BANGKOK/TOKYO -- Thailand's largest industrial estate developer has suspended work on a $1 billion project in Myanmar due to fears that the military coup and possible international sanctions will drive investors away from the country.
Amata had just begun construction on the 2,000-acre industrial complex outside Yangon in December but the development, including a new power plant, will be put on hold, chief marketing officer Viboon Kromadit told reporters on Tuesday.
The announcement is a sign of the impact that the military coup, which began on Monday with the detention of Aung San Suu Kyi and other civilian leaders, could have on business activity in the country.
"We and our clients are concerned about a possible trade boycott by Western countries," Viboon said. "It's very likely to happen, particularly from the U.S. and the EU. And if that happens, new investment in Myanmar will definitely be badly affected."
Viboon said Amata had no choice but to take a "wait and see" approach to the situation.
"COVID has hit us very hard. Now the coup has worsened the situation and that has made investors to wait and see. ... We as a land developer have to wait and see as well."
Around 20 companies, mostly Japanese, are in talks to buy land in the complex to set up production bases, according to Amata. The company said it has already spent 140 million baht ($4.7 million) on the first phase of construction.
Several other multinational companies have suspended operations due to the military coup while trading on the local stock exchange has been disrupted.
Suzuki Motor, the largest automaker in the country by new car sales, halted operations at its two plants all day Tuesday following half-day suspensions on Monday.
Operations will only resume "once we confirm that safety is guaranteed," the company told Nikkei Asia. The Japanese carmaker has around 400 employees in Myanmar, all of whom are safe, according to Suzuki.
"The situation is changing quickly, so we're making decisions day by day," the company added.
Suzuki Motor controls 60% of the local car market, ahead of compatriots Toyota Motor and Nissan Motor. New car sales in Myanmar totaled 21,916 in 2019, up 25% from the previous year, according to the latest available data from the Automotive Association of Myanmar.
Suzuki has played a major role in fostering Myanmar's auto industry for over two decades, having manufactured motorcycles and automobiles through a joint venture with Myanmar Automobile and Diesel Engine Industries, under the Ministry of Industry, since 1999.
Suzuki's long history in Myanmar paved the way for the automaker to be allowed to establish a fully-owned subsidiary in the country in 2013. It now produces four models at plants in Yangon South Dagon Township and the Thilawa Special Economic Zone.
Denso, a leading Japanese auto part supplier, has also halted production at its local plant since Monday afternoon. "Gathering information has been quite difficult," the company said, adding that it will consider later whether to resume operations from Wednesday. Denso said it has confirmed the safety of its roughly 60 employees.
The coup has also forced ANA Holdings, operator of All Nippon Airways, to review its business in Myanmar. A Myanmar Notice to Airmen, or NOTAM, issued on Monday said that Yangon International Airport is closed until April 30. A NOTAM is a notification from an official body alerting airspace users to hazards along their route.
The Japanese airline decided to cancel its flights on Wednesday and Friday from Yangon to Narita International Airport near Tokyo. ANA had planned to operate two flights per week, on Wednesday and Friday, from Yangon to Narita in February in response to reduced flight demand caused by the COVID-19 pandemic.
ANA has not decided whether to cancel its scheduled flights next week but will have no choice if the airport closure continues.
Australia's Woodside Petroleum joined the ranks of companies putting some activities in Myanmar on hold, Reuters has reported. The company has been working with France's Total SA and Myanmar-based MPRL E&P to develop Myanmar's first ultra-deep water gas project, known as A-6.
"Access to some infrastructure is limited and as a result we have postponed some logistical activities while we await further clarity," the company said in emailed comments on Tuesday.
Meanwhile trading on the Myanmar stock market has yet to return to normal. The Yangon Stock Exchange, or YSX, suspended trading in all shares for the second consecutive day on Tuesday, according to bourse advisor Toru Onoda.
The military jammed lines of communication in Myanmar since early Monday, making it difficult for securities companies to access the exchange system.
"The bourse will reopen on Wednesday at the earliest," Onoda said.
Both wired and wireless communications were largely restored by Tuesday and banks have resumed operations. The stock exchange will decide Tuesday on reopening the market after confirming that trades can be executed smoothly under the current conditions.
YSX opened in March 2016 for trading only to Myanmar citizens. International investors were allowed to join the market from March 2020. Only six companies are listed, with one more slated to join in March. As of Jan. 29, the total market capitalization of listed companies stood at 719 billion kyat ($541 million), about a thousandth of the market capitalization of Stock Exchange of Thailand, its regional peer.
Additional reporting by Masayuki Yuda in Bangkok