Big 4G and hotel projects give way to manufacturers seeking cheap labor
Yangon, Myanmar's commercial capital, is situated
near a Japanese-backed special economic zone. (Photo by Yuichi Nitta)
YANGON -- Myanmar approved less foreign investment for a second
straight year, underscoring the challenges that Aung San Suu Kyi's
government faces in keeping up the momentum of capital inflows.
Foreign
spending greenlighted by the Directorate of Investment and Company
Administration fell 14% to about $5.7 billion for the year ended in
March, agency data shows.
Transportation and communications
investment plunged by more than two-thirds to $900 million, in what
appears to be a lull following a round of spending on 4G wireless
infrastructure and other big projects. The electric power sector
suffered a 55% drop, while flows into hotels and tourism slid 56%.
The
military's persecution of the Rohingya, condemned by the international
community as human rights abuses, causes concern for Western and other
companies weighing deals in the Southeast Asian frontier economy. But
the data shows no clear link to falling investment.
Manufacturing
investment soared 50% to a four-year high of more than $1.7 billion, as
Chinese and other companies -- mainly in the apparel industry -- set up
shop in Myanmar to take advantage of relatively low labor costs.
The total number of investments surged 61% to an all-time high of 222, with manufacturing accounting for just over 60%.
The
Thilawa Special Economic Zone drew $400 million last fiscal year for a
53% increase in foreign investment, which is approved under a separate
framework. The zone on the outskirts of Yangon is being developed
jointly by Japan and Myanmar, and Japanese companies rank among the most
prominent investors.
Myanmar's parliament passed legislation last
year to ease restrictions on foreign investment, which is set to take
effect in August. Recent deals include Singapore-based beverage group Fraser and Neave's return to Myanmar's beer market and a $5 million investment in local ride-hailing company Oway by Japan's Daiwa Securities Group.
Kazufumi
Tanaka, head of the Japan External Trade Organization's Yangon office,
called the flow of foreign money into manufacturing a "positive" sign.
Though individual investments tend to be smaller than in other fields,
the sector is expected to be a major economic growth driver.
Ref;https://asia.nikkei.com/Economy/Myanmar-struggles-to-sustain-foreign-investment
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