It gives me great pleasure to welcome you to the 2019 Invest Myanmar Summit and to see so many investors and business people, representing a wide range of industries, sectors, interest groups, and organisations, here with us today.
I am confident that this Summit — the first of its kind in Myanmar — will serve to highlight the immense opportunities available to both local and foreign investors and provide you with the opportunity to explore Myanmar’s exciting and ever evolving investment landscape.
I am happy to note that, throughout our two-day event, Union and State and Regional governments, together with our private sector partners, will be provided with an invaluable opportunity to showcase their respective investment proposals.
I would like to express our deep appreciation to the Summit organizers, the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry, who have worked tirelessly, in partnership with the Myanmar Investment Commission and the Directorate for Investment and Companies Administration, to make this event a success.
I hope all of you will find this event both fruitful and enjoyable and that you will take away happy memories that will serve to bring you back to Myanmar again and again.
Perhaps it might be worth noting that today’s event is taking place on the birthday of King Yazadarit, ruler of the ancient Kingdom of Hanthawaddy Pegu, one of our most renowned monarchs. His reign, recorded in the classic text “Razadarit Ayedawbon”, saw a range of ambitious administrative reforms, combined with the creation of peaceful conditions that helped to transform the ancient kingdom into a successful trading power. It was also on this day in 1945, 74 years ago, that supplies began to reach the Republic of China over the newly reopened “Burma Road”.
So, we meet on a truly auspicious date, the birthday of one of our nation’s foremost reformers, and also the day which saw the culmination of a highly strategic infrastructure project which undoubtedly impacted on the course of World War II in the South-East Asian theatre.
Why do we say ‘invest in Myanmar’?
Myanmar’s enviable geographical location makes us both a strategic market, as well as a crossroads between China, India, Bangladesh, Laos, and Thailand.
China, India and the ten economies that make up ASEAN, of which Myanmar is a member, together represent a potential consumer market of more than 3.5 billion people. These same economies combined account for some $15 trillion dollars, or 20 per cent, of our global GDP.
This market nexus is expected to evolve into one of the most dynamic and vibrant markets the modern world has ever seen. The McKinsey Global Institute predicts that by 2025 over half of the world’s consuming class, that is, those with an income of more than $10 a day, will live within a five-hour air journey from Myanmar.
We have a sizeable population of 53 million, half of whom are aged 30 or below. Thus, Myanmar also has a sizeable and expanding internal market which will surely benefit from greater cooperation and integration with external markets.
As the largest country in mainland Southeast Asia, Myanmar not only possesses significant potential for agricultural production, we are also richly endowed with minerals and natural gas.
Myanmar’s southern seaboard, when connected with Thailand’s thriving Eastern Economic Corridor, creates one of the world’s most strategic economic corridors, offering access routes to the Indian and Pacific Oceans via the Bay of Bengal and the Andaman Sea, as well as to the neighbouring economies of Cambodia, Laos, Viet Nam and, of course, China.
It is our firm belief that Myanmar has much to contribute by connecting regional markets to international trade routes, and in so doing, we shall be able to play a major role in supporting the expansion of trade and investment throughout the Asia-Pacific region and indeed, throughout the world.
Global/Regional Landscape and Scene Setting
Just as Myanmar has undergone rapid social, economic and political transformations in recent times, our world has also been undergoing multiple, concurrent transformations.
Throughout the past forty years, our region has experienced the greatest surge of economic growth the world has ever seen. This rapid growth, within ASEAN and the rest of Asia, has spearheaded the creation of new trade relationships, spurred the invention of new technologies, and facilitated the movement of peoples, ideas, goods, services and capital in ways which in the past had never before been thought possible.
Indeed, we live in an era in which Asia is rising, poised to shape the world. Consequently, economic integration, coupled with innovation, free trade, growing people-to-people connections and regional connectivity, presents Myanmar and our investors with vast opportunities.
With our advantageous geographical location, relatively low labour costs, and the enormous potential of our people, it is the best of times for grasping the opportunities that will arise as the global economic pendulum swings from West to East.
However, there are also challenges that must be overcome.
One key challenge for Myanmar will be to find ways and means of ensuring that we continue to benefit from this global and regional inter-connectedness, keeping in mind that less developed countries with weaker links to the global economy are at greater risk of falling further behind.
