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Japanese Businesses Express no Interest in Dawei or Kyaukphyu SEZ

Interview with Katsuji Nakagawa from the Japan Chamber of Commerce and Industry in Myanmar

Japanese businesses have not indicated any interest in Dawei SEZ or Kyaukphyu SEZ, and see the lack of reliable power supply as the biggest challenge in Myanmar, the chair of the Japanese Chamber said.

Katsuji Nakagawa, chair of Japan Chamber of Commerce and Industry in Myanmar (JCCM) and country head of Sumitomo Corporation Group, spoke to The Myanmar Times about the concerns and development of Japanese investments and businesses on June 9 in his office.

In an honest revelation, he said that Japanese companies, unlike Western firms, do not face public pressure on human rights issues, and that Japanese businesses in Myanmar have not expressed a desire to be involved in Dawei or Kyaukphyu SEZ.

After the “Conflict in Myanmar: Impact on Investment and Business” panel discussion on May 30 organised by the British Chamber of Commerce Myanmar, Vicky Bowman, director of Myanmar Centre for Responsible Business told The Myanmar Times that investments in Myanmar are unlikely to be considered a reputation risk for Asian companies.

“Since the Rohingya issue is increasingly the dominant newspaper story about Myanmar in the media, not just in the West but in the region, this is colouring perceptions of the country and political risk.

“The difference is that Asian companies, unlike Western companies, rarely encounter shareholder and media activism on human rights, and therefore investments in Myanmar are unlikely to be considered a reputation risk for them.

“The Chevron shareholders resolution which will be voted on at their annual general meeting on 31 May is an example of this. I doubt you would see such a resolution facing an Asian company,” she said.

Ms Bowman was referring to the US-based Chevron resolution vote. A small number of shareholders at Chevron singled out Myanmar in a resolution vote on May 31, requesting Chevron to issue a report by the end of November 2017 examining the feasibility of adopting a policy of not doing business with the Myanmar government.

The Myanmar Times asked the JCCM chair whether it is true that Japanese companies do not face the same public pressure on human rights issues.

“I’ll tell you not [no]. No public pressure. No public pressure in Myanmar and no public pressure in Japan. Our headquarters in Japan also do not have the pressure,” Mr Nakagawa said.

Peace process impact on business “not so big”

Many commentators have argued that, given Trump’s shift in foreign policy and the reputation risks of western companies investing in Myanmar, Myanmar is tilting towards China, Japan and other Asian neighbours for investment and support. The Myanmar Times asked him whether the Japanese investment approach is different from the Chinese or other Asian countries.

“I don’t see any difference. Myanmar is a new frontier market. Japanese companies are very keen to contribute to Myanmar society and to its people.

“Japanese businesses understand that Myanmar is a big potential market. Historically, we have had a good relationship with Myanmar,” he said.

He went on to say that, during former president U Thein Sein’s tenure, the Japanese government expected democracy and changes to take place in Myanmar, and supported private companies to venture into the market.

“Japanese government and private companies have started coming back to Myanmar during the military days. This is supported and initiated by the Japanese government.

“The Japanese government knew that a new Myanmar government would come in soon.

“The NLD [National League for Democracy] party would win the election and a new democracy would start – the Japanese government understood and expected this prospect,” he added.

Mr Nakagawa expressed his bemusement as to why the US did not lift the sanctions during U Thein Sein’s tenure.

“At that time, the US still kept the sanctions on Myanmar under U Thein Sein’s government.

“I don’t know why – maybe they judge the situation very strictly, or maybe they couldn’t understand the situation well.

“But the Japanese government was aiming and expecting that democracy would be coming during U Thein Sein’s time,” he said.

The JCCM chair explained that major sectors which Japanese businesses are involved include agriculture, construction, logistics, services, banks and insurance and heavy industries.

But he added that heavy industries would take more time to develop, due to the lack of power supply and lack of clarity in regulations.

Yohei Sasakawa, Nippon Foundation chair, was appointed by the Japanese government as a special envoy for national reconciliation in Myanmar to engage exclusively to facilitate the peace and reconciliation process. Tokyo has taken Myanmar’s peace process very seriously.

When asked about the importance of peace process to foreign direct investment (FDI) climate, Mr Nakagawa said that the “effect” of peace is “not so big” for businesses.

“Of course, it [peace process] is an important issue. It is the first [top] priority for State Counsellor Daw Aung San Suu Kyi.

“But, for businesses, frankly, the effect is not so big,” he said, adding that the Japanese government has been very keen to support the cause and highlighting Tokyo’s humanitarian contribution.

The JCCM chair also named the lack of power supply as the biggest obstacle in doing business in the country.

No interest in Dawei expressed

Japan’s Prime Minister Shinzo Abe confirmed back in 2014 he would support the economic zone, a joint project between Thailand and Myanmar that aims to link the Andaman Sea to Bangkok and the Gulf of Thailand.

In February 2017, Tanintharyi Region finance minister and vice president of the Dawei special economic zone (SEZ) Management Committee U Phyo Win Tun told The Myanmar Times that Japan was becoming more interested in the project, which would likely restart soon.

But there has been no specific announcement on Japan’s investment in the zone.

Separately, the Myanmar government has asked the Japanese government for help in drawing up the Tanintharyi Region’s development master plan along with a comprehensive development plan for the Dawei SEZ.

The JCCM chair said that the chamber is not aware of any interest from Japanese businesses regarding the Dawei project. He said Japanese companies in Thailand might be interested, but not for businesses in Myanmar.

“Those companies [who have expressed an interest in Dawei] are working in Bangkok.

“But here in Myanmar, at least among JCCM members, we did not have any comments like ‘oh we want to support Dawei’.

“Maybe the situation is different in Bangkok. But the JCCM here does not have any comments on Dawei,” he remarked.

The same applies to Kyaukphyu project, according to Mr Nakagawa.

“Kyaukphyu – not so much. We have never heard of any Japanese companies supportive of Kyaukphyu,” he noted.

 

Source: The Myanmar Times

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