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UNCERTAIN FUTURE IN MYANMAR
- Subject: UNCERTAIN FUTURE IN MYANMAR
- From: soewin@xxxxxxx
- Date: Sat, 05 Apr 1997 17:12:00
The Nikkei Weekly (31 March 1997) Asia In Transition. (Nikkei Shimbun is the
most influential financial newspaper in Japan.
UNCERTAIN FUTURE IN MYANMAR
Potential. That is the word one hears most often from Japanese executives
who describe the business climate in Myanmar.
"They have great potential, including many natural resources and cheap
labor," says Satoru Takahashi, the Bank of Tokyo-`Mitsubishi's chief
representative in Rangoon.
But the down side for investors, apart from political tensions linked to the
ruling military junta, is an old problem: weak infrastructure.
Executives say that poor port conditions and high transportation costs
prevent companies from Investing in production facilities in Myanmar.
"New factories will rely on imported parts," said banker Takahashi.
"Reliable supplies will be essential."
A joint effort involving investors from Singapore and Hong Kong is building
a new container port across the river from Rangoon which may be in operation
by the end of 1997, but traders still face such obstacles as poor roads,
antiquated train lines and unreliable water networks.
Japanese direct investment in Myanmar from 1991 to 1995 was only $71.5
million, compared to about $250 million for U.S. firms during the same period.
But last year every major Japanese city bank established a representative
office in Rangoon, obviously betting on the country's potential.
Another chief obstacle, cling to industry sources, is that Myanmar hasn't
enacted financial reforms to ease currency convertibility and to make hard
currency available to repay offshore borrowings.
Among existing investment plans, one of the most ambitious, drafted by
Mitsui & Co., envisions a scheme to use supplies of natural gas from the
Gulf of Martaban to produce fertilizer and electrical power.
In other deals, Sumitomo Corp. signed a 10-million deal to improve Myanmar's
telecommunications system, while state owned Myanmar Heavy Industries and
Mazda Motor Corp. have agreed to produce Mazda brand commercial vehicles.
Mitsui is also building an industrial estate near the Rangoon airport, but
analysts say that unless large scale infrastructure projects are realized,
Myanmar's potential may not be realized.
Hydropower is the country's most abundant resource. About 37,000 MW in
potential hydropower resources have been identified, but the actual
electricity base in Myanmar is tiny compared to neighboring Thailand and
southern provinces in China.
This weakness also presents opportunities for power developers. The country
hopes to attract foreign investments in power plants aiming to sell
electricity to Thailand.