TOKYO • Toyota Motor is planning to build an automobile factory in Myanmar, according to Japan's Yomiuri Shimbun.

An official announcement could come before the end of the month, with construction on the plant to start this year.

The plant, to be located in the Thilawa Special Economic Zone on Yangon's outskirts, will assemble pickup trucks through knockdown production, in which parts imported from Japan and other nearby nations are put together.

Myanmar has a population of about 50 million people, on par with South Korea and Spain. It is also a young nation, with an average age of 27.9. While it is one of the poorest countries in Asia, it has seen strong economic growth recently and is expected to grow at annual rates of 6-7 per cent.

Though only about 17,500 new automobiles were sold in the country last year, the figure has more than doubled compared to the previous year. Toyota exports about 2,000 passenger and commercial vehicles to Myanmar per year and sees the market as one with strong growth potential.

As of last December, Toyota had 50 automobile and parts production sites in 27 nations and regions. The Myanmar factory would be a new strategic base.

Myanmar's government has implemented policies that give preferential tax treatment to firms that produce automobiles locally.

Suzuki Motor was one of the first entrants among Japanese carmakers. It has two factories in the country assembling compact cars, for which it now commands more than half of the market. Nissan Motor and Ford Motor are among the other carmakers that have a presence in Myanmar.

Analysts believe Myanmar has the potential to grow into a market similar in size to neighbouring Thailand, which has a population of 69 million and where about one million vehicles are sold per year.

Myanmar saw an investment boom after it transitioned to a civilian government in 2011, and American and European sanctions were lifted. However, foreign direct investment logged its third straight year-on-year fall in fiscal 2018.

In response, the administration led by Aung San Suu Kyi passed the first major reform of the nation's corporate law in about a century last year. Restrictions on foreign currencies were relaxed and a new investment and foreign economic relations ministry was established to solicit investment.

The Thilawa Special Economic Zone is a joint public-private development involving Japan and Myanmar that opened in 2015. Companies that set up operations there receive corporate tax exemptions. As of April 1, more than 100 companies, including those from Thailand, South Korea, Europe and the US, were operating in the zone.

YOMIURI SHIMBUN/ASIA NEWS NETWORK