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The 2021 Myanmar coup: a Japanese tale of sorrow and sadness

With yesterday’s abrupt coup by the military junta in Myanmar, Japanese multinational companies (MNCs) are faced with enormous difficulties. After the global financial crisis in 2008, the Japanese Yen appreciated tremendously, forcing MNCs to actively invest in Asian neighbor countries. Some former US officials, who have maintained close ties with the Japanese business leadership and still remain extremely influential here in terms of essential decisions by Japanese MNCs for foreign business opportunities, enthusiastically advised corporate Japan to make sizeable direct investments into Myanmar, which almost simultaneously began to democratize its own political system. Expecting to have their investments protected by the US and other Western powers one way or another, Japanese companies invested 768 million USD in FY 2019/2020 directly into Myanmar, according to the Central Statistics Bureau of Myanmar. In the last year, 414 Japanese MNCs and SMEs have built up operations there, while Japanese foreign ministers were paying official visits to the country almost every year since 2011.

I have been personally very concerned about such an unprepared attitude on the part of Japanese companies vis-à-vis Myanmar, for I was once allowed to get involved with gold assets held by the military junta three years ago. The assets (to the tune of 8,000 metric tons) were carefully kept in warehouses of one of the leading Thai banks, which the military junta made an effort to sell to foreign buyers. The deal did not materialize since Chinese and Korean state buyers refused to accept the price offered by the junta. This event however would give me the strong feeling that the military junta in Myanmar would soon attempt a “counter-revolution”.

Despite the recent positive developments initiated by the ascend to power of Aung San Suu Kyi, mirrored by Japanese enterprises’ firm (and naïve) belief in the country’s future political and economic stability, yesterday’s coup by the military junta puts a brutal end to the democratization and the opening of Myanmar. This is really bad news for Japanese companies, since they will not be able to withdraw their massive investments in the country once the UN Security Council imposes, sooner or later, a series of economic and financial sanctions against Myanmar. The only way to get out of this unprecedented crisis would be for them to petition the Suga administration to effectively take diplomatic measures in an appropriate way. However, there is not much hope of success in this regard, as PM Yoshihide Suga is yet to prove his diplomatic craft abroad while he remains stuck in a long-drawn-out political turmoil at home.

In financial markets, there is a proverb that goes: if either the Japanese or the Arabs get into a market, it’s obviously too late to earn any profit. Myanmar may well turn out to be just that type of market, where an unfortunate corporate Japan remains at the mercy of the local military junta and could be losing their assets… again.

Picture credits: ANN News

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