REUTERS - Military-ruled Myanmar, one of the world's most isolated states, appears to be taking steps to attract more investment after a new government was formed following the first election in 20 years on Nov. 7.
The resource-rich country has been hurt by decades of economic mismanagement and deep-rooted corruption. Western sanctions in place because of the regime's poor human rights record have squeezed investment and Myanmar has no access to loans from major financial institutions.
Analysts say it is possible sanctions could be reviewed when a new government is formed and if Nobel laureate Aung San Suu Kyi, who was released from house arrest on Nov. 13, leads a campaign to have them scrapped.
Following are details about Myanmar's economy, trade and investment.
ECONOMY
Official statistics from Myanmar's secretive military government are notoriously unreliable and it claims to have achieved growth of between 10-13 percent annually from 2004-2009. Economists believe this is exaggerated. The Asian Development Bank estimates growth of 7 percent in 2006, 5.5 percent in 2007, 3.6 percent in 2008 and 4.4 percent last year.
The ADB said exports surged 47 percent in 2006 before declining annually, with export growth of 4.4 percent last year.
Myanmar was not affected by the global economic crisis because of its limited trade and financial links with the West. However, the devastating Cyclone Nargis in 2008, which claimed as many as 140,000 lives, did major damage to its rice fields.
Agriculture forms the backbone of Myanmar's economy, accounting for about 40 percent of GDP and employing over 50 percent of the workforce.
TRADE AND INVESTMENT
Myanmar's biggest trade partners are its immediate neighbours and other Asian countries. Forty-two percent of its exports go to Thailand, 21 percent to China, 13 percent to India and 9 percent to Singapore. Five percent of its exports go to Africa.
According to government data, China has pumped $8.17 billion into Myanmar in the current fiscal year, accounting for two thirds its total investment over the past two decades. Energy projects formed the bulk of the investment, with $5 billion in hydropower and $2.15 billion in the oil and gas sector.
Total foreign direct investment (FDI) for the 2009-10 fiscal year was almost $315 million compared to nearly $985 million a year earlier, although independent economists dispute this data.
EXPORTS
Gas is by far Myanmar's biggest and most lucrative resource for export and most of it is consumed by Thailand. When construction of a huge pipeline from the Bay of Bengal to China's southwestern Yunnan province is complete, gas and oil exports are expected to surge.
Teak and hardwood is also a major export area, with China its main customer, as are garments, although the sector has been hard hit in recent years by regional competition.
Agriculture and commodities like beans and pulses, fish and seafood are lucrative areas for Myanmar. Rice is seen as an area with huge potential if the government carries out much-needed reforms to its rice sector.
Under British colonial rule, Myanmar was the world's biggest rice exporter and shipped 3.4 million tonnes in 1934. It shipped 1.09 million tonnes in 2009, up from 547,000 tonnes in 2008. Industry officials say Myanmar is planning to become a major rice exporter in the next few years.
PRIVATISATION DRIVE
Private sector reforms have accelerated over the last year in Myanmar with the selloff of about 300 state assets, from real estate, gas stations and toll roads to ports, shipping companies and an airline.
The privatisation process was seen as a move to strengthen the hand of businessmen with close ties to the ruling junta. The sales were highly opaque and many were not advertised to ensure only cronies of the military took part in the bidding process.
Four new banks set up this year are owned by close allies of the generals. Banking in Myanmar is seen as a largely dysfunctional sector and the private sector's share of credit has fallen 25 percent in the last five years.
INVESTMENT POTENTIAL?
The reclusive junta has formed the Myanmar's Business Council to promote investment opportunities. It says "Myanmar is not a 'maybe market', it will be a 'must have' market". It has tried this before, with limited success.
It is seeking to attract investment in its energy sector, promoting its offshore oil and gas reserves and potential for hydropower and downstream industries. It is also pushing its tourism potential and is promoting its culture, landscape, beaches, lakes rivers and mountains as magnets for visitors.
Foreigners, including Western companies held back by sanctions, are showing increased interest in investing in Myanmar, particularly in its telecommunications sector and in construction materials.
However, the country remains an unknown quantity. Corruption and cronyism are rife and regulation is a grey area. Economists say the government's fiscal policies are destructive to the country's prospects and the economy is unbalanced and unstable. While investment consultants believe the country has huge potential, they also warn of massive risks.
