Japanese investor interest in Myanmar is likely to remain robust as the Bank of Japan continues to hold short-term interest rates at minus 0.1 percent.
With cash deposits generating negative returns at home, Japanese companies are likely to continue investing funds elsewhere, including in Myanmar.
Among the latest investors in the country are JFE Steel Corporation, Meranti Steel, JFE Shoji Trade Corporation, Marubeni-Itochu Steel Inc and Hanwa Co,which will form a joint venture to produce and sell hot-dip galvanised and coloured flat steel products for the building and construction sector in Myanmar.
The five companies will establish a manufacturing and sales company, JFE Meranti Myanmar Co, in Myanmar through a Singapore-based holding company. Once approved, the JV will begin the construction of a $85 million plant at the Thilawa Special Economic Zone (SEZ).
When complete and operational in 2020, the plant will be the first project focused on manufacturing high-grade galvanised flat steel products in the country.
Rising demand
JFE Meranti Myanmar sees demand for flat steel products used for building roofs, walls and other structures expanding rapidly on the back of economic development in Myanmar.
Currently, most of these steel materials have to be imported, but the company reckons demand will soon rise for locally produced, high-quality products supported with technical services and short lead times.
Demand will be backed the growing number of foreign companies entering Myanmar, as these investors are likely to build manufacturing plants and facilities to operate, the company said in a statement. Meanwhile, local preferences are expected to shift towards higher-end products as the standard of living rises.
JFE Meranti Myanmar will join the list of Japanese companies preparing to operate in Thilawa in the coming months. This includes car maker Suzuki, which will open a manufacturing factory in the SEZ next year.
Out the 84 projects with permission to operate in Thilawa, more than half are Japanese-run, according to the Japan External Trade Organisation (JETRO). Of this, 35 have already commenced operations, with 70 factories built at the end of September.
For the first six months of the current 2017-18 fiscal year, a total of $183 million in FDI has been approved for Thilawa, according to government data. In the 2015-16 fiscal year, Japanese investments in Myanmar hit its highest level at $220 million.
[Click here to see original article published in Myanmar Times]