Myan­mar is step­ping up its ef­forts to at­tract for­eign in­vest­ment and boost eco­nomic de­vel­op­ment.

Myan­mar is step­ping up its ef­forts to at­tract for­eign in­vest­ment and boost eco­nomic de­vel­op­ment.

Norway-Asia Business Review - - Contents - LARRY JAGAN

They have launched a diplo­matic of­fen­sive to im­prove their in­ter­na­tional image, although the prob­lems in Rakhine have over­shad­owed the gov­ern­ment’s ap­peal to western com­pa­nies. “Myan­mar is now def­i­nitely open for busi­ness,” the new chair­man of the Myan­mar In­vest­ment Com­mis­sion (MIC), U Thaung Thun told Busi­ness Re­view after ad­dress­ing a group of for­eign busi­ness­men in Yangon re­cently.

“Mea­sures to make do­ing busi­ness eas­ier in Myan­mar, to at­tract in­vest­ment and re­duce bu­reau­cratic de­lays have re­cently been put into place,” he added. This is a point the State Coun­sel­lor, Daw Aung San Suu Kyi also made when she ad­dressed an in­ter­na­tional au­di­ence of aca­demics, busi­ness peo­ple and stu­dents in Sin­ga­pore in Au­gust, en­cour­ag­ing in­vestors to ex­plore the coun­try’s in­vest­ment pos­si­bil­i­ties.

“I would like to in­vite our friends to join us on our jour­ney. Our jour­ney is not a sim­ple one; it is an ad­ven­ture into our un­known fu­ture,” she said. “We have many chal­lenges to face, many weak­nesses that we must ad­dress, but we have con­fi­dence, con­fi­dence in the abil­ity and the ca­pac­ity of our peo­ple to grow into these chal­lenges.”

The gov­ern­ment is re­launch­ing its drive to boost eco­nomic de­vel­op­ment. With elec­tions some two years away, gov­ern­ment min­is­ters un­der­stand the po­lit­i­cal fu­ture of the coun­try is on the line. A se­ries of or­gan­i­sa­tional changes have been rolled out that are in­tended to re­vi­talise the gov­ern­ment’s eco­nomic plans and im­ple­ment a com­pre­hen­sive strat­egy.

This is partly in re­sponse to the busi­ness com­mu­nity’s in­creas­ing frus­tra­tion with the lack of gov­ern­ment di­rec­tion and poli­cies. For months Myan­mar’s busi­ness peo­ple have been com­plain­ing that the gov­ern­ment has not shown any lead­er­ship, its eco­nomic poli­cies di­rec­tion, and there was an ab­sence of new ini­tia­tives on the hori­zon -- amid gen­eral eco­nomic stag­na­tion, and plum­met­ing busi­ness con­fi­dence.

In the eyes of the Myan­mar busi­ness com­mu­nity, one of the prob­lems hith­erto has been the gov­ern­ment’s pre­oc­cu­pa­tion with the peace process and con­sti­tu­tional re­form.

“The gov­ern­ment -- led by State Coun­sel­lor Daw Aung San Suu Kyi -has pri­ori­tised the peace process at the ex­pense of eco­nomic re­forms,” said U Zaw Naing, head of the lo­cal com­pany, Man­dalay Tech­nolo­gies. But the two are not mu­tu­ally ex­clu­sive he said, and should be de­liv­ered in tan­dem.

“On top of that, the busi­ness com­mu­nity feels that the gov­ern­ment does not have enough com­pe­tent lead­ers in the area of eco­nomic poli­cies,” he added.

The most im­por­tant change has been the ap­point­ment of a new fi­nance min­is­ter, U Soe Win in May. He is de­ter­mined to re­vi­talise the gov­ern­ment’s eco­nomic poli­cies and en­sure their ef­fec­tive im­ple­men­ta­tion, ac­cord­ing to gov­ern­ment in­sid­ers. Although he has only been in his job for a lit­tle over three months, there are sig­nif­i­cant signs that with him at the helm, that the gov­ern­ment is com­mit­ted to boost eco­nomic growth.

