Japan minister pledges Myanmar debt relief, loans

PUBLISHED : Friday, 04 January, 2013, 11:26am
UPDATED : Friday, 04 January, 2013, 11:29am

Japan’s new government will stand by pledges to waive Myanmar debt and extend new loans, its finance minister said on Thursday on a visit to boost economic ties with the former army-ruled nation.

Taro Aso also agreed to consider Japan’s involvement in the planned multi-billion dollar Dawei deep-sea port in a meeting with reformist President Thein Sein, according to a Japanese official with knowledge of the talks.

The visit by the former premier – who was brought back to the frontline of Japanese politics by Prime Minister Shinzo Abe after his election victory last month – reflects the economic importance Japan places on Myanmar.

It comes despite growing international concern about a civil war raging in Myanmar’s northern state of Kachin, where the United States and the UN on Wednesday urged Myanmar to halt air strikes against ethnic minority rebels.

Japan’s previous government first announced last April that it would forgive 300 billion yen (US$3.4 billion) of the 500 billion yen owed by Myanmar, following a string of dramatic political reforms in the one-time pariah state.

Aso confirmed on Thursday that Tokyo will extend 50 billion yen of new loans to the long-isolated Southeast Asian nation to help upgrade power systems, boost rural development and fund a planned industrial park, the official said.

They would be the first new yen loans to Myanmar by Japan in nearly three decades.

Former junta-ruled Myanmar craves investment to spur growth and boost its dilapidated infrastructure, while export-reliant Japan is hunting new opportunities in the resource-rich nation to offset sluggish domestic growth.

The two countries last month agreed to start work this year on a huge industrial zone near Yangon.

The 2,400 hectare Thilawa project will include a port and industrial park and be up and running in 2015, according to Japan’s Ministry for Economic, Trade and Industries. Aso is due to visit the site on Friday.

The huge Thilawa project is expected to be led by a consortium of Japanese companies including Mitsubishi Corporation, Sumitomo Corporation and Marubeni Corporation.

Myanmar is also keen for Japan to invest in the cash-strapped Dawei project but Tokyo has said its priority is the Thilawa development.

Unlike its Western allies, Japan maintained trade ties and dialogue with Myanmar during years of junta rule which ended last year, warning that a hard line could push it closer to key ally China.