Myanmar recognizes Hong Kong’s distinctive role as the Belt and Road initiative’s “superconnector” (U Thaung Tun, Chairman of Myanmar Investment Commission)

10 Jul 2018

Myanmar recognises Hong Kong’s “distinctive role” as the Belt and Road Initiative’s “superconnector”, a cabinet minister said last week during an official visit to the city, while businesses urged Nay Pyi Taw to draw up its own priorities in the Initiative and proactively reach out to investors.

Newly appointed chair of the Myanmar Investment Commission (MIC) U Thaung Tun, who is also a cabinet minister, led a delegation including U Aung Naing Oo from the Directorate of Investment and Company Administration (DICA) and Daw Nilar Kyaw from the Yangon government as well as business leaders to take part in the third Belt and Road Summit organised by the Hong Kong Trade Development Council (HKTDC) last week.

Myanmar recognises Hong Kong’s distinctive role as the superconnector in the BRI. - U Thaung Tun, cabinet minister and Myanmar Investment Commission chair

“Myanmar has always attached and continues to attach great importance to Hong Kong. We are aware that Hong Kong is one of the best places in the world to do business.

“Myanmar recognises Hong Kong’s distinctive role as the superconnector in the BRI,” he remarked at the welcoming reception. Trade between the two regions reached US$386 million last year, while the city accounted for more than 10pc of the total approved FDI flow in the country. Numerous multinationals associated with Hong Kong, including Hutchison Ports, Jardine Matheson, Kerry Logistics, Shangri-La Hotels and Resorts and Hongkong and Shanghai Hotels, are active in Myanmar.

“Our relations go way back to the colonial times. We want to provide a mutually beneficial relationship.

“With Myanmar opening up, there is an opportunity for Hong Kong investors to jump on the bandwagon and join the great numbers of investments coming to Myanmar. Hong Kong is an extremely well-connected city, and Myanmar is only three hours away by flight,” the MIC chair continued. Citing the new Investment Law and Companies Law, he stressed that “the time is ripe to invest in Myanmar” and pledged that the country “will be transparent, efficient, and friendly to our investors” to “seek to promote responsible investment.”

U Thaung Tun, along with the UK’s trade minister Baroness Fairhead and other officials, spoke at the Summit’s luncheon plenary. He said that closing Myanmar’s infrastructure gap can “contribute to the ongoing peace process” and wooed the audience to invest in transport and energy infrastructure, vowing to provide “a level-playing field” for foreign investors.

At a sideline interview, Melvyn Pun from Yoma Strategic Holdings urged the Myanmar government to step up efforts in the BRI. 

“I believe the government needs to take a much more proactive role in identifying the key opportunities for Myanmar.” The BRI is about investments and connectivity in Asia, particularly China, and hence Myanmar can take advantage of that by “plugging some of the infrastructure gaps that we have”. 

Instead of waiting for road or railway proposals, Myanmar should identify her own priorities and key areas which the country wants to attract capital. Regarding the country being too passive, “I think this is a point about the BRI but also a point, more broadly, that Myanmar is sometimes too reactive in waiting for investors to come.”

“If you look at the Hong Kong’s approach, such as the HKTDC who arranged the Summit and also, for example, Singapore and even Chinese regional governments, they are very proactive in reaching out and looking for those investors and partners who they want to bring into the country. I think Nay Pyi Taw can take that approach,” Mr Pun commented. Beyond infrastructure, Myanmar can collaborate with Hong Kong and China in IT-related investments such as e-commerce and mobile money.

I believe the government needs to take a much more proactive role in identifying the key opportunities for Myanmar. - Melvyn Pun, Yoma Strategic

John Barnes, director of Marga Group, said there are a few criteria which Myanmar should focus on in order to attract BRI investments.

Firstly, commercial terms and contract arrangements must be matching with other international investment destinations, he pointed out. “The world has seen multiple economies open and globalise. While each market has its own pace of development and unique traits, business models largely follow the same trajectory. Investors will balance the risks and rewards across markets, hence both investment risks and incentives should be clear and competitive from the get-go.”

Secondly, access to financing for Myanmar, which is limited compared with the rest of ASEAN, needs to be addressed. For the private side, local consumers need to access credit at more reasonable rates for purchases of homes and other investments. “We constantly see emerging market taking off with the introduction of comprehensive mortgage laws and other credit tools. Foreign currency loans such as US dollar-denominated loans can be introduced too.”

Mr Barnes said that direct active engagement with investors is always the first step in promoting inward investments, using the example of U Thaung Tun’s visit to the city. Another step is to organise tours and bring potential government partners and investors to Myanmar, as well as community engagement early on. “The local community should be briefed about the advantages of having foreign direct investment, including the economic and social benefits. History has taught us that foreign capital will always enlarge the pie and create more wealth for everyone, but some people feel that FDI create unnecessary competition and social problems. These negative feelings can be eliminated with proper planning,” the director explained.

History has taught us that foreign capital will always enlarge the pie and create more wealth for everyone, but some people feel that FDI create unnecessary competition and social problems. - John Barnes, Marga Group

Meanwhile, Vincent Lo, chair of the HKTDC, warned that the looming trade war between America and China means the BRI is more important than ever, as countries can avoid trade frictions by producing and selling locally.

Peter Beynon, chair of British Chamber of Commerce Myanmar, who was also present for the Summit, observed that the specific published projects of the BRI in Myanmar will link Yunnan Province  - and the whole of western China - to the Indian Ocean both logistically and as a trade route. “The infrastructure that will be required to achieve this objective will surely bring employment and prosperity to Myanmar. I am optimistic that properly embraced, the BRI will be positive for the country and the people of Myanmar,” Mr Beynon commented. However, this does not mean that Myanmar merely “opens its doors and welcomes everything”. 

“Myanmar must scrutinise each project on its merits and ensure that there is true value and real benefits to the people of the country and the economy,” the business leader went on.

Similarly, a Japanese logistics pioneer headquartered in Thilawa Special Economic Zone who joined the delegation is keen to capitalise on the cross-border trade between China and Myanmar: Tomoaki Yabe, managing director of Daizen, said that private businesses are supportive of efforts to improve the infrastructure and boost trade, given that projects adhere to international standards and are fair and transparent for all players. 

His logistics firm, which is Myanmar’s first bonded warehouse and freezone warehouse operator, is set to open an office in Myawaddy within the next few months. The Yunnan-Shan cross-border logistics will be the next move. 

“Our next target is possibly branching out to Muse, where Yunnan-Shan border trade is expected to be a major area of growth,” Mr Yabe noted.

 

(The Myanmar Times: https://www.mmtimes.com/news/myanmar-throws-weight-behind-hong-kong-belt-and-road-superconnector.html )