Foreign companies are showing unwavering interest in Myanmar, despite concerns about the reform process.
In the first two weeks of January, the representatives of four companies showed up at the office of the Directorate of Investment and Company Administration (DICA) in Yangon, according to its website.
They were Toyota Tsusho Corp, ZTE Corp, Shell Eastern Petroleum (Pte) Ltd, and Siam Commercial Bank. All had discussions with Aung Naing Oo, director-general of the DICA, on matters relating to investment in Myanmar.
Leading SCB’s delegation to the discussion on January 15 was Kamalkant Agarwal, adviser to the chairman of the executive committee and Head of International Banking Business, Yangon Representative Office.
Steve Jones, the new business development manager of Singapore-based Shell Eastern Petroleum (Pte) Ltd, was seen at the office on January 8.
A day before, Aung Naing Oo welcomed Wang Weichao, chief finance officer of ZTE to the office. On that day, he also welcomed Toyota Tsusho representative Shinichi Hondo.
While SCB and ZTE have offices in Yangon, Toyota Tsusho – Toyota Group’s sole trading company – operates through a liaison office. Shell still has no office in the country, though it was among foreign exploration firms awarded new concessions last year. As Myanmar opened its doors to foreign investment, companies from different parts of the world have shown interest in getting connected with the country, resulting in a continued increase in foreign direct investment (FDI).
Greenlight for $6.6 bn projects
In the first nine months of the fiscal year 2014-15 starting April 2014, new foreign investment projects worth US$6.6 billion were approved by the Myanmar Investment Commission (MIC). Throughout fiscal 2013-14, the value was $4.1 billion, rising sharply from $1.4 billion in the previous year.
At the end of 2014, 859 companies from 37 countries have won approval with combined project value of $52.8 billion. Projects from China accounted for 27.43 per cent of total, making it No 1 in terms of approved project value, followed by Thailand (19.41 per cent), Singapore (15.78 per cent), Hong Kong (13.16 per cent) and the United Kingdom (7.03 per cent).
Of the total, 598 companies from 31 countries have invested a combined $42.78 billion in the country. The value of 67 Chinese companies was the highest, at $14.4 billion or 33.7 per cent. This is followed by investment from Singapore (18.70 per cent), Hong Kong (16.04 per cent), Korea and Thailand (7.36 per cent). Out of 81 Thai companies with approvals, 45 have invested a total of $3.2 billion in the country.
Notably, only 46 companies from Japan have invested a total of $285 million in Myanmar, though projects worth $387.4 million from 57 companies were approved. It was expected that more investment from Japan would flow into the country after the Thilawa Special Economic Zone as well as the Dawei Special Economic Zone are completed. Japanese companies are taking the lead in the development of Thilawa SEZ. Companies from the country are also expected to get involved in the development of Dawei SEZ. Existing foreign investments include those from several European countries, Russia, Panama, Mauritius and Samoa.
In a briefing for Thai investors late last year, Standard Chartered Bank (Myanmar) chief representative Tina Singhsacha noted that the Myanmar government’s commitment to further reforms, natural resources and the abundance of young workers (with the median age of 27 years) are major magnets for foreign investors.
There’s an opportunity that Myanmar can leapfrog, she said. One example is the jump in their knowledge of money laundering in the past year. Meanwhile, though small and one of the least developed countries, some of the 23 local banks are planning mobile banking services.
She noted that it may be too early for some kinds of manufacturing while Yangon traffic, poor infrastructure nationwide and slow Internet speed could pose big challenges.
“It’s important to be there, as perception could be worse than reality. Be on the ground as much as you can, to understand the country. You need to be alert and prepared to act quickly. Along the way, you need to be patient and you also need a good lawyer and show long-term commitment. As the country lacks skilled labour, any businesses with capacity building programmes could be rewarded in the long term, she noted,
Source: The Nation