While foreign direct investment has exploded in Myanmar in recent years, a lack of oil and gas investments seems to be hamstringing the emerging economy
Foreign direct investment (FDI) in Myanmar looks set to drop roughly 30% for the year ending 31 March, reports Nikkei Asian Review. A drop in oil and gas investments, it says, has underscored the government’s need to target other industries with more attractive economic policies.
The burgeoning Southeast Asian country took in about $6 billion in FDI during the 11 months prior to February, an official at the Directorate of Investment and Company Administration informed Nikkei Asian Review. An expected $1 billion in March would bring the yearly total to roughly $7 billion, the first year-on-year drop since the 2012 fiscal year.
FDI has rapidly increased in Myanmar in recent years on the heel of political reforms that began in 2011. The subsequent lifting of sanctions by the US and EU saw foreign companies flood in to a relatively untouched market.
But oil and gas investments – which accounted for 40-50% of investment in the 2014 and 2015 fiscal years – has largely dried up in recent months, as no new gas and petroleum fields have been offered for development since the start of the 2016 fiscal year. Investment has largely been focused on communications, given rising mobile phone usage, as well as manufacturing, brought on by a booming garment industry.
Some also put the blame on the new government helmed by the National League for Democracy. An economic plan released in July 2016 is said to have fallen short on promises to flesh out infrastructure within Myanmar, while government pledges to increase environmental regulations on large-scale developments has some companies worried their projects could be cancelled.