In an Oct. 11 meeting in Tokyo held at the initiative of Japan, 26 countries and five international organizations including the Asian Development Bank and the World Bank agreed to work together to help Myanmar with its reform efforts. The problem of Myanmar’s overdue debts — the biggest obstacle to the country’s full return to the international community — is likely to be solved. It is hoped that the fruit of the meeting will give impetus to Myanmar’s democratization and economic reform efforts so that it can quickly end its isolation in the international community.
Japan, Myanmar’s largest creditor, announced that it will forgive some ¥300 billion of Myanmar’s roughly ¥500 billion overdue debts to it, convert the remaining some ¥200 billion debts into new low-interest loans and resume yen-denominated concessional loans at the earliest time possible next year.
The ADB and the World Bank also expressed their intentions to clear Myanmar’s overdue debts to them in January 2013. Myanmar owes about $500 million to the ADB and about $400 million to the World Bank. Japan plans to help the two banks’ debt clearance efforts by offering bridge loans from the Japan Bank for International Cooperation to Myanmar so it can return the debts by utilizing the JBIC loans, with a view to the ADB and the World Bank resuming loans to Myanmar
The results of the meeting show that the ADB and the World Bank have a positive view of Myanmar’s reform efforts. The Southeast Asian country is getting attention from the international community in part because it is rich in natural resources and with a population of 50 million, it has an inexpensive but excellent labor force. Japanese Finance Minister Koriki Jojima said that Japan’s yen-denominated concessional loans can be used for development of power sources, improvement of roads and ports, and development of agricultural villages.
The U.S. is also paying attention to Myanmar’s democratization efforts. U.S. State Secretary Hillary Clinton told visiting Myanmar President Thein Sein that the United States will relax its ban on imports from his country. There is a possibility that the U.S. will completely lift its economic sanctions against Myanmar. The National League for Democracy leader Aung San Suu Kyi’s opinion apparently has induced changes in the U.S.’ thinking toward Myanmar.
But some of the countries that are Myanmar’s creditors are cautious about giving financial assistance to Myanmar because its democratization efforts have just started. Although Mr. Thein Sein acquiesced to Ms. Suu Kyi’s entry into national politics, released political prisoners and relaxed the control of speech, the constitution gives the military one-fourth of the parliamentary seats and conservatives within the military are not positive about democratization efforts. Conflicts with Muslim minorities are serious and truce with armed organizations of ethnic minorities has yet to come.
Japan must carefully consider what concrete assistance it can offer Myanmar to help further its democratization and reconstruction.