RANGOON — Foreign direct investment in Burma is continuing at a staggering pace, hitting more than US$6 billion in the first nine months of the current fiscal year, according to figures from the Myanmar Investment Commission.
From April to the end of December last year, 25 countries spent $6.62 billion on foreign direct investment (FDI), well above the commission’s US$4-5 billion estimates for the year to April 2015 and almost doubling the US$3.5 billion total inflows of the 2013-14 fiscal year.
Singapore-listed companies comprised more than half of the investment volume with a combined total of US$3.8 billion, reflecting an apparent trend of managing local projects remotely from the investment haven, particularly for oil and gas projects. Dr Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers and Commerce Industry, said that many international firms had routed their FDI spend through their Singapore offices.
“As far as I know China still tops the FDI list,” he said. “The Myanmar Investment Commission shows that Singapore based companies are topping the list, but this isn’t a reflection only of Singaporean investments. Most international companies are based there.”
Dr Maung Maung Lay disputed suggestions that the large volume of investment money channeled through Singapore was partially the result of attempts to bypass remaining economic sanctions against Burma.
“It’s not because of US sanctions. The US government has eased sanctions in recent years. I expect there will be many US and European companies investing here after the general election later this year,” he said.
In line with government expectations, foreign investment in Burma’s telecommunications sector topped the list, accounting for 20 percent of the total, followed by manufacturing. The tourism industry placed third with a recent expansion of international hotel chains into the country.
Aung Naing Oo, director-general of the Directorate of Investment and Company Administration, said that strong growth in foreign direct investment was likely to continue on the back of several large international firms gearing up for expansion into the local market.
“Some major investors are still waiting to invest in Burma but some are coming in, for example Nestle, Coca-Cola, Unilever and Pepsi. Other multinational companies are still doing surveys,” he said.
Pyi Wa Tun, chairman of the Parami Energy group of companies, cautioned that foreign direct investment in Burma needed more focus on generating local prosperity.
“The government has approved almost all proposals from foreign companies that say they will provide local jobs, but what we have to consider is how our country can generate profits from these investments,” he said. “These investments should work with local small and medium enterprises, rather than just granting job opportunities on their own terms.”
According to the Myanmar Investment Commission’s figures, among the other significant FDI contributors were firms based in the United Kingdom ($563 million), Hong Kong (US$455 million), the Netherlands ($302 million), China ($256 mllion), India ($208 million) and South Korea ($150 million).