Ja­panese in­vestors urge govt to ad­dress trade is­sues

Busi­ness­men from the Asian in­dus­trial pow­er­house call on the gov­ern­ment to ad­dress trade and in­vest­ment con­cerns, es­pe­cially in the ar­eas of lib­er­al­i­sa­tion, elec­tric­ity sup­ply and bu­reau­cratic red tape.

The Myanmar Times - - Front Page - THOMP­SON CHAU [email protected]­times.com

THE most se­nior Ja­panese busi­ness leader in Myan­mar urged the gov­ern­ment to recog­nise how lib­er­al­i­sa­tion, ef­fi­cient bu­reau­cracy and re­li­able power sup­ply al­lowed Thi­lawa Spe­cial Eco­nomic Zone (SEZ) to at­tract con­sid­er­able in­vest­ments. He also warned that cur­rent re­stric­tions placed on for­eign firms in the re­tail and whole­sale sec­tor are al­ready “the max­i­mum” but com­mended the min­istry’s re­form ef­forts.

Ac­cord­ing to in­for­ma­tion from the DICA, Ja­panese in­vest­ment ap­proved in fis­cal year 2017-2018 (ended in March) amounted to US$384 mil­lion. In­clud­ing in­vest­ment via third coun­tries and to the Thi­lawa SEZ in south­ern Yangon, Ja­panese in­vest­ment in fact more than quin­tu­pled from the same pe­riod a year ear­lier, reach­ing $1.48 bil­lion. This made the is­land coun­try among the big­gest in­vestors in Myan­mar.

Ja­pan Inc plays an im­por­tant role in Myan­mar’s in­vest­ment land­scape. Thi­lawa SEZ, ini­ti­ated by then Pres­i­dent U Thein Sein and re­cently hailed by State Coun­sel­lor Daw Aung San Suu Kyi as “a crown­ing suc­cess”, is spear­headed by Ja­panese firms, re­ceiv­ing around $1.5 bil­lion in­vest­ments.

More re­cently, the grow­ing in­vestor in­ter­est in re­tail and whole­sale might re­sult in much-needed for­eign di­rect in­vest­ment for Myan­mar, amid the gov­ern­ment’s dis­ap­point­ing han­dling of the econ­omy. Ap­proved FDI this year has fallen short of the gov­ern­ment’s es­ti­mates by a wide mar­gin, while tourist num­bers have been largely stag­nant.

The Myan­mar Times sat down with Ku­nio Negishi, chair of Ja­pan Cham­ber of Com­merce and In­dus­try in Myan­mar (JCCM), to talk about the lat­est de­vel­op­ments. For a start, he said re­cent re­forms in par­tially lib­er­al­is­ing the re­tail and whole­sale sec­tor, and the new Com­pa­nies Law, have en­cour­aged busi­ness in­ter­est from Ja­pan, but the lack of re­li­able power sup­ply re­mains the pri­mary chal­lenge to at­tract man­u­fac­tur­ers.

Re­tail and whole­sale Myan­mar’s com­merce min­istry in May au­tho­rises 100 per­cent for­eignowned com­pa­nies as well as joint ven­tures to carry out re­tail and whole­sale busi­nesses in the coun­try. Mr Negishi wel­comed this par­tic­u­lar re­form and high­lighted that “a num­ber of Ja­panese com­pa­nies are se­ri­ously con­sid­er­ing to en­ter re­tail and whole­sale in Myan­mar.” Among the in­vestors who reached out to the min­istry to dis­cuss in­vest­ment op­por­tu­ni­ties was Tokyo head­quar­tered Aeon.

This is a par­tial lib­er­al­i­sa­tion. The new pol­icy places sub­stan­tial fi­nan­cial re­stric­tions on for­eign in­vestors (US$5 mil­lion and $3 mil­lion paid-up cap­i­tal for 100pc for­eign in­vest­ments in whole­sale and re­tail busi­nesses, re­spec­tively), as well as a min­i­mum floor area (for­eign in­vestors or joint ven­tures are not al­lowed to op­er­ate stores smaller than 929m2).

How­ever, lo­cal re­tail­ers are still not happy with this small step for­ward in lib­er­al­i­sa­tion. Myan­mar Re­tail­ers As­so­ci­a­tion (MRA), for ex­am­ple, in­sisted that there should be fur­ther re­stric­tions im­posed on non-Myan­mar firms to fend off for­eign com­pe­ti­tion from lo­cal op­er­a­tors.

In re­sponse, Mr Negishi warned that the cur­rent re­stric­tions im­posed on for­eign play­ers have reached “the max­i­mum”.

“We ap­pre­ci­ate very much the com­merce min­istry’s ef­forts to open up the sec­tor for for­eign com­pa­nies. But fur­ther re­lax­ation should be ex­pected be­cause Myan­mar’s bar­rier to en­try for com­pa­nies out­side is still high,” the busi­ness leader said, adding that im­pos­ing fur­ther bar­ri­ers would sig­nif­i­cantly de­ter in­vest­ment. With more play­ers en­ter­ing the mar­ket, Myan­mar con­sumers would be able to choose from a wider va­ri­ety of prod­ucts. Healthy com­pe­ti­tion will drive down prices, ben­e­fit­ing con­sumers across the coun­try.

