Nov. 21 (Bloomberg) -- Resona Holdings Inc., Japan’s fifth-biggest bank by market value, is seeking an alliance with a financial institution in Myanmar as its corporate clients enter the Southeast Asian nation.
The company sent an executive in charge of global businesses to Myanmar last week to study the country, President Kazuhiro Higashi, 56, said in an interview in Tokyo yesterday.
“I see more of our clients expanding into Myanmar as infrastructure improves,” Higashi said. “The main reason why they’re interested in the country is its low production costs.”
Resona would join its bigger rivals in tapping credit demand from Myanmar as the government opens up its economy to foreign investment following five decades of military rule. The move gives Japan a chance to establish another low-cost manufacturing base similar to that of Thailand, home to factories of Nissan Motor Co., Canon Inc. and Hitachi Ltd.
The bank is working with accounting and law firms in Myanmar to learn how to help its Japanese customers enter the market, according to Higashi. Without naming clients, he said most that have already begun operating in the country of about 64 million people are companies in the textile industry.
Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, set up a representative office for its lending arm in Yangon in August 2012. Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. opened offices in the Myanmar capital earlier this year.
Orix Corp., Japan’s most acquisitive financial firm, said in July that it’s working toward deals in countries including Myanmar. Nissan received a license to build cars in the country in September. ANA Holdings Inc., Japan’s biggest airline, said in August it will buy a stake in a Myanmar carrier.
Japan has sought closer ties since the 2010 election that brought Myanmar President Thein Sein to power, hosting him in Tokyo last year. Prime Minister Shinzo Abe traveled to the Southeast Asian country in May in the first visit by a Japanese leader for 36 years.
Shares of Resona rose 0.4 percent to 528 yen at 11:24 a.m. in Tokyo, extending this year’s gain to 35 percent. The benchmark Topix Index advanced 0.9 percent and is up 45 percent in 2013.
Elsewhere in Asia, Resona signed an agreement with Public Bank Bhd., Malaysia’s third-biggest lender, in May to service Japanese companies looking to enter the country and borrow in the local currency. That marks the 11th partnership with local banks in Asia for Resona, which doesn’t have banking licenses outside Japan.
Resona doesn’t plan to buy stakes abroad until it completes the repayment of a government bailout, Higashi said. The Tokyo-based bank, which received public funds in 2003 after capital fell below requirements, plans to pay back the 772 billion-yen ($7.7 billion) balance by March 2018, earnings statements showed last week.
Higashi said in March that Resona plans to boost new loans to Japanese businesses expanding in Asia by 25 percent to 50 billion yen within a year. The bank made new loans of about 20 billion yen in the six months ended Sept. 30, according to the company.
Economic growth in developing Asia will accelerate to 6.5 percent next year from 6.3 percent in 2013, the International Monetary Fund forecast last month, even as the U.S. considers paring its monetary stimulus.
“Developing nations are said to have been doing poorly since the issue came up that the U.S. may taper its stimulus measures,” said Higashi. “But once you fly over to those countries, you notice that that’s not true. They are vibrant, and there are many Japanese companies seeking to increase production capacity there, rather than at home.”
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