Myanmar Garnering Enthusiastic Attention from Around the World
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In 2013, Prime Minister Shinzo Abe became the first sitting Japanese prime minister in 36 years to visit Myanmar, and he took the occasion to resume full-scale economic cooperation. Myanmar is now garnering attention as Asia's last frontier, and more than 250 companies from Japan have set up operations there. I had an opportunity to travel to Myanmar in late July, and while there I visited four businesses connected with our company: business in the Thilawa Special Economic Zone, the telecommunications business, the human resources development support business, and the automobile business. Here I will describe the contributions being made by employees of the Sumitomo Corporation Group to Myanmar's economic and industrial development in the midst of dizzying economic growth.
Efforts in the Thilawa Special Economic Zone
I visited an interminably rainy Myanmar in July at the height of the rainy season, heading to the Thilawa Special Economic Zone (SEZ) located about 20 km from Yangon. As I took notice of the large number of Japanese cars plying the road, the local driver noted with a smile: "Japanese products are popular in Myanmar. 90% of the cars driving around Yangon are Japanese." I had no idea that I would see so many Japanese cars in Myanmar, and I couldn't hide my surprise. Also astonishing in terms of road traffic was that, unlike in other Southeast Asian countries, there were no motorcycles on Yangon's streets. Motorcycles can be seen driving around in the suburbs, but the government has banned them within the city limits.
One project in Myanmar that has garnered attention and seen steady progress is the Economic Zone project underway in Thilawa SEZ Zone A. Development, sales and operations for this Zone are the responsibility of MJTD(*1), a joint venture established by private and public sectors of both Myanmar and Japan , and companies from numerous other countries besides Japan have opted to become tenants, indicating high regard for the Economic Zone inside and outside Japan.
MJTD's President & CEO, Takashi Yanai (Overseas Industrial Park Department) said, "The overseas industrial park business is rooted in local communities, so it is important to gain the understanding of local residents. MJTD has contributed to its community by donating stationary goods , umbrellas and other supplies to the school children living near Thilawa. Interacting with the local residents is absolutely crucial." With many companies reportedly considering expansion into Myanmar, rental factories are being erected within the Zone to serve as footholds for small and medium-sized enterprises moving into Myanmar that will enable them to reduce their initial investments.
With Myanmar's trade volume increasing substantially and its domestic consumer market expanding, the demand for logistics services is expected to rise. Thilawa Global Logistics (TGL)(*2), the first logistics company in the Thilawa SEZ, will certainly be able to support the transport operations and thereby meet the needs of many incoming companies. TGL's Managing Director Yoshihisa Hayashi (Logistics Business Department) noted: "It is important to build foundations early on to meet growing logistics needs."
Within the Thilawa SEZ these is a project site of a 50,000 kW gas-fired power plant under construction. Power shortages are still a serious problem in Myanmar, with blackouts occurring frequently, though not as often as before. Having a power plant installed next door is a significant advantage when constructing a factory within the Economic Zone. Once the thermal power plant starts to supply electric power to the Thilawa SEZ, this will undoubtedly be helpful in improving the infrastructure within the industrial park. The first unit of the power station is scheduled to be completed in spring 2016. Construction on this station is moving forward quickly, and there were many workers at the site. The site manager, Mr. Shuzo Manda (Power Plant EPC Department No. 1), has dedicated himself to supervising the site, even coming in to work on weekends, to ensure that construction is completed on schedule, and he enthusiastically related: "We are making steady progress in construction with full support from Mr. Tatsuya Watanabe of the Yangon Office, focusing on the construction completion as scheduled." The future growth of the area around the Thilawa SEZ bears watching.
*1 MJTD is the abbreviation for Myanmar Japan Thilawa Development Ltd., a company engaged in development, sales, and operations for industrial parks.
*2 A comprehensive logistics company in which Sumitomo Corporation and Kamigumi Co., Ltd., hold shares
The very vibrant MJTD office
Thermal power plant construction site in the Thilawa SEZ
Explosive permeation of mobile phones
Something that struck me in particular when looking around towns in Myanmar was that more people than I had expected were carrying mobile phones, with everyone seeming to enjoy talking on their phones.
Since July 2014 Sumitomo Corporation has joined with MPT(*3) and KDDI to enter the telecommunications business in Myanmar. The penetration rate of mobile phones in Myanmar was just over 10% (as of FY 2013) in a population of over 50 million, attributable in part to the difficulty of obtaining SIM cards. Until recently, SIM cards were quite expensive for the average citizen. Since 2014, however, cheap SIM cards have become available for purchase at a reasonable price, and the penetration rate has risen at an accelerating pace. The current administration has announced a target of an 80% penetration rate by 2016. It is clear now to anyone and everyone that demand for mobile phones, already enjoying explosive popularity, will climb higher in future.
Among the strengths of MPT are the wide coverage area and the good call quality. There are fewer and fewer places within Yangon where signals do not reach, and calls are rarely cut off even when users move indoors. In addition, a brand makeover and the establishment of direct sales outlets are some of the various strategies that have been put force since last year. MPT advertisements have recently been plastered on buses and taxis in an effort to permeate the image of a new brand. Involved in MPT's local business operations, Yoshiaki Benino (Network Division) pointed out: "We need to provide the people of Myanmar with a better reception environment. We are actively engaged in advertising and PR activities such as broadcasting new commercials to inform the public about MPT's newer services."
