- Saw Naing (Applied Economic)
During the time of political transformation, when the time could not see the pronounced economic take-off and when the time was replete with a lot of requirements in infrastructure, it is not uncanny that the foreign investors are wavering and hesitant to invest in Myanmar. The elected civilian government is working devotedly for the development of politics, economics and social affairs so as to be able to obtain the peace in country while the people are yearning for the regular economic development as quickly as possible.
About five months have passed for the 2017-2018 financial year. People want to see the better job opportunities, the increase in per capita income and the flourishing of small, medium and large enterprises in the second fiscal year of the incumbent government. To be able to gain those developments and successes foreign direct Investment is inevitably needed. FDI can bring in the technology, source of market, methods of market finding and management employed by them together with the financial capital. The more FDIs are coming in, the better will the foundation for the faster economic take-off and sustainable economic growth be fostered. Therefore, the departments under the new government are luring the investors at their utmost capability and by all available means.
After one year period under new government, Myanmar Foreign Direct Investment Law could have been amended. Guiding rules and regulations for Regions and States were also prescribed. It is known that company laws are also going to be amended to be in line with the prevailing condition. The existing condition in the respect of labour wages, taxes, customs duty, transporting expense, infrastructure, domestic market, international markets, linkage and involvement in trade agreements, stability of exchange rate and political situation of the country are reviewed and amended where necessary by the ministries and departments concerned, for the FDI of Myanmar to be more attractive to the foreign investors. In this context, types of business of FDI should be taken into consideration. For instance, the general expense is the most important for the investors in production business while the stability of macro-economy and political situation is the most important for the investor in service business. Besides, the laws, rules and regulations enacted can be easily amended when necessary. The Myanmar Investment Commission and related government departments are now striving to fill the requirements in all fronts to attract the FDI.
Due to the above endeavours of the government more FDIs are now working in Myanmar, some more are poised to come in and some are still watching and pondering to invest in Myanmar. However, the information that dictate negative effect on the potential investors should be viewed with great care as it can jeopardize the FDI development in Myanmar. After the economic sanction had been lifted by EU and America the foreign investors beckoned more interest to invest in Myanmar and the international investors had expressed their positive view on Myanmar economy and encouraged investments in Myanmar. In the same time there were also voices of negative view expressing that current situation in Myanmar was not favourable for FDI and some exaggerated and negative versions on some weaknesses of economic situation in Myanmar had been voiced more frequently. It is not good for the country to have such negative views rampant across the other countries as it can shed bad effect on the volume of FDI flow into the country.
Whether the report with negative views was written deliberately to curb the FDI development or else it was written with constructive critical intent was not important. However, what was important was the departments or organizations concerned should know those weaknesses earlier than the international investors and take necessary measures to eliminate the constraints to the smooth flow-in of FDI. The departments concerned must be well prepared to prevent the bad news, no matter whether it is rumour or exaggerations or true facts, from spreading among both local and international investors. It is not as effective and easy as expected in trying to erase the negative news by overwhelming with true story. The image of country that is striving to attract foreign investors becomes blemished once the negative information no matter whether it is true or false has spread oversea. Since Myanmar is still in nascent stage in transforming the country into democratic State introducing the market economic system, there might be some accomplishments but a lot of requirements and shortages still remain. However, if the bad aspect only is pointed out and keep silent on the achievements, the foreign investors who are going to invest in Myanmar and unfamiliar with the country’s situation might change their decision to invest in Myanmar.
Problems concerning with land affairs, disputes between employers and employees on wages, salary and overtime wages, in many times were not addressed well and then followed the worker’s demonstrations that often turned into violent crowd which usually made wanton destruction of whatever things in their way. You can imagine the scenario when those undesirable incidents in Myanmar were spread to foreign countries and described in international news media. It was a negative impact on the FDI of Myanmar. Foreign investors, after hearing the news of unruly incidents will surely be dithering to invest in Myanmar. CMP textile factory owned by Chinese national that produced Swedish popular brand clothes can be cited as an example of such an undesirable event. As the problem could not be solved properly at the very beginning, it had grown to uncontrollable state and it became a media event. News and photos of those incidents were covered in international news and media. Those events were vividly found curtailing the FDI from entering Myanmar. Therefore, it is very important to properly settle the problems in an early stage before it goes flare up.
Another thing to consider was the news that were written in the international news papers in the pretext of giving information for new potential investors about investing in Myanmar with hidden intent to undermine the FDI in Myanmar. Such news was found in a blog one month ago. In another blog it was written to disappoint people who were interested in investing in Myanmar with the title “Don’t invest in Myanmar, here’s Why”. Likewise the article under the title “ Don’t invest in Myanmar – says 25-year-old mogul” was expressed in the website of a company which called itself “Asia Media Company” There were many people sharing that news.
In that article it was written that investing in Myanmar was making a mistake and gave three supporting facts to that notion.
1. Myanmar Investment Law could not fully represent the true ground situation; Corruption was rampant;
2. No property ownership was given to foreigners; condominium law that dictates allowance of 40% ownership of foreigners was enacted in 2016, but it is still difficult to translate it into practice.
3. The preliminary expense was very high to invest in Myanmar. It took more time and effort to invest in Myanmar than to invest in Cambodia and Mongolia. It encouraged investing in other countries that were in the same category with Myanmar in the respect of rate of development but better in bureaucratic mechanism. Moreover, it pointed out that according to the World Bank report Myanmar ranked 170 out of 190 countries in Ease of Doing Business Index. Myanmar was said in that article ranking at the bottom of the Asian countries. Now we have to look intothe low in-flow of FDI whether it was due to the negative news about Myanmar or due to the bureaucratic snafu. We have to figure out the causes for the low in-flow of FDI.
It is a devious act to highlight the negative news leaving the positive developments in the shadow. Such attitude is meant for hindering the flow of foreign investments into Myanmar. In other words it is a typical FDI assassination. Assassination means making clandestine effort to cease the development or survival of something. FDI is the most crucial one in the development of a country. So, all the departments need to take concerted effort to boost the FDI flow and to make the Myanmar Investment Law and the laws related to FDI laws harmonious and interconnected.
The news about the good effort of the departments concerned for FDI development and connected positive news should be spread to the investors of the other parts of the world through foreign-based Myanmar diplomats, economic ambassadors, local and foreign news media which wish the well-being of Myanmar and local and foreign tour companies.
It is necessary for Myanmar to develop the supportive institutions that enable to guarantee stable electricity, land affairs, production and trade to attract more the FDI to enter Myanmar.
Domestic conditions should also be reviewed. What hinders the FDI flow? Departments also have to change their way of thinking and performing according to the suggestions of local professionals, intelligentsia and researchers if their suggestions reflect the true situation of the country. Then try to send the good news to international investors. Furthermore, if the intense endeavour to promote the FDI marketing copitalizing the developed domestic conditions during the transition period can be made, it can attract more the FDI and also can deter the plots that will undermine the FDI flow into the country.
Translated by Khin Maung Win