We therefore recognize the urgent need for the public sector and the private sector; the primary engine of economic growth and job creation in Myanmar and a main driving force in favour of inclusive and sustainable development; to work closer together as we seek market-based solutions to many, but not all of course, of our development challenges.
To understand Myanmar’s contemporary investment landscape, we must also seek to understand the broader forces at work.
The pursuit of market friendly economic policies, together with rapidly increasing regional cooperation and integration, have been highly beneficial for the Asia-Pacific region, allowing many of us to make a successful transition from low income, low growth to middle-to-high income, high growth. Myanmar seeks to do the same.
By our own choosing, today our country is more exposed to external market and political forces than ever before. On balance, Myanmar stands to gain from this exposure which brings with it the potential for new investment, new technologies and knowledge transfer. But that is not to say that we are immune from the less positive aspects of globalization. In today’s hyperconnected world, when one economy so much as catches a common cold, many more are put at risk of contagion.
At the global level, FDI inflows continued their decline in 2018, following a 23 per cent decrease in 2017 from the previous year. The Asia-Pacific region has not been immune from this downward trend.
According to the latest available data, FDI inflows to the Asia-Pacific region have stagnated slightly when compared with previous years. However, our region has remained a primary destination for FDI, accounting for 39% of global FDI inflows in 2017, a rise of 9 percentage points compared to 2016. Furthermore, developing Asia-Pacific economies were collectively the largest recipient region for FDI inflows worldwide in 2017.
Myanmar has also been a major beneficiary of intra-regional FDI, experiencing a 45 per cent increase in FDI inflows. Evidence of this can be seen throughout the country; an example is the new manufacturing plant set up by Malaysia-based Kian Joo Group in the Thilawa Special Economic Zone.
There can be no doubt that Myanmar is benefiting from our advantageous geographical position.
Myanmar Macroeconomic Forecasts
In Myanmar we often say “collect the water while it is raining”.
The most recent economic forecast provided by the ASEAN+3 Macroeconomic Research Office suggests that Myanmar’s economy is expected to grow by some 7.4 per cent in the 2018-2019 Fiscal Year, up from 6.8 per cent during the 2017-18 Fiscal Year, and from 5.9 per cent during the 2016-17 Fiscal Year.
We should also note that inflation is forecast to stabilise at 5 per cent during the 2018-2019 Fiscal Year. This is still higher than what we may have hoped for but it is a marked improvement on previous years. At its peak in 2015, inflation stood at 9.99 per cent.
With these positive forces converging, both regionally and in Myanmar, now is the time for us to be bold and ambitious, and bold and ambitious we shall be!
Major Myanmar Reform Efforts
As a member of the global community of nations, the Government of Myanmar has confirmed our commitment to the realization of the Sustainable Development Goals.
To this end, we have developed a comprehensive social, economic and environmental policy reform agenda – the Myanmar Sustainable Development Plan or MSDP – which provides a unifying and coherent roadmap for all future reforms.
Structured around 3 Pillars, 5 Goals, 28 Strategies and 251 Action Plans, the MSDP can be seen as the expression of our national development vision.
The MSDP is founded on a long-term vision: a vision of a peaceful, prosperous and democratic country. The MSDP also provides a detailed strategic planning matrix which will assist in the prioritisation, sequencing and implementation of strategic development and investment initiatives across all sectors, and across all States and Regions.
The first goal focuses on peace and national reconciliation, with a focus on the achievement of political stability, while the second goal emphasises macroeconomic management, with a focus on the achievement and maintenance of economic stability, without which broader, multi-sectoral development cannot begin to materialise. Hence, the first and second goals are amongst those most critical for ensuring a strong foundation upon which all future development can be based.
The third goal relates to job creation and private sector growth, while the fourth relates to human capacity and social development, including the expansion of access to quality education and healthcare.
The fifth goal, natural resources management and environmental protection, is aimed at protecting not just our country but our planet, through sustainable environmental and natural resources management.
Directly relevant to today’s event, Strategy 3.3 clearly notes our commitment to creating a favourable investment-and-business-enabling environment. Thus, we can say that what we are doing now here, is part of the implementation of our strategic planning DNA.
