Final Report Chapter 2 Background of the Project 1.9% increase. After transition to civilian rule (after 2010), vigorously continued investments to the energy field such as mainly hydraulic power generation, natural gas, and oil, and surge in sightseers and inspection tourists looking for investment opportunities have contributed to the economic growth and are factors to continue a stable nearly 6% growth. Regarding the international trade in 2011, exports are 49.2 billion kyats with a 0.4% increase over the previous year, and imports 48.7 billion kyats with a 37.3% increase, showing noticeable expansion of imports. The reason for this is that the government employs "export first doctrine" admitting import within earned foreign currencies, and trade surplus is recorded for 10 consecutive terms. In 2011, however, accompanied with relaxation of regulations, a substantial increase in import has started, and amounts of export and import are almost the same, bringing in the result of contraction of surplus (524 million kyats). 2.1.5 Unified Exchange Rate Myanmar shifted to a dirty floating rate system in April 2012. Before then, exchange rates applied to the actual business were not an official parity rate of 5.4 kyats per dollar, but a market rate of 830 kyats per dollar (January 2013), and the market rate has appreciated more than 15% over about a year. In August 2011, the rate came close to 1 dollar=700 kyats. This variation causes large impacts on the export business. Table 2.1-4 describes transition of the official parity rate. Table 2.1-4 Transition of exchange rate US$ JPY (100Yen) 2008-2009 5.4510 5.4305 2009-2010 5.4553 5.8504 2010-2011 5.5450 6.3997 2011-2012 5.3990 6.8052 2012-2013 (April-Nov) 849.49 1065.03 Source：CSO（Central Statistical Organization） On the other hand, Foreign Exchange Certificate (FEC) had been abandoned in July 2013. Myanmar nationals had been prohibited to get foreign money and permitted to get only FEC until official announcement of new Foreign Exchange Law in August 10 2012. Foreigner had not been permitted to withdraw the money remitted from foreign country by US dollar but only permitted to withdraw by FEC principally. By 2003, even foreign tourist entering into Myanmar had been requested to change from US dollar into FEC without exception. Considering those past conditions, abolishment of FEC would be a big change. 2.2 Assistance Trend of Japan 2.2.1 Assistance Policy of Japan Japan traditionally examined and implemented on a case-by-case basis with a focus on projects in basic human needs (BHN) while keeping eye on democratization and improvement of human rights situations regarding economic cooperation with Myanmar. Japan changed its economic 2-4