Taiwan’s Catch-Up with Myanmar Constrained by China Ties

Taiwan’s Catch-Up with Myanmar Constrained by China Ties

Taiwan’s Catch-Up with Myanmar Constrained by China Ties

Shortly after Taiwan President Tsai Ing-wen (蔡英文) won a second term in the island’s presidential election on January 11, Chinese President Xi Jinping (習近平) made his first state visit to Myanmar. [1] In a move that irked Taipei, Beijing and Naypyidaw reiterated their support for each other’s core interests. The two sides issued a joint statement on January 18 that claimed Taiwan was an “inalienable” part of China. [2] Xi met with State Counselor Aung San Suu Kyi and Myanmar Army Chief Min Aung Hlaing, backing the Myanmar military’s campaign against Rohingya Muslims, which a United Nations report called a genocide. The Myanmar government, in turn, reaffirmed “its commitment to the ‘One-China’ policy” and supported “the efforts of China to resolve the issues of Taiwan, Tibet, and Xinjiang, which are inalienable parts of China,” according to the joint statement. In response, Taiwan’s foreign ministry condemned the joint statement that sought to “diminish the sovereignty of the Republic of China, Taiwan.” Taipei is playing catch-up on developing ties with Myanmar, which opened to the world in 2011 after six decades of self-isolation under a military dictatorship. More broadly, China’s close ties with Myanmar have made it difficult for Taiwan to develop comprehensive links with the Southeast Asian country.

Taiwan-Myanmar Ties Constrained by China

China has emerged as a dominant external player in Myanmar, a position that has been strengthened by the Rohingya crisis since 2017. The Chinese government has backed the civilian government led by former democracy icon Aung San Suu Kyi and the Myanmar army’s (Tatmadaw) repressive crackdown and ethnic cleansing campaign against Rohingya Muslims in western Rakhine State. As the United States and other countries have condemned Aung San Suu Kyi’s silence on the Rohingya issue, Beijing has often come to Naypyidaw’s defense as a means to pursue its strategic interests in the resource-rich Southeast Asian country.

China has been pushing the Belt and Road Initiative (BRI, formerly known as “One Belt, One Road”), in particular the China-Myanmar Economic Corridor that includes the controversial Kyaukphyu Special Economic Zone along the Bay of Bengal. China’s strategic ties with Naypyidaw, coupled with its extensive economic presence throughout the country, have constrained Taipei’s development of more robust ties with Myanmar. According to former Taiwan representative to Myanmar, Chang Chun-fu (張俊福), some of Taiwan’s operations in Myanmar are still subject to significant restrictions because of the close relationship between Naypyidaw and Beijing.

Myanmar Re-opens to the World

After Myanmar launched economic and political reforms and re-opened to the international community in 2011, Taiwan’s government and businesses were motivated to explore opportunities to develop ties with the resource-rich country. After nearly six decades of non-existent ties, Taiwan’s relations with Myanmar were underdeveloped compared to the island’s more robust economic ties with other Southeast Asian countries, in particular Singapore, Indonesia, Malaysia, Vietnam, and the Philippines. Myanmar’s outward turn and transition from military rule toward democracy marked a turning point in Taiwan-Myanmar relations, not to mention Myanmar’s relations with the United States and many other countries.

Prior to 2011, Taiwan-Myanmar relations had languished for several decades. Taiwan’s relations with Myanmar were “not good” during Myanmar’s military rule (1962-2011), said Representative Chang. China, however, emerged as Myanmar’s lone ally during the junta period, shielding the country from censure and sanctions from the United Nations Security Council in the 1990s. For a long time, Taiwan’s foreign ministry could not set up a representative office in Myanmar because of Naypyidaw’s close ties with China, according to Chang. For a time, Taiwan-Myanmar bilateral matters were handled by the Taipei Economic and Cultural Office in Thailand (駐泰國台北經濟文化辦事處). During this period, Burmese citizens had to travel to Thailand to apply for a Republic of China (ROC) visa.

In March 2016, the Taipei Economic and Cultural Office in Myanmar (TECO, 駐緬甸台北經濟文化辦事處) began operations in Yangon, the largest city and former capital of Myanmar. However, it is notable that the office was not located in the current capital, Naypyidaw. TECO’s mission is to provide consular services and facilitate exchanges in trade and investment, agriculture, education, culture, tourism, and capacity building between the two sides. TECO replaced the Yangon-based representative office of the International Cooperation and Development Fund (TaiwanICDF, 國際合作發展基金會), an aid agency overseen by Taiwan’s Ministry of Foreign Affairs. Prior to the opening of TECO, the Taiwan External Trade Development Council (TAITRA, 中華民國對外貿易發展協會) , a semiofficial entity that promotes foreign trade, also maintained an office in Yangon. Subsequently, the Myanmar government opened the Myanmar Trade Office (MTO, 緬甸聯邦共和國駐台北貿易辦事處) in Taipei in 2015.

After the opening in 2011, Taiwan has been progressively building comprehensive ties with Myanmar. Initially, Taiwan’s strategy toward Myanmar emphasized economic and trade relations because they best showcase Taiwan’s strengths, said Representative Chang. However, he argued that Taiwan has other advantages to offer, including health and welfare services, which will help to strengthen relations with the Myanmar government. Since its establishment, TECO has worked to gradually build links with Myanmar through economics and trade, tourism, health services, medical treatments, and education, among other areas, according to Representative Chang. For example, Taipei has provided assistance for projects in Rakhine State, including the donation of 30 houses for ethnic Mro people in the Maungdaw township.

