Htet Tayza discusses the UK government’s recent decision to provide a considerable credit facility for British exporters to Myanmar.
Foreign direct investment
UK Transport Minister Lord Ahmad recently visited Myanmar. The trip was designed to show how the UK government is planning to provide support to Myanmar’s banking and transport sectors, which have already benefited considerably from British foreign direct investment (FDI) in the country.
Figures quoted by Deal Street Asia, a regional finance news site, show that the UK is the fifth-largest foreign investor in Myanmar. As of the close of January 2016, the UK invested roughly £4.058 million in the South-East Asian nation making it the fourth largest of Myanmar’s foreign investors. Government figures show that as of the end of January, permitted FDI in Myanmar hit US$5.9470 million, with $4.753m being provided to the country’s transport and communications sector.
Lord Ahmad announced that UK Export Finance (UKEF), the UK’s export credit agency, will extend UK exporters looking to do business in Myanmar a $300 million credit facility. This is designed to provide them with the financial support required to export effectively to Myanmar.
Commenting on the deal, Lord Ahmad said: “As new opportunities emerge, I am thrilled to be able to announce that UKEF has increased its cover capacity to $300 million to help UK companies export to Burma. This is important both for British companies and for Burma’s economic development.”
While in Myanmar, Lord Ahmad launched UK Trade & Investment (UKTI) Burma’s Business is GREAT campaign. This initiative allows locals to register for a free business matching service, giving them the means to contact roughly 20,000 UK-based suppliers. UKTI Burma has previously announced that the UK’s government also will support Yangon by providing direct lending on deals in Myanmar which involve notable British content.
Htet Tayza’s commentary
In September 2015 the International Monetary Fund (IMF), forecasted that Myanmar’s economy would grow by 8.5% last year and by a similar pace in 2016. Commenting on projection the IMF’s mission chief for Myanmar, Yongzheng Yang said: “Myanmar has made impressive strides in economic reform, including in the dismantling of trade barriers and the opening of the banking sector… With continued economic reforms and FDI, the country’s economic prospects look favourable.”
As its fourth largest foreign investor, the UK is vital to Myanmar’s economic expansion. Therefore, the UK government’s decision to provide a major credit facility for UK-based exporters to Myanmar should boost trade between the two countries, aiding the South-East Asian nation’s economic growth. Also, the Business is GREAT campaign will provide small business owners in Myanmar with the chance to benefit from direct connections with the world’s fifth largest economy, potentially allowing them to drive the nation’s economic growth in 2016.