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TheStreet Open House

Suu Kyi Visit Highlights Japan's Myanmar Push

Another major trading house, Mitsui & Co. (MITSY), is beginning imports of rice and is planning to build rice mills in Myanmar, once the world's biggest rice exporter, to help it process 300,000 tons a year for export.

In the financial sector, Daiwa Securities Group and the Tokyo Stock Exchange are working with Myanmar's financial regulators to help set up a stock market by 2015. Meanwhile, convenience store operators such as Family Mart and Lawson are considering opening outlets.

China's investments, largely in energy and mining, have generated controversy over exploitation of Myanmar's rich natural resources that has done little to resolve the country's chronic power shortages. In response, last year the Myanmar government abruptly suspended construction of the China-backed Myitsone dam, which would displace thousands and flood the spiritual heartland of Myanmar's Kachin ethnic minority.

The Japanese focus on manufacturing, services, and infrastructure projects such as road building has gotten a much warmer reception.

"Myanmar is very keen to attract investment from places other than China. Japan in particular is very welcome because the Japanese have shown they are interested in investing in projects that add real value," said Rachel Calvert, a risk expert at the IHS consultancy in Singapore.

Though Myanmar was one of Asia's strongest economies in the 1950s, conditions declined steadily after a military coup in 1962. Its market of more than 60 million people, with average per capita income of only about $715, offers huge potential, analysts say.

But the risks are likewise high, given the lack of many modern legal and political institutions, endemic corruption, relatively scarce skilled labor and crumbling infrastructure. Only a quarter of the Myanmar population has access to electricity, which is intermittent at best.

"It's not all smooth sailing. The country was under military rule since 1960s. There's a lot of basic building block things that have to happen to make Myanmar a more effective investment environment," said Temple University's Kingston.

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