Mizuho Corporate Bank opened a representative office in Yangon on Friday, joining the legion of domestic companies seeking to tap into Myanmar as it moves toward democracy.
Mizuho’s move underlines the recent rush to enter a market previously isolated by economic sanctions imposed by the international community.
Myanmar’s abundant natural resources, cheap labor and 62 million potential consumers make it an attractive investment target for Japanese companies. Only a few, however, managed to penetrate the market amid the U.S.-led economic sanctions.
But ever since Myanmar’s junta launched a reform drive last year, companies have been champing at the bit. Several have already announced plans to make a foray into the country.
Lawson Inc., Japan’s second-largest convenience chain, said Thursday it will send two senior officials to Myanmar this week in hopes of launching its first franchise by the end of the year.
The Daiso discount chain already opened a store in Yangon last month. Suzuki Motor Corp. is poised to restart a joint venture, spearheading moves by domestic automakers. Suzuki’s previous joint venture ended in 2010 when its local business license expired.
The Japan External Trade Organization said more than 290 of the nation’s companies visited Myanmar between last April and December, up 50 percent from the same period the year before. JETRO is planning to set up a business support center for them by the end of this year.
Japanese clothing makers have long capitalized on Myanmar’s cheap labor, but JETRO said there’s more diversified interest now, including for factory builders, accountants and legal specialists.
“Everybody is thinking ‘China plus one’ now. Myanmar could be the one,” said Masayoshi Watanabe of JETRO.
China has been losing its luster amid rising wages and labor strikes, leading companies to boost operations in members of the Association of Southeast Asian Nations, while maintaining their presence in China.
A recent announcement by the U.S. that it will ease some sanctions on Myanmar might be an encouraging sign for Japanese companies, but experts say the lack of infrastructure and transparent business system pose obstacles.
“There are some uncertainties as the extent of the relaxation is unknown, but more companies will try to enter the country,” said Eitaro Kojima of JETRO
Japanese investment in Myanmar has been minor at a cumulative $221 million since 1988, compared with China’s $9.63 billion. But Tokyo, in the face of increasing global competition, has pursued more economic ties with the nation.
After U.S. Secretary of State Hillary Rodham Clinton visited Myanmar in November, Foreign Minister Koichiro Genba and trade minister Yukio Edano followed suit and forged an agreement to launch economic talks.
The government is also considering a resumption of yen loans to Myanmar for the first time in 25 years, which would spur more investment opportunities for traders such as Marubeni Corp. and Mitsui & Co.