At a symposium in Tokyo Saturday, a Myanmar business leader encouraged Japanese companies to keep pace with their Chinese and South Korean rivals who are investing in the newly democratizing country or risk missing out on prime opportunities before the 2015 elections.
U Thein Oo, chairman of the Myanmar Computer Federation, said Myanmar, which has a population of more than 60 million, sees Japan as a great business partner but that its companies’ feasibility studies take too long compared with South Korean or Chinese firms, which are already receiving government help to tap the new market.
Thein Oo said the next three years will offer the best opportunities for investment.
The Myanmar government, which will be tested in the 2015 elections, is trying to show tangible evidence of social and economic reform by inviting foreign investment.
“The window is open, but not forever,” he said. “Japan might not be left with any economic opportunities if it does not act immediately.”
Thein Oo also sits on a number of government committees, including one tasked with reviewing the constitution.
Japan’s investment in Myanmar has remained relatively low at $221 million since 1988, while China is spending $9.6 billion to build a dam and telecommunications system. But since U.S. Secretary of State Hillary Rodham Clinton visited Myanmar last December, Japan has been surveying its options for re-engaging there.
Prime Minister Yoshihiko Noda is expected to announce the resumption of yen loans to the once-isolated nation for the first time in 25 years when Myanmar President Thein Sein visits Japan for the upcoming Japan-Mekong summit later this week. However, the two leaders are scheduled to talk about Myanmar’s unpaid $5 billion debt first.
Japanese companies have been flocking to the emerging economy, which they believe can serve as a gateway to South Asia and become a source of cheap labor.
The latest companies to add their names to the list are Tokyo Stock Exchange Group Inc. and Daiwa Securities Group Inc., which struck a deal with Myanmar’s central bank to set up a stock exchange.
A stock exchange is bound to attract business to Myanmar, but it will take two years to build the system to global standards. Currently, only two public companies are listed and traded in Myanmar.
The Myanmar government is also reforming banking and foreign investment laws to improve transparency in an effort to get the U.S. and European countries to lift economic sanctions. For example, new legislation would lift a ban on private citizens renting land to foreign businesses.
It is also offering to extend its tax exemption period to five years from three if they reinvest their profits in Myanmar.
However, analysts warn that the revision of the investment law alone will not ensure favorable business conditions because the government is notorious for taking ages to process business applications.
“The question is how they are going to implement that. They need to have better governance as well,” said Toshihiro Kudo, a Myanmar specialist at IDE-JETRO, a research institution affiliated with the Japan External Trade Organization.
Kudo also said political uncertainty still hangs over Myanmar. For example, the country might face severe setbacks if National League for Democracy leader Aung San Suu Kyi proposes drastic changes, such as by pushing for civilian control or the indictment of military officers.
The league swept by-elections held earlier this month, and Suu Kyi won a seat in Parliament.