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Amid a rapid easing of political tension in Myanmar, a key joint economic panel of Japanese and Myanmar government officials and private-sector experts will hold what is supposed to be its last meeting next month.

According to government sources, the joint panel will meet in Tokyo around July 20 to wrap up nearly two years of discussions on ways to resolve structural problems that have hobbled the impoverished Southeast Asian country’s economic development.

The panel will then compile a final report on its findings by the end of the year for submission to top leaders of the two countries, the sources said. The final report is expected to contain policy recommendations on a wide spectrum of areas, from financial and monetary affairs to industrial and agricultural matters.

The panel’s meeting will come less than three months after Myanmar’s military regime released prodemocracy leader and Nobel Peace Prize laureate Aung San Suu Kyi from house arrest, on May 6.

Japan rewarded the military regime, the State Peace and Development Council, for Suu Kyi’s newly granted freedom only four days later by signing an official document with Yangon on providing a 628 million yen grant for a hydroelectric power project.

This is the first installment in grants-in-aid worth an estimated 3 billion yen to 3.5 billion yen that Japan plans to extend for the rehabilitation of the superannuated Baluchaung No. 2 Hydro Power Plant, the largest Myanmar power plant accounting for roughly a one-fourth of the power-strapped country’s total power generation.

The joint Japanese and Myanmar economic panel was inaugurated as part of Japanese technical cooperation in June 2000 in accordance with an agreement in November 1999 between then Prime Minister Keizo Obuchi and Than Shwe, chairman of the SPDC.

Obuchi and Than Shwe held talks in the Philippines during the so-called ASEAN-plus-three summit, the first top-level meeting between Tokyo and Yangon since the military took power in Myanmar in a 1988 coup. Two years later, the military nullified the results of an election in which Suu Kyi’s National League for Democracy won a landslide victory.

The ASEAN-plus-three summit has been held annually in recent years among top leaders from the 10 Association of Southeast Asian Nations plus Japan, China and South Korea. Japanese ODA consists of yen loans, grants-in-aid and technical cooperation.

The former U.S. administration of President Bill Clinton objected to the Japan-Myanmar economic panel, claiming that it would only spoil the SPDC by signaling that Japan condones its lack of progress on democratization and human-rights protection.

But Japan has gone ahead with the panel’s work, advocating a policy of “constructive engagement,” instead of isolating Myanmar from the international community, as a means of bringing favorable changes to the country.

The U.S. and Europe have toughened economic and other sanctions against Myanmar during the past decade. Japan has also frozen large-scale economic aid for new projects in principle, but what it classifies as humanitarian projects, like the Baluchaung rehabilitation, have been exempted from the freeze.

The 1997-1998 Asian financial and economic crisis dealt a severe blow to the Myanmar economy, which had already been struggling amid international economic sanctions.

“Because of politically motivated objections from the U.S. and Europe, no loans have been extended to Myanmar from the World Bank and the International Monetary Fund, over which they wield strong influence,” one senior Japanese government official said. “The joint economic panel between Japan and Myanmar was launched to provide intellectual assistance to help Myanmar meet economic conditions for receiving fresh lending from such international institutions once political conditions are met sometime in the future.”

The official said, however, that it remains to be seen whether the joint economic panel will actually be disbanded after compiling a final report by the end of the year.

“Everything depends on how strongly the SPDC will be willing to heed such a panel’s advice and carry out structural reforms of the economy,” the official said. “Although the SPDC has a deep distrust of the U.S. and Europe, it has been willing to listen to what Japan says.”

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