A long wait for in­sur­ance Cru­cially, pro­tec­tion­ism stands in the way of at­tract­ing for­eign in­vest­ments in many sec­tors. The gov­ern­ment, for ex­am­ple, has yet to open up the in­sur­ance sec­tor to for­eign play­ers, de­spite hav­ing com­mit­ted to do so in the first quar­ter of last year.

Sev­eral ma­jor Ja­panese in­sur­ance providers have opened rep­re­sen­ta­tive of­fices in Yangon and are still wait­ing for the lib­er­al­i­sa­tion, ac­cord­ing to the JCCM chair. At the mo­ment, they can only do busi­ness in Thi­lawa SEZ. “Of course, de­lay in re­form dis­cour­ages busi­nesses. I hope the Myan­mar gov­ern­ment will soon de­cide to open up the mar­ket, af­ter which Ja­panese in­sur­ance firms have a range of in­sur­ance prod­ucts which will help the healthy growth of Myan­mar’s econ­omy,” he ex­plained, tak­ing ve­hi­cle in­sur­ance as an ex­am­ple.

“Right now, only around 10 per­cent of peo­ple in­sure their cars in Myan­mar. In Ja­pan, al­most ev­ery­one has car in­sur­ance. That makes it a much safer so­ci­ety. We must look into ef­forts to raise aware­ness in Myan­mar about the im­por­tance - and ne­ces­sity - of se­cur­ing in­sur­ance, and how that is go­ing to sup­port peo­ple’s lives and pro­vide them se­cu­rity when ac­ci­dents hap­pen,” Mr Negishi said. Fur­ther­more, he sug­gested the au­thor­i­ties to re­lax the reg­u­la­tion on lend­ing for do­mes­tic banks, for­eign ex­change and fi­nan­cial ser­vices.

‘De­vel­op­ing ru­ral ar­eas is im­por­tant but I sug­gest the gov­ern­ment to think about the rea­sons be­hind Thi­lawa’s suc­cess.’

Ku­nio Negishi Ja­pan Cham­ber of Com­merce and In­dus­try in Myan­mar

Learn from Thi­lawa The gov­ern­ment has re­cently made it clear that it wants to at­tract more FDIs to re­mote and ru­ral ar­eas, such as Chin State, be­cause most in­vest­ments con­cen­trate on big cities these days.

How could that be done? The busi­ness leader sug­gested Nay Pyi Taw to look at the fac­tors which make Thi­lawa SEZ “a suc­cess”, no­tably a more open econ­omy (within the zone), a clearer reg­u­la­tory en­vi­ron­ment, ef­fi­cient bu­reau­cracy, and re­li­able power in­fra­struc­ture.

Firstly, Thi­lawa area is gov­erned by SEZ Law, which al­lows for­eign in­vestors sub­stan­tially more room to do busi­ness. There is also a one-stop ser­vice cen­tre within the SEZ, there­fore busi­nesses can avoid the need to wait for per­mits from dif­fer­ent au­thor­i­ties, sav­ing time and un­cer­tainty. Thirdly and above all, in­fra­struc­ture in terms of power sup­ply, wa­ter sup­ply, roads and ports - sup­ported by Ja­panese over­seas de­vel­op­ment aid, has de­vel­oped sig­nif­i­cantly over a rel­a­tively short pe­riod of time.

“De­vel­op­ing ru­ral ar­eas is im­por­tant but I sug­gest the gov­ern­ment to think about the rea­sons be­hind Thi­lawa’s suc­cess,” he ex­plained. In­fra­struc­ture, in both con­nec­tiv­ity and power sup­ply, is the rea­son Ja­panese in­vestors fo­cus on Yangon and Man­dalay.

In or­der to se­cure in­vest­ments in in­fra­struc­ture and en­ergy, Mr Negishi said, pub­lic-pri­vate part­ner­ships - the model much prized by the gov­ern­ment - should ad­here to in­ter­na­tional stan­dards and be bank­able.

Photo: Shin Moe Myint

Ku­nio Negishi, chair­man of the Ja­pan Cham­ber of Com­merce and In­dus­try in Myan­mar, right, speaks to The Myan­mar Times dur­ing a re­cent in­ter­view.

Photo: Aung Htay Hlaing

Lo­gis­tics of­fi­cers work in­side Daizen Myan­mar’s ware­house in Thi­lawa Spe­cial Eco­nomic Zone, which is the first bonded and free­zone ware­house in the coun­try.

Photo: Shin Moe Myint/ The Myan­mar Times

Ku­nio Negishi, chair of Ja­pan Cham­ber of Com­merce and In­dus­try in Myan­mar (JCCM), sits down with The Myan­mar Times to talk about the lat­est de­vel­op­ments.

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