Japan Gives Myanmar $504 Million Loan, Forgives $1.7 Billion Debt
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The Japanese government on Sunday agreed to grant Myanmar nearly $503 million in fresh development loans, while cancelling about $1.74 billion in debt remaining from pre-1988 contracts, reported the Associated Press.
The Japanese government on Sunday agreed to grant Myanmar nearly $503 million in fresh development loans, while cancelling about $1.74 billion in debt remaining from pre-1988 contracts, reported the Associated Press.
The agreement was signed in Myanmar’s capital, Naypyitaw, at the end of a three-day visit by Prime Minister Shinzo Abe; and will see some of the new aid go into the development of the 2,400-hectare (5,900-acre) Thilawa Special Economic Zone, which is currently being developed by Japanese firms near the commercial capital of Yangon.
The Japanese Ministry of Foreign Affairs added that the new terms came only after Myanmar had met certain conditions, including a series of political and economic reforms, while Japan was keen “to continue to back up the progress of Myanmar’s reforms and will continue its support to Myanmar.”
Under the terms of the new loan, Myanmar will only have to carry a 0.01 percent interest, through 40 years, with a 10-year grace period included.
Separately, Japan also cancelled $1.74 billion in debt arrears owed by Myanmar, after already forgiving nearly $3.58 billion in debt earlier this year.
As of March 2013, Japan was still only the 11th-largest investor in Myanmar, with $270 million in overall investments, way behind the $14.2 billion committed by China and $9.6 billion by Thailand. Still, Japan is Myanmar’s largest aid donor, helping the country clear its $952 million debt to the World Bank and the Asian Development Bank earlier this year.
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Over the weekend, Prime Minister Abe became the first Japanese leader to visit Myanmar in 36 years, meeting both President Thein Sein and opposition leader Aung San Suu Kyi.
Previously, Japan had close ties with Myanmar when the military junta took power in 1988, prompting Tokyo to suspend all grants for major projects at that time
Accompanied by business leaders from more than 30 Japanese companies, Abe also addressed a Myanmar-Japan business seminar at Myanmar’s Federation of Chambers of Commerce and Industry in Yangon on Saturday.
[quote]”Myanmar is a geopolitically important partner, located between China and India – Asia’s two emerging giants – and along Japan’s shipping lanes for importing oil from the Middle East,” a senior Japanese official said prior to Abe’s visit to the Wall Street Journal.[/quote]Related: Myanmar – Asia’s Next Tiger?: Dan Steinbock
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Bloomberg reported that Myanmar’s gross domestic product may grow by 6.75 percent this fiscal year, while Japanese companies have looking to diversify their manufacturing operations following recent wage increases in Thailand, Malaysia and Indonesia.
The Thilawa Special Economic Zone, to be ready by 2015, is Japan’s biggest investment project in Myanmar, led by trading companies Mitsubishi Corp., Marubeni Corp. and Sumitomo Corp.
