August 9, 2013
Traders Hotel, Yangon, Myanmar
Ladies and gentlemen,
Thank you for the opportunity to speak with you today. I am pleased to make my first visit to the Republic of the Union of Myanmar as President of the Japan International Cooperation Agency (JICA). It is exciting to be in a country that is in the midst of a sweeping transformation. Today, I would like to talk about JICA's perspective on our support to Myanmar, and in the subsequent discussion, I hope to benefit from your insights and knowledge to further improve the effectiveness of our cooperation.
Indeed, Myanmar is in the midst of historic change. 2012 will be remembered as a milestone year for Myanmar; the country started crucial steps to rejoin the international community. Important events will take place in Myanmar in the next few years, as well: the country will chair ASEAN in 2014 for the first time; and it will conduct its next general elections in 2015. Incidentally, 2014 will also mark the 60th anniversary of diplomatic ties between Myanmar and Japan.
Japan's official development assistance (ODA) for Myanmar has a long history. It dates back to 1954, when construction of the Baluchaung No. 2 Power Plant started. It is gratifying to note that Baluchaung No. 2 remains one of the most efficient power plants in Myanmar, accounting for some 11% of the country's total energy supply. I would like to applaud the engineers of Myanmar for their superb work to maintain the facility. However, many decades have passed since its construction, and it is now in need of rehabilitation. I am therefore happy to report to you that we have decided to support rehabilitation of the long-serving Power Plant with the government of Myanmar.
Another example of JICA's assistance to Myanmar is the Bridge Engineering Training Center Project. It began in 1979 and trained more than 25 engineers and 120 technicians over 6 years. In that time, I should mention, there was a tragic airplane crash that took the lives of dedicated Japanese experts and their Myanmar counterparts. On Tuesday, I visited their monuments in the Japanese Cemetery in Yangon. Even after the termination of the main project and throughout the years when Japanese assistance to Myanmar was limited, Japan maintained the ties with this Center. The Training Center remains not only a repository for, and Center of Excellence in, bridge technology, but it also serves as a capable bridge designer and builder in Myanmar. Now that international cooperation for infrastructure has resumed, I expect this Training Center to play a vital role in bridge and road projects throughout the country. These projects are just some of the most noteworthy examples of JICA's "long-term engagement" with Myanmar.
Actually, "long-term engagement" is what I would like to emphasize in this speech. We believe "long-term engagement" helps our partners accumulate technology, infrastructure, human capital, as well as build relationships of trust, or "social capital." That, in turn, forms the basis for shared innovations, eventually contributing to the development of organizations, societies, and the country as a whole. Japan's own experience of modernization and development validates this view.
To emphasize the importance of long-term engagement, let me cite one example from JICA's experience in another country: the Eastern Seaboard Development and industrial human resource development projects in Thailand.
Now, Thailand is a large auto manufacturing hub in Southeast Asia. Led by a cluster of car makers, 640 parts suppliers, and 1,700 auto parts subcontractors, Thailand's auto production reached 2 million units in 2012.
This impressive growth of the automobile industry in Thailand was triggered by the Eastern Seaboard Development Project, which lasted from the 1980's into the early 1990's. The World Bank opposed the idea of this project and considered it as premature. But the then-government of Thailand prioritized industrialization and promoted the development of industrial parks with networks of harbors, highways, and railways. JICA supported this effort with ODA loans. During the past 25 years, the Eastern Seaboard has grown into a large industrial and export base with 14 industrial complexes, 1,300 factories, and 360,000 workers.
However, enhanced infrastructure alone did not create this achievement. Another critical development was the gradual improvement of factor endowments, such as skilled labor, entrepreneurship, and effective and efficient institutions. The prospect of infrastructure development, coupled with the prospect of capacity and institutional development, attracted direct investment // and a miraculous chain reaction ensued, first slowly but eventually at a galloping pace. JICA is very proud of taking part in this project since its beginning in the 1980s and throughout the 1990s by providing many ODA loans as well as technical cooperation. We believe that long-term engagement bore fruit in this case, too.
It is obvious that there are many differences between what Myanmar faces today and what Thailand faced in the 1980s. But there are some things from the latter's experience that augur well for Myanmar today; right infrastructure, capacity and institutional development, direct investment, and, yes, long-term engagement.
