YANGON - Asian Development Bank (ADB) aims to lend at least US$350 million (Bt12.3 billion) a year to Myanmar during 2017-2022, targeting to finance government and privately-owned projects mainly to improve the country’s infrastructure and create jobs.
At the press conference on Wednesday afternoon, ADB President Takehiko Nakao said that the bank would scale up lending to both the government and private sector.
“We are also thinking of a higher number for lending. This $350 million is only for the concessional lending to the government. We are also supporting the private sector. We are also thinking of expanding our lending to the commercial banking sector,” he said.
“The $350 million sum is just our baseline target of concessional lending (to the government). We can consider raising the amount. That number can be even larger if we are successful.”
Completing his 3-day visit to Myanmar, Nakao said lending to the private sector would depend on negotiations. Borrowers will shoulder a slightly higher interest rate than the government. Loans to the private sector could reach $250 million per year.
Since 2013 until 2015, the bank has loaned nearly $1 billion to Myanmar.
Nakao said that ADB is currently working with the Myanmar government on a new country partnership strategy (2017-2021) to support sustainable inclusive growth. The new five-year strategy will prioritise three key sectors - infrastructure, education, and rural and agricultural development.
As part of the strategy, ADB will support road connectivity, transport, energy, power generation and transmission, agriculture and irrigation, telecommunications, energy sector, urban infrastructure including water supply and sanitation, curriculum reforms in secondary education, health projects to address HIV/AIDS, malaria, and other communicable diseases, climate resilience, and private sector initiatives. Priority is placed on strengthening business regulations, improving access to finance, and promoting public-private partnerships.
“A strong focus on structural reforms in key areas is also critical to the country’s development. Further improvement of the business environment is essential to attract foreign direct investment, which will boost financial resources as well as transfer of knowledge and technology,” he said.
Yet, he said the government should ensure that no foreign investor violated international labour standards, particularly in the area of child and forced labour. He also urged the government pay attention to the safety of workers, complaints-receiving mechanisms and corruption.
Starting from next year, ADB would allocate $5 million per year to technical assistance for capacity building.
Nakao also sees the possibility that Myanmar would receive some forms of co-financing from other development lenders such as World Bank and Asia Infrastructure Improvement Bank (AIIB). ADB this month joined hand with AIIB for a $100 million loan for a highway project in Pakistan.
“AIIB can play a role as China has been important to Asean for some projects. But Myanmar is also close to India and Southeast Asian countries. So I do not think Myanmar will entirely lean on AIIB. ADB will continue to play a very important role in this country.”
On Wednesday, Overseas Private Investment Corporation (OPIC), the US government's development finance institution, launched operations in Myanmar with a US$250 million loan to Yangon-based Apollo Towers Myanmar Limited, which is focused on the construction and maintenance of telecommunications towers.
Nakao noted that Myanmar needed a good strategy for future growth, saying good policies would speed up development pace.
“Every country needs a certain policy or strategy or planning for the future_ what kind of country they want to be, what kind of investment they will make, what kind of education they would like to strengthen, etc. So they need a strategy which should be flexible and realistic,” he said.
The government is urged to improve infrastructure, mobilise resources, raise revenue by strengthening the tax system, approve projects quickly without causing any trouble and risk to the government, and work more with development partners. Infrastructure and peace building are the key challenges to Myanmar’s growth, he said. But he admitted that there is no single solution.
“Myanmar is very important to the international community. It is also important for the prosperity of Asia. If Myanmar becomes a peaceful and stable country, it will positively impact on Asean countries. In this regard, Myanmar is so important.”