Myanmar, a country known as the last frontier in Asia
- Environment & Infrastructure Business Unit
- Electric Power & Energy
Myanmar is located in the western part of the Indochina Peninsula, surrounded by Laos, Thailand, China, India and Bangladesh. This country covers about 680,000 square kilometers and its population is said to be more than 60 million. The gross domestic product (GDP) of the country is increasing every year, and in 2012, the country registered significant economic growth at a growth rate of 6.5%.
In its medium-term management plan, Sumitomo Corporation has included Myanmar in a list of countries on which company-wide, strong emphasis is being placed. For example, specific efforts focusing on Myanmar consist of engagement in projects funded under grant assistance programs from the Japanese government such as "Project for providing communications infrastructure" and "Project for supply of airport/aviation security infrastructure" along with investment and participation in projects such as the "Hino Motors service stations Project." One of the most noteworthy projects is the Thilawa Special Economic Zone (Class A Area) Development Project, which includes joint investment and participation from Mitsubishi Corporation and Marubeni Corporation. This project has attracted significant attention as a public and private sector joint project undertaken by Myanmar and Japan. At the beginning of January 2014, I had my first opportunity to visit Myanmar, a last frontier of Asia.
Myanmar and Japan
At the beginning of January, when light snow was falling in Japan, I headed to Myanmar where the temperature was more than 30 degrees Celsius. I took an airplane which flights once a day directly between Narita and Yangon, and many of the passengers appeared to be office workers. Statistics show that the annual number of overseas visitors to Myanmar arriving at Yangon International Airport in 2012 totaled 726,817, with people from Thailand accounting for the largest portion, followed by Japan with 66,772 visitors, which account ten percent of the total number of overseas visitors. I was wondering what makes such large number of Japanese business-related visitors come to Myanmar.
One of the major reasons is the accelerated democratization of the country after the incumbent President Thein Sein, who was inaugurated in 2011, completed the transition from military to civilian rule. Following the transition to civilian rule, western countries began lifting economic sanctions they had previously imposed on Myanmar, and the Japanese government resumed its official development assistance (ODA). As a result, many Japanese people involved in ODA projects began visiting the country once again, leading to an increase in the number of Japanese visitors. Also, the establishment of local representative offices, which serve as important platforms for foreign companies to advance into the Myanmar market, is rapidly increasing.
A mother and her child selling corn on the street. They use thanaka, a traditional vegetal cosmetic of Myanmar that protects the skin from sunburn.
In general, when manufacturing companies advance into an emerging market, they initially establish a post to export their products. When the market matures and the GDP starts to increase, they begin sales activities to increase the number of consumers in the country therefore, the business model of local production for local consumption can be established. For example, in Thailand, there were many production sites of foreign-affiliated companies for the purpose of export a decade ago , but as GDP increased, labor costs also increased. As a result, sales of products that have been customized for the Thai people have been increasing. According to the data comparing monthly basic wages of production workers between Thailand and Myanmar in 2012, the wage in Thailand was USD 345 compared to USD 53 in Myanmar. It is said that Myanmar has been increasingly recognized as a country that can replace Thailand in terms of providing labor resources to labor-intensive enterprises in Southeast Asia in the future (*1), and this is the reason why the country is being called the last frontier.
*1 Survey of Japanese-Affiliated Companies in Asia and Oceania (FY2012 Survey)
Another reason for the increasing number of Japanese visitors to Myanmar is the long and favorable relationship that exists between Myanmar and Japan. Friendly relations between the two countries started during World War II, when Japan assisted General Aung San, who was supported by the people and considered to be the Father of modern-day Burma. The two countries normalized diplomatic relations at an early stage after the war and there have been many friendly interchanges in their history. The year 2014 marks the 60th anniversary of Myanmar-Japan diplomatic relations. On this memorable occasion and because of the strong support of the Japanese Government led by Prime Minister Abe, Japanese companies have been accelerating establishment of their local offices in Myanmar. This is also one of the reasons for the increase in the number of Japanese visitors to Myanmar.
Sumitomo Corporation started its business in Myanmar in the 1950s, long before the recent "Myanmar boom". On the occasion of the launch of business related to trucks and busses based on the postwar compensation agreement made between the two governments, the Yangon Office was established and its business gradually expanded. Until 18 months ago, there had been only one staff member stationed at the office, but in 2013, the number of expatriate staff members alone reached 11 and the atmosphere at the office is now very lively.