In addition to "long-term engagement," another thing that I would like to emphasize today is the regional context of Myanmar's development. I believe that many people in Myanmar are convinced that isolation does not lead to development and that increased interactions with neighbors and the international community is the key to a better tomorrow. ASEAN now aims at creating an economic community, as well as a political security community and a social cultural community, by 2015. Myanmar should take advantage of this trend of regional integration. While fulfilling the responsibility as chair of ASEAN, I am sure that Myanmar will play a constructive role in guiding community-building efforts in Southeast Asia.
And Japan is ready and pleased to join ASEAN's efforts of regional community-building. This is firstly because peace and stability in Southeast Asia is critical for peace and stability in the Asia-Pacific, secondly because expanding markets with increasing production capacity in Southeast Asia is crucial for the health of the Japanese economy, and thirdly because spreading democratic values in Southeast Asia is intrinsically gratifying to the Japanese people. These are the bases of Japan's commitment in community-building in Southeast Asia.
Prime Minister Shinzo Abe demonstrated Japan's commitment to support community-building in Southeast Asia by visiting 7 ASEAN countries in the first seven months of his administration. As you know well, he visited Myanmar last May. Newspapers have reported recently that he is planning to visit the three other ASEAN member countries by December, when he hosts the special ASEAN-Japan Summit to commemorate the 40th anniversary of Japan-ASEAN Partnership in Tokyo.
As an implementing organization of Japan's international development assistance, JICA is tasked to put these ideas into practice. We are working hard to improve what ASEAN members call ASEAN connectivity.
To promote "enhanced physical infrastructure connectivity," we are working on the development of two East-West Economic Corridors in the Mekong area and roll-on roll-off shipping networks in the maritime region of ASEAN. To promote "enhanced institutional connectivity," we are working on the efforts of improving custom clearance procedures to provide efficient logistical systems, and protection of intellectual property. And, to promote "people-to-people connectivity," we are strengthening the networks of engineering universities in ASEAN to improve research and educational standards.
So far, I have emphasized two fundamental things. First, JICA's efforts are based on the philosophy of long-term engagement. Second, JICA's efforts in Southeast Asia are conducted within the context of ASEAN community-building and ASEAN-Japan partnership.
These serve as the backdrop of JICA's activities in Myanmar.
As I said, in May 2013, Prime Minister Abe visited Myanmar. He pledged that Japan's public and private sectors would support Myanmar's efforts to promote the nation's democratization, rule of law, economic reform, and national reconciliation. JICA will be responsible for the provision of grant aid, technical cooperation, and loans, which will total 91 billion Japanese Yen or 910 million US Dollars for the current fiscal year alone.
Prime Minister Abe's declaration can be understood better if you put it in the context of Japan's overall ASEAN policy. Myanmar's development is a crucial element of community-building in Southeast Asia and Japan's vision of ASEAN-Japan partnership. Just as we, the Japanese, want a more peaceful, prosperous and democratic Southeast Asian-regional community, we would like to be a partner of a more peaceful, prosperous, and democratic Myanmar.
Japan's support for Myanmar consists of three pillars: 1) improvement of people's livelihoods, including assistance for ethnic minorities and people living under the poverty line, 2) capacity building and institutional development, and 3) development of infrastructure and related systems necessary for sustainable economic development. All three pillars are important, and JICA tries to keep an appropriate balance in each project, across different projects, and in the program as a whole, between economic development and poverty reduction, urban development and rural development, tangible assets and intangible assets, and between short-term outcomes and long term outcomes. We believe that this approach will promote inclusive and sustainable growth.
Let me elaborate on some specifics.
First, peace-building. We believe that the key to internal peace is the regional poverty reduction and shared improvement in living standards. JICA is conducting "Program for Ethnic Minorities in Karen and Mon states," a comprehensive approach including social infrastructure, industrial development, development of agriculture, enhancement of the administrative capacity, as well as development of economic infrastructure. If it proves successful, we will consider extending similar efforts to other regions. In addition, JICA expects Myanmar to accelerate sharply its efforts to remove deadly landmines, as their presence hinders development activities.
