FOCUS: Japan sticks to quiet Myanmar diplomacy while companies in limbo

© Kyodo News

The year of violence in Myanmar since the military seized power in a coup on Feb. 1, 2021, is presenting Japanese Prime Minister Fumio Kishida with a formidable challenge as he identifies human rights as a key diplomatic pillar while being unable to work out effective ways to bring about change in the Southeast Asian country.

Japan has adopted a cautious diplomatic approach with Myanmar, where over 1,500 people have been killed by the military. The United Nations estimates the political and economic turmoil likely drove almost half of the population into poverty heading into this year.

As the crisis drags on, some companies have announced plans to exit Myanmar while others, including many Japanese ones, are maintaining a wait-and-see stance amid persisting uncertainty over the outlook for the country that investors used to call "the final frontier."

Experts on foreign policy and the Myanmar situation argue the time is ripe for Japan to prepare to take a tougher stance by enacting a law similar to the Magnitsky Act in the United States that imposes sanctions on foreign government officials and others accused of human rights violations.

At the same time, efforts should continue to pursue dialogue, not only with the military but also with the National Unity Government, a parallel government formed by pro-democracy forces following the 2021 coup that ousted civilian leader Aung San Suu Kyi, according to the experts.

"When sanctions are imposed by other major economies, Japan, to ensure the measures are effective, should not create a loophole. In that sense, Japan needs its own Magnitsky law," said Maiko Ichihara, an associate professor at Hitotsubashi University.

"We can boost the effectiveness of a carrot when we also have a stick at hand. The government should use it as leverage to push for real democratization in Myanmar," the international relations expert said.

Major powers such as the United States and Britain have imposed targeted sanctions on junta leader Senior Gen. Min Aung Hlaing and other military officials as well as companies linked to the regime, while Tokyo's efforts to engage with the military to stop the violence and restore democracy are yet to bear fruit.

Japan has built close ties with Myanmar and stepped up its provision of official development assistance following the 2011 launch of a quasi-civilian government, while maintaining communication channels with the military. In the aftermath of the coup, Japan suspended new ODA projects.

Myanmar is strategically important as Japan, along with the United States and other like-minded nations, is seeking to realize a "free and open" Indo-Pacific, while Beijing is pushing its "Belt and Road" infrastructure initiative to expand influence.

China tops the list when Japanese politicians debate the need to address human rights abuses in other countries through new legislation, with the situation in the far western region of Xinjiang and the tightening of Beijing's grip on Hong Kong under the spotlight.

But Kishida remains evasive about enacting a law that would enable Japan to sanction officials of foreign countries such as China and Myanmar for human rights abuses, saying he will follow the debate among lawmakers and continue to "consider" the matter.

"Japan has to move to change the situation when the diplomatic efforts it has made as a mediator are not working," said Kei Nemoto, a professor who specializes in the modern history of Burma at Sophia University.

Nemoto said Japan has various options to break the impasse, such as suspending, rather than scrapping, ongoing ODA projects until progress is made, or allowing the NUG to set up a diplomatic office in Japan, as some countries have done. "This will put pressure on the junta."

While the Japanese government has not taken any decisive measures on Myanmar, over 400 Japanese companies are operating in the country, touted as having high growth potential. Some foreign companies like energy giants TotalEnergies SE of France and Chevron Corp. of the United States have decided to withdraw from Myanmar.

Among major Japanese firms, Kirin Holdings Co. is seeking to resolve a dispute with a military-linked entity over ending their beer partnership but does not plan to exit Myanmar.

"Companies are still trying to determine which is bigger -- the potential benefits of continuing operations or the reputational damage that may result over human rights issues," Nemoto added.

In a recent survey conducted by the Japan External Trade Organization, 52.3 percent of Japanese firms operating in Myanmar said they do not plan to change their operations in the next year or two, 27.5 percent said they would scale down, and 6.7 percent said they will either relocate some operations to a different country or exit Myanmar.

"Making products in Myanmar is not in itself a reputational risk. It is doing business with the military or engaging in a scheme that allows money to go to the military," said Kazufumi Tanaka, managing director of JETRO's Yangon office.

"Still, there may be more companies downsizing and suspending their businesses for now, or pulling out if they cannot project profits or make business plans for a longer period," he said.

For Kishida, the Myanmar crisis is expected to require delicate diplomatic maneuvering despite his wish to step up summit diplomacy this year. Japan has not recognized the junta or the NUG as the legitimate government of Myanmar.

"Human rights diplomacy is easy on the ear but difficult to carry out in reality," Ichihara said.