NAYPYITAW — Foreign direct investment (FDI) into Myanmar declined by nearly US$900 million in the 2017-18 fiscal year compared to the previous fiscal year, according to chairman of the Myanmar Investment Commission (MIC) U Thaung Tun.
“Despite the drop in investment volume, the number of foreign investors and invested businesses increased,” U Thaung Tun said as he explained the MIC for 2017-18 fiscal year report on Friday in Parliament.
The chairman did not provide details about the reasons behind the decline or which sectors were hit the hardest.
In the 2016-17 fiscal year, Myanmar received US$6.649 billion from 25 countries in 138 businesses belonging to seven sectors.
Twenty-eight countries invested in the country in the 2017-18 fiscal year, and China, the Netherlands, Japan, Korea, Britain and the United States of America were the top investors.
When foreign investment was allowed for the first time in 1988 to date, China, Singapore and Thailand have been the major investors in Myanmar, according to the MIC report.
The manufacturing sector attracted a large proportion of foreign investment, accounting for 30.94 percent of total investment. This was followed by real estate development and the service sector.
Last year, US investment in developing countries around the world totaled nearly US$1.2 trillion and Myanmar received US$5 billion. Meanwhile, potential US investors retreated after the country changed its economic policies, said Lower House lawmaker U Aung Hlaing Win of Mingaladon Township.
“In the past, we received certain levels of investment because it is normal [for investors] to reap around 10 percent profit [on investments] in developing countries. And they usually get 30 percent profit in the oil and gas sector,” he said.
“But these days, taxes are levied strictly and there are also industrial disputes,” he added.
There have been weaknesses in implementing economic policies under successive governments, said U Aung Hlaing Win, adding that inflation, land disputes and exorbitant land prices also hinder investors.
“Lately, an investor came and said that he needed about 50 acres of land. It is not yet clear if he has to buy the land or if the government will lease it,” said U Aung Hlaing Win.
“In our country, it seems that the MIC approves business proposals only when an investor has land, capital and technology. It is impossible for investors to fulfill all those requirements. The government should help fulfill them. But it can’t,” he added.
The government should ease its restrictions on land utilization, for example, allowing the use of farmland for other purposes.
“If there is improved access to electricity, better transportation and political stability, things will get better,” said U Kyaw Myo, general manager of CP Co.
“Investors have no confidence and dare not take risks. As there is no mass production in the country and we have to rely on imports, this allows manipulation of the cost of a dollar. There must be circulation of money in an economy. But some who seek to exploit the situation have held money in order to manipulate the price. So, there are few exports and this leads to economic decline,” he said.
In the 2017-18 fiscal year, Myanmar received US$5.718 billion in 222 businesses in nine sectors. Meanwhile, the investment of citizen investors totaled almost 4 trillion kyats (US$2.6 billion).
“Foreign investors will come only when they can make a profit. Economic prospects are not very encouraging next year,” U Aung Hlaing Win told reporters.