Negative impact on investments in Myanmar from the loss of EU “GSP” is debatable (U Than Aung Kyaw, Deputy Director of DICA)

The Directorate of Investment and Companies Administration (DICA) believes that revoking Myanmar’s EU GSP will probably not have a severe impact on investments in Myanmar, according to U Than Aung Kyaw, Deputy Director of DICA.

“It’s only been around five years since the EU granted us Everything But Arms (EBA) in June 2013. We already have CMP garment investments in our country. Moreover, when you look at the investments in Myanmar, most of the investments in the country are not from the West,’’ he added. He was referring to the Cut-Make-Pack (CMP) garment exports. As of 2017 the sector stood third on the list of export items as earnings reached nearly $700 million USD during four months of 2018FY.

The EU placed more orders in the CMP market after the reinstatement of GSP rights to Myanmar. In the past many companies from South Korea and Japan invested in the sector; now the sector sees an inflow of investments from China as well.

The EBA is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty-free and quota-free, with the exception of armaments. The EBA is part of the EU Generalized System of Preferences (GSP) system. The GPS is a preferential tariff system which provides for a formal system of exemption from the more general rules of the World Trade Organization (WTO). So, it stands to reason — at least at first glance — that losing the GSP would be a bad thing.

The Financial Times reported that the European Union will send an inquiry team to Myanmar to review EBA trade as the EU is considering trade sanctions against Myanmar over the issues in Rakhine State.

Even though some Western countries are not making many investments in Myanmar, most of their investments are in the oil and gas sector, not in labor intensive sectors such as the garment sector.

Myanmar’s top investors are Asian countries such as China, Thailand, Singapore, South Korea, and Hong Kong, according to U Than Aung Kyaw.

Moreover, Myanmar has backup plans at the ready such as looking for new markets to trade with and easing trade barriers in order to counter such sanctions.

Despite the investment officer’s claims that a removal of the EU GSP will not have a severe investment impact, private businessmen said that there is potential for workers and exporters in garments and fishery to suffer financial loss because of the sanctions.

According to them, such sanctions and revocation of GSP would affect nearly 300,000 workers, who could be out of a job. The Ministry of Commerce said that it will negotiate with the EU and has prepared to look for potential new markets.

The Financial Times also reported that some international companies and right groups have urged the EU not to adopt such sanctions. Indeed, hopefully both the EU and Myanmar can come to an agreement to retain the GPS rights for Myanmar.

(Myanmar Business Today: https://www.mmbiztoday.com/articles/negative-impact-loss-eu-gsp-debatable-dica )

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