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Myanmar strategy to get rethink after failed infrastructure bids

Kyodo

Japan is going to have to rethink its strategy for opening business opportunities in Myanmar, one of the last untapped markets in Asia, as Japanese consortia have failed to win international tenders to develop the country’s infrastructure.

Airport construction and expansion projects as well as telecom operator licenses are among key deals that Japan has lost to other foreign consortia that have included South Korean and Chinese bidders, dealing a blow to Japan’s all-out efforts at the government and private-sector levels to win contracts.

“There is a need to revise (our) game plan,” a high-ranking government official said in the face of Japan’s poor record in securing contracts despite its promise of official development assistance and debt waivers for Myanmar.

In the tender for a project to upgrade Yangon International Airport, the country’s major gateway for international visitors, Japanese government officials were confident until the last minute that the contract was a done deal.

But when the Myanmar government announced the winner for the expansion project last Saturday, it was a consortium including Chinese and local corporations.

The government also announced that a project to build the new Hanthawaddy International Airport had been awarded to a consortium led by South Korea’s Incheon Airport, beating a consortium that included New Kansai International Airport Co.

Hanthawaddy International Airport is to be built near Bago, about 70 km north of Yangon, Myanmar’s largest city.

It hasn’t been all bad news for Japan. A consortium of Mitsubishi Corp. and a Japan Airlines Co. affiliate, JALUX Inc., won a contract to repair and operate Mandalay International Airport serving Myanmar’s second-largest city for the next 30 years for around ¥6 billion.

But the scale of the contract is significantly smaller compared with the project to build the new airport, which is estimated at several hundred billion yen.

After opening up to the world following decades of military rule, Myanmar wants to draw more than 7 million tourists by 2020.

The Myanmar government has not disclosed its criteria for selecting tender winners, but an official at a trading house surmised that the deciding factor is connections with influential figures close to Myanmar President Thein Sein.

The official added that Myanmar, in choosing tender winners, is trying to strike a balance among participating countries.

Japan also failed in its pursuit to enter the largely untapped mobile phone market in Myanmar, which would have given it access to 60 million potential customers.

In June, the Myanmar government announced that Norway’s Telenor and Qatar’s Ooredoo won telecom operator licenses out of 12 qualified bidders, which included KDDI Corp. and Sumitomo Corp.

Speculation was rife in Myanmar that the surprising inclusion of oil-rich Qatar was because the Middle Eastern country offered an extraordinary amount of investment.

Reflecting Japan’s eagerness to support growth in Myanmar, Prime Minister Shinzo Abe visited the country in May with around 100 representatives of the corporate sector.

In a meeting with Thein Sein, Abe pledged ¥91 billion in fresh ODA while waiving ¥190 billion in debt. The prime minister also said Japan’s public and private sectors would together support Myanmar’s nation-building efforts.

Japan has until now focused on the United States and Europe as rivals in international bidding, but competition has been heating up with other Asian bidders.

A senior official of the Myanmar government said South Korea and China are in no way inferior to Japan as bidders and the debt waiver and ODA from Japan was only one of the factors considered during bidding.

  • tocharian

    The Chinese Dragon still seems to have a stranglehold and a death grip (shime-waza) around Burma’s jugular veins. Perhaps Abe and the Japanese underestimated the “China-Angst” (fear of China) that still goes straight to the heart of the corrupt Burmese generals (or ex-generals and their cronies) causing paralysis or indecision or irrational and “murky” decision making.
    Burmese also think that their best foreign policy (economically and politically) is to sit on the fence (Burmese might say they are doing a delicate balancing act but that’s just a euphemism for not having enough courage to make a bold step away from Chinese coercion). A true sovereign nation has to take decisive steps in one direction or another and deliver what it promises. Switching sides, according to how the wind is blowing is not a noble act (Aung San, Suu Kyi’s father already did that in WW II).

    • Lu Hla

      What Aung San did was the right thing since Burma was in a moribund
      state under Japanese occupation and people were tortured a lot by the
      Japanese soldiers. History still remains fresh.

      • tocharian

        So what should Burma do about the exploitative Chinese invasion that is ruining the environment of Burma and destroying the social fabric of the poor rural population right now (Letpadaung copper mine is just one example)?
        What the Chinese are doing to the country with the help of some ex-junta generals and other “business cronies” is definitely “fresher” than WW II

  • Steven R. Simon

    Simon says that Japanese construction firms are world-class and if Burmese authorities turn up their noses Japanese firms should take their business elsewhere.