Second, agriculture. Today, Myanmar enjoys an "economic boom" of sorts, focusing on industries and services. Still, the agricultural sector in the country remains very important, employing about 70% of the labor force in Myanmar. Agriculture was one of the areas that JICA continued to support while the government of Myanmar was the target of economic sanctions. Many government officials have studied agriculture in Japan. Building on this legacy, JICA will continue to support agriculture as a sector that can immediately improve living conditions of many people, and as a sector that holds significant potential because of the country's diverse climate conditions.
Third, health and education. These areas require both "quick wins" and "long-term engagement." For instance, drug-resistant malaria has been found along the Thailand-Myanmar borders. Urgent action is needed to stop the spread of drug-resistant malaria. JICA Experts in Myanmar play a central role in addressing this issue.
Everyone would agree that education is very important for Myanmar's future. JICA plans to assist, on a "long-term basis," the reform efforts of the government of Myanmar, with a focus on curriculum reform of basic education. With regard to higher education, JICA plans to start providing support to engineering universities and for the promotion of business capacity building and human capital development.
Fourth, banking and finance. These two sectors are essential for activities of the government and private sectors, and require a legal and regulatory framework, infrastructure and human resources for proper functioning. In these areas, JICA plans to provide assistance of an unprecedented scope. Specifically, JICA expects to provide, in coordination with IMF, comprehensive support to the introduction of a central banking system that is most suitable for the country. JICA also intends to assist in human capacity development to support commercial banking and capital markets.
Lastly, infrastructure. Although the quantitative needs are great, we must also ensure there is a long-term plan to ensure effective performance. While developing large-scale interventions, JICA also takes account of Myanmar's capacity and tries to work together with our national counterparts to lift Myanmar's technical capacity to international standards. Our plan will be open, and we will welcome other donor agencies and private sector funds to participate with us. In each project, JICA will converse with the government of Myanmar to ensure inclusion of: 1) benefits to the general public, including socially-disadvantaged people and societies, 2) appropriate environmental and social considerations, and 3) life-cycle cost management.
While development partners (DPs) strengthen their commitments, Myanmar also needs to provide an enabling environment for DPs' activities. Among the many issues to be addressed, I would like to highlight one of the most critical: the security issue. When violence broke out in Rakhine State last year, which even spilled over into other parts of the country, Japan joined other DPs in issuing a joint statement. I would like to reiterate that we support the government of Myanmar in its efforts to restore security and stability according to international standards.
We also strongly support the Nay Pyi Taw Accord, which emphasizes country ownership and improvement of efficiency and effectiveness of development aid. In this regard, JICA welcomes the establishment of Sector Working Groups (SWGs). JICA is a member of 12 SWGs out of 16 in total, including those on ‘transportation," "electric power," and "public finance management"--in which JICA serves as a DP co-lead. JICA intends to contribute actively to ensuring effective aid coordination at the sector level within the framework of SWG and to promote development effectiveness in Myanmar.
For Myanmar's economic growth and poverty reduction, not only development aid but also private capital inflows are essential. It is also important to lower the barriers to private sector entry, // set rules and regulations, // and establish a framework in which to foster private sector activities.
We hear that Japanese private companies' exploration into investment opportunities in Myanmar's markets are sometimes sarcastically described as NATO (No Action Talk Only) or 4L (look, listen, learn, and leave), as they appear very slow in their decisions. This, I think, is an unfair characterization. Much like JICA, "long-term engagement" is also a common approach among the numerous private companies in Japan. Entering into a foreign market requires huge amounts of both financial and human resources, and decisions need to be made carefully. Once a decision is made, however, the Japanese private sector tends to engage on a long-term basis, providing training for capacity development and offering technologies. What they have done to help transform Thailand into an automobile production center should amply prove this point. So, before you give up on the Japanese private sector, please be patient; you will be rewarded in the long run.
Finally, I believe it is time that the development efforts in Myanmar—including JICA's support—should re-emphasize the long-term commitments and dedication. When an economy is freed from excessive restrictions, it will enjoy a burst of growth, just from efficiency gains. Constructing a competitive and successful economy will require more than that—accumulation of collective capabilities. It is hard work, and it will take time. We have to do it step by step. Based on Japan's own development experience, I think many Japanese understand this process. I am sure that the leaders and the people of Myanmar understand this. There are many things we need to do quickly. But we should not lose sight of long term goals. Slow and steady wins the race. The longest way round is the shortest way home. Great achievements come one step at a time.