According to a Japan External Trade Organization report, 70% of Japanese companies investing in Myanmar will either expand their operations in the country in a year or two despite the severe hit to its economy from last year s military coup and the coronaviruses epidemic.
According to the report, 52.3% will keep their current level of operations in Myanmar and 13.5% will expand them, while 27.5% will scale back their business in the country and 6.7% will withdraw from the country or move their operations to a third country.
More Japanese investors may have no choice but to reduce operations if the business environment continues to deteriorate in Myanmar, according to the Dec. 9 report.
With the first anniversary of the Feb. 1 coup approaching, the United Nations said on December 31 that the political and security situation in Myanmar is expected to remain volatile in 2022, and that a fourth wave of COVID-19 is considered a growing risk, due to the emergence of new variants of the coronaviruses.
In October, the International Monetary Fund predicted that Myanmar's economy would shrink 17.9% in 2021, down 9.0 percentage points from the Washington-based institution's estimate in April.
The IMF projected that the gross domestic product of Myanmar would contract 0.1% in 2022.
According to the JETRO survey, 63.6% of respondents expected their operating profits to fall from a year earlier in the year, while 27.8% said they would chalk up the same level of profit.
There were 180 companies responding to the survey conducted by the Japanese government-backed organization in August and September. As of June 30, a total of 433 Japanese companies had invested in Myanmar.
Asked if they would reduce, relocate or withdraw operations from Myanmar, 68.4% of respondents cited declining sales and 50.9% referred to the country's low growth and potential.
The deteriorating business environment caused by the instability of the political situation and uncertainty about the future of the country, according to some.
Several construction companies have touched on Japan s suspension of new official development aid in response to the military swoop of the democratic government of Myanmar led by civilian leader Aung San Suu Kyi.
A UN agency said that there was a dismal outlook for Myanmar, saying that 14.4 million people, or about a quarter of the country's population, will need humanitarian aid in the year 2022, as well as food and medical supplies.
The UN Office for the Coordination of Humanitarian Affairs said the prices of food and other household commodities went up after the coup, and that the country's humanitarian situation has been exacerbated by the pandemic.