Investments from the European Union member countries are likely to surge after signing of the EU-Myanmar investment protection agreement, said a senior EU official.
Antonio Berenguer, EU’s head of trade and economic affairs, said that the agreement would encourage investment from Europe by improving legal certainty and predictability surrounding investments.
“This agreement aims to provide investors with the classical guarantees such as non-discrimination, fair and equitable treatment and protection against expropriation without compensation. At the same time, it will safeguard the right of the State to regulate in the interest of the country and its people,” he said.
Berenguer added that the agreement would also encourage quality investments — those that are intended to be long lasting and socially and environmentally responsible – which would provide business opportunities in Myanmar and contribute to sustainable economic growth.
The first round of negotiation for the agreement took place between 9 and 12 February 2015 in Yangon. Jointly organised by the Directorate of Investment and Company Administration and EU Directorate of Trade, the four-day meeting offered the EU the opportunity to present its text proposal and to have a first exchange of views on the text with the Myanmar counterparts.
Nine EU officials were present over the course of negotiations. The next round will take place in May.
“This was the first opportunity to discuss the EU text proposal with several Myanmar ministries and agencies. It is therefore too early to reach conclusions, but it can be pointed out that the talks were productive and held in a very constructive atmosphere,” said Berenguer.
A senior DICA official echoed Berenguer’s view, saying that the talks were constructive and both sides showed a strong commitment to the important agreement for EU investors and for Myanmar’s fast-developing economy.
“So far, we have allowed 107 enterprises from 12 European countries to invest more than US$5.11 billion in our country. Yet, as the total amount of capital to be brought in is only about 9.63 per cent of the overall FDI [foreign direct investment], we are trying to encourage more European businesses to invest here,” she said.
According to the statistics, as of January 31, the UK is the biggest European investors in the country with 77 enterprises investing US$3.71 billion, despite the fact that a lot of these investments are from the British overseas territories. The Netherlands is the second largest European investors with 11 enterprises investing US$551.54 million, followed by France, Russia, and Austria in the top five European investors list. Other EU countries which have been allowed to invest in Myanmar are Luxembourg, Switzerland, Germany, Sweden, Denmark, Norway, and Cyprus.
Trade as a driver for growth
Berenguer sees trade, the empowerment of people, and encouragement of entrepreneurship as driving forces for catalysing development while aid plays a crucial role.
In July 2013, the EU reinstated trade preferences for Myanmar by granting the Everything but arms preferences (EBA) under the General Scheme of Preferences (GSP) with retroactive effect to June 2012. The trade regime allows Myanmar to export all its products except weapons duty free and quota free to the EU market.
“Since 2012, we have seen the exports of Myanmar to the EU increase from Euro 165.135 million in 2012 to 222.544 in 2013 and to 391.877 in 2014, an increase by 137 per cent compared to 2012. This trend is set to continue,” said Berenguer.
Trade between Myanmar and the EU has been growing incredibly rapidly, but investment from the EU in Myanmar has not grown as quickly as trade. European Union companies are by far the largest investors in Asean: since 2005 EU companies have invested an average Euro 13.6 billion annually in the region.
“We would like to see the same trend also for Myanmar. In terms of ease of doing business, Myanmar is not yet an easy country, not just for EU investors but for everybody,” he said.
Source: The Nation