By Takeo Harada
Special to Arab News Japan
TOKYO: Japanese companies invested $768 million in Myanmar in 2019/20 as the country finally started to break free from years of military rule. That investment may now be at risk as the generals once again have taken control of the country, which could face severe sanctions.
In the last year, 414 Japanese companies built up their branches there, according to the Central Statistics Bureau of Myanmar. After the global financial crisis in 2008, the yen appreciated a lot and “Japan Inc.” sought to invest in Asian countries, including Myanmar.
Some former US officials, who have maintained close ties with business leaders in Japan and were extremely influential in decisions made by Japanese companies concerning foreign business opportunities, enthusiastically advised Japanese companies to make direct investment in Myanmar.
As a former advisor on gold assets held by the military junta, I have been concerned about how unprepared Japanese companies are vis-à-vis Myanmar. The junta had 8,000 tons of gold in one of Thailand’s leading banks and they tried to sell this off to foreign buyers. That proved difficult as Chinese and Korean state buyers refused to accept the price proposed by the junta. I was left with the feeling that the military junta in Myanmar would soon attempt a counter-revolution.
The coup in Myanmar was sudden and those Japanese companies that have invested in the country are likely to face problems with their investment. If, as is likely, sanctions are imposed against Myanmar, companies will have problems withdrawing their investment in the country.
The only way to get around this problem is to ask the Suga administration for diplomatic assistance. On the diplomatic front, Japanese foreign ministers have made visits to the country almost every year since 2011, but this could now pose problems for the government in Tokyo if it is forced to condemn the coup. Diplomatically, there is not much hope of success, as the prime minister doesn’t have a lot of credit on the diplomatic front and is struggling to deal with problems at home.
In the financial market, people have this maxim: If either the Japanese get into a market, it’s too late to earn any profit in the market. That will certainly be the case this time as those Japanese businesses are now at the mercy of the local military junta and face losing their assets.