Japan announced a plan Thursday to restart yen loans to rapidly reforming Myanmar, as Tokyo steps up efforts to help bring the once-pariah Southeast Asian nation into the fold of the global economy and benefit from its high economic growth potential.
“Japan is planning to resume its full programme in Myanmar with yen loans to help support Myanmar’s sustainable economic development…at the earliest possible timing next year,” Japanese Finance minister Koriki Jojima said in his opening remarks at a meeting of international officials on Myanmar’s overdue debt.
Jojima offered no hints on the size of potential loans, but said Japan wants to help Myanmar in areas such as electricity and road rehabilitation, rural development and improvement of port facilities.
The gathering represents a stepped-up effort by host country Japan to bring major nations a step closer to a deal to address the issue of Myanmar’s international arrears. Those overdue debts have long hindered inflows of new funds needed to reinforce the Southeast Asian state’s growth prospects and embryonic democratisation.
“It is high time the international community join efforts to underpin reform by Myanmar, and reintegrate Myanmar as one of its members,” Jojima said.
While no comprehensive deal was expected at the meeting, the event is drawing attention. Many international investors see Myanmar – a country of 60 million people – as a potential source of raw materials and a possible large consumer market after a series of reforms implemented in the past year, following the nation’s long isolation under a military dictatorship.
But economic sanctions by the US and others since the late 1990s have hindered Myanmar’s growth. It still lacks some of the most basic infrastructure needed to rival other manufacturing nations in Southeast Asia, such as Cambodia, hence its needs for funding from outside.
Japan will lead the world by carrying out its planned debt relief for Myanmar in January through a bridge loan and a write-off, Jojima said.
Myanmar’s arrears with Japan amount to about JPY 500 billion ($6.4 billion), the biggest chunk of the overdue debt Myanmar owes to the rest of the world, according to estimates by Japan’s finance ministry.
Jojima also said Japan intends to offer a $900 million bridge loan through a government-linked bank to settle Myanmar’s arrears with the World Bank and the Asian Development Bank. The step, combined with Japan’s planned debt-relief for Myanmar, would eliminate most of the Southeast Asian nation’s overdue debt and empower the international and regional lenders to resume loans to the country.
Jojima added that the World Bank and the ADB “will be in a position to clear Myanmar’s arrears in January 2013.”
Japan’s export-reliant, resource-poor economy could benefit hugely from Myanmar, which is rich with natural resources, traditionally sympathetic to Japan, and seen as having potential to become a high-growth economy and a low-cost manufacturing hub.