Asean as a whole will benefit from foreign direct investment (FDI) as
Myanmar starts to see improved cash flow in key sectors, says the Japan
External Trade Organisation (Jetro).
Toshihiro Kudo, senior research
fellow at Jetro's Institute of Developing Economies, said Myanmar has long been
a missing link in the region despite having a strategic geographical position
among Asean members.
"The electrical/electronics
and apparel sectors in Myanmar are enjoying foreign direct investment that is
supporting its export-oriented growth strategy," he said.
Myanmar's emergence and its
increasing engagement with international communities are of great significance
to the enhanced connectivity of the region.
Mr Kudo said service link costs
need to be reduced for Myanmar to join the region's production networks and to
attract multinational firms to relocate there.
Lower service link costs will
enlarge its production network with Cambodia and Laos to export to other Asean
countries, Japan and South Korea, he said.
Exports could be made through
Thailand under the country's free trade agreements and regional agreements with
partners such as India and China.
Mr Kudo said FDI will play a
crucial role in Myanmar's electrical and electronics sector as well as other
machinery production.
Foreign firms including joint
ventures will increase their presence in the textile and apparel industry in Myanmar
too, he said.
Providing information and
statistics as well as consistent and clear-cut investment promotion policies
such as those of Thailand are vital to attract FDI.
"The recent Myanmar boom has
attracted many business missions. If Myanmar fails to meet their expectations,
however, the boom may function as an amplified speaker of negative news to the
international business community," Mr Kudo said.
Myanmar's new foreign investment
law, which took effect late last year, does not have an English version, so
foreign investors remain unclear about what they can do there and with what
conditions, he said.
While Myanmar's developments
could intensify FDI competition with neighbouring countries, the country should
be viewed as a complementary base in Asean. Japanese and South Korean firms are
keen to invest but will do so through Thailand, he said.
Koji Kubo, a research fellow at
Jetro Bangkok, said some challenges remain in Myanmar's foreign exchange
market, with gaps between rates in the public and private sectors as well as
within the private sector itself.
Myanmar still relies on cash, and
exporters are encouraged to sell their foreign exchange to banks, he said.
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