Investment ministry plan generates mixed reaction

Critics of the government’s move to form a ministry for attracting investment say it was needed years ago, but supporters say the negative comments are premature.


THE GOVERNMENT’S decision to create a new ministry to attract foreign investment has drawn criticism from opposition politicians and political analysts, but has been broadly welcomed by a business community affected by a flat economy.

President U Win Myint announced on November 19 that the National League for Democracy government would establish a Ministry of Investment and Foreign Economic Relations and that it would be headed by Myanmar Investment Commission (MIC) chairperson U Thaung Tun.

The ministry will take over the Directorate of Investment and Company Administration (DICA) and the Foreign Economic Relations Department from the Ministry of Planning and Finance.

Opposition politicians accused the NLD government of taking too long to address a multi-billion dollar slump in foreign investment and analysts have called for a performance review of the ministries that play a role in attracting FDI. The business community has broadly welcomed the decision to form the new ministry in the expectation it will boost foreign direct investment.

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Figures from DICA show contracted investment fell US$900 million in 2017-18, from $6.65 billion to $5.72 billion, while just $1.82 billion was approved from April 1 to October 31. The actual inflow of FDI remains strong – most sources show it has risen in recent years – but the relative lack of new investments being approved is a potential cause for concern.

“The performance of this government on investment and the economy is obviously still in need of improvement, but I don’t think it can be fixed only by forming a new ministry,” said political analyst Dr Yan Myo Thein. He said weaknesses in the performance of the MIC, Ministry of Planning and Finance and Ministry of Commerce may have been obstacles to foreign investment.

Yan Myo Thein urged the government to assess the performance of existing ministries and their ministers and permanent secretaries.

“In its remaining two years, it should conduct those assessments quickly and try to achieve a better performance by removing or replacing personnel and facilitating necessary measures,” he said.

Dr Soe Tun, chair of Myanmar Automobile Development Public Co Ltd, is among several business leaders that have supported the move. He said the new ministry would give Thaung Tun a clear mandate and increase the authority of investment-related bodies like the MIC.

In his previous role as Minister of the Office of the Union Government, Thaung Tun did not control DICA, which has been overseen by Minister of Planning and Finance U Soe Win. The positions of MIC chair and finance minister were held concurrently by U Kyaw Win until he resigned as planning and finance minister in May 2018.

However, Soe Tun said the government should heed concerns expressed about its likely cost. “If this ministry can work effectively, its cost will be recovered through economic benefit, but if it is ineffective, the criticism will be validated,” he said.

U Aye Tun, managing director of Aung Thein Than Co Ltd, said he expected that the new ministry would transform and strengthen the role of the MIC from that of an agency that approved and monitored investments to one that played a bigger role in developing the economy.

“I hope this ministry will end delays and that the process of approving investments becomes smoother and faster,” said Aye Tun, who is also an executive member of the Union of Myanmar Federation of Chambers of Commerce and Industry.

While some opposition politicians have accused the NLD of taking too long to establish the ministry, others have questioned whether it was needed in the first place. They attribute the downturn in foreign investment to the Rakhine crisis and its spoiling of the country’s international image, rather than to any problems with the operations of DICA and MIC.

Daw Nyo Nyo Thin, an independent who represented Bahan-2 in the Yangon regional parliament until her defeat by an NLD candidate in the 2015 election, said the NLD was not properly prepared to govern when it took office in March 2016 and decision-making remained highly centralised under State Counsellor Daw Aung San Suu Kyi.

“Instead of only relying on the instructions and thought of Daw Aung San Suu Kyi, there should be leaders at a variety of levels within the government,” she said.

Meanwhile, Pyithu Hluttaw MP U Sein Win (Independent, Maubin) told parliament on November 15 that the government should provide details about the ministry’s structure and objectives.

Sein Win, who resigned from the NLD in July 2017, said there was a need to consider whether forming the ministry would benefit Myanmar. He doubted whether there would be enough time under the current government for the ministry to achieve its aims.

The government has just over two years left in office and is likely to spend the last six months of its term preparing for the 2020 election, Sein Win said, warning that this may not leave enough time for creating a well-functioning ministry.

The government should have held talks in advance with specialists about its plan to create the ministry to determine whether it was absolutely necessary, Sein Win said.

“Since our country is still poor, we must minimise government expenditure,” he said.

U Ye Min Oo, an economic adviser to the NLD with interests in the financial, construction and tourism sectors, strongly defended the decision to form the ministry, saying criticism of the move was premature.

He said the length of time until the end of the government’s term mattered less than whether the ministry was needed and could fulfill its role.

“This decision shows the government’s commitment to attracting investment to Myanmar,” Ye Min Oo said. “We need to watch how well it works – but it’s definitely too early to criticise.”

TOP PHOTO: Workers at a garment factory in Yangon on November 1. Manufacturing has been a major driver of inflows of foreign investment. (AFP)

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