Light Manufacturing to Lead Way in Foreign Investment
By Kyaw Hsu Mon 2 January 2017
RANGOON — Burma’s light manufacturing sector will lead the way in foreign direct investment in 2017 although investor concerns over the country’s infrastructure persist, according to the local business community.
Foreign investors visiting in the last year had questions over energy supply, transport and land issues and heavy industry manufacturers are hesitant to invest, Dr. Maung Maung Lay, vice chairman of Union of Myanmar Federation of Chambers and Commerce Industry told The Irrawaddy.
Many international delegations discussed future investments but did not promise to invest due to weak infrastructure he said, adding that delegations of Western countries visiting Burma were increasing over other Asian countries in 2016, he said.
“Power supply was a major issue for investors,” he added, “they told us they couldn’t produce products by candle light so they couldn’t promise investment.”
Light manufacturing—particularly cut make pack (CMP) garment factories—requires only cheap labor and factories are available in industrial zones. Investors from the US and EU are also keen to take advantage of the Generalized System of Preferences (GSP) tariff system.
Burma wants to reach US$6 billion of FDI in the fiscal year ending Mar. 31, 2017 despite FDI reaching just $3.65 billion through Dec.16, according to government body the Myanmar Investment Commission (MIC).
Director-general of the Directorate of Investment and Company Administration (DICA) and secretary of the MIC U Aung Naing Oo said Burma would enjoy an FDI influx even though this year’s FDI inflow was $1.3 billion less than that of 2015.
Of the total FDI, the transportation and communication sector accounted for $1.9 billion, manufacturing $1 billion, and property $728 million.
Local business leaders, however, were less confident that the $6 billion could be reached in the next three months.
Dr. Soe Tun, vice chairman of the Myanmar Rice Federation, said, “The target cannot be met as I’ve seen no significant change in the market.”
He pointed out that rules and regulations of the Myanmar Investment Law will not be released until April and investors are likely to defer until that time.
U Ye Min Oo of the NLD’s economic committee said that FDI flow could reach the target if MIC approved delayed hydropower projects.
“I heard that some FDI proposals in the hydropower sector amount to $2 billion but are waiting permission—if they are given the green light FDI could reach the government’s target,” he said.
He urged caution, however, and said, “reaching the target is not important, the major thing is how effective these projects are in helping our country.”