Myanmar growth slowing as foreign investment drops
The World Bank has adjusted this year’s economic growth forecast for Myanmar to 6.9 per cent from previously 8 per cent.
The global lender blames a range of factors for the slump. High inflation, weaker local consumption and a less active real estate and construction market, slower export expansion, rising costs for oil imports and – along with exchange rate volatility, structural constraints and a lack of clear economic policy – lower foreign investment inflows.
A delay in the start of operations of the reconstituted Myanmar Investment Commission after the new government came to power also contributed to a backlog in foreign investor applications last year.
According to the bank, real-term growth in 2016 was estimated to be 6.5 per cent, down 1.3 percentage points from an earlier estimate. Real-term growth in Myanmar declined for three straight years and fell below 7 per cent in 2016 for the first time in five years.
Foreign investors are expressing concerns over energy supply, transport and land issues, and heavy industry manufacturers are hesitant to expand for the same reason. According to Maung Maung Lay, Vice Chairman of the Union of Myanmar Federation of Chambers and Commerce Industry, many international delegations discussed future investments, but did not promise to invest due to weak infrastructure..
“Power supply was a major issue for investors,” he said. “They told us they couldn’t produce products with candle light so they couldn’t promise investment.”
Other issues are the country’s stubbornly devaluing currency, the kyat and the low US dollar supply from banks.
However, Myanmar wants to reach $6 billion of foreign direct investment (FDI) in the fiscal year ending March 31, 2017, even though FDI reached just $3.65 billion through December 16, according to the Myanmar Investment Commission. Of the total FDI, the transportation and communication sector accounted for $1.9 billion, manufacturing $1 billion and property $728 million.
Local business leaders are not confident that the $6 billion would be reached. Soe Tun, Vice Chairman of the Myanmar Rice Federation, said that “the target cannot be met as I’ve seen no significant change in the market.” He pointed out that rules and regulations of the Myanmar Investment Law will not be released until April and investors are likely to hold back until that time.
The World Bank has adjusted this year's economic growth forecast for Myanmar to 6.9 per cent from previously 8 per cent. The global lender blames a range of factors for the slump. High inflation, weaker local consumption and a less active real estate and construction market, slower export expansion, rising costs for oil imports and – along with exchange rate volatility, structural constraints and a lack of clear economic policy – lower foreign investment inflows. A delay in the start of operations of the reconstituted Myanmar Investment Commission after the new government came to power also contributed to a backlog...
The World Bank has adjusted this year’s economic growth forecast for Myanmar to 6.9 per cent from previously 8 per cent.
The global lender blames a range of factors for the slump. High inflation, weaker local consumption and a less active real estate and construction market, slower export expansion, rising costs for oil imports and – along with exchange rate volatility, structural constraints and a lack of clear economic policy – lower foreign investment inflows.
A delay in the start of operations of the reconstituted Myanmar Investment Commission after the new government came to power also contributed to a backlog in foreign investor applications last year.
According to the bank, real-term growth in 2016 was estimated to be 6.5 per cent, down 1.3 percentage points from an earlier estimate. Real-term growth in Myanmar declined for three straight years and fell below 7 per cent in 2016 for the first time in five years.
Foreign investors are expressing concerns over energy supply, transport and land issues, and heavy industry manufacturers are hesitant to expand for the same reason. According to Maung Maung Lay, Vice Chairman of the Union of Myanmar Federation of Chambers and Commerce Industry, many international delegations discussed future investments, but did not promise to invest due to weak infrastructure..
“Power supply was a major issue for investors,” he said. “They told us they couldn’t produce products with candle light so they couldn’t promise investment.”
Other issues are the country’s stubbornly devaluing currency, the kyat and the low US dollar supply from banks.
However, Myanmar wants to reach $6 billion of foreign direct investment (FDI) in the fiscal year ending March 31, 2017, even though FDI reached just $3.65 billion through December 16, according to the Myanmar Investment Commission. Of the total FDI, the transportation and communication sector accounted for $1.9 billion, manufacturing $1 billion and property $728 million.
Local business leaders are not confident that the $6 billion would be reached. Soe Tun, Vice Chairman of the Myanmar Rice Federation, said that “the target cannot be met as I’ve seen no significant change in the market.” He pointed out that rules and regulations of the Myanmar Investment Law will not be released until April and investors are likely to hold back until that time.
