Abe in Myanmar (Kantei)

By Alex Calvo

SNA (Tokyo) — Japanese Prime Minister Shinzo Abe’s late May to Myanmar (Burma) has highlighted the scale of Japan’s interests in the country. These not only include trade, investment, and economic cooperation, but also comprise national security themes.

Myanmar is home to key natural resources, offers cheap labor and untapped markets, and is located at a strategic crossroads.

It also offers the chance to strike at Beijing without using force by depriving China of a key component of its desired sphere of influence, and even providing a possible template for dealing with North Korea.

The change in Japanese policy is not taking place in a vacuum, but rather Tokyo is moving forward broadly in line with New Delhi and Washington. Despite differences in their national agendas, all three powers believe that it is in their national interests to prevent Naypyitaw from remaining locked in Beijing’s arms. Instead, they would like to see a country open to a presence by different actors and with breathing space in its foreign policy.

The downside to this is the criticism by international groups and minorities that the new policy may involve a grand bargain whereby human rights concerns are swept under the carpet in the name of geopolitics and realpolitik.

Traditionally it was the minorities in the north that complained of their treatment by the central authorities. Their political status and economic well-being remain tenuous. However, recent episodes of violence have shifted media attention over the last few months to Muslims in the south.

The trip by Shinzo Abe was the first visit by a Japanese prime minister in thirty-six years. It reflects Abe’s more activist regional agenda, as well as the normalization of Myanmar’s relations with the West, which included, for example, Myanmar President Thein Sein visit the White House just a few days before Abe’s trip.

This more activist Japanese regional agenda complements India’s “Look East” policy and the US government’s “pivot” to the Pacific.

One of the announcements that attracted the most media attention was Tokyo’s decision to write off US$1.74 billion in outstanding bilateral debts, in parallel with the granting of some US$500 million in fresh loans. This comes on top of last year’s debt cancellation worth US$3.4 billion.

The significance of these packages lie not only in the impressive figures involved, but also in the fact that these are the first Japanese loans to Myanmar since 1987. A statement by the Foreign Ministry explained, “The government of Japan considers it important to continue to back up the progress of Burma’s reforms and will continue its support to Burma.”

Beyond the usual rhetoric accompanying such announcements, it seems clear that Japan is working hard to become one of Myanmar’s top economic partners following years of weak relations due to the sanctions and the political isolation of this Southeast Asian country.

In addition to paving the way toward expanded economic relations, these moves are linked to infrastructure projects: The diplomatic notes exchanged during the visit explain that US$168 million will be devoted to miscellaneous infrastructure improvements; US$138 million to electricity generation; and US$198 million to supply power to the Thilawa Special Economic Zone.

This last item is a joint project – Japan’s largest in the country – promoted by nine state-owned companies, holding 51% of the shares, and a Japanese business consortium, holding 49%. The Japanese consortium is led by three major trading companies: Mitsubishi, Marubeni, and Sumitomo.

Located in the Yangon Region, the former capital and still the nation’s largest city, it involves the development of 2,400 hectares of land. Plans include the construction of both high-tech factories as well as facilities devoted to labor-intensive industries, such as textiles.

As part of his trip, Prime Minister Abe visited the site of the project, and a memorandum of understanding was signed.

U Hset Aung, who serves both as the Chairman of the Thilawa Special Economic Zone Management Committee and as Deputy Minister of National Planning and Economic Development, said that the memorandum of understanding was a “milestone of the bilateral relationship,” adding that it would create job opportunities. He also explained that the environmental impact assessment which is currently being carried out in proposed site of the Thilawa Special Economic Zone would be completed by August this year.

The Special Economic Zone may thus fit with Myanmar’s need to promote exports and to create jobs, as well as the search by many Japanese companies for lower costs abroad.

This is more pressing given the continued tensions with China, which seem to have prompted Japanese doubts about the wisdom of concentrating its manufacturing enterprises in that one country. Although it is difficult to find public statements to this effect, Japanese corporations seem to be thinking hard about alternatives to China.

Some voices compare Japanese investments in Myanmar favorably to the more established Chinese presence in the country. Economics Professor Sean Turnell of Macquarie University in Sydney told Voice of America, “Again, the Chinese investment is mostly resource and energy projects. It is mostly about taking stuff out of the ground or taking energy out of Burma and into China, with China as the main consumer. But, if we look at what Japan is about it is essentially projects that will have a deep impact within Burma. It is not just simply about taking out resources. It is actually planting infrastructure and institutions in place.”

Professor Turnell’s comments refer to Japanese attempts to project soft power in a number of areas, including development, and the often-heard criticism that the Chinese presence in poor countries is not really conducive to their economic progress.

A big challenge for Abe, but a potentially rewarding one, is to be able to bring together two important domestic constituencies at both the popular and bureaucratic-political level: those concerned with soft power, the environment, human rights, and development aid; and those more geared towards geopolitics and national security. As in many other areas of the world, if Tokyo can design a policy which fits with the interests of both lobbies, this may ensure its continuity and strength.

Despite optimism on both sides, bilateral trade and investment still stand at relatively modest figures. According to official statistics, trade amounted to just US$1.4 billion in 2012, with the balance in favor of Japan. Japanese investment in Myanmar as of March 2013 was US$270 million. Japan is currently the eleventh-ranked foreign investor in the country.

During his visit, Prime Minister Abe met ruling officials such as President Thein Sein as well as the famous opposition leader, . This appeared to signal Japan’s support for further democrtization and political transition.

Japan’s engagement with Myanmar is clearly deepening, but the threat of major violence involving the country’s myriad minorities may yet pose an obstacle ahead, especially if it pits those Japanese most concerned with development and human rights against those who view the region primarily in terms of Japanese national security.

However they may be, Prime Minister Shinzo Abe’s tour certainly demonstrates that Japan is back in Myanmar after a decades-long absence.

During his visit, Prime Minister Abe met ruling officials such as President Thein Sein as well as the famous opposition leader, Aung San Suu Kyi. This appeared to signal Japan’s support for further democrtization and political transition.

Japan’s engagement with Myanmar is clearly deepening, but the threat of major violence involving the country’s myriad minorities may yet pose an obstacle ahead, especially if it pits those Japanese most concerned with development and human rights against those who view the region primarily in terms of Japanese national security.

However they may be, Prime Minister Shinzo Abe’s tour certainly demonstrates that Japan is back in Myanmar after a decades-long absence.

Alex Calvo is a Professor of International Relations and International Law, European University in Barcelona.