March 21, 2017 7:00 am JST
Myanmar braces for 30% drop in foreign investment
MOTOKAZU MATSUI, Nikkei staff writer
YANGON -- Foreign investment in Myanmar appears poised to
plunge roughly 30% for the year ending March 31 amid the absence of new
oil and gas projects, highlighting the need for the government to lure
other industries with deregulation and firm economic policy plans.
Myanmar
received about $6 billion in foreign direct investment during the 11
months through February, an official at the Directorate of Investment
and Company Administration told The Nikkei. An additional $1 billion or
so is expected for March, the official said, bringing the annual total
to around $7 billion for the first year-on-year drop since fiscal 2012.
Foreign
investment had typically increased since Myanmar's democratization in
2011, stoked by efforts to improve ties with the international community
and throw open the economy under the government headed by retired Gen.
Thein Sein. But much of that money was concentrated in the energy
sector, as 40-50% of investment in fiscal 2014 and fiscal 2015 flowed
into oil and gas development.
Such oil and gas investment was
nonexistent as of the end of February because no new gas and petroleum
fields had been offered for development since the start of fiscal 2016.
More money went into the communications field amid growing cellphone use
as well as into manufacturing, driven by the expanding sewing industry,
than in fiscal 2015. But the overall decline remains substantial,
exposing the fragile foundations of a resource-dependent economy.
Policy transition
Some
point out that the political handoff in March 2016 between the Thein
Sein government and State Counselor Aung San Suu Kyi's National League
for Democracy hampered investment. The NLD government released an
initial economic policy plan in July laying out 12 priorities such as
infrastructure building, but provided little detail on those points.
Plans to fill out Myanmar's power infrastructure and draw investment are
not yet forthcoming.
"The government is short on talent who can draw up economic policies," a diplomatic source said.
The
NLD also has pledged to give greater weight to environmental impact
assessments for large-scale economic development projects, and signaled
that plans formulated under the previous administration for coal-fired
power plants will be reviewed in light of potential environmental
damage.
Those moves raised concerns among foreign energy companies
that their projects could be suspended, a source at a Japanese trading
house said. This "has prompted businesses to suspend their projects
until they can assess the details of the new government's economic
policies," the source said.
Looser rules on the way
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