Choosing the Japanese Way: Thilawa Special Economic Zone in Myanmar

From 1962 onward, Myanmar was a military dictatorship. In 2007, General Thein Sein became Prime Minister and began a process that would lead to the country’s gradual democratization by releasing political prisoners and talking with Aung San Suu Kyi. At the same time, Thein Sein worked to attract foreign investment and made a proposal to Japan to develop a special economic zone together. Although China had been its most important partner, Myanmar wanted to strengthen relationships with countries such as Japan, India, and other members of the Association of Southeast Asian Nations. Japan on the other hand, was interested in Myanmar’s cheap labor and its markets. Japan also has an interest in countering China’s growing influence in Myanmar and Southeast Asia by strengthening its relations with these countries.

On December 21, 2012, Myanmar and Japan agreed to develop an industrial park of about 400 hectares in Thilawa Special Economic Zone near Yangon. Nevertheless, Myanmar remained unsatisfied. Aspiring to win the general election in November 2015, Thein Sein requested that Japan consider additional support for a major expansion of the zone. While such an expansion could benefit Japan, it might also provoke indigenous discontent in Myanmar, against the background of an unstable government. In addition, it is uncertain whether Thein Sein will remain in office after the next general election. How should Japan react to Myanmar’s request?