Rakhine violence has no impact on economy
The ongoing conflict in northern Rakhine is not expected to have an impact on Myanmar’s economy and foreign direct investment, according to the business community.
CONCERNS that the ongoing violence in Rakhine State could result in capital outflows and economic sanctions are rising in the investor and business community.
At the 2017 Myanmar Global Investment Forum in Nay Pyi Taw on September 12, U Aung Naing Oo, secretary of the Myanmar Investment Commission, said he is not expecting any negative impact on the country’s economy as a result of the unrest.
“The issues are happening in the northern part of Rakhine. However, all the investments are in the southern part and offshore. So for the time being, there is no impact on foreign direct investments (FDI),” he said.
No impact on FDI Since 2013, the MIC has approved US$2.8 billion in total FDI in Rakhine. “If there was any negative impact on the area, there would not have been any investment interest. Yet, investments are still flowing into offshore oil and gas projects and hotel projects in Rakhine. So, I don’t think there will be any negative impact on FDI for now,” U Aung Naing Oo said.
If the violence persists over a longer period, though, the political impact may dent the flow of FDI going into Rakhine. “However, I am quite confident that the Myanmar government can restore stability there in the short term,” he said.
U Maung Maung Lay, Vice President of Union of Myanmar Chamber of Commerce and Industry (UMFCCI), said foreign investors are savvy enough to know when to remain invested and whent to withdraw from existing projects.
“The international focus on human rights and environmental impact is more frequent these days. But from an investment point of view, no one will deviate from an area or country where they believe they can reap business profits,” he said.
Still, while there is no visible impact on the Myanmar economy so far, U Maung Maung Lay conceded the country’s image and reputation as an investment destination would take a hit if the violence in northern Rakhine continues.
Maungdaw industrial zone Even without the current fighting though, northern Rakhine is not ready for development and FDI, U Aung Naing Oo said.
“That area is not well-developed. If we want to attract more investments we need to first develop the infrastructure. The current infrastructure in northern Rakhine is not ready,” he told The Myanmar Times during a side interview at the event.
He added that so far, there have not been any local investments in the conflict zone.
Weeks ago, the State Minister for Finance, Revenue, Economics and Planning, U Kyaw Aye Thein, told The Myanmar Times that its expects to start construction of an economic zone dedicated to promoting trade, manufacturing and services in the outskirts of Maungdaw Township in northern Rakhine this year.
The project’s aim is to foster economic growth, create jobs and promote regional stability based on long-term economic development, according to the minister.
But U Aung Naing Oo said there has not been any official direction or proposals for that Maungdaw project, which was approved under the previous government. So far, some K2.8 billion has been invested in the project, The Myanmar Times understands.
A salesperson handles a transaction with a customer at Aung Tha Mar Di Jewelry and Gold Shop on 29th Street in Yangon, on September 13. People continue to spend in Yangon despite the violence in Rakhine State.
Shoppers at the MarketPlace supermarket in Yangon. The violence in northern Rakhine is not expected to affect the economy and FDI.