Seventeen Japanese vehicle companies, including Honda, are reportedly eyeing manufacturing opportunities in Burma for sales in local and international markets.
A delegation from the Japanese Suzuka Chamber of Commerce representing automobile manufacturers on 18 January met with Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) officials to discuss the plan.
Burma’s domestic Weekly Eleven journal quoted Suzuka chief Tokushige Shimoda as saying that the company has “been preparing to produce and sell cars in cooperation with other countries, including Myanmar [Burma], Bangladesh and Indonesia.
“Cars manufactured in Myanmar will be sold in the local market as well as in foreign markets, including China,” he added. The delegation had met with 73 Burmese car manufacturers.
Burma is seen as fertile ground for growth in manufacturing, given its low wages and flimsy workers’ rights legislation which sees millions of Burmese travel to neighbouring countries such as Thailand and Malaysia to support their families.
This has prompted positive signs from the country’s garments sector as wages have risen in neighbouring countries like China and Bangladesh. In both cases labour rights and demands have made headlines, with workers in both nations demanding a minimum wage scheme; something that is not seen in Burma.
The Japanese economy has been sluggish of late and as a result the country’s industry giants have been looking at new markets. As Shimoda told local press, “it is getting more and more difficult to manufacture and sell cars in Japan as the population of the country has stopped growing.”
This will come as a welcome boost for Burma’s manufacturing sector, especially given that Japan’s largest car manufacturer, Toyota, recently divested from the country, supposedly over disquiet about the junta’s human rights record.
Concerns also abound however about the poor local infrastructure in Burma. Transport and electricity are considered unreliable or non-existent, pushing business people on the border to relocate to Thailand and utilise desperate, mobile Burmese labour.
The Japanese manufactures will join Indian industry giant Tata, which is due to set up operations in Magwe division to produce heavy trucks.
The majority of the automobiles in Burma had previously been imported from other nations, with the government only handing out a limited number of permits to import vehicles. This has kept the country’s vehicle stock aged and prices high.
This combines with cheap labour and an ASEAN free trade agreement, both within the regional bloc and with China, which would enable tariff-free exports. Overall it points to serious potential for growth in the sector, but more importantly, badly needed jobs in the urban centres.