Last week, the Asia Development Bank announced that Japan would provide US$22 million in grants to finance ADB programs aimed at rural poverty reduction and improving HIV/AIDS care in Burma, the latest monetary injection that has come from renewed interest in Burma and its economy. Aside from Tokyo’s assistance, Japanese private enterprise has also been eyeing Burma in recent years as the country has opened its doors to investment from abroad. The Myanmar Investment Commission says Japan could top the foreign direct investment table next year.
Following the ADB announcement on Friday, The Irrawaddy sat down with Kazuhiko Koguchi, the regional lender’s executive director for Japan, to talk about Burma’s growth prospects, Japan’s investments in the Southeast Asian nation, and changes to its business environment that still need to be implemented.
Question: With Burma’s economic growth at more than 7 percent this year and predicted by President Thein Sein to reach 9 percent next year, what is the ADB’s view on the economy?
Answer: Yes, Myanmar has growth potential, because Myanmar has a lot of natural resources—it can export natural gas as well as precious metals. And also, Myanmar is quite rich in terms of agriculture and has a population of 60 million, and young people. So given all these conditions, we’re quite optimist about the medium-term growth of Myanmar.
At the same time, there are many constraints here, like the lack of infrastructure. If we remove these bottlenecks, I think that Myanmar’s growth can be sustained. What is most important though is sustainable growth. Not just one or two years of high growth but five, 10 years [of growth]. As long as Myanmar can work to remove the bottlenecks, we’re quite confident about future economic growth prospects in Myanmar.
Q: What about those who say that foreign investors are still, for the most part, waiting to put their money into Burma?
A: The business environment is not optimal. There are still many restrictions, and the issue of finance—how to get the money within Myanmar and also getting finance from abroad. The Myanmar government has to address these issues very seriously. But once these issues have been addressed, I am quite confident—because I am Japanese—I know that many Japanese companies want to invest in Myanmar. But once again, they have to address the bottlenecks, over-regulation and the lack transparency.
Q: TheMyanmar Investment Commission has tipped Japan to be among the top investors in the country next year. Do you see this as likely?
A: I cannot predict whether it will be first place or second place, but I can tell you that at the moment, many Japanese companies are interested in coming to Myanmar, believing in future prospects. They are interested in the natural resources, some companies want to do business in agriculture, some want to do business in tourism.
Q: Do you think it is true that Burma’s economy is dependent on the country’s political trajectory and stability? Some business observers say major FDI is waiting on the results of the 2015 elections.
A: I cannot predict about the election, but we are reasonably optimistic that whatever the state of the government may be, the government is going to continue reforming its political and economic structures. And as long as the government is committed to maintaining this reform momentum, I am quite confident that foreign companies will trust and believe in the future prospects of Myanmar.
Q: What laws are foreign investors looking for Parliament to pass this year?
A: I think there are many, many areas, but as far as what I’ve heard from the private sector, I think the banking system and the payments system is the area that the government needs to look at very seriously. Because even if you set up a company, if the company cannot transfer money within the country or across the border, the company cannot survive.