NAYPYIDAW — Foreign direct investment (FDI) into Burma has exceeded the government’s original target just six months into the fiscal year, according to Aung Naing Oo, director-general of the Directorate of Investment and Company Administration and secretary of the Myanmar Investment Commission.
The Myanmar Investment Commission estimated earlier this year that FDI would reach US$4-5 billion in the 2014-15 budget year, but by the end of September, the country had already seen almost $4.09 billion in foreign investment.
“Now we do expect that $5 billion will be reached within the next three months, but we still haven’t predicted how much through the end of this budget year,” Aung Naing Oo told The Irrawaddy in Naypyidaw, pointing out that last year’s target of $3 billion was also exceeded when Burma took in $4.11 billion.
Aung Naing Oo told Reuters last month that the government had revised its FDI estimate to more than $5 billion.
In line with government expectations, foreign investment in Burma’s telecoms sector topped the list, accounting for 20 percent of the total, with the manufacturing sector following second. The entry of some international hotel chains into Burma’s market has also boosted FDI.
“In the telecoms sector, more investment is coming in now than we’d expected, and another factor: the offshore blocks that the Ministry of Energy has granted foreign companies, which accounted for about $700 million this year,” Aung Naing Oo said.
Qatar-based Ooredoo and Telenor of Norway have promised to dramatically boost mobile phone and Internet use in Burma, setting up networks and putting cheap SIM cards on the streets for the first time in August and October, respectively.
In the oil and gas sector, Thailand’s biggest oil and gas company PTT Exploration and Production (PTTEP) earlier this year said it would invest $3.3 billion in Burma over five years. In late March the government announced the foreign winners—including Anglo-Dutch firm Royal Dutch Shell, France’s Total, Italy’s Eni, Norway’s Statoil and US-based Conocophillips—of the rights to deep-water oil and gas exploration in the Bay of Bengal.
Dr. Maung Mang Lay, vice chairman of the Union of Myanmar Federation of Chambers and Commerce Industry, said that despite growth in recent years, Burma’s FDI potential remained under-realized.
“We still need better infrastructure in Burma, and other Asean countries are also inviting this FDI to come to their countries competitively,” he said.
He said that while telecoms and the manufacturing sector were the big draws so far this fiscal year, the oil and gas sector would take a growing portion of the FDI pie.
“Many labor-intensive foreign garment factories are coming to the manufacturing sector. I expect that these two sectors [manufacturing, and oil and gas] will remain on top of the list at least for next year,” he said.
According to figures from the Hlaing Tharyar industrial zone, Rangoon’s biggest, there are more than 90 garment manufacturing operations among more than 500 factories in the zone.
“Some major investors are still waiting to invest in Burma but some are coming in, for example Nestle, Coca-Cola, Unilever, Pepsi. Other multinational companies are still doing surveys,” Aung Naing Oo said.
The Myanmar Investment Commission expects FDI to reach $6 billion in the next budget year, though it has not yet announced an official target.
“The investment in heavy industry is still less than other sectors recently, because we do not have strong enough infrastructure here. We need better electricity and port facilities for them,” Aung Naing Oo said.
