May 26 (Bloomberg) -- Japanese Prime Minister Shinzo Abe will offer Myanmar 40 billion yen ($395 million) of new funds and exempt about 200 billion yen of delinquent debt when he meets President Thein Sein today, Jiji Press reported without citing anyone.
As Myanmar’s largest creditor, Japan last year agreed to settle $6.6 billion in debt and provide loans to help repay the Asian Development Bank and World Bank. Japan has sought closer ties since the 2010 election that brought Thein Sein to power, hosting him in Tokyo last year and sending Finance Minister Taro Aso to Myanmar in January with business leaders.
Support for Myanmar will lead to growth for Japan, Kyodo cited Abe as saying to reporters in Myanmar yesterday. Abe is the first Japanese leader to visit the South Asian country in 36 years, as his nation’s companies seek to invest in an economy that has some of the cheapest labor in Asia. Myanmar’s annual pay burden for a worker in manufacturing totaled $1,100 per year, less than half the cost in Vietnam and a sixth that of Thailand, according to a Jetro survey published in December.
Japanese companies are looking to diversify manufacturing operations following recent wage increases in Thailand, Malaysia and Indonesia, and a territorial dispute with China that soured ties between Asia’s biggest economies.
Suzuki Motor Corp. got permission from Myanmar in February to form a manufacturing subsidiary to make small trucks beginning this month. Sumitomo and NEC Corp. last week signed a contract to help improve the country’s communications network.
Mitsui & Co. in March said it would import 5,000 metric tons of rice from Myanmar, its first purchase in more than four decades. The trading company may invest 15 billion yen to build three rice-milling plants in Myanmar capable of processing 300,000 tons a year for the Middle East and Africa, a Mitsui spokeswoman said in March.
Abe yesterday met opposition leader Aung San Suu Kyi, and his itinerary during the three-day visit includes a visit to the port and industrial estate at Thilawa, 25 kilometers (16 miles) south of Yangon, Myanmar’s biggest city. Mitsubishi Corp., Marubeni Corp. and Sumitomo Corp. are helping to develop the port, part of which is set to open as early as 2015.
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