The Japanese government will lend official development assistance
(ODA) to Myanmar, implement a plan to cancel national debt and help
complete the Thilawa special economic zone, Japanese officials announced
in Yangon last week.
On January 3, Japan’s former prime minister
and recently appointed finance minister, Taro Aso, met with President U
Thein Sein and senior government officials in Nay Pyi Taw to discuss
bilateral economic relations.
According to Reuters, Mr Aso
reaffirmed an earlier promise to waive part of Myanmar’s US$5.74 billion
debt to Japan. He said that the Japanese government would absolve about
$3.36 billion of the debt in two phases throughout 2013, while a
consortium of private Japanese banks led by Mitsubishi UFJ Financial
Group would issue a loan for the remaining $2.24 billion.
Masaki
Takahara, executive managing director of Japan External Trade
Organisation (JETRO) in Yangon, said writing off the debt is a necessary
step to restart loans to Myanmar. He said these loans will be vital in
the investment and implementation of new infrastructure products.
The
Japanese government plans to loan the country $56.1 million this year
in ODA and plans to allocate $22.4 million to infrastructure projects
throughout the seven states and regions, Mr Takahara said. He said that
$11.2 million will be allocated to the rehabilitation of existing power
plants and $22.4 million to the completion of the Thilawa SEZ outside of
Yangon.
Although a Memorandum of Cooperation between Japan and
Myanmar on the construction of the Thilawa SEZ had been postponed last
year, Mr Takahara said it was signed last month. The MoC will pave the
way for building joint-ventures between the countries’ private
consortiums, he said.
“As [JETRO] is an organisation that
promotes Japanese trade and investment, we have been trying to invite
Japanese investment towards Myanmar. But the lack of proper
infrastructure is an obstacle for new investment,” he said.
Mr
Takahara said the completion of the Thilawa SEZ will continue towards
solving this obstacle, as the project aims to reduce electricity cuts
and provide Yangon with an international-standard industrial park.
Myanmar
and Japan have had two official consultations over Japan’s ODA for
sustainable economic development in Myanmar, Xinhua reported last
December.
The first consultation was in 1998, when the Japanese
government granted Myanmar a loan for the Yangon International Airport;
the second was in 2002, when the Japanese government granted a loan for
the renovation of the Baluchaung hydro-electric power station.
Ichiro
Maruyama, minister counselor of the Japanese embassy to Yangon, said
that future ODA will support the development of infrastructure,
including electricity, transportation and IT.
“If the [Japanese]
government wants to build an electricity plant, the electricity only
distributes to the economic zones and not to the people living in the
area. We can’t call that ODA. ODA is meant to help all people, not just
an industrial area,” Mr Maruyama told The Myanmar Times.
Mr
Maruyama said banking is vital to Japanese corporations’ investment in
Myanmar. In December 2012, the Bank of Tokyo-Mitsubishi UFJ and
Co-operative Bank signed a Memorandum of Understanding, while Kanbawza
Bank signed an MoU with Sumitomo Mitsui Banking Corporation. Under the
agreements, the Japanese banks will provide the domestic banks with
technical assistance as they gear up for Japanese investment.
“Japan
lost touch with Myanmar many years ago and we are ready to help.
Myanmar is now in its take-off period with the economy. Japan is
indebted to Myanmar because of World War II, so now it’s our time to
give back to the economy,” Mr Maruyama said.
U Set Aung, deputy
minister for National Planning and Economic Development, told
businessmen investing in the Thilawa SEZ that Myanmar is yet to
guarantee credit for small- and medium-sized enterprises. The comments
were made during a workshop at the Union of Myanmar Federation of
Chambers of Commerce and Industry (UMFCCI) on January 9. However, he
said the government can ensure credit for domestic business when they
borrow from the bank.
“When the Japanese government provides us
with ODA, domestic investors can run their businesses well, with very
low interest rates at 0.01 percent,” he said.
According to the
Directorate of Investment and Company Administration, Japanese
investment to Myanmar stands at about $246 million. The investment stems
from 29 projects to date comprising manufacturing factories, banking
and the Thilawa SEZ.
source: The Myanmar Times
http://www.mmtimes.com/index.php/business/3756-japanese-oda-to-fund-nation-s-infrastructure.html
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