Photo/Illutration Officials examine a railway bridge in Myanmar under a Japanese official development assistance program to make repairs. (Provided by the Japan International Cooperation Agency)

Japan is withdrawing its official development assistance (ODA) for a key railway project in Myanmar that has stood as a symbol of cooperation between the two countries for the past 10 years.

The decision, as a mark of protest over the 2021 military coup against the democratically elected government, affects financial assistance for upgrades to the railway system.

Japan has been involved in the rail project since 2013. It notified Myanmar last autumn that it will not provide additional yen loans that are essential for its continuation.

Myanmars military authorities sent word by April that they understood Japan’s position, sources said.

The project stands as testimony to efforts by Japan to provide infrastructure-related assistance.

Japan is expected to review other major ODA projects for the country to protest continued oppressive military rule in Myanmar, observers said.

The project upgrades involve 620 kilometers of track linking Yangon, Myanmar’s largest city, and Mandalay in the central part of the country.

As its rails and bridges were aging, trains were prone to delays and derailments.

Japan declared it would resume yen loans in Myanmar after a civilian government regained the reins of power in 2011.

A feasibility study on upgrading the rail network got under way in 2013 and the project got going in 2018. This has resulted in repaired or renewed rails, railway bridges and signal systems.

Japan had reached an agreement with the Myanmar government to provide yen loans of up to 142.2 billion yen ($1 billion) for the project by 2020.

Tokyo had been ready to provide more funding in the form of yen loans as needs arose until around 2024 when the project is scheduled for completion.

However, Japan informed the Myanmar military in November that it would overhaul the project, and consider canceling some parts of it, according to sources linked to diplomatic relations between the two countries.

“It is difficult to consider providing additional yen loans,” the Japanese government told the Myanmar military at the time. “The project requires more time and funding due to things like the COVID-19 pandemic, the deteriorating security situation and the rapid depreciation of the yen against the dollar.”

Japan has suspended new yen loans for Myanmar since the coup.

Had it not done so, Tokyo would have been seen as recognizing the military administration as the country’s legitimate government.

The notification to Myanmar about the railway project made clear that Japan will not sign a new contract to provide additional loans to the country, even for an existing project that started before the coup.

Some repair work for the railway project stopped as the weaker yen and other factors caused a shortfall in aid that Japan had promised. But Japan has decided not to do anything about that, according to sources.

It is believed that only around a quarter of the project has been finished.

(This article was written by Makoto Oda and Azusa Kato.)