[Date Prev][Date Next][Thread Prev][Thread Next][Date Index ][Thread Index ]

Reuters-INTERVIEW-Myanmar faces for



Subject: Reuters-INTERVIEW-Myanmar faces foreign investment drought

INTERVIEW-Myanmar faces foreign investment drought
07:20 a.m. Feb 23, 1999 Eastern
By Rajan Moses

YANGON, Feb 23 (Reuters) - Myanmar said on Tuesday it had suffered a sharp
drop in foreign direct investment (FDI) due to the Asian financial crisis,
but was taking rearguard measures to keep its sluggish economy ticking over.

``The regional economic turmoil has affected FDI inflow. For 1998/99
(April/March) financial year, investment is stagnant and there is very
little inflow so far,'' said Thinn Maung, director of the Directorate of
Investment and Company Administration.

Most painful is the trickle in FDI from Association of Southeast Asian
Nations (ASEAN) countries that account for 52.3 percent of total FDI
entering Myanmar, he told Reuters.

``Countries affected by the crisis have set very tight financial and banking
policies in loans and capital outflow. So the investors from especially
ASEAN countries have difficultly to bring in FDI into Myanmar,'' he said.

In the 1996/97 business year, military-ruled Myanmar received $2.8 billion
in FDI, but that dropped to about $1 billion in 1997/98, he said.

``In 1998/99, FDI has been stagnant. We have had very little inflow so
far,'' Thinn Maung said but gave no figures.

Most FDI in Myanmar is concentrated in the oil and gas sector, followed by
manufacturing and then hotels and tourism.

To sustain foreign investment, the cabinet had approved relief steps to
allow those already running business operations to reduce tax and other
payments to the government.

For investors who had either not completed projects due to problems stemming
from the crisis or had not yet started them, the government had agreed to
allow delays of up to a year. Further yearly delays could also be
considered, he said.

To alleviate investment problems, the government was promoting investment by
its own citizens, offering them the same tax breaks as foreign investors as
well as duty-free machinery and raw materials, Thinn Maung said.

In fiscal 1997/98, Myanmar approved 13.8 billion kyats ($2.3 billion) in
local investment. In the first 10 months of fiscal 1998/99, Myanmar approved
22.6 billion kyats in citizens' investments, he said.


``The crisis has had its effects on tourism and led to unemployment and
retrenchments,'' he said, adding that citizens' investments had created some
employment opportunities.

However, most of these investments were in resource-based and
labour-intensive, export-orientated industries such as garments and other
cottage industries, he said.

Thinn Maung said it was hard to say how long FDI would take to recover as
the situation in various ASEAN countries differed.

``Generally it may take about two to three years for any recovery in the
region.''

The government was now turning to boosting production and exports from the
agriculture sector, dominated by rice and pulses, to earn foreign exchange.
The farm sector accounts for more than 40 percent of gross domestic product.

Gold, silver, lead and copper exploration projects were under way, but the
government had become cautious about logging and was focusing instead on
value-added wood-based industries such as furniture making.

``Needless to say, we have a lot of gas and we are ready now to sell to
Thailand from the first (offshore Yadana) gas field,'' he said. ``By the
turn of the century, we will have a lot of income from the sale of gas and
will generate more power projects to beat current shortages.''