The eco­nomic com­mit­tee struc­ture that over­sees pol­icy and co­or­di­nates gov­ern­ment ini­tia­tives has been re­vamped. The State Coun­sel­lor Daw Aung San Suu Kyi, is now clearly com­mit­ted to ad­dress­ing the coun­try’s eco­nomic needs. She has taken over as chair­man of the coun­try’s top eco­nomic

pol­icy com­mit­tee: the Na­tional Eco­nomic Co­or­di­nat­ing Com­mit­tee (NECC), which com­bines eco­nomic min­is­ters, Cen­tral Bankers, and mem­bers of the Na­tional League for Democ­racy’s eco­nomic com­mit­tee.

At the same time, this com­mit­tee has been strength­ened and el­e­vated to the pin­na­cle of the gov­ern­ment’s eco­nomic pol­icy-mak­ing. With the State Coun­sel­lor as Chair­man, this group has added po­lit­i­cal au­thor­ity. It is meant to help for­mu­late eco­nomic pol­icy and co­or­di­nate the gov­ern­ment’s im­ple­men­ta­tion of eco­nomic pol­icy ini­tia­tives and strat­egy.

One of those is the new Com­pa­nies Law that came into af­fect two months ago. The gov­ern­ment hopes this will help kick-start their ef­forts to at­tract for­eign in­vest­ment. The law, which more than two years to fi­nalise, will elim­i­nate lay­ers of bu­reau­cracy and stream­line the com­pany reg­is­tra­tion process, cre­at­ing greater in­vest­ment op­por­tu­ni­ties, es­pe­cially for for­eign busi­nesses. Un­der the new law for­eign in­vestors will also be per­mit­ted trade on the Yangon Stock Ex­change (YSX), but of­fi­cials have cau­tioned that more time will be needed be­fore this is fully im­ple­mented.

“It’s a game changer,” said U Aung Naing Oo, Di­rec­tor Gen­eral of the Direc­torate of In­vest­ment and Com­pany Ad­min­is­tra­tion (DICA). “It will sup­port the mo­men­tum of eco­nomic growth and pro­vide a ma­jor im­pe­tus for for­eign in­vest­ment, by mak­ing it much eas­ier for for­eign in­vestors,” he told Busi­ness Re­view.

Un­der the law, for­eign in­vestors can in­vest in Myan­mar com­pa­nies, and se­cure up to a 35% stake in the lo­cal firm, open­ing up enor­mous po­ten­tial for for­eign par­tic­i­pa­tion. “More for­eign in­vest­ment is likely to be at­tracted as in­ter­na­tional in­vestors will be able to con­sider al­ter­na­tive fi­nan­cial deals, and not be re­stricted to form­ing joint ven­tures,” said Dr Maung Maung Lay, Vice Pres­i­dent of the na­tional em­ploy­ers group, the Union of Myan­mar Fed­er­a­tion of Cham­bers of Com­merce and In­dus­try (UMFCCI).

Reg­is­tra­tion and reg­u­la­tions are all to be sim­pli­fied and the bu­reau­cracy in­volved stream­lined. “Ev­ery­thing is be­ing done on­line: it’s a clear and sim­ple process that sig­nif­i­cantly re­duces the reg­u­la­tory bur­den and com­pli­ance costs on com­pa­nies,” said U Aung Naing Oo. It also in­tro­duces a level play­ing field for both lo­cal and for­eign com­pa­nies, he added.

“This is a pos­i­tive step in the eyes of in­ter­na­tional in­vestors as there will be more re­li­able in­for­ma­tion avail­able,” said Ms Vicky Bow­man, Di­rec­tor of the Myan­mar Cen­tre for Re­spon­si­ble Busi­ness. “It’s a solid law, a well-drafted law and a well-trans­lated law,” she told Busi­ness Re­view. The main weak­ness is not in the law it­self but whether it is ef­fec­tively im­ple­mented and en­forced, and the abil­ity of com­pa­nies to live up to the am­bi­tions of the law, she re­flected.

The Myan­mar In­vest­ment Com­mis­sion (MIC) has also been re­struc­tured, and new mem­bers added, pre­cip­i­tated by the res­ig­na­tion of the for­mer Fi­nance Min­is­ter, U Kyaw Win – who used to chair it. It ap­proves all in­vest­ment ap­pli­ca­tions, es­pe­cially for joint ven­tures, and spear­heads the gov­ern­ment’s ef­forts to at­tract for­eign in­vest­ment. U Thaung Tun, the Min­is­ter for the Min­istry of the Of­fice of the Union Gov­ern­ment Min­is­ter and Na­tional Se­cu­rity Ad­vi­sor – was re­cently ap­pointed as Chair­man of the com­mis­sion.

