Japan is one of the biggest contributors to Myanmar and provides humanitarian support, loans at low interest rates, technological support and investments in the Thilawa Special Economic Zone (SEZ). Investment from Japanese companies went up after 2011 and has increased further since the democratic government took administration. The following is an interview with Mr. Hiro Yamaoka, the Managing Director of Japan External Trade Organisation (JETRO) in Yangon. JETRO provides information to Japanese companies interested in doing business in Myanmar and assists Japanese companies coming to invest here as well.
“Foreign investment and technology can boost the export sector in Myanmar but the Myanmar government needs to promote it more,” Mr. Hiro Yamaoka
Q: There are 84 companies working in Thilawa SEZ’s Zone A and Zone B. How many of them are Japanese companies?
A: The most recent statistics show that 42 of them are Japanese companies so half of the companies them are Japanese.
Q: Zone B is being expanded and they say basic infrastructure will be completed within a year. What role will Japanese investment play in this?
A: Zone B is being expanded by 100 hectares which is one third of Zone A. We hope to between 10 and 15 companies come invest in this.
Q: Investment hasn’t been flowing as much as it was expected. Is it because of the investment law and what other obstacles are there when investing in Myanmar?
A: Japanese investors have to consider two options when investing in Myanmar. For example, investing in Thilawa SEZ and investing in other industrial/economic zones.
Thilawa SEZ operates in accord with the Myanmar Special Economic Zone Law so it’s a good law for investing in ASEAN. Japanese companies are not hesitant with working in Thilawa SEZ. However, the laws for the other industrial zones are still being reviewed in the Hluttaw for amendments so Japanese companies are still surveying the situation. Freedom is important for foreign companies investing here as there are more restrictions for foreign companies compared to local companies.
Q: Japanese investment in Myanmar is low compared to investment in Viet Nam. When Viet Nam opened the doors for businesses, Japanese investment increased. How are prospects in Myanmar?
A: I believe Myanmar’s government needs to first enact policies and laws that help investors do well here. Foreign companies have to think about the risks when they come to do business in a country. They have to consider the political situation of the country and the stability of its government is very important. I think Myanmar’s main interest for investment from Japan is in the export sector. Japanese investment would primarily go to building factories for manufacturing but for that to happen we also need adequate electric supply. If Myanmar is able to develop their electric power supply like Viet Nam it will probably attract more Japanese investors.
Q: What sectors are Japanese investors mainly interested in Myanmar?
A: There is a huge interest in investing in manufacturing processes and upgrading service capabilities. As an example, in the construction sector, Myanmar has to import all the necessary building materials but it needs these factories and processes to assemble them here. There are also many food products not available in Myanmar so there is a huge interest in providing services for these food products. The third one is industrial production because I think Myanmar has potential in manufacturing industrial products for export. Myanmar has the lowest basic wages compared to other companies so I believe it will create more job opportunities and increase the country’s export so it’s a sector that might get more development. Another area of interest is agricultural products. I think they can be exported to other countries as high-value commodities.
Q: While it’s true Myanmar has low labour costs there is also a lack of skilled workers, so do you think Myanmar will be ready when investment and technological support come in?
A: Companies mainly look at expenses when doing business. Viet Nam is able to produce Japanese industrial products because of the low costs and they have stable electric power. Myanmar could probably provide its own generators and call in skilled workers from overseas. So without stable electricity and skilled workers, Myanmar needs a bit more development to reach this level. Myanmar should start with small industrial products that require low production costs and then eventually work its way towards high-value products.
Q: Is there any interest in investing in other economic zones like Kyaukpyu and Dawei?
A: In the long-term, I think Kyaukpyu and Dawei have potential for development in maybe 30 or 50 years’ time but currently Thilawa SEZ has a lot of momentum. It really depends on the government as to how much they will open up the other economic zones and how much they are willing to develop them. Myanmar has about one fifteenth the amount of economic zones as Viet Nam so there is room for development. But in Yangon the situation looks like you may have to rent the land from their current owners and set up your own electricity, water and transformers so Japanese companies are more attracted to investing in Thilawa SEZ right now.
Q: Do you have any other comments?
A: About 300 representatives from Japan attend the monthly meeting at our JETRO office in Yangon. We discuss with these Japanese companies about investing in Myanmar and they talk about economic development and improving the livelihood of the Myanmar people.
I want to talk about 4 characteristics of Japan. Japanese companies are said to be slow in coming to invest but that is because we think for the long term. We also provide proper training and education to our workers so that they become professional and skilled employees.
Third is that Japanese companies are very strict so they avoid anything that goes against the law. They always operate within the law.
Finally, Japanese companies always work hard for profit and pay the proper taxes. That is all I want to say.
HSu Hnin Le