Despite the difficulties and the government’s insufficient attention to deal with economic issues, some meaningful progress has been made on the economic front: the new Investment Law, new Companies Law, rules to the Condominium Law, and improvements in Yangon's transportation

17 เมษายน 2561

The last fiscal year was a tough one for the economy owing to the Rakhine crisis and the government’s insufficient attention to deal with economic issues. But despite the difficulties, some meaningful progress has been made on the economic front, with the new Investment Law coming into force, new Companies Law signed into approval and rules to the Condominium Law finally released. On a municipal level, businesses were impressed by the reforms in Yangon’s transport, notably the introduction of Uber and Grab, as well as the Yangon Bus Service (YBS), though the latter has its fair share of controversies.

In fact, economic growth and a surge in foreign direct investments (FDI) compared to the previous year were supported by the initial phase of economic liberalisation, with investors attracted by Myanmar’s status as one of Asia’s last frontier markets, according to the International Monetary Fund (IMF). But the Fund warned that a second wave of reforms, especially in the banking system and further opening up the economy to joint foreign ventures, is necessary to maintain the momentum.

Crucially, much of the government’s promised reforms in areas such as finance and services have been slow to take shape, and confidence among the business community in Myanmar is dwindling. Companies are beginning to pull out of the country and potential investors are holding back funds, or channelling it elsewhere. 

Here are ten quotes from Myanmar’s officials and ministers as well as business leaders which both influenced and helped shape the economy in the fiscal year 2017-18:

1. Govt fails to improve ease of  doing business

Vice President U Myint Swe said last July that the government is committed to raising its ranking on the World Bank’s ease of doing business index from the 170th in 2017 to less than 100th within the next 3 years.

“If all our companies make all-out efforts and if all departments understand and improve on the 10 indicators on doing business set out by the World Bank, Myanmar’s ranking can rise within the 100 rank [by 2020],” he said.

Despite the pledge, Myanmar fell one place in 2018 to 171st and now remains the least favourable country to conduct business within the ASEAN region.

2. Political stability paramount for Asian investors

In a historic visit by a Hong Kong leader, Chief Executive Carrie Lam last September came to Myanmar to promote trade and investment ties. When asked about how the Rakhine crisis would affect investor confidence, she said political stability and policy clarity are paramount for investors. 

“For investors, I think the number one concern is stability, and certainty, and transparency in operations, because they are putting in a lot of money. So, they want to have a business environment that is clear, that is certain, and that is stable. 

“The clear message from the Hong Kong business community is that wherever they want to invest, they are looking for stability and certainty.” 

“They don’t want to be put in a situation where there’s always a lot of disruption to their business, [or] where government policies are uncertain or, in another words, would change from one day to another. That would make investments extremely difficult,” she explained.

3. Progress on resolving energy demand

U Soe Myint, deputy permanent secretary of the Ministry of Electricity and Energy, announced in late January that the ministry greenlighted four power projects, three of which will receive imported LNG for re-gasification. The projects will be carried out in Kan Pauk in Tanintharyi, MeeLaungGaing in Ayeyarwady, and Ahlone in Yangon. The fourth one, involving natural gas, will be carried out in Kyaukphyu, Rakhine State.

These projects mark a major step forward to resolving Myanmar’s energy crisis and show the administration’s commitment to get the infrastructure ready for the economy.

“The LNG will be delivered by LNG carriers for re-gasification and power generation at the plants. The plants have been allowed to commence doing so,” U Soe Myint said.

4. Japanese investors face no human rights pressure

Katsuji Nakagawa, chair of Japan Chamber of Commerce and Industry in Myanmar (JCCM), spoke to The Myanmar Times about the concerns of Japanese investors in June. He said that Japanese companies, unlike Western firms, do not face public pressure on human rights issues.

“I’ll tell you not [no]. No public pressure. No public pressure in Myanmar and no public pressure in Japan. Our headquarters in Japan also do not have the pressure.”

“The difference is that Asian companies, unlike Western companies, rarely encounter shareholder and media activism on human rights, and therefore investments in Myanmar [with regards to the Rakhine crisis] are unlikely to be considered a reputation risk for them,” Vicky Bowman from Myanmar Centre for Responsible Business observed. Mr Nakagawa’s comments are an honest revelation.

5. Better communications with investors imperative

Felix Chung, honorary chair of the Hong Kong Myanmar Manufacturers’ Association, told this newspaper in September that, from a business perspective, manufacturers were not anxious about the Rakhine crisis because their investments are mainly located in the southern part of the country. 

“What I understand is that what’s happening is [located] in the very northern part of Myanmar, and all the economic activities are in the southern side. Basically, it should not be affecting most of the [Hong Kong] investors.”