An im­por­tant part of the MIC’s work is to at­tract for­eign in­vest­ment through in­ter­na­tional trade road shows and pro­mo­tional cam­paigns. An ex­pe­ri­enced for­mer ca­reer diplo­mat and a flu­ent English speaker, U Thaung Tun is a per­fect fit for the job.

“Myan­mar needs to ag­gres­sively and ac­tively at­tract in­vestors,” said U Zaw Naing. “In­vest­ment pro­mo­tion, es­pe­cially in in­fra­struc­ture and the gov­ern­ment’s de­vel­op­ment strat­egy is sorely needed at this point of time,” he added. The gov­ern­ment is si­mul­ta­ne­ously pre­par­ing a pub­lic in­vest­ment pipe­line or project bank – as it is more com­monly called – to co­or­di­nate in­vest­ment in the coun­try’s in­fra­struc­ture.

This is a list of pri­ori­tised po­ten­tial in­fra­struc­ture projects that are in the pipe­line – in­tended to avoid ran­dom se­lec­tion, as well as in­tro­duce ra­tio­nal­ity and trans­parency into the se­lec­tion process, ac­cord­ing to the gov­ern­ment’s eco­nomic ad­vi­sor, Sean Tur­nell. They are ranked ac­cord­ing to so­cio-eco­nomic im­pact, ac­cess to fi­nance and con­tract terms – whether gov­ern­ment funded, with over­seas de­vel­op­ment as­sis­tance, or pub­lic pri­vate part­ner­ship.

Within this con­text, there are great op­por­tu­ni­ties for Nor­we­gian com­pa­nies, the Pres­i­dent of the Myan­mar-Nor­way Busi­ness Coun­cil, Mr Ola Borge told Busi­ness Re­view. “There are good po­ten­tial prospects in sec­tors like en­ergy and aqua­cul­ture – where there is very strong need for new in­vest­ments – and are ar­eas in which Nor­we­gian com­pa­nies are world lead­ers.”

But in­vest­ing in Myan­mar is out with­out its dan­gers and pit­falls. “We see that many Nor­we­gian -- and other West­erns com­pa­nies -- have en­tered the mar­ket with­out a good strat­egy and un­der­stand­ing of the busi­ness en­vi­ron­ment,” he added. “Those busi­nesses have of­ten failed, while busi­nesses that have done their home­work have had very good com­mer­cial suc­cess,” he warned. “So I guess the mes­sage is: ‘Do your home­work!’”

But while the gov­ern­ment’s push to boost eco­nomic de­vel­op­ment and at­tract for­eign in­vest­ment is full-steam ahead, the Rakhine prob­lems still cast a long shadow over the coun­try’s in­vest­ment cli­mate, es­pe­cially in at­tract­ing for­eign in­vest­ment. In the in­terim, Myan­mar will have to rely on Asian in­vestors, said U Aung Naing Oo. “We can­not ex­pect in­vest­ment from the West in the near fu­ture,” he said. Not for two or three years at least.

“We to­tally un­der­es­ti­mated the im­pact of the Rakhine cri­sis – now com­pounded by the ver­dict in Reuters’s jour­nal­ists case – on for­eign di­rect in­vest­ment from the West,” U Aung Naing Oo told Busi­ness Re­view. “We are fear­ful of the ef­fect the con­tin­ued cri­sis will have on in­vest­ment from Europe and the US. We don’t ex­pect it to change in the near fu­ture, not un­til after the 2020 elec­tions,” he lamented. Though the gov­ern­ment will try to re­store bet­ter re­la­tions with those coun­tries and as a con­se­quence, we hope in­vest­ment from them will come.

The State Coun­sel­lor is spear­head­ing the gov­ern­ment’s ef­forts to im­prove it in­ter­na­tional image and at­tract for­eign in­vest­ment. Her speech to the World Eco­nomic Fo­rum in Viet­nam in mid-Septem­ber was an­other ex­am­ple of her at­tempt to ally in­ter­na­tional con­cerns and em­pha­sise the gov­ern­ment’s mes­sage: Myan­mar is open for busi­ness. Left: Yangon is be­com­ing a mod­ern metropo­lis with new build­ings reach­ing for the sky.

PHOTO: SHUTTERSTOCK

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