Loan Debts: Japan’s Multi-Billion Dollar Gift to Burma
Japan is planning to present Burma with its biggest gift of 2012—cancellation of billions of dollars of debt.
That’s the view of one of Tokyo’s leading newspapers, the Asahi Shimbun, this week ahead of a five-day visit to Japan by Burma’s President Thein Sein beginning April 20.
Burma owes the Japanese government between US $3.7 billion and $6.2 billion—depending on whether some past loans were converted into grants.
The debt and future financial aid will be the main issues of discussion when Thein Sein meets Japan’s Prime Minister Yoshihiko Noda, said Asahi Shimbun.
“Following the debt waiver, [Japan] plans to resume full-fledged yen loans to [Burma] for the first time in 25 years,” the daily newspaper said.
But cancellation of the debts will be conditional on continuing reforms in Burma concurrent with moves toward a fully democratic political system, the paper quoted an unnamed Foreign Ministry official as saying.
The debts are made up of loans and non-payment penalties going back 20 years.
Development aid from Japanese government agencies began drying up after the violent 1988 Burmese military clampdown, and came to a virtual stop after Aung San Suu Kyi was detained in 2003.
The top-level meeting, now planned for Saturday, April 21, was deliberately delayed by Tokyo until the outcome of the April 1 parliamentary elections became known.
Japan is the region’s most generous lender country. The Japanese are particularly keen on lending money to help improve the economic infrastructure of Southeast Asian countries. The most recent example is a $1.7 billion long-term, low-interest loan to Indonesia for electricity grid construction.
During Thein Sein’s Japan visit he will attend a summit between five Mekong River region countries—Vietnam, Cambodia, Laos, Thailand and Burma—and the Japanese government.
It’s the fifth such summit aimed at developing economic cooperation, with Japanese assistance the prime mover.
EU Set to ‘Encourage Companies to Invest in Burma’
The European Union is expected to lift some, but probably not all, sanctions currently in force against Burma when member country foreign ministers meet in Luxembourg next Monday.
Widely anticipated changes by the EU were more or less confirmed this week by the 27-country bloc’s vice president for foreign affairs, Catherine Ashton.
She told the European Parliament that following further reforms and elections which saw Aung San Suu Kyi freely elected to Parliament, it was time to “build a partnership with Myanmar.”
She said this meant going further than the lifting last January of travel restrictions to the EU by some Burmese leaders.
“Removing sanctions and increasing aid is not enough,” Ashton told EU parliamentarians. “We all recognize the vital contribution the private sector has to make. We will encourage European companies to look for opportunities in Myanmar and also to bring the highest standards of corporate social responsibility with them.”
Expected changes by the EU follow the lifting of some sanctions against Burma this week by Norway and Australia. Both countries will retain weapons embargoes.
Norwegian Foreign Minister Jonas Gahr Stoere said financial aid would likely resume.
European Firms Most Likely to Cross the Line First if Sanctions Lifted
The list of big European businesses hinting at or rumored to be considering investing in Burma is growing by the day as the European Union moves closer to lifting blanket economic sanctions.
From Britain, names such as Shell, construction equipment maker JCB, and banks HSBC and Standard Chartered have been identified in British press reports as “interested”.
From Germany, the ubiquitous industrial-electronics giant Siemens, Commerzbank and the state-linked German Investment Bank, known by its German initials DEG, have been linked with Burma.
And from France, the oil giant Total—which never gave up its offshore gas field interests during the worst repressive periods of military rule—is expected to closely examine new offshore blocks coming up for exploration and development.
Germany’s DEG is probably the biggest development finance institution in Europe, specializing in “structuring the investments of private companies in developing and transition countries.”
DEG has already sent representatives to Burma to assess the business and social climate in the wake of recent political reforms, but would not confirm whether it has any firm plans.
“Our aim is to establish and expand private enterprise structures in developing and transition countries, and thus create the basis for sustainable growth and a lasting improvement in the living conditions of the local population,” the bank said.
Burma in Oil, Gas Talks with European Country Sanctioned by EU
A European country which is unfit to join the European Union because of its muddy politics and business is negotiating to become a partner in Burma’s oil, gas, gold and copper exploitation.
Belarus and Burma are close to “creating joint projects in the oil and gas sector” said the Russian news agency Interfax this week after a visit to the East European country’s capital Minsk by Burma’s Energy Minister Than Htay.
The Burmese minister held meetings with Prime Minister Mikhail Myasnikovich, who recommended that state-owned oil enterprise Belorusneft had the experience to form joint ventures in Burma.
Other business areas the two sides discussed included agricultural machinery, gas pipeline maintenance, electricity grid construction and gold and copper mining.
Ironically, as the EU prepares to lift sanctions against Burma it has recently imposed a variety of sanctions on a number of Belarus individuals and businesses, including judges, senior police officers and a weapons trader.
Visas bans and an assets freeze have been imposed on about 200 Belarus citizens.
Mobile Phones to Expand Internationally for SEA Games
Burma’s limited GSM mobile phone network is to be greatly expanded and will be more freely linked internationally by the time of the South East Asia Games being played in the country in 2013.
Burma needs to be able to attract visitors to the games and also extend phone links for business, the Minister of Communications, Posts and Telegraphs was quoted by the Chinese Xinhua as saying this week.
“Discussions are on-going between [Burma] and most of the Asean member countries to expedite the move which is also aimed at attracting more foreign investment,” Xinhua said.
The ministry has already said it aims to provide 30 million new mobile phones lines over the next five years but needs investment in network infrastructure to make any expanded system workable.
