – Japan said May 21 it is in talks with Myanmar on an investment treaty, with Tokyo eyeing terms to help its companies establish themselves in the isolated nation as it embraces democratic reforms.
A second round of the negotiations, which began in February, started in Nay Pyi Taw on May 23 between officials from the countries’ foreign and trade ministries, a Japanese trade ministry official said.
“We hope to support Japanese firms’ investment in Myanmar” by preparing investment terms that are non-discriminatory to foreign firms, he told AFP.
“We hope to seal a deal by later this year, hopefully by the ASEAN summit in November,” he added.
The move comes as Myanmar prepares for an economic resurgence following the end of decades of military rule, which in turn is attracting attention from firms all over Asia seeking a piece of the potentially lucrative market.
Investment rules for foreign firms are hazy in Myanmar, said Yoshihiro Araki, a researcher at the Japan External Trade Organisation.
“I don’t know of any laws that clearly stipulate rules such as domestic procurement and technological transfer, so it is difficult for companies to pour in a huge amount of money without an investment treaty,” he added.
However, Sumitomo Mitsui Banking Corp said on May 22 it will lend technical support to Myanmar’s biggest commercial bank as it looks to tap the country as it embarks on reforms that ended decades of isolation.
SMBC, the retail banking unit of Sumitomo Mitsui Financial Group, said it signed an agreement on May 21 with Kanbawza Bank, Myanmar’s largest commercial bank, with an eye to expanding its presence in the country.
The Japanese firm said it will advise the Myanmar lender on banking operations and help train its employees, a Sumitomo spokesman said.
“The [agreement] is the first of its kind signed between a Japanese bank and a private bank in Myanmar since the recent progress in democratisation in Myanmar,” the Japanese lender said in a statement on May 22.
“While considering possibilities, including a future business tie-up between the two banks, we aim to build our supporting system for our clients entering into the country,” it said.
Ministop, one of Japan’s convenience store chains, has also struck a deal with Myanmar’s largest retailer, City Mart, “on a possible business tie-up to open convenience stores in Myanmar”, a company spokesman said on May 21.
Tokyo has said it would forgive about US$3.7 billion of Myanmar’s debt and resume suspended aid as Japanese firms continue a push into the country.
Myanmar has largely untapped natural resources, including minerals, metals and fossil fuels, and a potentially huge tourism sector, although challenges abound with the rule of law weakly enforced and a major infrastructure deficit.
The United States on May 17 eased investment sanctions on Myanmar and named the first US ambassador to the country in more than two decades.
Group of Eight leaders gathered for talks in the United States at the weekend praised the “remarkable efforts” of President U Thein Sein and pro-democracy leader Daw Aung San Suu Kyi in delivering democratic reforms.