Investors flirt with Myanmar again, but WB warns of risks<\/p>\n
By Juergen Dauth<\/p>\n
SINGAPORE (DPA): Hong Kong textile manufacturer Joe Pang set
\nup in Myanmar to take advantage of the country's cheap labor and
\nended up paying a very high price for it.<\/p>\n
\"We believe that Myanmar has great potential,\" Pang says with
\na shrug, but politics is something that is beyond his control.
\nFearing sanctions and customer boycotts, clients in Europe and
\nthe United States stopped dealing with his firm.<\/p>\n
Others are still tempted, Halpin Ho for example. Another Hong
\nKong entrepreneur, Ho was afraid of missing out on the much-
\nawaited surge in the Myanmar economy and invested in a business
\ncenter in the capital city, Yangon.<\/p>\n
But he soon discovered that the planned financing for the
\nThuwanna New Business District was completely unrealistic -- the
\nmilitary government retroactively charged him for the costs of
\nthe infrastructure.<\/p>\n
Small wonder, then, that the World Bank and the Asian
\nDevelopment Bank are warning potential investors not to take
\nhasty decisions on Myanmar. The legal system in the country is
\nmurky and the government's economic program inadequate to
\nguarantee steady growth.<\/p>\n
Myanmar's 45 million people are among the world's poorest,
\nwith an education level near the bottom of the international
\ntable: only one in four children completes primary school.
\nMoreover, the ruling military government devotes a combined total
\nof only about 20 percent of its annual budget to education,
\nhealth and social programs.<\/p>\n
\"Defense,\" on the other hand, gets about 45 percent. And the
\ncurrent account deficit is running at about 6 percent of gross
\ndomestic product.<\/p>\n
According to the World Bank, the result is poor prospects for
\nstable economic development. The junta did announce a
\nprivatization program, encouraging an investment euphoria in the
\ncountry, but it has faded, leaving the state still dominant in
\nall sectors of the economy.<\/p>\n
Myanmar's biggest \"entrepreneurs\" are the ministries. The
\nUnion of Myanmar Economic Holdings is 40-percent owned by the
\ndefense ministry, and foreign investors wishing to deal with any
\nof the vast conglomerate's many divisions cannot avoid
\ninvolvement with the generals.<\/p>\n
Foreign investors have put some US$4 billion into Myanmar
\nsince 1990, but only 30 percent of them have managed to find
\nlocal private partners, mainly because of domestic firms'
\ndifficulties in raising sufficient capital.<\/p>\n
Since the imposition of a U.S.\/European Union economic boycott
\non Myanmar, the flow of foreign finance has essentially dried up
\nand state-owned enterprises have been grabing the lion's share --
\nabout 80 percent -- of all capital generated domestically.<\/p>\n
Private partners inside Myanmar, the World Bank has warned,
\ngenerally have little staying power. And the government cannot be
\nrelied upon to live up to its commitments to develop necessary
\ninfrastructure.<\/p>\n
The junta -- officially named the State Law and Order
\nRestoration Council (SLORC) -- is bankrupt, and financing its
\nspending with the central bank's printing press -- not to mention
\nslave labor.<\/p>\n
Accordingly, the monetary situation raises a huge question
\nmark for investors: while the SLORC insists on an official rate
\nof six kyats to the U.S. dollar, the Myanmar currency's
\nunofficial rate is 150 to the dollar.<\/p>\n
Foreign oil and mining firms, more than any others, are
\nwilling to enter Myanmar, despite the uncertainty, in order to
\ngain access to the country's rich natural resources.<\/p>\n
The French oil company Total, building a $1.2 billion gas
\npipeline from the Gulf of Martaban to Thailand, has found that
\noperating in Myanmar can be extremely expensive: it is having to
\npay for essential port facilities, roads and bridges.<\/p>\n
Still, as the last large, undeveloped economy in southeast
\nAsia, Myanmar is playing host to many foreign companies looking
\nforward to the day when the economy must finally begin to take
\noff.<\/p>\n
No one wants to come too late, \"even though we are not making
\nany profits at present,\" said Mike Nagai, the local manager for
\nthe major Japanese firm Mitsui.<\/p>\n
With an eye to future investors, the Muenchner
\nMessegesellschaft, a Munich-based exhibition organizer, will open
\nMyanmar's first-ever industrial fair later this month.<\/p>\n
The political consequences of this opening in Myanmar cannot
\nbe foreseen. Small foreign firms have not been alone in being
\nburned by international politics as it affects Myanmar.<\/p>\n
Threatened by human rights organizers with a boycott, the
\nAmerican soft drink maker Pepsico was embarrassed into dropping
\nits plans to move into Myanmar. Heavy protests also convinced two
\nmajor breweries, Dutch-based Heineken and Denmark's Carlsberg,
\nthat Myanmar remains simply too hot to handle.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/investors-flirt-with-myanmar-again-but-wb-warns-of-risks-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}