Japanese Finance Minister Taro Aso met Myanmar's president and senior officials yesterday in a sign that Tokyo wants to tap a market of 64 million people that has been dominated by neighbouring China.
The trip to Myanmar is Aso's first official foreign visit since Prime Minister Shinzo Abe's cabinet took office last month.
Aso said Japan's new government would stand by pledges to waive Myanmar debt and extend new loans, and agreed to consider Japan's involvement in a planned multibillion-dollar Dawei deep-sea port, according to a Japanese official with knowledge of the talks.
Japan's previous government said last April that it would forgive 300 billion yen (HK$26.73 billion) of the 500 billion yen owed by Myanmar, following a string of political reforms in the one-time pariah state.
Aso confirmed that Tokyo would extend 50 billion yen of new loans to help upgrade power systems, boost rural development and fund a planned industrial park, the official said.
Aso, who is also deputy prime minister, was to visit an economic zone south of Yangon, the former capital, that companies including Marubeni and Sumitomo may help to develop.
He met President Thein Sein yesterday at the presidential palace in Naypyidaw, the capital.
Japan's push into the nation bordering India and China may produce trade opportunities for its stagnating economy while helping Thein Sein meet a pledge to attract labour-intensive industries to create jobs.
However, the competition risks further straining relations between Asia's two biggest economies.
"China considers Myanmar as its turf, and China is very sensitive of the US and Japan making headway," said Takuji Okubo of Japan Macro Advisers.
Additional reporting by Agence France-Presse