Businesses are practically tripping over themselves to expand in Myanmar as the nation opens up to foreign investors.
Myanmar’s foreign direct investment is predicted to increase by 70%, jumping by US$7 billion over the previous year. The figure would be the largest amount of inward FDI Myanmar has ever received since the country’s liberalization in 2011.
As of November, the Myanmar approved roughly US$4.4 billion worth of investment projects, slightly more than the US$4.1 billion approved in 2013, according to Myanmar’s Ministry of National Planning and Economic Development.
A large amount of approvals tend to happen near the end of the year, meaning that the figure should exceed US$7 billion when the final numbers are released.
Transport & Telecom: Popular Sectors for Expanding in Myanmar
Myanmar’s transport and telecommunications sector were the most popular, drawing over 30% of Myanmar’s total FDI by themselves. Foreign capital poured into the nation’s mobile phone sector after it was opened for investment in the middle of 2014.
While foreign investors used to focus almost exclusively on the raw material and mining industries, a spree of tax breaks and deregulation by the government of Prime Minister Thein Sein have lured companies to many other industries in Myanmar.
The biggest investors in Myanmar were Singaporean businesses, which were responsible for 57% of all FDI in the country between April and November. Companies in Hong Kong ranked second, followed by the United Kingdom and China in third and fourth places respectively.
U Aung Naing Oo, director general of the Directorate of Investment and Companies Administration, said the amount of Singaporean capital in Myanmar seems large because U.S. and European business have brought in money through their subsidiaries based in the city-state.
“Most of the US investments have indirectly entered into Myanmar through Singapore. The investments of some other countries entered into Myanmar indirectly through Singapore, too. That’s why the amount of Singapore’s investments in Myanmar is huge,” she said.
Myanmar saw its largest amount of FDI back in 2010 when China made several different investments in hydroelectric power, bringing the total to US$6.1 billion during that year. The country will continue to attract a large amount of investment.
With that said, making the decision to expand in Myanmar is tough. Corruption still thrives in the nation, while Southeast Asia offers many other choices for businesses. Some of them are easier and less bureaucratic than Myanmar.
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