Thai businesses are continuing to eye Myanmar opportunities, downplaying concerns the country’s political situation may slow investment here.
Several Thai business delegations visited Yangon last week looking to expand in the fast-growing economy, though some experts added further reforms in Myanmar are required to attract investment.
Thailand investment will reach US$100 billion in the next 15 years through projects in a number of sectors, said Thai Ambassador Pisanu Suvanajata at a seminar hosted by Bangkok Bank on July 18.
“Myanmar needs to ensure political and economic [reforms] carry on, and constraints on doing businesses in Myanmar must be eliminated,” he said.
Thailand was the second-largest source of approved foreign investment in Myanmar as of the end of June, worth about $10 billion or 22 percent of the total, with much of the total thought to be from PTTEP’s offshore oil and gas projects. China was the largest, with approved investments of $14 billion.
However, Thai investment in Myanmar has been diversifying. Siam Cement Group announced plans for a $400 million cement factory in Mon State last week. Several Thai banks are also still in the race for foreign banking licences, while garment and footwear factories are looking to set up shop, drawn partially by lower labour costs.
Thailand has been run by a military junta since a May 22 coup. Ousted Prime Minister Yingluck Shinawatra visited France last week, where she met with her brother Thaksin, while military official General Prayut Chan-O-Cha is still in control in Bangkok.
The coup has been blamed for slowed border trade, which pushed up local prices for imported goods like liquefied petroleum gas (LPG) – the main fuel used in Myanmar’s kitchens – though Thai officials said border trade continues as normal and it is only illegal trading that has been limited.
Thailand Department of Foreign Trade official Akarapong Dipavajra said trade flows to the border are continuing as usual, though added there had been a crackdown on illegal border trade.
Prices may have risen for Thai-made goods such as LPG, but the hikes are temporary and will soon return to normal, he said.
He added that businesses in Thailand are operating normally, and are interested in expanding in several sectors in Myanmar. While China is the largest source of approved investment in Myanmar, Thailand investors are interested in a wider variety of sectors.
Large Thai-based cement maker Siam Cement Group announced plans for a $400 million cement plant in Mon State’s Kyaikmayaw township last week.
SCG president and CEO Kan Trakulhoon said the factory will be able to produce about 1.8 million tonnes of cement annually when it is completed in 2016, with excess demand met from imports from Thailand.
The firm has been importing cement to Thailand since 1997, and has seen demand increase on an annual basis, he said.
“Our brand can compete locally because we can offer very good quality,” he added.
Meanwhile, four large Thai banks are among the 25 foreign banks still competing for banking licences in Myanmar.
The Central Bank of Myanmar officials have said between 5 and 10 foreign banks will be selected to begin operations this year, though the winners will face a number of restrictions.
Bangkok Bank executive vice president Chaiyarit Anuchitworawong said the bank aims to focus on areas that domestic banks find it hard to reach, and would also like to finance the agricultural sector and provide long-term SME loans – if the Central Bank of Myanmar allows foreign banks into the sectors.
“We want to encourage SMEs from start to end as we have experience in the sector in our country,” he said last week at a conference the bank hosted in Yangon.
“We will operate as the central bank permits, especially in connecting globally [in areas] which domestic banks currently cannot perform,” he added.
Bangkok Bank, Kasikornbank, Siam Commercial Bank and Krung Thai Bank are all still in the hunt for a licence, according to a July 15 statement from the Central Bank of Myanmar.
Meanwhile, Thailand’s Department of Foreign Trade also assisted in bringing garment and footwear businesspeople for a Myanmar business matching event last week.
“Thailand’s footwear is a very strong industry,” said Mr Akarapong. “We export a lot of footwear to many countries.”
However, some Thai business are interested in setting up in Myanmar, attracted partially by labour costs that are about a third of Thailand’s.
Expensive land and challenges with laws and regulations are hurdles to investment, he added.
“As well, business operation costs for foreign investors must be properly controlled,” he said. “Myanmar needs macroeconomic stability together with its growth and regulatory reform.”
Source: MYANMAR TIMES