Tuesday, July 25, 2017

Foreign investment falls by $2 billion

Foreign direct investment into Myanmar this fiscal year is worth US$2 billion less than in the same period last year, said officials, who ascribe the muted investment appetite to uncertainty during the election period.

Between April 1 and the end of December 2015, foreign investment came to $4.9 billion, compared with $6.9 billion in fiscal year 2015, U Aung Naing Oo, director general of the Directorate of Investment and Company Administration, told The Myanmar Times.

Based on current figures he expects foreign investment this fiscal year to reach $6 billion. “Investment has fallen because companies are waiting until the new government has taken power,” he said. “Big companies are likely to start investing again after the transition period.”

Nevertheless, this year’s target may still be beaten. In fiscal year 2015, DICA had initially forecast just $4 billion in pledged foreign capital. When the figure reached $4.7 billion after just six months, the target rose to $6 billion. By the end of the year, $8.1 billion of foreign investment had been committed.

Of the investments pledged this fiscal year until end-December, over $2 billion will be spent by 10 firms in the oil and gas sector, over $1.5 billion will be spent in the telecoms sector, over $720 million was pledged by 108 companies into the production sector and $239 million was committed by three companies into the real estate and construction sector.

Over $47 billion will be invested into electrical power generation and $131 million into the services industry, according to DICA figures.

More than 50 percent of companies given approval to invest in Myanmar are garment and shoe factories, and over 30pc are other factories including food and beverage, plastic, wood and home decoration materials. The remaining 20pc of companies are in the hotel, construction, and oil and gas sectors.

“Most of the companies given permission to invest in Myanmar this year will provide numerous job opportunities, which is our priority,” said U Aung Naing Oo.

To boost investment further, Myanmar needs to pass stronger investor protection laws, said Daw Khin Ohn Thant, a retired adviser to the national planning and economic development ministry.

“Myanmar struggles to comply with agreement contracts and its laws are weak. Whenever we meet with foreign entrepreneurs, they point out the frequent changes in our economic policies. This needs to change, if we want the country to develop.”

Vietnam was able to graduate from least-developed country status through foreign investment, she said, and Myanmar should be able to do the same.

Since 1988, when Myanmar first started tracking foreign investment, until the end of 2015, the Myanmar Investment Commission had approved $59.153 billion in foreign investment from 1033 international companies.

Translation by Emoon