Long reliant on China, Myanmar turns to Japan

Long reliant on China, Myanmar turns to Japan

The Japanese government is lending loans for the projects at 0.01 per cent interest

On a street in central Yangon the final moments of Kenji Nagai’s life were captured in a Pulitzer Prize-winning photo, an image that exemplified the brutality of military rule in Myanmar. Nagai, a Japanese journalist, was shot five years ago during a crackdown on protesters by security forces, and his death was a low point in relations between Myanmar and Japan.

Now, as Myanmar seeks to shed its authoritarian past, a much different picture is emerging. Japan is rapidly ramping up its presence in the country with a heavyweight deployment of government assistance and corporate heft reminiscent of the large investments at the height of Japan’s global economic power in the 1980s.

One block away from the spot where Nagai was killed, on the fourth floor of City Hall, two dozen Japanese engineers are drawing up a master plan to remake the roads, telephone and Internet networks, water supply and sewage systems of Yangon, the country’s long-neglected commercial capital.

With the attention to detail they are famous for, Japanese engineers are measuring traffic patterns in Yangon, inspecting 70-year-old water pipes and poring over maps and blueprints. “Myanmar is saying, ‘Welcome! Please help us,”’ said Ichiro Maruyama, the deputy chief of mission at the Japanese Embassy in Yangon.

President Thein Sein, who travelled to Tokyo earlier this year to plead for help, is outsourcing crucial parts of his drive to redevelop the country to the Japanese. In addition to the makeover for Yangon, a Japanese consortium has been tasked with building a large industrial zone and satellite city on Yangon’s outskirts. The totality of Japanese assistance has stunned those who watch the country closely.

“I’ve been somewhat astonished by the extent of the Japanese involvement and alacrity with which they’ve moved,” said Sean Turnell, an expert on Myanmar’s economy at Macquarie University in Sydney.

By choosing Japan for these crucial projects, Myanmar is diversifying away from China, its largest foreign investor in recent years. Myanmar has become a sort of strategic battleground between Asia’s two economic titans, China and Japan, Turnell said. “This is a competition for pre-eminence and influence in Asia,” he said.

China and Japan have diverging interests in the country. Japan is eager to tap into Myanmar’s cheap labour force and extend its massive network of factories spanning Thailand and Indochina. China is more focused on extracting Myanmar’s natural resources like natural gas, gems, timber and rubber as well as electricity from hydroelectric dams.

The impression that China is robbing the country of these resources has led to an anti-China backlash, including recent protests against a copper mine near the central city of Monywa and the suspension last year of the Myitsone hydroelectric dam.

John Pang, the chief executive of CARI, a research organisation based in Malaysia, says the Myanmar government’s pivot toward Japan “is not so much an attraction to Japan as much as a revulsion against the Chinese.” “It’s a game the Chinese gave away,” he said.

The Japanese, Pang said, “come across as nonthreatening” and have managed to build up trust with Myanmar’s leaders.

Upgrade relations

Many other governments have sought to upgrade relations and business contacts with Myanmar — South Korean and Singaporean companies are very active in the country — but Japan has been far more comprehensive in its approach.

Japan’s overall strategy is to deploy the full force of what used to be called Japan Inc. Some of the country’s largest conglomerates — Mitsubishi, Marubeni and Sumitomo — are working in cooperation with the Japanese ministry of international trade and industry.

“We haven’t had any project like this in at least 20 years,” said Masahiko Tanaka, the chief representative of Japan’s International Cooperation Agency, which will provide financing for the projects.

The Japanese government says it is willing to lend Myanmar money for the projects on terms that are near-giveaways: loans with 0.01 per cent interest payable over 50 years and with no payments due for the first 10 years.

While the cheap money is no doubt attractive to the cash-strapped nation, Thein Sein appears to be counting on something else: help in winning the next election, scheduled for 2015.

“They are requesting that the project be finished before 2015,” said Maruyama, the Japanese deputy chief of mission, referring to the industrial zone, which is called Thilawa and which will also include banks, schools, hospitals and other amenities of a city built from scratch. He jokingly calls the timetable “mission impossible.”

Yohei Sasakawa, the chairman of the Nippon Foundation, a Japanese charity that focuses its assistance on areas where impoverished ethnic minorities live, says the government is very aware that the population will want to see a “democracy dividend” — tangible benefits from the transition away from military rule.

Thein Sein has requested that the Nippon Foundation give priority to projects that can be completed quickly, like the construction of primary schools in remote areas, Sasakawa said.

Japan’s plans for the makeover of Yangon stretch the meaning of the word ambitious.

Large parts of the city’s infrastructure were built during the British colonial days, which ended in 1948. Train cars on British-built tracks ride on rotting railway ties. Yangon sidewalks are scarred by deep and treacherous crevices. A dilapidated sewage system covers only the central area, and pipes meant to deliver clean water are a Swiss cheese of leaks.

The Japanese government is also studying plans for mass transit systems, the rehabilitation of four power plants that provide electricity to Yangon, the construction of a second bridge over the Bago River and the addition of six berths to the port near Yangon that will serve the Thilawa project.

The Japanese government says it will have a better idea about the cost of the projects once feasibility studies are completed at the end of the year. But it is sure the price tag will be in the billions of dollars. It has already reached a deal that would forgive or reschedule Myanmar’s outstanding debt to Japan.

While Japan’s interest in Myanmar is partly geostrategic, for some older Japanese the re-engagement by Japan also cements a longstanding — and checkered — relationship between the two countries. Aung San, the country’s independence hero (and father of Daw Aung San Suu Kyi, who is now leader of the opposition in Parliament), trained in Japan before leading efforts to oust the British from the country.

By helping main figures of the Burmese independence movement, the Japanese see themselves as the having been ‘midwives’ of Burmese independence from the British, according to Turnell. The subsequent Japanese occupation of Burma during World War II was brutal. But the two nations developed a kind of kinship of former foes, something akin to the United States and Vietnam today.

The sentimentality that many Japanese have toward Myanmar may be in part because of a popular 1956 film, ‘The Burmese Harp,’ in which a Japanese soldier dons the robes of a Buddhist monk and remains behind after the war.

For Sasakawa of the Nippon Foundation, re-engaging with Myanmar is personal. He remembers eating rice shipped from Burma in the lean years after the war in Japan. “We are really late in repaying our obligation,” he said. “We are passionately looking forward to paying back the kindness of Myanmar.”

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