Myanmar opens up to foreign investment
4 January 2013
Channel NewsAsia – Asia Business Tonight
nfrastructure projects are mushrooming in Myanmar. To further improve the investment climate, its government had passed a foreign investment law removing some restrictions on foreign ownership on joint-venture companies. How far will Myanmar go to attract foreign investors?
In a live interview on Channel NewsAsia, Leon Perera, Chief Executive Officer of Spire Research and Consulting, opined that some sectors were set to take off in Myanmar. These included companies involved in mining, agri-business, tourism, as well as labor-intensive manufacturing that yearned to take advantage of Myanmar’s natural resources. Its government was also pushing basic infrastructure development that is “necessary for early-staged development for any economies that are opening up”. These areas included infrastructure, telecommunication, and to some extent, healthcare.
Perera shared that companies looking at investing in Myanmar should find local partners to handle local operations as well as enter joint ventures to mitigate risks. One problem companies would face is the employment of locals. To counter this, many companies chose to hire Myanmar nationals who are based overseas, and bring them back to Myanmar.
He further commented that the biggest challenge thus far would continue to be the political and regulatory risk in Myanmar. It is recommended that companies:
- Export, instead of having large domestic investments at the initial stage;
- Work with local partners to mitigate the total risk; and
- Take small steps in investments; so that the investment level increases slowly in line with the sales level.
Perera added that one big opportunity would be the provision of financing services to foreign investments entering and setting up operations in Myanmar. With the recent Japanese-Myanmar joint venture to build an industrial park in Myanmar, more of such collaborations were expected in 2013.
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