Land and electricity issues push away Samsung’s investment

Samsung, South Korea’s giant electronics company, may cancel its plan to establish a factory in Myanmar, due to lack of guarantees about land availability and electricity, said sources in the manufacturing sector.

According to Dr Maung Maung Lay, vice-president of the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), the company is shifting its focus to Vietnam.

“Myanmar’s skyrocketing land prices serve as a deterrent to the foreign investments. In fact, Samsung wants to invest in Myanmar. Its investment shift to Vietnam has resulted in a great loss for the country as Samsung’s investment is very huge. There may be the massive influx of foreign investments into the country if Samsung makes its investments here. The government needs to systematically manage the country’s lands,” he said.

In January 2013, Samsung won the Myanmar Investment Commission’s green light to establish a factory near Yangon. In July this year, the company received approval from Vietnamese authorities to build a US$1 billion factory for displays used in smartphones and tablets.

Soon after the government has enacted the Foreign Investment Law in 2012, foreign investors have eyed Myanmar. Foreign businesspersons are unanimous in saying that the skyrocketing land prices and power supply are major barriers for foreign investors.

“Foreign investors can rent land from the government but cannot buy it. They can run their businesses in the garment factory in Bago Region as well as in Ayeyarwaddy Region. But foreign investors have to rent the plots of lands with the high rental fees. As all we know, one acre price is Ks 3,000. It will cost Ks 1,000 million including the costs for construction of building. For instance, let’s suppose to construct a garment factory. Foreign investors find it difficult to run a garment factory with the investments of about US$ 0.4-0.5 million and investors have to invest US$ about one million to run a business. It would be OK for those investors to do business here by renting land or buildings,” said an entrepreneur.

An entrepreneur noted that Samsung was allocated a land plot in Nyaung-Hna-Bin. The Korean company refused to take it, saying that it is a low-laying place. It wants a vast area for the plant along with 50 megawatt of power.

“The government failed to give it a guarantee of power supply. So Samsung is eyeing new destinations,” the entrepreneur said.

The government can distribute only 20MW power supply for the entire Thilawa Special Economic Zone (SEZ). The remaining power supply will be generated with the help of Japanese government.


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