Economic Opportunities

While Myanmar is one of 18 countries included in Taiwan’s New Southbound Policy (新南向政策) launched by President Tsai in 2016, it plays a minor role in Taiwan’s overall trade and economic approach to Southeast Asia. Taiwan-Myanmar trade relations rank among the lowest out of Taiwan’s regional trade relationships, second only to Taiwan’s minuscule trade ties with Laos. In 2019, Taiwan-Myanmar bilateral trade reached USD $312.6 million, with Taipei enjoying a trade surplus of USD $171 million. Neither economy is the other’s main trade partner. Myanmar’s main export markets are China, Thailand, India, Germany, and Japan, while it largely imports from China, Singapore, Thailand, India, and Indonesia. Meanwhile, Taiwan’s main Southeast Asian trade partners in 2019 were Singapore (USD $26 billion in bilateral trade), Malaysia (USD $19.8 billion), Vietnam (USD $16 billion), Thailand (USD $9.8 billion), the Philippines (USD $8.2 billion), and Indonesia (USD $7.6 billion).

The relatively meager bilateral trade and investment ties may have been affected by the Myanmar government’s previous restrictions on Taiwan. Naypyidaw prohibited direct trade and foreign investment from Taiwan until 2013. Previously, Taiwanese businesses had to go through a third party or country in order to carry out trade and investment activities with Myanmar. There was also a temporary ban on Taiwanese commercial organizations in Myanmar. In addition, there was few official interaction between Taipei and Naypyidaw, as the two governments did not have economic and trade cooperation agreements with each other. In turn, this slowed the growth of bilateral economic and trade activities. By contrast, Taiwan has signed bilateral investment agreements with other Southeast Asian countries such as Singapore, the Philippines, Vietnam, Malaysia, and Thailand, as well as a free trade agreement with Singapore.

Since the Myanmar government began to allow foreign direct investment from Taiwan, Taiwanese investments in the Southeast Asian country have steadily increased. From 2013 to 2018, Taiwan’s foreign direct investment in Myanmar grew 172 percent from USD $131 million to USD $356 million. As of late 2019, there were approximately 270 Taiwanese businesses operating in the Southeast Asian country, across industries including agriculture, electronics, footwear, and textiles. Taiwan’s advanced technologies could help Myanmar propel its manufacturing capacity for exports, said Myo Thet, vice president of the Union of Myanmar Federation of Commerce and Industry.

A major Taiwanese investment project is the development of the Htantabin Technology Park northwest of Yangon. The project is led by Wedtex Industrial Corporation (偉特企業股份有限公司), a lace maker based in Taipei, and has also attracted other foreign investors. In May 2019, the Yangon region government and a Taiwanese delegation led by Wedtex President Jack Wang signed a memorandum on the project. Once operational, the technology park is expected to create approximately 150,000 new jobs in the country.

Taiwan’s interest in Myanmar continues to expand, particularly as the US-China trade war has shifted global supply chains and Vietnam becomes oversaturated with foreign companies. Accordingly, the World Bank predicts that the production relocation resulting from the US-China trade war could benefit Naypyidaw. Myanmar and Indonesia could serve as alternate markets for Taiwanese companies that are seeking to shift their operations from China and want to avoid the congestion in Vietnam. At the same time, Myanmar’s participation in the Regional Comprehensive Economic Partnership (RCEP), a free-trade agreement in the Asia-Pacific region that excludes Taiwan, may have the opposite effect, spurring Taiwanese businesses—particularly those in the garment industry—to divest from Myanmar to avoid future tariffs.

Coronavirus Assistance to Myanmar

Despite the absence of diplomatic relations, since the outbreak of the novel coronavirus (COVID-19), Taiwan has aided Myanmar in its battle against the virus. In March, Taiwan health experts held a virtual conference with Myanmar medical staff at a hospital after the latter sought out Taiwanese medical help to test and treat the coronavirus. The Burmese side needed assistance with testing for COVID-19 and interpretation of test results, patient treatment, and quarantine measures, according to Taiwanese medical experts. Previously, Myanmar was unable to diagnose the coronavirus and had sent swab samples to Thailand for testing. Naypyidaw, which has only one national laboratory for testing COVID-19, also sent some patient samples to Taiwan, which has upwards of 2,000 to 3,000 labs. Taipei said it would donate over one million surgical face masks to countries targeted by the New Southbound Policy. Despite being constrained by China, Taiwan’s medical diplomacy has played an important role in fostering collaboration and friendly people-to-people relations with Myanmar.

As Myanmar and Taiwan both rethink the risks attached to economic dependence on China, more recently sparked by the coronavirus, both sides have the opportunity to further develop commercial, medical, and societal ties. Greater collaboration over COVID-19 can help broaden bilateral ties beyond trade. Taipei has emerged as a leader on containment of the coronavirus and has used its face mask diplomacy to strengthen relations with the United States, European countries, and New Southbound Policy countries including Myanmar. Although Naypyidaw seeks to benefit from its strategic alignment with China, Beijing’s testy relations with many segments of Burmese society, which have protested in the past against large Chinese-funded infrastructure projects, provides room for Taipei to build a stronger foundation from the bottom-up through increased direct engagement with Burmese people and civil society.

The main point: Taiwan is playing catch-up on developing ties with Myanmar after the Southeast Asian nation opened to the world after decades of self-isolation under its military rule. Taiwan-Myanmar relations and trade are gradually growing, though the China factor remains a major barrier in many aspects of the relationship.

[1] Prior to 1989, the country was referred to as Burma. Beginning in 1989, the military government changed the country’s name to Myanmar.

[2] Beijing’s Chinese-language version of the joint statement said Taiwan was an “inalienable part” of “the People’s Republic of China,” instead of “China.”