The International Finance Corporation (IFC) intends to invest in Myanmar’s mobile tower industry, keen on the economic and financial benefits the sector will bring to the country, according to IFC resident representative Vikram Kumar.
While improved mobile connectivity will generate additional business activity, there are also direct advantages for Myanmar firms.
“There’s a huge spill-over effect from tower companies,” he said. “They contract local construction companies who contract local supply companies who hire locally.”
Mr Kumar said the IFC is in discussions with tower companies about supporting their investments plans over the medium term. The IFC is also keen to see a local Myanmar tower company, possibly in the next round of tower building expected next year, he said.
“It’s important to make sure no shortage of capital holds back development. The World Bank Group is fully committed that nothing holds back telecoms,” he said.
“Commercial banks are uncomfortable with Myanmar risk, especially when it comes to long term project financing,” he said.
To counter this, tower companies today envisage structuring their borrowing in a manner allowing commercial banks to get repaid outside the country, while at the same time being able to utilise the funds to pay for local expenses like labour and cement.
The IFC does not compete with commercial banks, and over the coming years, would like to promote more long term on-shore financing in Myanmar, where commercial lenders become more comfortable taking on Myanmar risk, he said.
Mr Kumar said it would ultimately be up to private firms to decide how to arrange their financing.
Edwin Vanderbruggen, a partner at legal advisory firm VDB Loi, earlier this month said there was no legal reason why international commercial banks and institutions could not provide financing immediately. While few financing deals have yet been implemented in Myanmar, he said several are currently in preparation.
“The laws are in place to do this, but the process is untested which is what has deterred lenders up to now,” he said.
“[But] for the right project, we are seeing a keen interest from commercial lenders in real estate, infrastructure and power. The legal framework has been updated in 2013, and the government is generally speaking very cooperative in facilitating foreign investment.”
Updating Myanmar’s bilateral and multilateral investment treaties could help to encourage commercial lending from abroad, he said.
Source The Myanmar Times