By ALIFAH ZAINUDDIN / pic by ISMAIL CHE RUS
MYANMAR is seeking more foreign direct investment (FDI) inflows from Malaysia to help develop its key economic sectors.
Malaysian conglomerates have been called to capitalise on the country’s increasing demand for electricity and vast areas of untapped land by bidding for energy projects and expanding oil palm cultivation capacities in Myanmar.
Former Deputy Finance Minister Dr Maung Maung Thein (picture) said Myanmar is a “low-hanging fruit” that would bring in significant returns to businesses, given the projected 6.7% growth in 2018.
“The power sector is the first priority of investment for the country and the second is agriculture. The country has a lot of arable land and a good labour workforce for Malaysian companies to establish their plantations.
“Malaysia already has the resources, knowledge and skills. It is just a matter of setting up and expanding their yields in Myanmar,” he told The Malaysian Reserve in a recent interview.
The former military dictatorship is one of the fastest-growing economies in Asia, with its gross domestic product (GDP) expanding by 8% in 2014 and 7% in 2015, before it dipped to just under 6% last year, due to severe floods that hit the country’s agriculture and food processing sectors.
However, Myanmar’s GDP is expected to recover this year, with the International Monetary Fund projecting a 6.7% growth.
Naypyidaw is currently working on a US$567 million (RM2.2 billion) project to expand the national power grid to make electricity accessible to 7.2 million households by 2030.
As it stands, the demand for electricity has risen at about 13% per year and common power outages in the country points to an energy crisis where supply fails to meet an overwhelming upswing in demand.
Studies showed that production for domestic use would be boosted by 42% to meet the estimated demand of 4,500MW by 2020 and 13,410MW by 2030.
Maung, who currently serves as executive chairman of ZICO Law Myanmar Ltd, said Malaysian utilities companies could participate in joint ventures (JVs) with either local energy players or the Myanmar government to bid for electricity production tenders.
According to data from the Myanmar Investment Commission, foreign investments in the power sector represented 27.9% of total investments with US$21 billion approved as of December 2017.
In addition to that, he said Malaysian palm oil giants could also expand their landbank size in Myanmar as the country has over 10 million hectares of arable land — the 25th-largest in the world.
Although Myanmar has sizeable palm oil plantations in its southern provinces, the country still imports from its palm oil producing neighbours — Malaysia, Indonesia and Thailand — to meet domestic demands.
Last year, Malaysian palm oil and palm product exports to Myanmar stood at 133,958 tonnes, a 32.3% decline from 197,702 tonnes in the previous year.
Meanwhile, Maung said the Rohingya conflict has had no effect on Malaysian investments into Myanmar.
Despite Malaysia’s vocal objection on the situation at Rakhine, there have been no change to Malaysia-Myanmar relations in terms of trade and investments.
“On Myanmar government’s side, there has been no restriction imposed on Malaysian companies or products. We practice open trade and do not subscribe to preferential treatment,” he said.
Nevertheless, he added that the situation has led to a slowdown in investments from Western countries.
At the height of the demonstration last year, various quarters had urged for Malaysian private investors to pull out as a sign of protest. Even Petroliam Nasional Bhd was urged to withdraw all of its investments from Myanmar.
However, Deputy Foreign Minister Datuk Seri Reezal Merican Naina Merican said in Parliament that Malaysian private investors will have to make their own decisions on their Myanmar investments.
“Generally, the Malaysian government will not be in a hurry in making decisions, especially in matters related to investments. Of course, if the investor is from the private sector, then the decision is for themselves to make,” he said.