I was able at the MPT direct sales outlet to see how employees interacted with customers. I was quite impressed to see Myanmar employees working comfortably and energetically at the storefront, living up to their image of diligence and seriousness. I was also encouraged to see them explain services in great detail to customers who came in person to the outlet. I think that attentive customer service may well be one factor explaining the rising penetration rate of cellphones in Myanmar.
*3 MPT is the abbreviation for Myanma Posts & Telecommunications.
MPT advertisement on display at Yangon Central Station
Mr. Benino (center) wearing a longyi, Myanmar's traditional garment
Training Myanmar's next generation
Blackouts in Yangon are apparently not as common as they used to be, but people told me that particular care must be taken when walking under power lines. Myanmar uses naked power lines that can cause accidents if they are cut and fall down. Some of reports say that more than 100 people die each year because of electrocution. One hotel employee sadly warned: "The lines are easy to cause electrical leakages especially during the rainy season, so you must take care." Seeking to eliminate accidents relating to power lines and to ensure a safe and secure supply of electric power, Sumitomo Corporation has been offering support in training local electrical engineering technicians with Kinden Corporation.
I visited the "Kinden Classroom"(*4) in Insein Township of Yangon, which has been offering the programs since last year. Outside, the second-term students were in the middle of applied practical training using power lines and power poles, calling out to each other as they cautiously made safety checks. Because a single moment of inattention at an actual work site could cost a life, their behavior was quite serious. The trainees undergoing classroom instruction were busily taking down notes about the content the instructors were teaching, and I was impressed with their diligence. I earnestly hope that the technicians trained here will help improve the country's power transmission/distribution line infrastructure as personnel forging the future of Myanmar. Some of the "Kinden Classroom" graduates are already working in Economic Zone within the Thilawa SEZ, and they will undoubtedly contribute to the development of these Economic Zone.
You are probably aware that the condition of Myanmar's rail lines is not as smooth as that of developed countries, and it keeps trains from getting up much speed, and hampering transport efficiency. More than 600 accidents occur each year, and one of the causes is the condition of rail lines. Track maintenance is needed to reduce these defects and boost transport efficiency. To make these improvements, Sumitomo Corporation, Japan International Consultants for Transportation, and Oriental Consultants have been subcontracted to train personnel in track maintenance work, and these companies are conducting seminars and on-site training. I believe that the technicians trained in this project will go on to improve transport efficiency by reducing the severe swaying of train cars.
This project, designed to train people capable of supporting the country's future, could well be termed "trainers' training." The people undergoing this training will be actively involved in improving their own country's infrastructure. I was struck by the efforts not only to draw closer to the people of Myanmar in doing business but also to support personnel training.
*4 This is the nickname for the "Sakura-Insein Technical Course," an occupational training course for electrical engineering technicians conducted jointly with Kinden Corporation and local training colleges.
Practical training being conducted outdoors using model power poles and power lines
The human resources development business also provides materials and equipment necessary for rail line maintenance. The photo shows a train passing alongside track maintenance.
Sumitomo Corporation's automobile business continuing to make inroads in Myanmar
As we drove north from Yangon along National Highway 3 for a little over an hour, a Service Station for buses and trucks manufactured by Hino Motors came into view. This service station offers a full range of after-sale services for commercial vehicles. I was rather surprised by the neat glass-enclosed showroom and the exterior that made me want to take a look inside.
Sumitomo Corporation's first step in the automobile business was the transport of Hino Motors-manufactured buses to Myanmar. Having started business in this country more than 60 years ago and continued its automobile business in Myanmar to this day, Sumitomo Corporation has clearly established deep bonds.
Summit SPA Motors(*5) Managing Director Takahiko Taniyama (Automotive Sales and Marketing Department No. 2) emphatically noted: "There are quite a few difficulties stemming from cultural differences, and we need to overcome these with determination and enthusiasm." As the construction industry begins booming in Myanmar in future, it is expected that truck transport will increase and that the demand for after-sales service for trucks will grow year-by-year in conjunction with the expansion in logistics operations. After-sales services for trucks, essential for Myanmar's economic growth, will unmistakably become an extremely important business in Myanmar over the medium to long term. The day is not far away when trucks made by Hino Motors will be driving Myanmar's industry.
In getting to know first-hand about our company's business locations in Myanmar and seeing the enthusiasm and devotion of the people working at front-line locations, I reaffirmed the importance of the businesses that our company is undertaking in Myanmar. The words of Hideshi Mega, General Manager of the Yangon Office, say it all: "I would like to make this country even better." As long as there are people committedly working on behalf of Myanmar, this country's growth will not stop. Future developments in Myanmar, Asia's last frontier, bear close monitoring. It was with this thought in mind that I departed Myanmar, the Land of Smiles.
*5 A company providing after-sales services for commercial vehicles, primarily those manufactured by Hino Motors
Large sign at Service Station for buses and trucks manufactured by Hino Motors prominent even at a distance
Managing Director Taniyama (second from left) and Deputy General Managing Than (center), and Yasuyuki Katsube (far left) at the Service Station for buses and trucks manufactured by Hino Motors
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