Present Situation of Foreign Direct Investment entering Myanmar and its future potential

  • By Khin Zar Li
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Myanmar is strategically located on the trading route between developing Asian countries and two economic super powers. Moreover Myanmar also is the center point to bring about the better and more convenient transportation of goods in Asia. The presence of sufficient amount of working-age human resources and abundant natural resources in Myanmar are the advantages for investors who want to invest in Myanmar.
The economic sectors in which international investors have mostly invested are oil and gas, electricity supply, information and communication, manufacturing and real estate sectors, all of which are supposed to be potential field for gaining more market shares. Apart from the above-mentioned economic sectors there remain many other potential sectors in Myanmar.

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The sound relationship between FDI and economic development leads to securing the long-enduring development in economy. Since the government understands that the important driving force for the development of the country is responsible investment, the firm determinations are laid to encourage the investments which are supposed to be constructive to the economic development of the country and its people.
In promoting the trade and investment the peace and tranquility of the country is sine que non. To acquire the long-lasting peace, the political dialogues were made and furthermore basing on the result of political dialogue peace talks are held between government, military, political parties and armed ethnic groups with the target to found a democratic federal union.
2nd Union Peace Conference 21st Century Panglong was held on 29 May 2017 and the conference could agree on the 37 points out of the discussed points. The government and all the stake holders have to implement together the peace and stability and economic development of the country.
The State has created the convenient opportunities for the investors and enacted the Myanmar Investment Law in October 2016. The prominent section in the law is the provision of the right of the investors to complain if there is any breach of the provisions that protect the investors. Basing on the type of investment and locations, the rules and regulations were ratified on 31 March 2017.

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Policy changes regarding the taxation to promote the trade, relaxation of the trade barriers, facilitating the trading and educative campaign for trade were made. The last financial year of the previous government 2015-16 FDI amounting to US$9.48 billion entered the country, however in 2016-17 only US$ 6.4 billion entered. 1st four months of 2017-18 FY sees the US$ 3.1 billion that is 50% of the total FDI of last FY.
The USD 3.1 billion was from investments by 95 businesses from 20 countries and has created job opportunities for over 30,000 local residents.
The five countries committing the most investment in Myanmar in the current financial year are Singapore, China, Netherlands, South Korea and Hong Kong.
The sectors they are mainly investing in are industry, construction, transportation and communication. Investments from China makes up 26 per cent of the total investment in Myanmar followed by Singapore and 1,312 businesses from 49 countries have entered Myanmar.
Yangon Region is currently receiving the most foreign investment followed by Mandalay, and Bago regions. The regions and states with no current foreign investment are Taninthayi, Magway, Rakhine, Mon, Kayin, Kachin, Kayah and Chin.
Sub-committees for investment have been formed on 7 July in regions and states with low foreign investment flowing in. The regions and states with working sub-committees for investment are Yangon, Mandalay, Bago, Ayeyawady, Nay Pyi Taw, Sagaing, Taninthayi, Magway, Shan, Kayah, Mon, Kayin and Kachin. Chin and Rakhine states will form sub-committees later this year.
The sub-committees have the authority to approve capital investments up to USD 5 million (KS 600 million) as well as approve tax exemptions and usage of land. Regional chief ministers are currently negotiating directly with government departments and foreign investors to construct new industrial zones in their regions.
The Myanmar Investment Commission (MIC) follows the World Bank Guidelines on the Treatment of Foreign Direct Investment to ensure a smooth process for domestic and foreign investors. The new Myanmar Investment Law gives equal rights to foreign and domestic investors and MIC accepts the necessary forms for investment on behalf of concerned ministries and departments and provides support for losses.
For economic development in Myanmar, the government is working on building a new market model to connect with the global market. Foreign investment and technological support is urgently needed for this endeavor. The government hopes that with the combined efforts of all its organisations more foreign investment will flow in the near future.

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