RANGOON — American companies have been conspicuously absent from the 106 local and foreign direct investment proposals made during the first quarter of the 2016-17 fiscal year, which started in April.
Burma’s Investment Commission, reconstituted in early June after a period of dormancy brought about by the installation of a new government in April, has so far processed only eight of the 106 proposals.
Minister of National Planning and Finance Kyaw Win chairs the commission, with Minister of Commerce Than Myint appointed as vice chairman.
Than Aung Kyaw, deputy director general of the Directorate of Investment and Companies Administration (DICA), told The Irrawaddy that the commission was now making “dramatic” progress through the backlog.
According to Investment Commission data, more than US$2 billion worth of investments have been pledged during the first quarter of this fiscal year from April to June.
In the first quarter of the 2015-16 fiscal year, 71 projects were approved at a valuation of $2.65 billion. The first quarter of the 2014-2015 fiscal year saw 39 projects approved valued collectively at US$810 million.
Out of the 98 proposals that currently await scrutiny, 47 are for foreign direct investment, according to DICA director Min Zaw Oo, who is a member of the proposal assessment team in the Investment Commission.
“Most of the proposals are from manufacturing businesses from various different countries,” he said.
However, US businesses are not among the foreign investment proposals Burma has received under the new government, according to the DICA.
The top foreign investors for this opening period are Singapore, followed by China, the Netherlands, Malaysia, Thailand, Hong Kong and India.
Maung Maung Lay, vice-chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, said that Burma’s rudimentary infrastructure and lack of skilled labor may be a factor deterring investment from the US, since their businesses are based on “cutting-edge technologies.”
“Most of the foreign investment proposals we have received are for labor-intensive businesses. But the US does not engage much in labor-intensive business now,” he said.
“Their businesses are somewhat hi-tech, and can’t operate in the absence of well-developed infrastructure, for example, a stable electricity supply. And skilled labor is needed to operate hi-tech businesses,” he said.
In May, the US government reduced sanctions targeting Burma’s financial sector and certain state-owned enterprises involved in mining and timber extraction. The aim was to boost trade between the two countries and enable American investment—even though key economic players with close links to Burma’s military remained blacklisted.
It appears, however, that American companies and investors continue to approach Burma with trepidation—although this could change after the National League for Democracy (NLD) government’s economic policy, currently vague, is properly clarified.
“Many US and EU companies investors come here via Singapore, where they are already established,” explained Than Aung Kyaw, deputy director general of the DICA. “Singapore is positioned close to [Burma] and has a reliable banking system. That’s why US investors are not coming here directly.”
In 2015, US exports to Burma were valued at $227 million and imports at $144 million, according to DICA figures. Since 1988, total approved US investment in Burma has been $248 million.