Since this government came into office, Myanmar has been actively pursuing a range of FDI liberalisation measures.
In recent years, we have undertaken a number of reforms, some major and obvious, some more subtle but, in their own way, equally significant. All are primarily focused on updating the regulatory and legal environment aimed at developing a market-based economy which targets inclusive economic growth. Necessary structural reforms have also been made to boost Myanmar’s development through greater integration with the global economy.
These reforms have had a profound impact on Myanmar, fundamentally enhancing our investment environment.
One of the first major reforms was the introduction of the Myanmar Investment Law. Introduced in 2016, the Myanmar Investment Law offers investors a more transparent, more liberal and more protected investment environment, bringing our investment-enabling-environment further in line with international and regional agreements.
Then, in December 2017 we launched the new Myanmar Companies Act which came into effect in August 2018.
Under the old 1914 Myanmar Companies Act, a locally incorporated entity with any foreign shareholding was considered a foreign company in Myanmar. With new legislation in place, foreign investors are now permitted to hold up to 35 percent of shares in a domestic company without the company losing its categorisation as a local company. Changing this legal definition will allow foreign investors to undertake business activities that were previously restricted to companies fully owned by Myanmar citizens.
The new Companies Law has also been designed to offer greater protection for minority investors whom we expect will contribute to a considerable improvement in Myanmar’s ranking in the Ease of Doing Business Index.
Major reform efforts have been complemented by the recent launch of MyCo, an electronic registration system through which companies can now be incorporated online, thus eliminating the need to physically wend your way to the registrar’s office.
We are already seeing some results of this. During the 5-month period following MyCo’s launch (1 August to 31 December 2018) some 8,400 new companies were registered online. Put in another way, the number of companies registered in just 5 months constitutes 10% of the total number registered during the last 30 years, from 1988 to 2018.
This is the type of progress we are determined to replicate and expand.
Further steps will involve migrating many other manual processes online so that investors will no longer need to come to a physical single window to have their needs addressed.
Retail Sector Liberalisation
With the launch of the Companies Law, we have been able to open up new economic sectors to investment. For example, in 2018 this administration successful opened Myanmar to wholly foreign-owned firms operating in the wholesale and retail sectors, a move which has attracted solid investor interest from Europe, Japan, South Korea and beyond.
Education Sector Liberalisation
We have also begun to liberalise the education sector, opening the way for 100 per cent foreign-owned educational institutions, as well as locally owned schools and joint ventures.
As noted earlier, we have made tremendous progress with regard to the development of Special Economic Zones.
I am very pleased to report that the Thilawa SEZ has become a crowning success in a very short period of time, receiving a total investment of over US$ 1.491 billion; this reflects the dollar value of those investments actually entering the economy.
Investors from countries such as Japan, the United States, Germany, France, Sweden, Australia, China, India, Singapore, Thailand and Taiwan have invested in the Thilawa SEZ, and there are many more eager to enter Thilawa SEZ Zone B.
I am happy to be able to say that a single window system is already in use at the Thilawa SEZ, and that it is providing a strong and positive precedent.
Future rollouts of similar systems elsewhere, starting with the Myanmar Investment Commission, are planned.
We also hope that recent discussions between Thailand and Myanmar, with support from China and Japan, will see similar progress made at the Dawei SEZ in short order.
CBM-NET and MACCS
Other notable reforms that will be of interest to our investors are the development of an electronic payments and settlement system, the ‘CBM-NET’, and an electronic customs and cargo clearance system, ‘MACCS’.
Our CBM-NET consists of a Real Time Gross Settlement (RTGS) system, a central securities depository system, and a mechanised cheque clearing system which is connected to all banks within Myanmar. The CBN-NET converts the once-manual process of clearing and settling payments into an entirely electronic system, thus constituting an important step toward the modernisation of our banking processes.
Likewise, our MACCS system now enables exporters and importers to apply for customs declarations and port clearances online. This system connects not only to major ports but also to several major land border crossings. The result has been shorter customs clearance times and greater efficiency gains overall.
Importantly, the Myanmar Investment Commission (MIC) has been reconstituted and is now under new management that will take forward the momentum of change and transformation. The new MIC management team is determined to turn Myanmar into a major regional trade and investment destination and has been urged to take a much more proactive approach to investment approvals.