Copyright © 2010 Reuters
Source:http://thestar.com.my/news/story.asp?file=/2010/11/18/worldupdates/2010-11-18t155114z_01_nootr_rtrmdnc_0_india-529996-1&sec=worldupdates
The resource-rich country has been hurt by decades of economic mismanagement and deep-rooted corruption. Western sanctions in place because of the regime's poor human rights record have squeezed investment and Myanmar has no access to loans from major financial institutions.
Analysts say it is possible sanctions could be reviewed when a new government is formed and if Nobel laureate Aung San Suu Kyi, who was released from house arrest on Nov. 13, leads a campaign to have them scrapped.
Following are details about Myanmar's economy, trade and investment.
ECONOMY
Official statistics from Myanmar's secretive military government are notoriously unreliable and it claims to have achieved growth of between 10-13 percent annually from 2004-2009. Economists believe this is exaggerated. The Asian Development Bank estimates growth of 7 percent in 2006, 5.5 percent in 2007, 3.6 percent in 2008 and 4.4 percent last year.
The ADB said exports surged 47 percent in 2006 before declining annually, with export growth of 4.4 percent last year.
Myanmar was not affected by the global economic crisis because of its limited trade and financial links with the West. However, the devastating Cyclone Nargis in 2008, which claimed as many as 140,000 lives, did major damage to its rice fields.
Agriculture forms the backbone of Myanmar's economy, accounting for about 40 percent of GDP and employing over 50 percent of the workforce.
TRADE AND INVESTMENT
Myanmar's biggest trade partners are its immediate neighbours and other Asian countries. Forty-two percent of its exports go to Thailand, 21 percent to China, 13 percent to India and 9 percent to Singapore. Five percent of its exports go to Africa.
According to government data, China has pumped $8.17 billion into Myanmar in the current fiscal year, accounting for two thirds its total investment over the past two decades. Energy projects formed the bulk of the investment, with $5 billion in hydropower and $2.15 billion in the oil and gas sector.
Total foreign direct investment (FDI) for the 2009-10 fiscal year was almost $315 million compared to nearly $985 million a year earlier, although independent economists dispute this data.
EXPORTS
Gas is by far Myanmar's biggest and most lucrative resource for export and most of it is consumed by Thailand. When construction of a huge pipeline from the Bay of Bengal to China's southwestern Yunnan province is complete, gas and oil exports are expected to surge.
Teak and hardwood is also a major export area, with China its main customer, as are garments, although the sector has been hard hit in recent years by regional competition.
Agriculture and commodities like beans and pulses, fish and seafood are lucrative areas for Myanmar. Rice is seen as an area with huge potential if the government carries out much-needed reforms to its rice sector.
Under British colonial rule, Myanmar was the world's biggest rice exporter and shipped 3.4 million tonnes in 1934. It shipped 1.09 million tonnes in 2009, up from 547,000 tonnes in 2008. Industry officials say Myanmar is planning to become a major rice exporter in the next few years.
PRIVATISATION DRIVE
Private sector reforms have accelerated over the last year in Myanmar with the selloff of about 300 state assets, from real estate, gas stations and toll roads to ports, shipping companies and an airline.
The privatisation process was seen as a move to strengthen the hand of businessmen with close ties to the ruling junta. The sales were highly opaque and many were not advertised to ensure only cronies of the military took part in the bidding process.
Four new banks set up this year are owned by close allies of the generals. Banking in Myanmar is seen as a largely dysfunctional sector and the private sector's share of credit has fallen 25 percent in the last five years.
INVESTMENT POTENTIAL?
The reclusive junta has formed the Myanmar's Business Council to promote investment opportunities. It says "Myanmar is not a 'maybe market', it will be a 'must have' market". It has tried this before, with limited success.
It is seeking to attract investment in its energy sector, promoting its offshore oil and gas reserves and potential for hydropower and downstream industries. It is also pushing its tourism potential and is promoting its culture, landscape, beaches, lakes rivers and mountains as magnets for visitors.
Foreigners, including Western companies held back by sanctions, are showing increased interest in investing in Myanmar, particularly in its telecommunications sector and in construction materials.
However, the country remains an unknown quantity. Corruption and cronyism are rife and regulation is a grey area. Economists say the government's fiscal policies are destructive to the country's prospects and the economy is unbalanced and unstable. While investment consultants believe the country has huge potential, they also warn of massive risks.
Copyright © 2010 Reuters
Source:http://thestar.com.my/news/story.asp?file=/2010/11/18/worldupdates/2010-11-18t155114z_01_nootr_rtrmdnc_0_india-529996-1&sec=worldupdates
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