Staffs of Yangon Office, surrounds Hideshi Mega, General Manager of the Yangon Office at dinner.
Characteristics of the people in Myanmar
During my visit to Myanmar, I was attracted to the characteristics of the Myanmar people. When I visited Shwedagon Pagoda in Yangon City, I was impressed by their deep belief in Buddhism. Each day of the week has a particular guardian deity and I saw people praying devoutly at a shrine that worships the guardian deity of the day of the week in which they were born, offering flowers to the shrine and pouring water over their deity's statue. A Myanmar woman told me that there is also a "vegetarian week," which is a Buddhist practice. It soundeda bit hard to change their dietary habits occasionally, but it appears as though they don't mind such inconveniences for the sake of their religious beliefs, indicating how pious they are.
In response to my question about what the characteristics of the Myanmar people are, Masateru Yamato, Director of the Nay Pyi Taw Office, who has been in Myanmar for 13 years in total, said, "They are very mild-mannered, and even though we cannot communicate in each other's language, I feel that they are trying their best to be kind to me. I do hope to be of great help fot those considerate people of Myanmar through our business activities."
Even during my short stay, I felt very comfortable with their friendly smiling faces and graceful attitude, which made me feel that I want to visit this country again.
Inside Shwedagon Pagoda
An elephant without tusks, the guardian deity of Wednesday (afternoon), the day of the week on which the author was born.
Each day of the week has a particular guardian deity, for example, a mole and a bird.
Masateru Yamato (front right), Director of the Nay Pyi Taw Office; and Toshio Motegi (front left), Deputy Director of the Yangon Office.
A photo taken with staff members at a local restaurant.
Thilawa Special Economic Zone (ClassA Area) Development
A new project called the Thilawa Special Economic Zone (Class A Area) Development Project is quite outstanding.
The Thilawa Special Economic Zone is one hour drive far from downtown Yangon. The more we move away from the center of Yangon City where traffic congestion is serious, the fewer cars and buildings there are, and nearing the planned site of the development, there are only scattered raised-floor houses around. After driving through the idyllic scenery spotted with pasture goats and water buffalo, you will reach the planned site of the extensive industrial park. Since the groundbreaking ceremony at the end of November 2013, development has been taking place at a rapid pace. About fifty dump trucks, excavators and road rollers were operating to level the ground.
Myanmar has three seasons: the dry season, which is the most pleasant, is from October to February; the hot season, when both temperature and humidity are high, is in March and April; and the rainy season, which begins around May. According to Takashi Yanai from the Overseas Industrial park department of Sumitomo Corporation, serving as the onsite manager, major construction work is scheduled to be carried out during the dry season, taking into account working efficiency. Yanai's explanation for this was very persuasive. When I visited there in January, which falls in the dry season and is supposed to be the most pleasant season, it was very hot and I was sweating in my helmet.
No matter how tight the construction schedule is, it is necessary to maintain a high level of construction quality. What Mr. Yanai said impressed me was that he should keep in mind that the country is letting them use its land. He continues it is also important to consider how we can contribute as the long-term benefit for Myanmar, rather than carrying out work in haste just to meet a deadline. Efforts can be put for Myanmar such as establishing the standards of wastewater discharge to prevent contamination, identifying of companies that intend to purchase land for the purpose of reselling it, and inviting companies that are serious about doing business there.
When the industrial park is completed in the Thilawa Special Economic Zone, tenant manufacturers will be able to not only start their business but also employ the local people in Myanmar. The area is still vacant, but in a year so, all the necessary infrastructure will be completed, lots will be passed on to tenants, and factories will be built. I can imagine that many Myanmar people will work at the factories and the Thilawa Industrial Park will become a hub of manufacture that supports Myanmar's economy. "The industrial park business is very challenging. I hope to provide both employment opportunities to the local people in Myanmar and satisfaction for tenant manufacturers by this Thilawa industrial park" said Mr. Yanai. His words sounded persuasive and I had a feeling that we will be able to see the smiling faces of the Myanmar people in the land of Thilawa in a couple of years.
Class A Area is now being developed.
Mr. Yanai from the Overseas Industrial park Department serves as the onsite manager.
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