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Japanese firms expand footprint in Myanmar despite challenges from Covid-19 and military coup

A street scene in Yangon, Myanmar (Photo: IANS)

About 70 per cent of Japanese companies investing in Myanmar will either maintain or expand their operations in the south-east Asian country in a year or two despite the military coup, says a Japan External Trade Organization (JETRO) report.

Kyodo news agency says that Japanese firms have managed to retain their operations despite the challenges from the spread of the coronavirus pandemic.

The JETRO report said 52.3 per cent Japanese companies will maintain current levels of operations in Myanmar and 13.5 per cent will expand them, while 27.5 per cent will scale back their business in the country and 6.7 per cent will move their operations to a third country.

The JETRO report however had a caveat also. It said that if the business environment continues to deteriorate in the coup-affected country some of the Japanese investors may reduce their operations or even withdraw.

Kyodo news quotes the JETRO survey as analysing that 63.6 per cent respondents expected their 2021 operating profits to fall from a year earlier, while 27.8 per cent forecast they would chalk up the same level of profit.

About 180 companies had responded to the survey conducted by the Japanese government-backed organization in August and September 2021.

As of late June, a total of 433 Japanese companies had invested in Myanmar.

Asked why they would reduce, relocate or withdraw operations from Myanmar, 68.4 per cent of the respondents cited declining sales and 50.9 per cent referred to the country's low growth and potential.

Some pointed to the deteriorating business environment propelled by the unstable political situation and uncertainty about the future of the country.

Construction companies spoke about Japan's suspension of new official development assistance in response to the Myanmar military's overthrow of the democratic government led by civilian leader Aung San Suu Kyi.

Conditions in Myanmar have slid steadily as pro-democracy groups have continued to resist the takeover by the military. Even the Association of SouthEast Asian Nations (ASEAN) said recently that the country teeters on the verge of a civil war. With the anti-coup groups digging their heels in and the military retaliating with force, socio-economic conditions in the south-east Asian country have slipped further.

Covid-19 too poses challenges for Myanmar. With the emergence of new viruses, a low vaccination rate and a boycott by the medical fraternity, 2022 will prove to be daunting for the Myanmarese people.