Myanmar is identifying its development priorities as work continues on the transition to an open 21st century economy after six decades of isolation, repression and economic stagnation.
In the initial stages, financial support from international organisations, including the World Bank, International Monetary Fund and the Asian Development Bank will play a big role, according to Dr Khin Shwe, a senator and member of National Assembly.
The government is now drafting the National Development Plan, which will cover all development over the next 30 years, he said at a recent ceremony to mark the opening of a representative office by Siam Commercial Bank (SCB) in Yangon.
The long-term plan will encompass plans for poverty alleviation, human resource development, investment and trade sector development, industrial, financial sector and currency development, as well as regional and sectoral plans.
The long-term plan also incorporates the current five-year plan for 2011-16, under which the government targets 7.7% annual average gross domestic product (GDP) growth.
Dr Khin Shwe said the government had identified five priority areas during the development period: tourism, electricity and power generation, communication and transport, mining and natural resources, and property development.
“We will also need financial support from international financial institutions like the World Bank, IMF and ADB during our country’s development. Myanmar is now welcoming investments from foreign investors to take part in our development,” he said.
The main investment destinations, he said, would be Yangon, Myeik and Mandalay. In Yangon, the industries of interest are the likes of gems, teak, garments, fishery and tourism. In Myeik the focus will be on granite, palm oil, natural rubber, fishery and tourism. Mandalay, the country’s second major business destination after Yangon, is a good base for investors interested in gold, nickel, power generation, construction and tourism.
The country, he said, had set aside special economic zones in Dawei, Thilawa and Kyauk Phyu to develop the various industries. Dawei, in the South of the country, is well-known in Thailand as the site of a major port and industrial estate complex for which Italian-Thai development Plc is the lead contractor. The Myanmar and Thai governments have affirmed their strong cooperation to assure other investors that the project will move ahead as planned.
Plots in Thilawa, which is not far from Yangon, have been occupied by many investors from Hong Kong, Malaysia and Singapore under memoranda of understanding with the Myanmar government. The Thilawa special economic zone has 37 plots with 200-metre quays.
The opportunity in Kyauk Phyu might be small because most of the areas have already been secured by Chinese and Korean investors, he added.
The flow of investments into Myanmar has been on the rise and as of July 2012 the total stood at US$41.086 billion from 485 projects. China is the largest investor group in terms of approved value at $14.142 billion, accounting for 34.4% of the total.
Thailand is the second largest with 61 projects worth a combined of $9.568 billion, accounting for 23.3%, followed by Hong Kong with 40 projects worth $6.371 billion, accounting for 15.5%.
By sector, power has attracted the most foreign investment. There are only five projects but they are worth $19.07 billion, accounting for 46.4% of total foreign investment in the country.
Next in line to the power sector is the oil and gas industry with 113 projects worth $14.18 billion, followed by mining with 66 projects worth $2.81 billion.
Dr Khin Shwe said the size of the planned power investments reflected the challenge Myanmar faced to develop reliable and secure electricity supplies in a country where only about 25% of the population now has access to power.
In the short term, the country needs to upgrade transmission and distribution systems, revise the electricity management plan, upgrade the capacity of existing power plants, and attract new skills, technology and funding.
In the long term, it will have to strategise what kind of balance it wants in terms of fuel sources. Water resources are abundant in the North, natural gas offshore and coal from both the southern and northern parts of the country.
Myanmar wants foreign investors to take part in producing and distributing electricity. The country has high potential for hydropower, with potential to generate up to 37,000 MW.
The country currently has 16 power plants with installed capacity of 2,331 MW. It has potential for more coal-fired plants though environmental concerns could limit where they are developed. Potential coal reserves in Myanmar are estimated at 711 million tonnes, with Shan state alone having an estimated 234 million tonnes.
Dr Khin Shwe said Myanmar also needed to invest in the tourism and property sectors as the country is rapidly opening up to travelers from around the world. According to the Ministry of Hotels and Tourism, the country has 17,146 hotel rooms. It needs at least 35,796 rooms by 2015 to serve with increasing number of visitors.
Tourist arrivals to the country are up by at least 30% this year and the total, by air and overland, could reach one million by year-end, industry executives have said. The country has 22 foreign-owned hotels, nine hotels operated by the government, and 678 run by local operators in all 11 zones countrywide.
“I’m sure that this year, there is also strong growth in this sector. We’re planning to have at least an additional 50 hotels by the end of 2013,” said Dr Khin Shwe.
In the hotel industry, the highest amounts of foreign investment are from Thailand, Singapore and Japan, respectively.
Myanmar will hold the 26th SEA Games in December 2013, giving tourism a further lift in the high season next year.
To meet rapidly rising demand for quality tourist accommodation, the country will likely need to attract more foreign hotel investors. Under the new Foreign Investment Law, Dr Khin Shwe said authorities may permit investors to lease land or to use it for up to 50 years, with two consecutive renewals of 10 years each for a total of 70 years.
The country is also reviewing the law on land and property development, which is expected to be finalised soon to match the Foreign Investment Law that was signed by the president on Nov 2.
“For economic development, Myanmar is following a market-based economic system with the newly reformed FDI law. In addition to the new law, labour-intensive sectors of the country will also attract foreign investors into Myanmar,” he added.
Additional reporting by
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Writer: Pattnapong Chantranontwong