Investment figures reveal growing diversity in sources and sectors

A recent investment forum was dominated by Asian businesses but official figures for 2017-18 suggest growing diversity in sources of investment and targeted sectors, with real estate, agriculture and services all on the rise.


IF YOU glanced around the room at the recent Yangon Investment Forum, you would have noticed something startling: an almost complete lack of Western businesspeople.

Organised by the Myanmar Investors Development Association (MIDA) and the regional government, the aim was to promote the “economic epicentre” of Myanmar – and, in particular, Chief Minister U Phyo Min Thein’s massive New Yangon City development on the city’s undeveloped western flank.

Of the foreign businesspeople present, just 7 percent were from the West, including the European Union, United States, Canada and Australia. In contrast, China accounted for 30 percent of participants, while ASEAN countries made up another 35 percent. The rest were almost all from Asia, too: India, Japan and South Korea. MIDA says it plans to organise similar investment forums in China in June and India towards the end of the year.

Prior the event, the chief minister had already publicly said that the New Yangon City project had attracted investor interest from China, South Korea and ASEAN. But the starkness of the disparity at the forum reflects a deepening sense that Western investors are turning away from Myanmar, and those from Asia, particularly China, are becoming more prominent.

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Already in 2018 several major projects have been awarded to Chinese investors, including the Yangon Central Railway Station redevelopment and the Ayeyarwady Region liquefied natural gas project. On April 30, the New Yangon Development Company signed a framework agreement with China Communications Construction Company to prepare a detailed proposal for the provision of infrastructure work for phase one of the project, which is expected to cost around US$1.5 billion.

China leading the way?

This is only partly borne out in investment figures. In 2017-18, approved Chinese investments through Myanmar Investment Commission totalled $1.395 billion – its second-highest annual figure since 2011-12, and around one quarter of the $5.718 billion total for the fiscal year. Hong Kong, Japan and South Korea all remained importance sources of investment, accounting for several hundred million dollars each.

But there were also significant investments from the Netherlands ($533.9 million), the United Kingdom ($211.2 million) and the United States ($128.7).

It’s difficult to disaggregate investment entirely, as many companies choose to invest through Singapore. While Singapore remained the largest single source of investment, with $2.164 billion, this was its lowest total since 2012-13.

The World Bank’s latest Myanmar Economic Monitor, released on May 17, said that while foreign direct investment commitments had declined in 2017-18, actual inflows of investment had remained steady and “Myanmar remains an attractive investment destination”.


Investment flowed into a more diverse range of sectors, including manufacturing, real estate, other services and agriculture, while there was less in previously dominant sectors such as transport and communications, power and oil and gas. Additionally, sources of investment continued to diversify; where Singapore accounted for half of all contracted FDI in 2015-16, it was only a quarter in 2017-18. The MEM said this was in part because there is less incentive for Myanmar companies to channel investment through Singapore.

It said that relatively strong foreign investment flows have helped to finance the current account deficit, but a “rapid decline” in investment would put stress on the external balance and currency.

Predictability and politics

Daw Khine Khine Nwe, the secretary of the Myanmar Garment Manufacturers Association (MGMA), said investors from any country wanted predictability. “It seems our country cannot give it yet to them, so they consider it a high-risk [place] to invest,” she said.

To attract more investment, Khine Khine Nwe urged the government to place more emphasis on economic policy stability with a focus on long-term development.

However, she said that Asian investors were more likely than their Western counterparts to invest in Myanmar for several reasons. One is that they can take advantage of Myanmar’s preferential trade status, such as the Generalised System of Preferences, which they might not have access to in their home country.

Myanmar Development Institute director of research Mr Sean Turnell said that any slowdown in Western investment was related to political developments and perception “more than anything else”.

“In other words, right at this moment, there is probably little the Myanmar authorities can do on this front,” he said.

He said he does not believe Myanmar is a very risky place to do business. “Probably the best thing the government could do now, especially against the broad international outlook, is to make sure domestic rules and regulations were as lean and accommodative as possible.”

Improving the business environment

The MEM, which was titled “Growth Amidst Uncertainty”, said that in order to boost private investment the government should continue with the implementation of the new investment and companies laws and associated regulations, while also making it easier to do business.

The government has set a target of moving into the top 100 on the World Bank’s ease of doing business rankings, up from 171 out of 190 countries at present.

The MEM said that reforms to meet this goal “can boost private investment and support the economy to compete globally”. While there has been recent progress, much remains to be done and it warned there were no quick fixes.

“[P]erceptions are that bureaucratic inefficiency, centralised decision making, and emerging protectionism are bottlenecks to improving the operating environment for the private sector,” it said.

It recommended strengthening coordination across the government and improving public communication in regard to recent economic reforms, monitoring progress on efforts to reform the business environment, and further liberalising regulations for foreign investment, including in banking and insurance.

On foreign investment specifically, it said the government should raise awareness of the new law and regulations, build staff capacity at the regional level, and clarify the setup of the Investor Assistance Committee.

“Complementary reforms should also be accelerated to improve investors’ access to land, infrastructure, skilled labour and quality domestic inputs.”

TOP PHOTO: Chief Minister U Phyo Min Thein speaks at the Yangon Investment Forum on May 9. (Kyaw Lin Htoon | Frontier)

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