Two big barriers – electoral uncertainty and poor infrastructure – are standing in the way of further foreign investment, business sources believe.Even as more foreign investment has flooded into the country, many investors have adopted a wait-and-see attitude, they say.
The Myanmar Investment Commission has already permitted about US$54 billion of overseas investment in the country, including $37 billion since 1990 for the power, oil and gas sector. But investment in manufacturing is on hold pending much-needed improvements in infrastructure, they say.
Economist U Hla Maung said yesterday, “Inadequate electricity supply and poor transport facilities mean investors have to put up more money, yet have to wait longer to see any profits.”
He added that the final removal of US and European Union sanctions would depend on the conduct of the November general election and other political considerations.
U Aung Naing Oo, the secretary of the Myanmar Investment Commission, said the removal from the sanctions blacklist of the names of some Myanmar businessmen recently could change the FDI environment by opening the way for more direct American investment.
The MIC has approved and invited more FDI in electric power generation and in projects to improve infrastructure in recent years, he said.
“We will develop a private-public partnership framework to attract more investments in infrastructure development, and we can expect ODA for some projects to solve infrastructure challenges,” he said.
To be sure, legal, policy, procedural and institutional reforms designed to build investor confidence have been made during the term of the present government, improving the investment environment to some extent. The country is now viewed more favourably by international investors.
About $8 billion has been earned for the 2014-2015 fiscal year, said the Directorate of Investment and Company Administration (DICA), with a further $6 billion expected for the present fiscal year as MIC formulates a long-term FDI promotion plan. This could increase as a result of the amended investment law to be submitted to parliament this month and related reforms, he said.
“Levelling the playing field, incorporating sound protections, and simplifying procedures while preserving the environment rather than tax incentives are the key elements of the new investment law,” said U Aung Naing Oo.
U Mg Mg Lay, vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry, said the chambers hoped to develop closer relations with responsible and ethical businesses, including in their counterpart US chambers, once sanctions are removed.
“We hope to see more foreign investment in the wake of better rules and policies,” he said.
Source: Myanmar Times