Since the country’s economic reforms launched in the last 3-4 years, and the lifting of most sanctions by Western countries in 2012 ,official figures suggest a significant increase in foreign direct investment (FDI) into Myanmar.
Yearly approved amount of Foreign Investment in the last few years perDirectorate of Company Administration (DICA) figures are as follows: $1.4 billion in 2102/2013, $4.1billion in 2013/2014, $8 billion in 2014/15, and from 2015 till end of January 2016 there has already been $5.2 billion foreign investment approved.
The bulk of the FDI money has been approved in the oil and gas, telecoms and manufacturing sector. Though it is somewhat unclear as to whether the totals presented by DICA refer to pledged amounts and/or how much of these amounts have actually been disbursed into the country.
Per official figures, China remains the largest investor with Singapore in second place. DICA figures as of 31 Jan 2016 state that $15.4billion Chinese foreign investment has been approved, while $12billion in Singapore investment has been approved in permitted enterprises. Interestingly, these figures don’t necessarily present an accurate story as to monies actually from Singapore – as Singapore is often used a s aconduit for a lot of trade and investment with Myanmar from many countries, including the US, which still has a sanctions programs in place with Myanmar.
Official figures and concerns as to the reliablity of data aside, there is without doubt significant change in the economic, political and social landscape in Myanmar since 2012. If the increase in the number of foreigners travelling intoMyanmar is in some way correlated to the amount of foreign investment into the country, then there has clearly been a surge since 2012.
Norway’s Telenor and Qatar’s Ooredoo have transformed the telecommunications space by launching cellphone services in 2014. And large companies such as Coca Cola and Gap have also set up Myanmar operations. The oil and gas secotr has attracted the likes of Chevron’s Unocal, Britains BG Group and Australia’s Woodside Petroleum.
So without a doubt foreign investors are interested and more and more present in Myanmar. The resource rich country with a sizeable population of 60million is obviously an attractive proposition for foreign investors.
But these pioneering investors must face a complex web of issues in are making inroads into their investments, and managing to navigate the complex bureaucracy and legal framework in Myanmar remains a real hindrance. The legal rules relating to foreign investment are haphazard and at times contradictory. Some rules date back to colonial Burma, such as the Companies Act (1914) while others such as the Foreign Investment Law were put in place in 2012. And it is not always clear whether recent rules have been overwritten by more recent government directive or notifications.
In Myanmar, law on the books is not always equivalent to law in practice, and in many areas peculiar practices have developed and are accepted as normal, though these practice are not necessarily written down anywhere.
In short, the legal framework for foreign investment, like other areas of law in Myanmar, can be exceedingly difficult to navigate.
On top of this, other issues that continue to affect foreign investment include the lack of infrastructure and electricity in certain regions. Political instability and ethnic clashes pose serious difficulties for investors, and these tensions are often at their worse in the resource rich areas – such as Kachin, Shan and Rakhine states, where foreign investors may be most interested. Corruption, land grabs, continuing foreign sanctions from the US and to a lesser extent Canada, and an unskilled workforce continue to be major obstacles in doing business in Myanmar.
And last but not lease, it is not at all clear how the new NLD government led by Aung San Suu Kyi will align or diverge from pre-existing practices.