Though some international companies are still in a wait-and-see mood before pouring their money into Myanmar, the nation remains confident that it can attract heavy investment this year, thanks to its ambitious Myanmar Investment Promotion Plan (MIPP).
Aung Naing Oo, permanent secretary at the Ministry of Investment and Foreign Economic Relations, said at a workshop on Thursday that Myanmar aims to attract foreign direct investment (FDI) worth US$5.8 billion this year.
“We have received nearly US$2.5 billion so far, and are trying hard to attract big projects in the second half of this year,” he said, adding the foreign investment inflow is expected to reach nearly the same as that of last year.
Launched in October last year, MIPP aims to receive US$200 billion from FDI over the next two decades. The three-phase plan aims to encourage domestic and foreign businesses to invest in labour-intensive industries, he said.
“At this point, we mainly focus on job creation, skill-set development and infrastructure development. We will also prioritise capital-intensive projects,” he said.
The official stressed the importance of political stability and policy certainty that largely influenced investment decisions. To him, the government plays a critical role in creating an enabling business environment.
“De-risking is vital. We need to reduce uncertainty and unpredictability to improve investor confidence in Myanmar,” he said.
The authorities are working on liberalisation and facilitation which they consider as integral parts of investment promotion, he added.
Recently, Myanmar has eased a lot of restrictions on banking, education, insurance, retail and wholesale sectors, in a bid to encourage foreign businesses to invest in the long-isolated country.
The official hinted at the liberalisation of more sectors this year.
“We are now reviewing which sectors should be the next, as we have a strong policy to open up as many sectors as we can. So there will be more to come,” he said.
He considers manufacturing as the most promising sector for foreign investment inflows, driven by the trade war between China and the United States.
“Nowadays, a lot of international companies are thinking of shifting their factories and investments in China to CLMV [Cambodia, Laos, Myanmar and Vietnam]. We need to ensure Myanmar will benefit from that,” he said.
“We do have enough labourers and, in terms of wages, Myanmar is the lowest in Asean. We have bright potential for labour-intensive industries including manufacturing and garments, as we are still entitled to trade privileges offered by the European Union.”
Around 60 per cent of garments in Myanmar is exported to European countries, taking advantage of the EU’s generalised system of preference that allows duty and quota-free imports from the country.
In terms of top investors, the official foresees a substantial increase in investments from Singaporean companies in the near future. Since early 2019, Singapore surpassed China, topping the list of investors. Singapore has traditionally been used as a proxy to circumvent sanctions for western involvement in Myanmar.
Thailand, Hong Kong and the United Kingdom are among the top five investors behind the two countries.
Aung Naing Oo said Myanmar would establish new industrial zones in the areas bordering Thailand, including Myawady and Hpa-an, to create more jobs for residents.
“While we are trying to attract new investors, it is also important to encourage the existing enterprises to expand their business by raising capital. And this is what we are striving for,” he said.
Currently, less than 10 per cent of foreign businesses in Myanmar have significantly raised their capital, while the remainder still take time to invest more, he said.