Experts warn Myanmar’s opposition victory could affect Japanese businesses

In the wake of Myanmar’s ruling party conceding defeat to Aung San Suu Kyi’s opposition forces in the nation’s first free general election in 25 years, Japanese experts say it could have mixed repercussions for Japanese companies investing there.

“We lost,” Union Solidarity and Development Party (USDP) leader Htay Oo, a close ally of President Thein Sein, told Reuters in an interview Monday in Hinthada, Myanmar.

The vote count was still underway, but preliminary reports from around the country indicated a wide margin of victory for Suu Kyi’s National League for Democracy (NLD).

“Japanese companies are worried about whether the NLD has sufficient knowledge and human resources to take the helm of state,” said Masahiko Ebashi, president of Myanmar Economic Research and Consulting Co., a think tank based in Yangon. “Can they really run the state without the help of the military?”

A former official of Japan External Trade Organization who was also a professor at Meiji Gakuin University, Ebashi compared the victory to when the Democratic Party of Japan knocked the Liberal Democratic Party out of power in 2009 after the LDP had been steering Japan for almost all of the postwar period.

“Even though Japan’s bureaucracy is considered well-organized and strong, there was still confusion after the DPJ took power,” Ebashi said. “Having witnessed that, Japanese firms are worried about what might happen in Myanmar.”

There were about 250 Japanese companies in the country as of the end of July, accounting for as much as $415 million in investment, according to JETRO.

Used Japanese cars are extremely popular in Yangon, where they make up about 80 percent of all autos on the road, according to JETRO. The organization, citing Myanmar government statistics, said Toyota Motor Corp. had a 73 percent share in the used car market in fiscal 2012.

Ebashi said it would be better if Suu Kyi’s NLD could cooperate with USDP in running the state, and if she clashes with the military party on issues such as constitutional revision there will be political unrest.

The NLD is pushing to scrap the clause in the nation’s constitution that allows a fourth of the seats in both houses of parliament to be allocated to the military.

Minoru Kiryu, a former professor at Osaka Sangyo University who is well-versed in Myanmar issues, is more optimistic.

If Suu Kyi’s NLD gains a majority in parliament and becomes the ruling party, the political situation is likely to stabilize, which would be good news for Japanese companies investing in Yangon, Kiryu said.

“It would be a problem if it’s a close race between NLD and USDP, but that doesn’t seem to be the case,” he said. Media reports said NLD may gain as much as 80 percent of the seats in parliament.

Despite the change of government, there will not be a considerable change in policies for the time being, and Yangon is expected to continue welcoming foreign investment, Kiryu said.

“But once the NLD takes power, they will make policy changes, including replacing ministers, and that may change the ways in which Japanese companies do business in Myanmar,” Kiryu said. “Companies need to watch the changes closely.”

Asked whether there is still a risk that the USDP might try to hold on to power, Kiryu said that is unlikely due to pressure from the international community, especially if the NLD wins a landslide victory.

On Monday, Japan’s Foreign Ministry welcomed the election, calling it an “important milestone” in Myanmar’s democratization process.

Japan has sent a mission headed by Yohei Sasakawa to monitor the election.

The ministry said Tokyo will continue to support Yangon in its democratization process and various reforms.

Source: Japan Times

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