Nay Pyi Taw needs to ensure investors aren’t misled over Rakhine crisis

Interview with Felix Chung, honorary chair of the Hong Kong Myanmar Manufacturers’ Association
THE responsibility lies squarely with Nay Pyi Taw to ensure that foreign investors are not misled over the Rakhine crisis, according to a manufacturer association.

The Myanmar Times sat down with Felix Chung, honorary chair of the Hong Kong Myanmar Manufacturers’ Association (HKMMA), in his office in Hong Kong on September 8 to talk about manufacturing and industrialisation. The HKMMA was established in 2013 by a group of textile, garment and manufacturing stakeholders and Mr Chung himself is a lawmaker representing the textiles and garment constituency in Hong Kong’s parliament.

He told The Myanmar Times that, from a business perspective, the manufacturers are not anxious about the Rakhine crisis because their investments are mainly located in the southern part of the country.

“What I understand is that what’s happening is [located] in the very northern part of Myanmar, and all the economic activities are in the southern side. Basically, it should not be affecting most of the [Hong Kong] investors.

“But the Myanmar government has to do a lot of things to clarify that. The government has to give a very straight [clear] message that there is nothing that will affect investors from overseas,” he said.

But the government needs to reach out to investors and seek their confidence. “A lot of news or messages are from the media.

“A lot of people from the outside, if they do not understand the situation or location of a country, can be easily misled. It really depends on how the government handles that [the communications] to make sure investors are not misled,” Mr Chung went on.

He added that the Myanmar government has not sent any message to reassure investors, and that a prospective Hong Kong investor has held up his investment plan due to the conflict plaguing the country.

Japanese investors based in Yangon and Thilawa have privately expressed the same view, urging Nay Pyi Taw to seek the confidence of international investors.

Thilawa is too slow

Hong Kong garment manufacturers are looking for sufficient government support and efficiency when they select an investment destination, according to Mr Chung. Myanmar attracts many manufacturing investors but few are translated into action. The initial plan to set up a Myanmar-Hong Kong garment-manufacturing industrial zone has not made good progress due to the lack of government support.

“I’ve been working with several big corporations in Myanmar, and since then, everybody’s been saying that ‘we have favourable policies from the government’. But the most difficult thing is the land prices – it is increasingly high since the country opened up to the international community.

“For my friends who visited the country in 2012, and then again in 2013, the land price [in between the two visits] may have increased by 30 percent already. So that has already put people off regarding investing in Myanmar,” he added.

The lawmaker explained that investors have confidence in Thilawa Special Economic Zone. But the investment process for the SEZ is too slow for garment manufacturers to be on board.

“Thilawa SEZ has been developing really well but the process is very slow. That’s another thing that puts people off.

“Hong Kong people are very efficient. When they [HK investors] go in, they make decisions and start right away. You just can’t wait for another 1-3 years. The opportunity is not waiting for us, especially if we want to build a factory from the ground, which takes 2-3 years,” he lamented. If investors need another 2-3 years for investment approval, then it will take a total of five years before the factories are up and running. “Nobody knows what’s going to happen five years later.”

CLMV and BRI

Myanmar’s low labour cost has a competitive edge over Cambodia and Vietnam but vocational training would be essential for a successful export-oriented industrialisation.

“Cambodia and Vietnam are already very mature in terms of the industrial and manufacturing sectors. The only attractiveness that Myanmar has is that the labour costs are still the lowest among those countries and the country has sufficient supply of labour. But it’s unskilled labour.

“There’s a lot of manpower in Myanmar but they’re all unskilled. The Myanmar government needs vocational training to support the type of industries they want to attract.

“If we go to Vietnam, we could easily get skilled labour but it’s a little bit more expensive. Myanmar has to consider how to attract investors and what kinds of facilities they can provide.

“I’ve already invited to bring in training programs from the vocational training centre [VTC] here to discuss growth and education in Myanmar, but so far there has been no response. It seems that nobody cares too much about setting up this skilled training centre,” he explained.

Mr Chung stated that manufacturers will consider Myanmar regardless of the Belt and Road Initiative. “Whether there is a Belt and Road policy, we will still come [to Myanmar].

“Five years ago, there was nothing about Belt and Road but Hong Kong investors still came to Myanmar,” he said, adding that there is no Belt and Road support for the manufacturing sector but the BRI’s infrastructure investment will indirectly benefit the industrialists.

Despite all the challenges, “there are positive stories”. The HKMMA chair shared with The Myanmar Times a successful case study: a Hong Kong-owned knitwear factory in the country, which currently employs 1,300 workers, is already planning an expansion. The factory is expected to hire 3-4,000 workers in two years time.

“If we remained in China, we would never have had a factory as big as that, because the cost in China is not cheap or competitive anymore,” Mr Chung remarked, who saw the project as a case study on how a win-win situation between the country and Hong Kong businesses can be achieved.

Source: Myanmar Times

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