FDI will take a hit if EU re­moves GSP: DICA

The Myanmar Times - - Business -

FOR­EIGN di­rect in­vest­ments (FDI) will suf­fer a blow if the EU with­draws its Gen­er­alised Scheme of Pref­er­ences (GSP), un­der which Myan­mar en­joys easy ac­cess to the world’s largest trad­ing block.

EU FDI in Myan­mar as well as FDI from coun­tries which tar­get the EU mar­ket through Myan­mar could take a hit should the EU can­cel its GSP priv­i­leges to Myan­mar, said U Aung Naing Oo, Di­rec­tor Gen­eral from Di­rec­torate of In­vest­ment and Com­pany Ad­min­is­tra­tion (DICA).

The EU is con­sid­er­ing re­mov­ing the GSP due to the on­go­ing cri­sis in north­ern Rakhine. Last week, an EU mon­i­tor­ing mis­sion vis­ited Myan­mar to meet with gov­ern­ment of­fi­cials, busi­nesses and labour as­so­ci­a­tions as part of it de­ci­sion mak­ing.

As a whole, FDI from the EU ac­counts for 10pc of to­tal FDI to Myan­mar. Most of the funds are chan­neled into the gar­ment man­u­fac­tur­ing sec­tor. Myan­mar ex­ports al­most half its gar­ment prod­ucts to the EU.

Other coun­tries in­vest in the Myan­mar gar­ment sec­tor to cap­ture a slice of the EU’s ris­ing de­mand for do­mes­ti­cally pro­duced tex­tiles, cloth­ing and footwear.

Cur­rently, for­eign­ers dom­i­nate 65pc of the Myan­mar gar­ment in­dus­try, while cit­i­zens own the re­main­ing 35pc of gar­ment fac­to­ries in the coun­try.

Of the for­eign-owned fac­to­ries, around 60pc is run by the Chi­nese, which then ex­ports to the EU, ac­cord­ing to Myan­mar Gar­ment Man­u­fac­turer As­so­ci­a­tion (MGMA).

All that could take a hit if the GSP is re­moved, U Aung Naing Oo said. Be­fore this, Myan­mar was ex­pected to draw FDI to­tal­ing US$5.8 bil­lion this fis­cal year, ac­cord­ing to DICA.

In ad­di­tion, the gar­ment man­u­fac­tur­ing in­dus­try em­ploys close to half a mil­lion work­ers, at least 75pc of which could lose their jobs if the EU blocks Myan­mar’s ac­cess to its mar­ket.

“Myan­mar is cur­rently un­der­go­ing po­lit­i­cal re­form to­wards a democ­racy and part of that process is al­le­vi­at­ing poverty lev­els in the coun­try. If peo­ple lose their jobs, it will de­lay our re­forms. We hope the EU will re­con­sider its in­ten­tions,” he said. – Thiha Ko Ko

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