Japan announced Sunday it will provide Laos with an aid package worth ¥10.46 billion to help the Southeast Asian country build infrastructure.
“I hope that our aid will contribute greatly to Laos’ economic development,” Prime Minister Shinzo Abe said at a joint press conference with Laotian Prime Minister Thongsing Thammavong after their talks at Abe’s office.
While Southeast Asia is recognized as a center of growth, financial disparities in the region remain between the more developed states such as Singapore and less developed ones including Laos.
The signing of an estimated ¥9.5 billion loan agreement, along with more than ¥900 million in grants, was done in the presence of the two prime ministers.
The yen loans will be disbursed to a project to expand the international airport terminal in the capital, Vientiane, and another project to support poverty reduction, the Foreign Ministry said.
The grants will partly help in a bridge construction initiative in the southern part of Laos, the ministry said.
To further boost their economic ties, Abe and Thongsing said they agreed to launch official consultations to conclude an aviation pact that will pave the way for direct flights.
The leaders also agreed to continue their talks to launch a security dialogue framework involving their nations’ foreign and defense officials, a move that Abe said “aims to strengthen our countries’ communication in political and security issues.”
They also agreed to boost people-to-people exchanges as their countries mark in 2015 the 60th anniversary of the establishment of diplomatic relations.
“We will further enhance our partnership and cooperation and work toward regional peace and prosperity,” Thongsing said at the news conference after their meeting.
Abe visited Laos last month as part of his 10-nation tour to all ASEAN nations after just 11 months in office to demonstrate Japan’s engagement with the fast-growing, resource-rich region.
Apart from Laos, the nine other ASEAN members are Brunei, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Myanmar investment deal
Japan and Myanmar on Sunday signed an investment treaty to nurture closer business ties as the once secluded Southeast Asian country opens its fast-growing economy to more foreign commerce.
Prime Minister Shinzo Abe and Myanmar President Thein Sein signed the deal in summit talks following a gathering of leaders from the Association of Southeast Asian Nations in Tokyo.
Japanese businesses have been eager to invest in Myanmar and have stepped up their activities there after Thein Sein’s reformist government came to power in 2011 after nearly 50 years of military rule.
The trade ministry said the agreement is intended to provide greater protections and a stable legal environment for investors.
Attracting foreign investment and lending is crucial for aiding the expansion of Myanmar’s resource-rich economy. The country has significant growth potential but is burdened with an inefficient farm sector. It also lacks a manufacturing base after decades of foreign sanctions and restrictive laws under military rule.
The treaty calls for Japanese investors to receive the same protections provided to other foreign investors under international rules and prohibits the imposition of export, technology transfer or other requirements in exchange for such investments. It is also intended to improve transparency, key for a country struggling with endemic corruption.
Japan is Myanmar’s largest aid donor. To help clear the way for the investment treaty, Tokyo agreed to forgive about $5.32 billion in debt owed by Myanmar and extended bridge loans to help clear the rest.
Abe has promised to help support Myanmar’s economic and political reforms with both public and private help, including fresh loans for infrastructure building and major development assistance that will support Japanese business interests in the democratizing Southeast Asian nation.
Japan’s investments in Myanmar still lag behind those of China and India, though that is fast changing.
Trading companies Mitsubishi Corp., Marubeni Corp. and Sumitomo Corp. are leading a project to develop the 2,400-hectare Thilawa Special Economic Zone, located near Yangon, Japan’s biggest investment in Myanmar so far.
Business leaders commit
Corporate leaders Saturday emphasized the importance of Southeast Asian markets for Japan companies at a meeting with leaders of the Association of Southeast Asian Nations.
“Japan’s economic circles will continue to deepen economic exchanges with ASEAN,” Hiromasa Yonekura, chairman of the Keidanren business lobby, said at the luncheon meeting. “Japan wants to contribute to sustainable growth in the ASEAN region.”
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, said: “ASEAN is Japan’s biggest investment destination. Our relations with ASEAN are indispensable to Japan’s economic revitalization.”
The luncheon with ASEAN was hosted by Keidanren and the JCCI.
Japanese direct investment in 10-member ASEAN soared 55.4 percent in the first half from the same period last year to a record-high $10.2 billion (¥1.05 trillion), according to a report in August by the Japan External Trade Organization.
That’s more than double what Japan is investing in China.