He added though, that“the Myanmar government has to do a lot of things to clarify that. The government h

6. Clock is ticking for real economic progress

Last June, Simon Tay, chair of Singapore Institute of International Affairs (SIIA), stressed the urgency of making some real progress and ensuring that some projects take off in Myanmar, as this would convince foreign investors that the government means business.

“There are many developing countries [in Asia] which are now trying to attract foreign direct investments. Vietnam is ahead of you [Myanmar] and they are quite big as well. Sri Lanka is, maybe, behind you after so many years of civil war but they are opening up and try to get investments.

“I am optimistic on Myanmar and I have tried to engage Myanmar for many years but I think this government has a certain timeline of which they must start to really implement. Otherwise, foreign investors will start going elsewhere,” he remarked.

7. Dawei SEZ: for the few or the many?

A total of 36 civil society organisations in February issued a joint statement demanding the authorities to reconsider the plans to revive the controversial Dawei Special Economic Zone (SEZ). The enterprise has been accused of grave human rights violations including forced evictions, a lack of transparency and environmental disruption.

“Dawei society’s land and livelihoods, shared histories and traditions, ecologies and cultures, and ability to build common futures are all under threat.

“Who will gain, and who will lose? We maintain grave reservations over who really benefits from dirty industries and resource extraction: a few political, economic, and military elites. 

“...we call on project proponents to carefully reconsider their plans to resume the Dawei SEZ. Instead, we must all build alternative futures, not just for Dawei society but Myanmar overall,” the organisations concluded. 

The statement has 36 signatories, including Dawei Development Association (DDA) and Progressive Voice. The developer of Dawei, Italian-Thai Development (ITD), is mired in a scandal in Thailand; its president, Premchai Karnasuta, was arrested and is currently charged by Thai authorities.

8. Delay in implementing Companies Law not surprising

The new Companies Law was passed during last December but the government decided to postpone the implementation until August this year. Such unanticipated delay sparked outcry among the Asian and western investment community. But it is hardly surprising.

Pedro Jose F Bernardo, partner at Kelvin Chia Yangon, said businesses just have to wait and see when the rules which accompany the law will be enforced.

“It is not surprising that the authorities have taken this stand in implementing the new Companies Law. We saw the same situation with the Investment Law. Even though it was passed last November, the bylaws were not implemented until February. Similarly, the Condominium Law has been approved but there have been no regulations issued until now,” he said in December.

“Eight months is a small period of time considering the magnitude of change we are looking at,” Nishant Choudhary, co-chair of EuroCham’s legal affairs advocacy group, noted.

9. Time to deliver

Upon approaching the end of this government’s second year, business leaders from all sides have voiced their disappointment at the government’s inaction on economic reforms. Peter Beynon, British Chamber’s chair, was deeply unimpressed by the pace and direction of reforms.

“In my view, the government has lacked effective and communicative leadership at all levels and I have not spoken to any businessmen who feel differently...

“The government lacks vision and personality. It is steeped in protocol and bureaucracy and, unless it is able to shed these burdens, does not deserve to be re-elected to serve the people again. It promised change in its manifesto but has delivered nothing to date. Time to deliver,” the chair stated.

10. Advice from departing lawyer

Eric Rose, lead director of Herzfeld Rubin Meyer & Rose, had it spot on when it came to the problem of US sanctions and Myanmar’s economic woes. His firm, which is the oldest American law firm in Myanmar, recently closed down its Yangon office. 

Mr Rose, who spent years lobbying the US to lift sanctions on Myanmar, said he no longer has confidence that Myanmar’s economic reforms would recover lost ground after almost two years of stagnation under this government. 

“Because of the lack of a coherent, comprehensive and transparent marketing and public relations campaign, Myanmar is falling further and further behind its ASEAN neighbours in both reputational risk, as well as ability of foreign investors to understand the government’s policies, despite the adoption of a new Investment Law and now, a Companies Law.”

He argued that the remaining US sanctions, the Rakhine crisis and Nay Pyi Taw’s inaction in liberalising the economy kept away European and American investors away.

“Baby steps have been taken” to start liberalising areas of trade to foreign companies, such as fertilisers, seeds and hospital equipment, but the lack of clarity has kept investments away.

The founding member of Myanmar’s American chamber said the final “nail-in-the-coffin” for his firm is the EU’s decision not to sign an Investment Protection Agreement [IPA] with Myanmar during the remaining term of this government.

 

(The Myanmar Times: https://www.mmtimes.com/news/what-they-said-10-influential-quotes-myanmar-economy-2017-18.html )