Japan to Take Leading Role in Pushing FDI in Rakhine

By Nan Lwin 8 February 2019

YANGON—The Japanese Ambassador to Myanmar revealed his government’s plan to boost economic development in Myanmar’s most troubled and impoverished Rakhine State by backing the upcoming investment fair there and by pushing Japanese investors to consider opportunities there.

Despite Rakhine’s tarnished reputation due to the Rohingya crisis and ongoing armed conflict, the government is desperately seeking foreign investment in the state as a means of improving economic development and thus solving the state’s issues.

With the slogan “Rakhine is open for business to the world,” the Myanmar Investment Commission and the Rakhine state government is set to kick off the first Rakhine Investment Fair on Feb. 21 and 23, with a Japanese government agency, Japan International Cooperation Agency (JICA) and the Japan External Trade Organization (JETRO) acting as co-organizers of the fair.

The Rakhine Investment Fair will focus on three major areas—the agriculture, livestock and fisheries sector, tourism development and small and medium enterprise (SME) development.

“We are seeking ways for Japanese investors to invest in Rakhine. We also want to introduce potential sectors to the [Japanese] investors,” Japanese Ambassador to Myanmar Ichiro Maruyama said at his residence on Thursday.

He said the Japanese government wants to find ways to help boost investment in Rakhine State and that it would act as a negotiator between the local government and Japanese investors.

“We want to figure out together how the [state] government can encourage the investors if they want to do investment in Rakhine State,” he said. “That is the main thing.”

In late January, Rakhine’s state government participated in the country’s first investment fair held in Naypyitaw which showcased six priority projects in the state: the Kyaetaw-Mingan development project which involves a port, trade zone, apartments, supermarket and a small and medium enterprises (SMEs) zone in Sittwe Township; construction of a new airport in Mrauk-U; the upgrade of Ngapali Airport in Thandwe Township; an eco-tourism project on Man Aung Island; Ponnagyun industrial project in Sittwe; and a new city project in Mrauk-U.

Rakhine is one of the poorest states in Myanmar though it is situated on the western coast which is rich in natural resources—particularly oil and gas. However, 69 percent of people in Rakhine are living in poverty, lack access to public services and struggle with poor infrastructure, unemployment, meager living conditions and a lack of legal support. Currently there are Chinese companies operating in the oil and gas sector and on mega infrastructure projects on the western coast of the state.

Ichiro Maruyama said that Japanese investors have their sights set on the agriculture, fishery and tourism sectors in Rakhine but have not yet made any specific decisions. The local government plans to sit down with Japanese investors after the fair in order to discuss further investment details.

Rakhine sits at a checkpoint of the Chinese-owned pipeline that has been carrying natural oil and gas from the Bay of Bengal, across Myanmar to Kunming in China’s Yunnan Province since 2010. Amid cries of outrage from the international community over the government’s handling of the Rohingya crisis in Rakhine State, China inked a framework agreement for the Kyaukphyu Deep Sea Port last November. The port will give China access to the Bay of Bengal and enhance its regional connectivity as part of Beijing’s Belt and Road Initiative (BRI).

Since the National League for Democracy (NLD) government took office in 2016, they have made several economic reforms. However, following the 2017 Rohingya crisis which badly tarnished the country’s image, foreign investment has significantly declined and western investors have grown increasingly cautious of Myanmar. FDI in Myanmar was shown to have significantly declined last year, dropping to its lowest since 2013. Rakhine is a particularly problematic state when it comes to inviting and securing foreign investment.

The Japanese ambassador said the main challenges for Rakhine in attracting investment are poor infrastructure and security issues. However, he said that his government is considering providing an Official Development Assistance in order to improve infrastructure, particularly electricity supplies and roads in Rakhine State.

He stressed, “we will try the best.”

Since 2017, Japan has been playing the role of mediator in the Rohingya repatriation process and is closely working with the Myanmar government in solving the problems in Rakhine State. In October, during her trip to Japan, Myanmar’s State Counselor Daw Aung San Suu Kyi praised Japan’s understanding and help during a time when tensions have been high between Myanmar and the rest of world.

“If there is economic development, I believe that there will be no conflict,” Ichiro Maruyama said.

At the Invest Myanmar Summit in Naypyitaw, Union Minister for Investment and Foreign Economic Investment U Thaung Tun strongly pushed investors to invest in Rakhine instead of blaming or shaming. Referring to the Rohingya crisis, he claimed that Rakhine State’s problems only happened in three out of 17 townships and that the rest of the state is safe to invest in.

The Rakhine government itself is also making efforts to attract investments in southern parts of Rakhine where there is no conflict, according to U Kyaw Aye Thein, Rakhine State’s minister of finance, revenue, planning and economy.

Earlier this week, the leaders of seven foreign business groups in Yangon—the British, Australian, American, European, Italian, German and French chambers of commerce—signed an open letter that called for more FDI in Myanmar, pointing out that it plays a major role in the country’s transition.

The letter stressed that Myanmar has been isolated for over 50 years and has only effectively ‘re-opened for business’ in the past six years, and that after having been in isolation for so long, that Myanmar now requires a broad regeneration of its economy to meet the demands of modern-day trade. The letter said the country has a significant range of private sector investment opportunities across every sector of the economy.

“Some countries have been blaming the Myanmar government for what happened in Rakhine. However, most of the countries—including Japan—want to see Myanmar’s economic development, lasting peace and also a peaceful transition,” Ichiro Maruyama said.

“I understand that there is conflict but we also need to look into the economic development [of Rakhine State] for the future,” he said.