Although China remains the biggest foreign investor in Myanmar, investments from other countries are quickly catching up in the Southeast Asian nation, which was once a pariah in the international community.
This was demonstrated in the energy and telecommunications sectors, where Myanmar has awarded licences and contracts to companies from several nations, but none as of late to any Chinese companies.
“Myanmar’s promise of economic reforms may reduce its heavy economic and strategic reliance on China, but this is expected to be politically difficult as doing so may affect entrenched political and military interests,” said John Lee, a visiting fellow at the Institute of Southeast Asian Studies in Singapore, in a paper presented late last year.
“If such reforms succeed, then the aim of limiting Chinese economic and strategic influence may also succeed. Should the economic or political reform process stall, Western governments and firms may begin to lose interest in the country.
“If that occurs, then [Myanmar] will have little choice but to revert to economic reliance on Beijing, which will once again strengthen Chinese strategic and political leverage over its neighbour,” Lee wrote.
China is the largest investor in Myanmar, with US$14.25 billion in cumulative investment as of the end of last month, according to the Myanmese state Directorate of Investment and Company Administration. China accounted for 30.5 per cent of total investments of US$46.71 billion.
The next-biggest investors in Myanmar were Thailand with US$10.11 billion and Hong Kong with US$6.55 billion.
The biggest investments are in power with US$19.28 billion, followed by the oil and gas sector with US$14.37 billion. The two sectors account for 72 per cent of total investments in the country.
Prior to last year, Chinese companies dominated Myanmar’s oil and gas sector. China National Petroleum Corp (CNPC), the biggest state-owned energy firm, has been involved in 11 oil and gas projects in Myanmar, including a US$2.5 billion pipeline from Myanmar’s west coast to Yunnan province.
Of the 36 oil and gas blocks Myanmar awarded to 47 companies since October, none was given to a Chinese firm.
Among the winners were United States oil major ConocoPhillips, Chevron, Anglo-Dutch giant Shell, Norway’s Statoil, Total of France and JSOC Bashneft of Russia.
Since Myanmese President Thein Sein took power in 2011, his reforms have led to the lifting of most European Union and US sanctions against his country.
Myanmar awarded Statoil and US partner ConocoPhilips a joint 50-50 licence to search for offshore oil and gas in the Bay of Bengal.
“This is a long-term opportunity with high subsurface risk, but with high-impact potential,” said Erling Vagnes, senior vice-president for Statoil’s exploration in the Eastern Hemisphere, in a company statement.
Myanmar has an estimated 7.8 trillion cubic feet of offshore gas reserves, according to the BP Statistical Review of World Energy and the US Energy Information Administration.
In 2010, Myanmar’s natural-gas exports totalled US$2.91 billion, equivalent to 32.8 per cent of the country’s exports, and in the first nine months of 2011, its natural-gas exports reached US$2.6 billion, according to the US Geological Survey.
So far, the Myanmese government has awarded two new telecommunications licences to Telenor of Norway and Ooredoo of Qatar. But in this sector, too, no Chinese firm has won a licence.
“China is still Myanmar’s largest foreign investor, but there have been indications that the authorities want a more diverse body of partners,” said Matthew Smith, executive director and a founder at Fortify Rights, a human rights group in Bangkok that has been following the flow of investments into the country.
Source: South China Morning Post