Myanmar Seeks Japan Debt Forgiveness in Tokyo Trip

Bloomberg NewsPresident Thein Sein today begins his first visit to Japan as head of state seeking a debt- forgiveness deal that opens the way for his nation’s biggest creditor to resume financing roads, bridges and ports.

Thein Sein and Japanese Prime Minister Yoshihiko Noda will discuss a “comprehensive solution” to resolving Myanmar’s debt when they meet in Tokyo tomorrow, said Masaru Sato, assistant press secretary at Japan’s foreign ministry. Japan pledged 403 billion yen ($4.9 billion) in loans to Myanmar between 1967 and 1987, according to foreign ministry data.

The nation of 64 million between India and China wants a share of the investment that Japanese exporters have poured into neighbor Thailand, with Honda Motor Co. among companies expressing interest. Thein Sein has overseen a shift toward democracy over the past year that’s boosting the odds of re- engagement with developed nations that limited trade with Myanmar during five decades of military dictatorship.

“This is a first step” for strengthening business ties, said Yoshito Asano, director of the government-affiliated Japan External Trade Organization in Bangkok, referring to Thein Sein’s trip and the debt talks. “Many companies have an interest in Myanmar but so far there are not many concrete plans to establish factories.”

Japan will aim to finance infrastructure projects in Myanmar if the debt issue is cleared, Kimihiro Ishikane, a deputy director of Asian affairs at the foreign ministry, said on Nov. 16. Sato declined to comment on an Asahi newspaper report that Japan will forgive 300 billion yen ($3.7 billion) in yen-denominated loans.

Debt Compromise
Such an agreement would amount to about 60 percent of Myanmar’s debt, according to Kei Nemoto, a professor specializing in Myanmar at Sophia University in Tokyo. Cheap wages, natural resources, historical ties and concern over China’s influence in Myanmar makes the country important for Japan, he said.

Policy makers “are now thinking that the time is right to deepen engagement with Myanmar, otherwise Japan may lose in the competition with other countries,” he said, noting that China, India and South Korea have increased ties with the Southeast Asian nation.

European Union governments will probably suspend most sanctions against Myanmar to reward the country for progressing from military rule toward democracy, an EU official said. The decision will be confirmed by EU foreign ministers on April 23, the official told reporters in Brussels today on condition of anonymity.

The U.S. has announced that it will ease trade and financial restrictions on certain sectors, without providing details.

Regional Summit
Thein Sein plans to meet Noda after a regional summit involving leaders from Cambodia, Vietnam, Thailand and Laos. On April 22, Thein Sein will visit power plants run by Tokyo Electric Power Co. and Electric Power Development Co., known as J-Power, according to Japan’s foreign ministry.

Yangon, Myanmar’s largest city, had the cheapest wages among 31 cities in Asia, according to a Jetro survey last year. Workers in the former capital earned less than $2 per day on average, compared with $4 in Cambodia, $5 in Vietnam and $14 in Thailand, it said.

Italian-Thai Development Pcl (ITD), Thailand’s biggest construction company, is pushing Japan to provide financing for an $8.6 billion deep sea port and industrial estate in Dawei, a Myanmar coastal town less than 300 kilometers (186 miles) from Bangkok. The company has named Mitsubishi Corp. and Mitsui & Co. as potential investors.