Foreign direct investment to Mandalay Region will boom within two or three years, as a number of ambitious projects launch and connectivity improves, according to Myanmar Investment Commission secretary U Aung Naing Oo.
Mandalay Region is currently in ninth place for foreign direct investment, receiving less than 10 percent of capital inflows, he said at the Mandalay Investment Fair on September 30.
Until now, he said, Mandalay city has been viewed by most foreign investors as a tourist destination.
“Yangon has a sea port, so the investment all comes to Yangon. Mandalay is 400 miles from the sea and logistics costs are much higher.”
However, once the Semeikhon Port is complete and the railways are upgraded, logistics costs will fall. “For local market distribution, Mandalay has more potential than Yangon,” he said.
Semeikhon Port is being built by Mandalay Myotha Industrial Development Public Company on the Ayeyarwady River, to the south west of Mandalay, beside Myotha Industrial Park.
Myanma Railways has also issued a tender for a dry port in Mandalay which will link to another in Yangon, reducing logistics hurdles.
For rail connectivity, Mandalay Central Railway Station is at the centre of Myanmar’s train network, but tracks and trains are in dire need of an upgrade.
In 2011, President U Thein Sein agreed to a line of credit from China Development Bank Corporation to fund a railway line from Kyaukphyu in Rakhine State to Muse in Shan State on the border with Yunnan province in China.
The line would have passed through Mandalay, but the project has been shelved due to widespread opposition. In the meantime, with help from Japan, several projects are under-way to upgrade and modernise the Yangon-to-Mandalay line.
Mandalay’s GDP accounted for around 12.4pc of Myanmar’s total in 2014 and is likely to rise this year, said U Aung Naing Oo. The region’s population is also seen as an advantage – with around 2.2 million residents, it is one of the largest in the country.
“Mandalay is in a strategic geographical location and the benefits of the population, market potential and connections with neighbouring countries will drive its economic boom,” he said.
Foreign investment into Myanmar has slowed due to uncertainties over the forthcoming election and transition to a new government. While over $8 billion of FDI was committed last fiscal year, less than half of this has translated into inflows.
Much will hinge on the details of a new investment law that has yet to be passed. Infrastructure development is also critical to foreign investment, according to businesspeople.
Others said last month that political and non-commercial issues, such as the political environment, ongoing economic sanctions and human rights concerns, may hold back foreign investment.
Mandalay has long been touted by authorities as a hot investment destination. However, while the city is a centre for mining and minerals trading, many foreign businesses still limit operations to Yangon.
Several other new projects are likely to change this, said U Aung Naing Oo. The 10,337-acre Myotha Industrial Park, around 36 miles (58 kilometres) from Mandalay will encourage businesses to the city.
Mandalay International Airport will also be upgraded by Japan’s Jalux and Mitsubishi Corporation and a subsidiary of Yoma Strategic Holdings. The companies have ambitious plans to transform it into a major Asian distribution hub.
A 5488-acre hotel zone in Tada-Oo township, along the bank of the Ayeyarwady River, will also help to encourage more foreign direct investment, said U Aung Naing Oo. The project is being developed by Myanma Travel Development Public Company.
The first Mandalay Investment Fair attracted more guests than anticipated, he added. “This is the first such conference. We also plan to host similar events in other states with economic potential such as Shan and Mon,” he said.
A business survey on Mandalay was carried out last month by the Japan International Cooperation Agency (JICA), the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and Myanmar Marketing Research and Development (MMRD).
It found that while the city has great potential, bureaucracy, poor infrastructure and high land prices are likely to hamper investment.
On the other hand the trading environment is competitive, according to the survey, which predicted that Mandalay’s hotel and tourism sector would prosper, as would construction and related businesses.
The trading and manufacturing sectors may improve according to market demand and the agricultural sector could benefit from improved techniques, it said.
U Aung Min, research director at MMRD, said that 46pc of survey respondents believed the future of investment into Mandalay was bright, predicting more foreign investment, better infrastructure and services.
Source: Myanmar Times