MYANMAR'S
prospects of becoming an economic heavyweight among Asean countries are
undeniably bright. Resource-rich, Myanmar possesses gemstones like jade, rubies
and sapphires, as well as minerals like coal, iron, timber, oil and natural
gas. It is also the second-largest Asean country in land area with a population
of about 60 million, of which 48.4% are below 45 years.
Moreover, foreign interest in Myanmar has
skyrocketed after by-elections in April in which opposition leader Aung San Suu
Kyi's party, the National League for Democracy, won 43 out of 44 parliamentary
seats contested.
Amid continuing hype over the country's
development prospects, one critical challenge that Myanmar faces is ensuring
expectations don't outpace economic and political reality.
Vietnam is a case in point. On March 31, the
headline in an article in The Economist magazine "Hero to Zero"
encapsulates perfectly the arc of foreign investor sentiment towards Vietnam.
Although Vietnam launched economic reform policies known as "Doi Moi"
in 1986, foreign enthusiasm began to accelerate only in 1990 on expectations the
US would soon normalise relations with Vietnam – which happened in 1995.
In 1989, foreign direct investment (FDI) in
Vietnam was a meagre US$4 million, figures from the United Nations Conference
on Trade and Development show.
One year later, Vietnam's FDI ballooned to
US$180 million and then soared to a high of US$2.3 billion in 1996 before
slumping by nearly 46% in 2000 to US$1.29 billion.
More volatile was the tidal wave of foreign
portfolio investment. In 2000, the first stock exchange in Vietnam was set up
in Ho Chi Minh City. Seven years later, the Vietnam Index (VNI) skyrocketed to
an all-time high of over 1,100 points.
In 2008, the VNI tumbled by 66% to 316
points. Although the VNI has recovered, it still remains below the 500-point
level. Last year, Vietnam was the world's third-worst performer, with the VNI
falling by 27%.
A major inhibitor for foreign investors is
the plummeting value of Vietnam's currency, the dong. Since June 2008, the dong
has been devalued six times. On February 11 last year, the State Bank of
Vietnam depreciated the dong against the greenback by a hefty 9.3% – the
biggest fall to date.
Two factors could help Myanmar to avoid a
repeat of foreigners' roller-coaster love affair with Vietnam.
First, Myanmar leaders are all too aware of
the danger of foreign investor exuberance. In her speech at Oxford University
last month, Suu Kyi cautioned "too many people are expecting too
much" of Myanmar.
Similarly, at the recent roundtable organised
by ISIS, several speakers from Myanmar highlighted the opportunities available
and the challenges the country faces.
Second, Myanmar is strategically located. A
gateway to the Andaman Sea, it is also close to major Indian Ocean shipping
lanes. Interest from China, Thailand and the US is more likely to expand
appreciably rather than to diminish significantly.
Not surprisingly, three of the biggest
investors in Myanmar are China, Thailand and Hong Kong, data presented by Aung
Naing Oo, director-general of Investment and Company Administration, at the
ISIS roundtable show.
At end-April 2012, Myanmar approved
investments from China and Hong Kong collectively of over US$20 billion or just
50% of the total. Thailand was second with approved investments of US$9.6
billion, accounting for 23.7% of the total.
Ranked ninth, the US is likely to boost its
investment from the current US$243.6 million, following the easing of sanctions
earlier this month, a move that will enable American companies to invest in
Myanmar. Another indicator of warmer ties was the arrival earlier this month of
US ambassador Derek Mitchell, the first American envoy in the country since
1988.
Unlike the US, China's engagement with
Myanmar is millennia-long. In imperial China, the Southeast Asian country was a
major source of top quality jadeite and tropical hardwood. Today, Myanmar also
offers China access to and from the Indian Ocean for the transport of goods,
including oil and gas. Meanwhile, the Middle Kingdom has invested heavily in
building the country's infrastructure.
As a foreign investor, Malaysia is ranked
seventh – with US$977.5 million in approved investment, one-tenth that of Thailand.
Despite the paucity of investment, some
Malaysian institutions may offer useful role models for Myanmar's
commodity-dependent economy. These include cash-rich plantation companies,
indigenous research institutions in rubber and palm oil, the concept of Felda
to alleviate rural poverty.
Agriculture contributes 36.4% of Myanmar's
GDP and employs 70% of its population. Out of 43,239 registered private
companies, nearly 83% are in the food industry. Top export earners are natural
gas (38% of the total), beans and pulses (12%) and jade (9%).
Myanmar's cornucopia of oil, natural gas,
minerals and gemstones underscore a critical challenge policymakers face – how
to prevent the benefits of its resources from being enjoyed only by a powerful
elite while an overwhelming number remain desperately poor.
Tan Siok Choo
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
No comments:
Post a Comment