YANGON—While many foreign investors have been scared away by the recent Rohingya crisis in Rakhine State, South Korea’s ambassador to Myanmar is confident of securing more investment from his country. His goal is in line with the South Korean president’s “New Southern policy” to deepen relations with Southeast Asian nations, including in the economic realm.
Speaking two days before he was due to travel to Myanmar’s most troubled and impoverished state to attend Rakhine’s first Investment Fair in Ngapali, Ambassador Lee Sang-hwa said on Monday at the embassy in Yangon that Seoul intends to increase investment in Myanmar. He said that while he is pleased with his country’s current place among Myanmar’s top investors, there is plenty of room for growth. South Korea is the country’s sixth-largest source of foreign direct investment, with FDI between 2012 and December 2018 totaling nearly US$4 billion (6.13 trillion kyats) according to the Myanmar government’s investment agency, the Directorate of Investment and Company Administration.
The ambassador said there are about 270 South Korean companies operating in Myanmar, compared to more than 2,700 in fellow ASEAN member Vietnam.
“Why not Myanmar?” he said. “State Counselor Daw Aung San Suu Kyi stated in her speech at the Investment Myanmar Summit [in Naypyitaw last month] that Myanmar is the last, best frontier market [in Southeast Asia].”
Despite Rakhine’s tarnished reputation due to the Rohingya crisis and the ongoing armed conflict there, the government plans to promote investment in the state, believing economic development is a key to solving the conflict.
On Feb. 21-23, the Rakhine State government will host the first Rakhine Investment Fair. Under the slogan “Rakhine is Open for Business to the World”, it will focus on developing three major sectors—tourism; SMEs; and agriculture, livestock and fisheries. The investment fair is part of the government’s “Look East” policy, designed to arrest a two-year decline in FDI.
Lee is one of six ambassadors to Myanmar expected to attend the Investment Fair. He said he aims to show his support for Rakhine and encourage South Korean investors to visit and see with their own eyes the investment opportunities the state has to offer.
The ambassador said the chairman of the Korea Garments Association in Myanmar would accompany him to the fair, as some garment factory owners have expressed an interest in relocating to Rakhine State.
There are more than 100 South Korean garment factories already running in Yangon, and some in Bago Region.
Lee said he discussed at a meeting with Daw Aung San Suu Kyi last year how
South Korea could contribute to the development of Rakhine’s economy. During the meeting, the state counselor mentioned two major sectors in Rakhine that were in particular need of investment—agriculture and the garment sector.
Recently, Lee visited the state capital, Sittwe, with representatives of the Korea International Cooperation Agency. The agency identified three townships in Rakhine as having potential for rural development projects: Sittwe, Kyauktaw and Mrauk-U. The projects involve upgrading roads, connecting residents to the national power grid, and introducing improved agricultural techniques.
State-wide, the Rakhine government has established six priority investment projects: the Kyaetaw-Mingan development project (an economic zone with a port, trade zone, apartments, supermarket and SME zone in Sittwe Township); construction of a new airport in Mrauk-U; upgrading Ngapali Airport in Thandwe Township; an ecotourism project on Man Aung Island; the Ponnagyun industrial project in Sittwe; and a New City project in Mrauk-U.
Additionally, “There is growing interest in the fishery and tourism sectors in Rakhine,” the ambassador said.
Regarding Special Economic Zones, Lee said, “My view is how do you make it special? In other words, how do you make it attractive [to potential investors].”
He urged the government to consider providing incentives like tax waivers, pointing out that the garment sector, the country’s most labor-intensive industry, ran into difficulty last year due to an increase in the minimum wage. He said some industries needed a 24/7 power supply, adding that there are still questions about the government’s ability to provide the full-scale electricity supply needed to make Rakhine a business friendly place suitable to an SEZ.
Situated on Myanmar’s west coast, Rakhine is rich in natural resources, particularly oil and gas, but remains one of country’s least-developed states. Nearly 70 percent of the population lives in poverty and lacks public services. Residents must cope with a lack of infrastructure, unemployment and poor living conditions.
Rakhine is already home to a number of major projects, however. Since 2016 India has been constructing a deep-water port in Sittwe, which sits on the Bay of Bengal. The estimated cost of US$120 million (183.9 billion kyats) is being financed by India as part of the Kaladan Multi-Modal Transit Transport Project, a bilateral initiative aimed at developing transport infrastructure in southwestern Myanmar and northeastern India.
Moreover, Rakhine is also home to a key section of a Chinese pipeline that has been carrying natural oil and gas from the Bay of Bengal across Myanmar to Kunming in China’s Yunnan Province since 2010.
And in November, Myanmar and China inked a framework agreement to construct the Kyaukphyu Deep Sea Port, which would give China access to the Bay of Bengal while enhancing its regional connectivity as part of Beijing’s Belt and Road Initiative (BRI).
Since the National League for Democracy-led government took office in 2016, it has initiated several economic reforms. However, the 2017 Rohingya crisis has badly tarnished the country’s image, causing foreign investment to decline significantly, with Western investors becoming particularly wary of Myanmar. FDI into Myanmar declined by nearly US$900 million in fiscal 2017-18 from the previous year to its lowest level since 2013.
In recent weeks, the leaders of seven foreign business groups from the British, Australian, U.S., E.U., Italian, German and French chambers of commerce in Yangon signed an open letter calling on the government to promote FDI in Myanmar, pointed out that such investment has a major role to play in the country’s ongoing democratic transition. Last week, Japan also unveiled a plan to promote investment in Rakhine State by pushing Japanese investors to consider opportunities there.
South Korean companies currently operating in Rakhine are involved in the agriculture, real estate, urban development, fishery and tourism sectors.
Ambassador Lee said that whenever people speak about Myanmar now, the topic of Rakhine is inevitably raised, something he said was detrimental to securing investment. He stressed that, “On our part, what we can do is help [investors] to come and see [Rakhine].”
Rakhine has much to offer businesspeople, he said.
He stressed that “seeing is believing,” adding, “From the embassy’s point of view, we would like to inspire potential investors and businessmen to come and see what Rakhine can offer.”