The new MIC team is reviewing all processes, not only within the MIC itself but also within other government agencies, with a view to establishing simple, clear and predictable Standard Operating Procedures (SOPs), together with a single-window approach to services delivery.
This single-window approach will go a long way toward addressing impediments faced by investors, while at the same time providing them with both pre- and post-investment services.
We recently launched the Myanmar Investment Promotion Plan (MIPP) which aims to attract more than US$200 billion through responsible and quality business over the next 20 years, facilitating Myanmar’s transition to a middle-income country.
To help sustain this already substantial reform effort, on 19 November 2018 the Government established the Ministry of Investment and Foreign Economic Relations (MoIFER). MoIFER has been mandated to address the needs of the State and its people, with a focus on facilitating an investment-enabling-environment, furthering regional cooperation initiatives, and enhancing the quality and effectiveness of Myanmar’s cooperation and coordination with development partners and international organisations.
The Project Bank
Those who know Myanmar well will know that this country offers the possibility of immense returns to investors who are both patient and innovative.
To assist investors in the process of identifying investment priorities in a more strategic, transparent and open manner, the Ministry of Planning and Finance and the Ministry of Investment and Foreign Economic Relations have developed a Project Bank, a rolling databank consisting of major, transformative projects that have been screened, appraised and prioritised such that they are ready for implementation with the most appropriate source of financing, be it government budget, development assistance or even through private sector financing, by way of Private-Public-Partnership (PPP) mechanisms.
Our Project Bank is envisioned as an online one-stop-shop, where all information on projects designed to implement the Myanmar Sustainable Development Plan can be easily accessed with a single click. In preparing these projects, the Government is prioritising appropriately balanced risk allocation between the government and the private sector, as well as the use of blended financing mechanisms to ensure the success of PPPs that are included within the Project Bank.
I hope that it is now obvious that Myanmar is committed to creating not only a favourable, but also a predictable, facilitative and friendly, investment environment.
The World Bank acknowledged the positive change in Myanmar’s investment climate brought about by these and many other reforms back in 2017 when we were granted the 2017 Star Reformer Award. But we cannot and will not rest on our laurels.
The Star Reformers Award was made on the basis of efforts made by the Government to usher in transformational investment policy and promotion reforms representing a significant shift in the development path of the country, improving the ease of doing business, and maximizing the potential benefits of foreign direct investment and its spillover effects in the domestic economy.
We will continue to strive to improve the investment climate.
But of course, many challenges remain. For example, our infrastructure gap continues to constrain Myanmar’s development potential.
Our energy potential has also yet to be fulfilled. Myanmar remains one of the world’s least electrified countries, notwithstanding our natural gas and renewable energy resources.
Myanmar’s ports must also be upgraded and expanded to meet growing demand.
Despite these challenges, or one may even say because of them, business opportunities are abundant in proportion to the critical need for foreign direct investment. Thus, for investors, challenges can be turned into opportunities.
Invest in our people
It is said that what is comfortable is rarely profitable. This is certainly the case when it comes to investment in frontier markets. As Southeast Asia’s final frontier market – final and best we hope – we offer innumerable investment opportunities; investment opportunities are everywhere in Myanmar. Some are plain to see, others are waiting to be found.
I stand here to reaffirm our commitment to continue our reforms and to build an investment-friendly-environment.
We only ask our investors to ensure that their investments are responsible, by incorporating environmental, social and governance factors into their investment and business undertakings.
So please do come to Myanmar, soak in an atmosphere brimming with opportunities, and witness our newfound economic vibrancy with your own eyes.
This has been a rather long speech and I hope it has covered all the salient points of our investment policies and the steps that we have been taking to implement them.
Before concluding, I would like to say that our greatest investment is in our people. Everywhere I go, I see our children bright and innovative, and they are the insurance of our future. And they are also the insurers for the future of investment in this country.
So, please invest in our people, in our potential.
I wish all of you the very, very best as we go forward in our business-to-business engagements and also in our people-to-people relationships. We value the deep, genuine and mutually beneficial friendships that can bring peoples and businesses together for the benefit of all.
I wish you and this Summit every success.