U Aung Naing Oo pointed out that having a fairly large population (according to the World Bank, the country’s population stood at 53.4 million in 2017) and low labour costs were not enough to draw foreign investors to Myanmar.
He added that political uncertainties, poor physical infrastructure, lack of skilled labour, an underdeveloped capital market, high taxes and a legal system with a hodgepodge of laws dating back to the British colonial era has held back investors.
The Myanmar legal framework requires an overhaul and has to be better rolled out and enforced. This is because foreigners will only be convinced to channel their money into the country if they knew that their investments would be protected by the rule of law.
“Many of Myanmar’s existing legislation is from the colonial era. More modern laws and regulations need to be enacted. However, there is also a need to improve performance of government agencies and ministries in enforcing the rules and regulations,” U Aung Naing Oo said.
He added that weak institutional capacity and lack of knowledge on procedure has hampered the effective implementation of new legislation in recent years. “It is not enough just to enact new laws. Good implementation of the rules and bylaws must be carried out as well. But many government organisations still do not know the procedures to enforce the law. For example, to implement the Intellectual Property Law, authorities need to undergo professional courses,” he said.
A local business owner, U Nay Lin Zin, said businesses frequently have to navigate through the lack of coordination and poor communication between ministries and agencies as well as the red tape.
“We are also concerned about policy changes that are not communicated properly. If it’s not good for local businesses, what more if it’s foreign investors,” he said.
Echoing the remarks of Minister of Investment and Foreign Economic Relations U Thaung Tun at the Yangon Region Investment Form held on May 10, U Aung Naing Oo said “government ministries and agencies at both the Union and region and state levels need to coordinate better and cooperate to cut red tape.”
“Coordination between the Union ad regional governments is very weak. We need to find a solution for this. There needs to be better communications on procedures such as license applications. For example, we need to consider granting businesses all the work permits at once rather than granting licenses only after other permits are obtained from various departments,” he said.
He added that there was a lack of communication among ministries and the private sector in the development of infrastructure such as highways, roads and bridges. “This lack of coordination and communications has made it difficult to fund these projects,” U Aung Naing Oo said.
In the first-half of the current fiscal year, Myanmar only received US$2.5 billion from foreign investors and the target may not be met for the year despite the government’s efforts to promote investments in the country.
So far, FDI is just 45pc of the US$5.8 billion targeted by the Myanmar Investment Commission (MIC) for 2018-19. Only four months remain to the current fiscal year.
Since 2012, the MIC’s annual target for FDI of US$ 6 billion was consistently met.
Data from the Directorate of Investment and Company Administration showed that so far, Singapore, with US$21.3 billion or 26.6 percent of total approved investments, was the largest investor in Myanmar, followed by China, with US$20.5 billion or 25.6 pc of total approved investments.
Myanmar saw the largest proportion of FDI in the transportation and communications sectors during the eight-month period from October to May in the current fiscal year, said U Thant Zin, acting director general of the Directorate of Investment and Company Administration (DICA) said last week.
FDI in Myanmar totaled US$ 1.1 billion by just three companies in the two sectors, representing around 42 percent of the US$2.6 billion in total investments.
Meanwhile, 115 companies invested in manufacturing, 13 in services and seven in livestock and fisheries. Investors also channeled funds into agriculture, hotels and tourism, energy, real estate and industry.
China topped the investors list with a total of 72 businesses investing in Myanmar. However, the Chinese channeled just US$260 million into the country compared to US$1.6 billion by 20 companies registered in Singapore.
During the first eight months of the current fiscal year, Myanmar citizen investments amounted to more than K1 billion, including expansion by existing companies, said U Thant Zin Lwin.
The domestic investments were concentrated in real estate, manufacturing, hotels and tourism, construction, industrial estate energy, mining, livestock and fisheries and agriculture, according to the DICA.