Oil prices, general elections weigh on Myanmar’s economy

SINGAPORE: The drop in oil prices and uncertainties surrounding Myanmar’s general elections later this year are weighing on the country’s economy, as it prepares to halt oil block auctions and braces for a drop in foreign direct investment (FDI).

In an exclusive interview with Channel NewsAsia, Myanmar’s Union Minister for energy Zay Yar Aung says he does not think the government will hold oil block auctions this year, as tumbling oil prices have already pressured foreign oil firms operating in the country.

“Foreign operators of the 4 offshore projects are severely impacted,” Mr Aung said on the sidelines of the inaugural Singapore Forum. “Because of the economic and political situation, I think the auctions will not be in this year.”

Reuters previously reported in October that the country earmarked 9 oil and gas blocks for auction in 2015, citing Than Tun, an official at state-owned Myanmar Oil and Gas. Myanmar awarded 20 blocks to foreign oil companies in March 2014.

The oil and gas sector drew US$3.6 billion in foreign direct investment in fiscal year 2014/15 which ended in March, accounting for 45 per cent of total FDI. Myanmar attracted a record US$8 billion in foreign investment last fiscal year, double the US$4 billion government target.

Because of a sluggish oil sector, Mr Aung, who is also Chairman of Myanmar Investment Commission, says the government aims to attract US$6 billion in FDI in fiscal year 2015/16.

“This year we have this situation of oil prices going down, and also the political stalemate,” Aung said. But he added that he expected more investment into the country’s nascent manufacturing sector to make up for some losses in the oil and gas business.

Myanmar’s general elections are scheduled for the first week of November, but opposition leader Aung San Suu Kyi has raised the possibility of boycotting the elections, citing lack of reforms in the country.

In its latest update on emerging East Asia, the World Bank maintained its 8.5 per cent growth forecast for Myanmar in 2015, same as last year.

Source: Channel News Asia

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