A changing Myanmar

In March 2016, a new government led by Aung San Suu Kyi was inaugurated in Myanmar, and in October, the US lifted all of its economic sanctions on the country. Myanmar has been garnering attention as “Asia’s last economic frontier,” and it is likely to see accelerating expansion of US and other foreign companies.

Anticipating future development there, Sumitomo Corporation designated Myanmar a strategic industrial focus for development by the entire Group in its Medium-term Management Plan that started in fiscal 2015, and has dispatched a total of nearly 50 employees to Myanmar. I had the opportunity to visit ventures Sumitomo Corporation is involved in there in early October, and I would like to describe Sumitomo Corporation’s involvement in a country that is now in the global spotlight.

About one hour drive from Yangon, I noticed that the numbers of cars and buildings had gradually diminished, with a scattering of stilted houses on a broad expanse of flat land evoking old-fashioned images of Southeast Asia. Far ahead of this scene could be seen a line of flags: the national flags of Japan and Myanmar as well as the flag of MJTD(*1), the local business company in charge of developing and operating the Zone A of the Thilawa Special Economic Zone (SEZ). The industrial park being developed within the SEZ’s Zone A is a major project under joint development since by the governments of Japan and Myanmar as well as private companies including Sumitomo Corporation. What kinds of changes has this once-vacant land undergone in the two years since sales began? With high expectations I headed toward the main gate towering before me.

Adjacent to the main gate was a brand-new two-story administration building housing the One-Stop Service Center, the Thilawa SEZ’s most notable feature. This Center is a general liaison set up by the Myanmar government for investment applications, company registrations, and other operational procedures required for foreign companies to move into the SEZ. Myanmar requires foreign companies to comply with the Foreign Investment Law when making investments, necessitating that applications be filed with all relevant ministries/agencies. This process takes time, imposing no small burden on companies. The Special Economic Zone Act applies to companies expanding into the Thilawa SEZ, however, and all of the complicated procedures can be handled in the Center, as its name implies, via one-stop service. Stepping inside, visitors receive waiting numbers, and staff members were at windows attentively dealing with inquiries. JICA specialists are also posted on a full-time basis to the Center, where they offer advice on setting up in the Thilawa SEZ. The systems and know-how that foreign companies need to receive assistance with assurance are all available here.

Next door to the administration building is Thilawa Global Logistics (hereinafter, “TGL” (*2)), a logistics company in which our company holds a stake. One of TGL’s remarkable features is that it has a warehouse inside the Thilawa SEZ to which customs officers are posted full-time. The company also enjoys an outstanding location a mere five minutes by car from Thilawa Port, with its facility situated just inside the main gate. Tenant companies using TGL have access to comprehensive import/export customs clearance and logistics services.

Further inside the zone was an expanse housing a tidy row of plants. A year or so after the zone had opened for business, about 80 companies had decided to move in, and agreements had already been concluded for about 90% of the plots for sale. As of October 2016, plants were being operated by nearly 20 companies from a wide range of industry sectors, from construction materials to foods and beverages, farm machinery, fertilizer, sewing, and assembly. Rental plants have been set up in the Thilawa SEZ. These rental plants offer production spaces that help companies hold down their initial investments and allow them to start up their operations without excessive time or difficulty, thus providing backup support for expansion by small and medium-sized companies. These have been well-received, with the existing plants for the most part full, and new rental plants are being constructed on a neighboring site.

Helping encourage many companies to set up in the Thilawa SEZ are the improvements made in basic infrastructure. Optical fiber has been laid in the Thilawa SEZ, providing communication speeds even faster than those in Yangon. Housing for employees has also been constructed nearby to make commuting convenient. The area’s previously rough roadways are being improved bit by bit. On a site adjacent to the Thilawa SEZ that lay vacant until a year and a half ago towers an impressive gas-fired power generation plant constructed with yen loan from Japan. This plant reportedly supplies electric power to Yangon as well as to the Thilawa SEZ.

A look at how completely the scenery has changed over the past two years offers an immediate picture of how smoothly business is progressing. This rapid development is underpinned by the fact that this project has received strong support from the governments of both Myanmar and Japan. The rainy season is just now coming to an end. With the start of the dry season, construction work will begin in greater earnest. Many more plants will be standing a few years from now, creating more employment, and the infrastructure will be even better. We have high expectations of uninterrupted development at the Thilawa SEZ.

*1: MJTD is the abbreviation for Myanmar Japan Thilawa Development Ltd., a business company funded by the governments of Japan and Myanmar as well as private companies

*2: A comprehensive logistics company funded by Sumitomo Corporation, Kamigumi Co., Ltd., and a Myanmar corporation

On October 7, 2016, MPT JO opened a new shop in Myanmar Plaza, one of the largest commercial facilities in Yangon. Myanmar Plaza is a modern commercial facility opened in 2015, and it was filled with young people and families despite it being a weekday. MPT JO now has nearly 130 stores, but this Myanmar Plaza shop stands out because it emphasizes MPT-brand promoting functions and customer care. In a first for the company, MPT JO launched its own brand of smartphones in September 2016. Other MPT JO shops and competitors’ shops primarily offer smartphones from multiple foreign manufacturers, but only MPT-brand smartphones are on display at this shop, which focuses on promoting the MPT brand to customers.

Special attention has been given to the shop’s interior design. The shop has partitioned counters for dealing with customers one-on-one, allowing visitors to consult about services without worrying about other customers. This setup is considered standard business practice in Japan, but shops in Myanmar do not have partitioned counters; indeed, most competing shops have nothing but a counter for ringing up sales. The Myanmar Plaza shop has installed sofas where people can relax while waiting, and provides free mobile phone charging and free WiFi. MPT JO COO Yoshiaki Benino (from Sumitomo Corporation’s Mobile Solution Business Department No. 2) says, “We want to make it a place where customers tired from shopping can feel free to stop in.” Such generous customer care, not available at other companies, will boost the value of the MPT brand.