Japan’s Okaya, Showa Sangyo join Myanmar's Bright Hands to produce reinforcing steel bars
YANGON, NNA – Japanese steel and machinery trader Okaya & Co. and steel processer Showa Sangyo Co. will form a joint venture with a local firm in Myanmar to produce reinforcing steel bars, or rebars, despite signs that the construction boom is losing steam in the emerging economy.
Okaya said Thursday that the Japanese firms had agreed with Bright Hands Co. to set up Bright Showa Okaya Rebar Fabrication Co. in Yangon in April.
Production capacity at Bright Hands’ existing factory will gradually increase over two years from the current 700 tons per month to 2,000 tons per month, a senior official of the project at Okaya in Tokyo told NNA Friday.
Okaya estimates that Myanmar needs an annual 400,000 to 500,000 tons of rebars for use in building construction, although demand peaked in 2015, posting a year-on-year drop in 2018.
Business sentiment in the country deteriorated due to the prolonged Rohingya crisis in the northern state of Rakhine, delaying construction of some apartment buildings, the official said.
While the construction sector shows signs of a slowdown, Okaya hopes to cash in on public works projects financed by Japanese official development assistance, he said, adding that three projects are planned for the next fiscal year.
Bright Hands has spun off its rebar processing division to form the joint venture. Showa will provide Japanese-made rebar processing facilities, said another Okaya official based in Yangon.
Bright Hands will hold a 65 percent stake in the venture with capital of $35 million, while Okaya and Showa will own 14.9 percent and 20.1 percent, respectively, according to a statement from Okaya.
Myanmar’s economy has been growing at an annual rate of 6 percent in recent years, but it also faces downside risks from an economic slowdown in China.
A Myanmar worker at Bright Hands Co. in Yangon producing reinforcing steel bars. (Photo courtesy of Okaya & Co.)