Myanmar stands to attract more foreign direct investment (FDI) in the years to come like other countries in the CLMV (Cambodia, Laos, Myanmar and Vietnam) group, thanks to the low wage cost which is attracting manufacturing firms aside from significant interest in the extractive industry and infrastructure, according to the Asean Investment Report 2013-2014.
Released on November 10 at the 4th Asean Investment Forum in Nay Pyi Taw, the report showed that FDI into Myanmar in 2013 rose to nearly twice the level of 2012, reaching US$2.6 billion. As in the other Asean member states, these numbers exclude non-equity modes of investment such as contractual arrangements and concessions in infrastructure or mining activities.
Entitled “FDI Development and Regional Value Chains”, the report showed that in 2013, Asean as a whole attracted US$122 billion in FDI about on par with those to China, compared to $114 billion in the previous year. Much of the future investment is expected to come from Asean companies, which seek to expand regional presence ahead of the Asean Economic Community (AEC).
“With the exception of the $664 million invested by the United Kingdom in 2012, FDI flows in Myanmar have been dominated by Chinese investments since 2008. In 2013, however, Asean emerged as the largest investor, with large levels of investment from Singapore ($655 million) and Thailand ($494 million). Asean and China together contributed 75 per cent of all FDI in the country in 2013,” said the report, completed jointly by Asean Secretariat and UNCTAD Division n Investment and Enterprise (DIAE).
In the 2014-15 fiscal year, Myanmar authorities expected to attract up to $5 billion in FDI.
While FDI inflows to Myanmar has been dominated by investments in infrastructure and extractive industry in oil, gas and mining activities, more is going to the manufacturing and sector sectors. Thanks to the Foreign Investment Law, FDI in manufacturing rose nearly seven-fold in 2013, to $364 million from $47 million in 2012, while FDI in oil and gas rose by 139 per cent to $1.6 billion.
The low wage cost has also attracted labour-intensive operations and apparel companies.
These companies included Costic International, Honeys Garment Industry, Nadia Pacific Apparel, Manufacturer GFT Enterprise, JS Filter, Eurogate Sportsware, THY Garment, Shinsung Tongsang Inter, Korea Link Industrial and Mac Do. Some major Thai garment companies are also setting up operations in Myanmar because of the cost factor.
More foreign garment and shoe manufacturers received approval to set up operations in 2013. They included Melody Global and Sunny Shoes from Taiwan Province of China; SDI Manufacturing, Shanghai Donglong Feather Manufacture and Jiangsu Solamoda Garments based in China; and AMG Factory from Hong Kong (China).
This rapid rise in FDI to the country has itself been supported by inward investment.
For instance, the rush of foreign investors to the country has also led to a rapid rise in investment in real estate, hotels and tourism-related activities since 2012. Hoteliers such as Accor (France), BEST WESTERN (United States) and Marriott (United States) have invested in the country; beverages companies such as Carlsberg (Denmark), Heineken (Netherlands) and ThaiBev (Thailand) received approval in 2013 to set up operation.
More fundamentally, Malaysian and Singaporean companies are involved in building airports and other infrastructure; and the Toyo-Thai Corp completed the first phase of a gas power plant in 2013. In a similar vein, Japanese trading companies such as Mitsubishi, Marubeni and Sumitomo are involved in the construction and development of the Thilawa Special Economic Zone.
“In short, in only a few years, Myanmar has seen the arrival of a large number of foreign investors from all over the world. For instance by 2013, major companies such as GE (United States), Samsung (Republic of Korea), Unilever (United Kingdom/Netherlands), Canon (Japan), Hilton (United States), Heineken (Netherlands), Carlsberg (Denmark), Mazda (Japan), Ford (United States), Nissan (Japan), PepsiCo (United States) and BAT (United Kingdom) had already invested and started operations in the country.22 Companies such as Coca-Cola (United States) and Unilever (United Kingdom/Netherlands) have also announced significant investment plans over the next few years. More major trans-national companies are planning to invest in different industries in Myanmar,” the report said.
At the launch, Masataka Fujia, the department head of Investment Trends and Issues Branch under the Unctad, said that that FDI from Japan has been on the rise and investors from other countries have show interest in the Myanmar market.
“Some competition stays in the region to attract foreign investment. Myanmar will have to compete with other countries in the same region such as Cambodia, Vietnam and Thailand in the garment industry, for example,” Dr. Masataka said
Source: ELEVEN MYANMAR