Japan and Myanmar signed a $414 million (Y42.78 billion yen) in low interest loans for infrastructure build-up and development of finance for small and medium sized businesses in Myanmar, according to a report by Pinsent Masons.

The Japanese Foreign Ministry says $268m (Y27.78bn yen) of the loans will be used for a project to build a bridge on a road in the east-west economic corridor, a route that crosses Myanmar, Thailand, Laos and Vietnam. The project involves a bridge on the road linking Bago and Kyaikhto, northeast of Yangon, a measure that will boost the logistics sector’s efficiency, according to the report.

The east-west corridor is important. Since the volume of trade with Thailand, the largest trading partner with Myanmar is expected to continue to increase, it is essential to develop the east-west economic corridor to boost the logistics sector's efficiency, the ministry said.

The maximum amount of the loan to finance small and medium sized businesses in Myanmar is $144m, which will allow them have enough funds to stabilise their business and expand operations.

According to the report, the repayment period will be 40 years, with a 10 year grace period. The loans will help weaken the economic impact of the pandemic on development of Myanmar’s industrial and business sectors, and create and retain employment, according to the ministry.