Analysts Predict FDI Slump During Year of Transition

By Kyaw Hsu Mon 10 February 2016

RANGOON — Burma’s foreign direct investment (FDI) flow is expected to be sluggish this year as the country undergoes a period of political transition, experts say.

Many of Burma’s main investors are focusing their attention on other countries in the region, particularly Singapore, according to Aung Naing Oo, secretary of the Myanmar Investment Commission (MIC).

“Many investors have settled in Singapore because they already have branches set up there. That’s why even if they’re from the US or EU, they only reach Burma through Singapore,” Aung Naing Oo said.

However, perhaps a larger problem is the protracted transition of power in the country following last year’s general election which saw the National League for Democracy claim an overwhelming majority.

According to Aye Lwin, joint secretary of the Union of Myanmar Federation of Chambers of Commerce and Industry, despite Burma heading down a more democratic path, investors are still taking a wait-and-see approach.

“If political leaders don’t follow the rule of law here, investors won’t come. That’s why they [investors] are waiting to see what they will do,” Aye Lwin said.

He added that the new government should work to bring more clarity to rules and regulations for investors and that local manufacturers, for their part, ought to look ahead to developing strategies to cooperate with foreign investors.

“Still,” Aye Lwin said, “these FDI figures are only estimated commitments. They’re not actual money coming into the country at the moment. So, we also have to wait and see.”

Currently, the top foreign investment sectors in Burma are power (33 percent), manufacturing (22 percent), oil and gas (20 percent), telecommunications (11 percent), and hotels and tourism (5 percent), according to MIC data.

Last fiscal year, FDI reached a record $8 billion, double the country’s 2013-14 total.

Singapore was the leading foreign investor, inputting nearly US$3 billion from April 1 to December 31, 2015. China was second with $670 million for the same period, according to official figures.