Sunday, August 20, 2017

The clock is ticking for Myanmar government to show real progress

Myanmar is not the only country in ASEAN which attracts foreign direct investments (FDIs), Simon Tay, chair of Singapore Institute of International Affairs (SIIA), said during the sideline interview of the 2nd ASEAN-Myanmar Forum held in the commercial capital yesterday.

The Second ASEAN-Myanmar Forum, hosted by the Singapore Institute of International Affairs, is held on June 28 in Sedona Hotel, Yangon. Zarni Phyo / The Myanmar TimesThe Second ASEAN-Myanmar Forum, hosted by the Singapore Institute of International Affairs, is held on June 28 in Sedona Hotel, Yangon. Zarni Phyo / The Myanmar Times

He added that the critical thing is to see some real progress in the next six to twelve months and ensure some projects taking off in Myanmar in order to convince foreign investors.

“In our region, in Asia, things are going well. But there are many developing countries which are now trying to attract FDI.

“Vietnam is ahead of you [Myanmar] and they are quite big as well. Sri Lanka is, maybe, behind you after so many years of civil war but they are opening up and try to get investments.

“I am optimistic on Myanmar and I have tried to engage Myanmar for many years but I think this government has a certain timeline of which they must start to really implement. Otherwise, foreign investors will start going elsewhere,” he said.

Mr Tay added that the recent announcement regarding the prioritised sectors is welcome but there is still a demand for more policy details and clarity.

“Even if agriculture can be the strength of Myanmar, I think we need more details about what sectors Myanmar wants to keep for Myanmar people, and what sectors they can open up to foreigners as well as how two sides can work together.

“Each of the sector needs more clarity and more details. I think the foreign investment law is good stuff, but while you have good policy you need more details. And then once you implement, you must monitor and follow up,” he said.

The National League of Democracy-led government needs to streamline the bureaucracy and provide more transparency. Strong enforcement is needed when decisions are made and policies are implemented. Those are the critical issues which will convince investors abroad that the new government means business, according to the SIIA chair.

“People are still interested in investing in Myanmar because the country has so much potential. They also understand that the changes of the government mean that some new handover issues are there.

“But it [the government] really needs to show the progress. Things such as Thilawa SEZ are good examples – they need to have more such examples.

“Processes must be streamlined and more decisions can be made with more details and more clarity. People still want to partner with Myanmar to grow the country and people, together with foreign investments. It’s a crucial time for Myanmar,” he noted.

Myanmar’s GDP growth rate slowed down to 6.5 percent in the fiscal year 2016-17, compared with 7.3pc in the previous year. Growth slowed in the first half of 2016-17, partly owing to falling exports and weak commodity prices, according to the Ministry of Planning and Finance statistics.

“Myanmar is still suffering from macroeconomic imbalances such as a growing fiscal deficit and inflation. Therefore, the government is preparing to accelerate reforms in the monetary sector.

“The government is planning to provide financial assistance for the country’s small and medium industries in order to expand their businesses. At the same time, the government is calling for careful and systematic use of money during the time of slowdown of economic growth,” said U Tun Tun Naing, permanent secretary of foreign economic relations department under Ministry of Planning and Finance during the key note speech at the event.

Among the 49 countries which invested in Myanmar, Singapore ranks second in FDI. A total of 240 Singapore-led projects with the total pledge amount of US$16.97 billion have been permitted as of end of May 2017, according to the old Foreign Investment Law and the new Myanmar Investment Law.

The investment of Singapore contributes 23.81 percent of the total FDI inflows to Myanmar. Up to the end of March 2017, 1,451 Singaporean companies have been registered in accordance with the Myanmar Companies Act.

“Foreign investment is very important for our country’s economic growth. That’s why the government encourages foreign investment which allows us to enhance productivity, increase exports, bring new technologies and services to the country.

“It also helps create new job opportunities, and will improve competition. I believe the future bilateral investment treaty will also support the further strengthening of our bilateral investment relations,” the permanent secretary added.

U Zaw Min Win, president of UMFCCI said, during the sideline interview that it is common for economic slowdown to take place during transition period and when the new administration is reviewing legislations and framework related to the economy.

“The economy is static at the moment as foreign investors are still ambivalent on whether they should enter the market or not.

“The main reason for this is that the policies need to be clarified. If the new investment law and companies act could be implemented soon, the more FDIs will be come into the country during the current fiscal year,” he remarked.