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Politics & Security

Developments in Myanmar and Impacts on India and Japan

Japan and India have significant public and private investments in Myanmar which they must reframe due to the current civil war and China's growing influence.

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Protesters hold up a portrait of Aung San Suu Kyi and raise three-finger salutes during a demonstration to mark the third anniversary of Myanmar's 2021 military coup, outside of the United Nations office in Bangkok, Thailand, February 1, 2024. (©Reuters/Chalinee Thirasupa)

The civil war in Myanmar seems to be spreading. Indeed, some of it is spilling over into the Northeastern part of India, especially into the states of Manipur and Mizoram. At the same time, Japan had been putting huge investments into Myanmar in the wake of the opening up of the country. However, that has taken a turn for the worse with the recent developments.

Tokyo had an early foothold with big investments in the ASEAN region. This started with the "Fukuda Doctrine" of 1977 outlining the nature of Japan's cooperation with the ASEAN nations.  However, its early efforts are on the back burner now and China now has a bigger hold in the region. 

Japan's Reduced Profile in the Region

One example of the change is Indonesia's high-speed railway between Bandung and Jakarta, built with assistance from China.

In another case, beverage giant Kirin, a high-profile Japanese company, left Myanmar after the coup. It sold its 51% stake in Myanmar Brewery, a joint venture. On the other hand, some Japanese businesses have chosen to stay put and are waiting for the crisis to blow over. Unfortunately, that is easier said than done. Japanese interests had also invested heavily in the Thilawa Special Economic Zone outside Yangon.

India, too, had been successful in building ties with the government in Myanmar. But that changed after the takeover of power by the junta leader Min Aung Hlaing, who ousted the elected government in a coup in February 2021. 

For some Japanese companies, Myanmar seemed as the "last frontier" of Asia. That certainly seems to be changing now as the civil war intensifies.

A member of the insurgent KNDF Karenni Nationalities Defense Force rescues civilians trapped amid airstrikes during a battle to take over Loikaw in Kayah State, Myanmar. November 14, 2023. (©Reuters/Stringer)

What's In It for India?

For India, there is a lot at stake.

First, Myanmar is India's gateway to Southeast Asia and the ASEAN region as a whole. Moreover, India shares a land border with that country. New Delhi has indicated that it would seal that border, but it is not an easy task given the terrain of the region. It is mountainous and prone to lots of rainfall. 

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India has already scrapped the Free Movement Regime (FMR), which allowed any member of a hill tribe and a citizen of either India or Myanmar residing "within 16 km of the border on either side, to cross on the production of a border pass, usually valid for a year, and stay up to two weeks per visit."

Second, India invested significantly in Myanmar. Especially in the field of infrastructure, with projects like the Kaladan Multi Modal Transport Project and the India-Myanmar-Thailand trilateral highway. These are surely going to run into difficult ground in the times ahead as there seems to be no immediate end to the ongoing civil strife in Myanmar.

Third, India has also invested heavily in projects like the Sittwe Port. All these projects will now be hanging for now, in light of the current situation.

People's Liberation Army PLA members, carry an injured person as they fight the Myanmar junta army near Sagaing Region in Myanmar. November 23, 2023. (©Reuters/Stringer)

What Can India and Japan Do?

India and Japan need to form a common approach when dealing with Myanmar. The year 2024 is going to be very difficult when it comes to the situation in that country. However, the silver lining seems to be the recent elections in Bangladesh. Those have brought back the Awami League to power. Hence, this is one country where India and Japan can pool their efforts and resources until the situation cools down in Myanmar.

The China Factor

India and Japan also need to worry about the China factor. The Chinese have long helped the insurgent groups in Myanmar as a means of gaining leverage in the country. This is something India and Japan have not done in the past and cannot do in the future. However, China would surely try to jettison any plans by India and Japan to make their position stronger.

British Ambassador to the United Nations and others released a joint statement condemning Myanmar's military regime, February 5, at United Nations Headquarters in New York (©Kyodo)

The Road Ahead

Already it seems that the anti-government ultras have wrested control of some parts of the country. The government, however, is in no mood to give up control of the country. It has some big and powerful friends in the form of China and Russia, which are keen on maintaining their influence with the ruling junta. 

Since the military coup, Japan has stopped giving new aid to Myanmar. Instead, it has called on the coup leaders to stop the violence. However, its stand has been much weaker than that of the United States, the European Union, and others. Nevertheless, totally cutting off contact with the government in Myanmar could also be risky as this could allow China to increase its leverage in the country to the detriment of India and Japan.

It was in 2013 that the former Japanese Prime Minister Shinzo Abe visited Myanmar. He brought with him executives from about 40 Japanese companies and organizations. For Japan, Myanmar is important for what is known in Japan as the "Thailand plus one" strategy. That calls for extending supply chains developed in Thailand by seeking new low-cost production sites in other ASEAN nations. It has come into increasing focus after the disruption in Japanese supply chains in the wake of the COVID-19 pandemic.

"Thailand plus one" certainly seems to be under threat now, given the present circumstances in Myanmar. Hence, it would be useful for India and Japan to draw up a combined strategy to tackle the situation in Myanmar, rather than simply wait for it to blow over.

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Author:  Rupakjyoti Borah
Dr Rupakjyoti Borah is a Senior Research Fellow with the Japan Forum for Strategic Studies.  The views expressed are personal.

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