Japan in Myanmar: What Lies Ahead?

The events in Myanmar have come as a major challenge for Japan. It all started on February 1 this year, when the “Tatmadaw” (military junta) staged a coup and took over the reins of power. It also detained the President Win Myint and the State Counsellor (akin to prime minister) Aung San Suu Kyi, and many other leaders of the National League for Democracy.

Japan has long had close ties with Myanmar. It had helped Aung San, the father of Burma’s independence movement and the father of Aung San Suu Syi. After Aung San Suu Kyi was elected as the State Counsellor in Myanmar in 2016, Japanese businesses had been slowly entering the Myanmar market.

For Tokyo, it is a dual challenge. On the one hand, it has to contend with the rising influence of China in Myanmar while at the same time, its influence is waning. On the other hand, it will be unable to go the whole hog against the Myanmar junta, owing to a series of factors at work.

First, it would not want to push the generals too hard as this could bounce back and Japan could lose whatever influence it wields in the political sweepstakes in Myanmar.

Second, Myanmar is an important element of Japan’s Free and Open Indo-Pacific Vision. Hence, Naypyidaw remains an important pillar in its approach towards the ASEAN region. It is worth recalling here that PM Suga visited Indonesia and Vietnam on his first overseas travel after taking office.

Third, Japan will need to work with other countries in the region, especially the ASEAN countries. In the past, Japan has accepted the principle of ASEAN centrality. Already some of the ASEAN nations have expressed some apprehensions about the Quad, which includes Japan, India, Australia and the U.S.

Fourth, Japanese companies in Myanmar have also been facing quite a few challenges. If they are seen as cooperating with the military government in Myanmar, they run the risk of running afoul of their business partners and customers in other parts of the globe as Japanese companies have a global presence.

Many of these Japanese firms have already poured in significant amounts of money into the Myanmar market. It will be difficult for them to recover their investment in the near future if the situation continues to simmer.

In addition, the country has also been hit by the coronavirus pandemic, which has made the situation much worse.

ASEAN’s Role

In a welcome move, the ASEAN held an emergency summit meeting on the situation in Myanmar and established “five points of consensus” about the Myanmar crisis. These include:

There shall be immediate cessation of violence in Myanmar and all parties shall exercise utmost restraint.
Constructive dialogue among all parties concerned shall commence to seek a peaceful solution in the interests of the people.
A special envoy of the ASEAN Chair shall facilitate mediation of the dialogue process, with the assistance of the Secretary-General of ASEAN.
ASEAN shall provide humanitarian assistance through the AHA(ASEAN Coordinating Centre for Humanitarian Assistance).
The special envoy and delegation shall visit Myanmar to meet with all parties concerned.

Options for Japan

Japan will have to wait and watch to see which way the wind blows in Myanmar. It would be unwise to side with any one of the parties to the dispute in the short to long term. However, as a democratic country and one of the leaders of the free world, Japan has an obligation to help the democracy movement in Myanmar, along with other like-minded countries.

Japanese companies will also have to consider moving investments away to other countries in the ASEAN region, although this is easier said than done.

Japan is a leading investor in Myanmar. Incoming investment from Japan stood at about $768 million USD, roughly 14% of the total FDI between 2019 and 2020. This is significantly higher than the $553 million USD that Beijing invested during the same period.

In addition, Japanese automakers had been eyeing the Myanmar market, but these plans now have to be put on hold. At the same time, the Japanese beer maker Kirin, which has a business relationship with Myanmar Economic Holdings (MEHPCL) in the country, has issued a formal statement expressing its concern over the human rights situation inside the country. A spokesman for the company, speaking to JAPAN Forward, added:

"We are in close discussions with MEHPCL about terminating the JV and are making every effort to address that matter urgently. Our aspiration was and remains to create a positive impact on Myanmar’s economy and society through our operations in Myanmar. At present, we are not planning on exiting Myanmar. We hope to find a way forward that will allow us to continue contribute to Myanmar’s economy and society."

The Myanmar Economic Holdings conglomerate is overseen by the junta's commander-in-chief, Senior General Min Aung Hlaing.

In addition, the Japanese supermarket operator Aeon Co had plans of opening its first Aeon Mall shopping complex in 2023 in Myanmar, all of which will now have to be put on hold.

It is unlikely that the situation in Myanmar will change overnight. Hence, Japan Inc. will have to adopt a wait and watch policy when it comes to developments there.

Through in an official statement from MoFA Japan, Foreign Minister Motegi noted that “the Government of Japan has strongly supported the process of democratization in Myanmar and opposes any action which goes against such process. Japan once again strongly urges the Myanmar military to swiftly restore Myanmar's democratic political system”.

Tokyo has not pushed the Myanmar junta so far. Whether this policy changes in the foreseeable future, we will have to wait and watch.

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Author: Dr. Rupakjyoti Borah

Dr Rupakjyoti Borah is a Senior Research Fellow with the Tokyo-based Japan Forum for Strategic Studies. The views expressed here are purely personal.