Myanmar’s government is increasingly turning its focus towards attracting foreign direct investment (FDI) to the country, helping bankroll economic growth. New figures indicate that these efforts are proving effective, as Myanmar surpassed its FDI goal in the latest fiscal year. Htet Tayza comments.
Myanmar is a booming frontier market economy, regularly racking up yearly annual growth rates of 6% at a minimum. It has become clear to authorities that they most encourage greater FDI flows, if they hope to grow Myanmar’s economy further, and make the country a competitor for regional powerhouses such as Thailand. FDI provides multiple benefits for businesses, such as supplying them with cash for expansion projects and the innovative new technologies they need to compete globally.
The government has announced a national development plan, which looks to achieve several key aims. This includes fostering business expansion, boosting key industries such as agriculture and facilitating both infrastructural and sustainable development. In a 2015 International Monetary Fund (IMF) report implied that it is critical that Myanmar attracts more FDI to make these targets a reality. Myanmar’s government recognises this, and has set an ambitious goal of raising FDI to US$140 billion by 2030.
Myanmar had a more modest FDI target, however, of US$6 billion for the 2016/2017 financial year. According to Eleven Myanmar, a local news source, it looks as though the South-East Asian nation has outperformed its expectations. Aung Naing Oo, the Secretary of the Myanmar Investment Commission (MIC), has announced that FDI will hit around US$7 billion by the end of this fiscal year (31st March).
Commenting, he said: “We have approved 135 foreign businesses according to the Foreign Investment Law during this fiscal year. Meanwhile, we have approved FDI inflows of US$262.59 million in the Thilawa Special Economic Zone, according to our SEZ Law. In total, we could approve US$6.87 billion this year.” The Secretary added that it is highly likely that Myanmar will attract over US$7 billion in FDI for the 2017/2018 financial year, as next month the MIC may approve more businesses for investment.
Aung Naing Oo also admitted that the MIC is implementing a number of initiatives, to boost FDI further. The body recently announced that it will hand power to approve investments to regional investment committees, so they can greenlight investments up to US$5 million independently. This is designed to facilitate FDI flows, by relaxing the rules in line with the new Myanmar Investment Law.
Explaining, he noted: “Committees will be chaired by state and region chief ministers, respectively. From now on, they have the power to approve foreign investment in their respective states and regions without submitting the investment proposal to the MIC. For example, if a foreign business wants to invest in Hpa-An, he can directly seek approval from the Kayin state investment committee chaired by its chief minister. They do not need to come to the MIC office anymore.”
There will be some exceptions, Aung Naing Oo added, where companies will still require MIC approval, and a list of said firms will be published imminently. Going on, he elaborated: “Generally, restricted businesses can be divided into four kinds. The first group can only be done by the state. No citizen and foreign investment is allowed. The second group will open to citizens only. The third group can be done only in the form of joint venture between local and foreign firms. The fourth group will [be] open to both citizen and foreign investment, but only with the approval of respective ministries.”
Myanmar has surpassed its FDI expectations, by creating a more favourable environment for investment activity. The government is focusing on liberalising investment laws, so foreign players feel more compelled to enter the market, as there are less administrative burdens involved. By rolling out measures such as devolving investment approval to regions and implementing the new Myanmar Investment Law, which is designed to level the playing field between foreign and local investors, Myanmar could push FDI even higher in the 2017/2018 fiscal year, facilitating economic prosperity.