The Hong Kong Trade Development Council (HKTDC) led a delegation to visit Myanmar to meet with businesses, investors and government departments earlier this week.
Having met officials from the Directorate of Investment and Company Administration (DICA) on February 21, Peter Wong, the head of the delegation and also HKTDC regional director (Southeast Asia and India), spoke to the Myanmar Times about trade relations between Hong Kong and Myanmar, as well as the prospect of Myanmar in China’s One Belt One Road initiative.
Asked whether trade relations between Hong Kong and Myanmar have changed under the NLD-led government, Mr Wong thinks that the new civilian-led government has realised their national economy can only take off with foreign investments. And infrastructure has a key role to play.
“Infrastructure is underdeveloped … [For example,] a lot of friends have told me about the lack of electricity here. This is important. For example, without electricity, investors would be hesitant to set up factories here. The same applies for other infrastructural support such as roads and bridges,” he said. Trade relations have not significantly altered.
From 2011-12 to 2016-17, Hong Kong accounted for 3.9% of FDI, ranking fourth after Singapore, China and the UK. However, he believes there is a lot more Hong Kong can do.
“Although Hong Kong ranks fourth in terms of FDI … a lot of people are actually not aware of [the potential] of the Myanmar market. This is partly due to the impression Myanmar used to have to the outside world, which is relatively negative. Apart from manufacturers, other sectors were reluctant to venture into this market,” he said.
But that is about to change, and it is not merely because of a transition from a military regime to democracy.
The game changer for Myanmar’s position in the international economy, according to Mr Wong, is China’s One Belt One Road (OBOR) initiative.
In 2013, China’s president, Xi Jinping, proposed an economic and trade program, creating a network of roads, ports, railways, pipelines and utility grids which would link China and Central Asia, West Asia, and parts of South Asia. According to McKinsey and Co, OBOR aims to create the world’s largest platform for economic cooperation, including policy coordination, trade and financing collaboration, and social and cultural cooperation. OBOR is expected to boost and finance capital projects and infrastructure in developing economies.
“Part of OBOR is a proposal on establishing a China-Myanmar-Bangladesh-India [BCIM] economic corridor. In this corridor, Myanmar acts as an important bridge for commercial activities between China and India. And because of that, there is an increase of interest among Hong Kong investors and Hong Kong companies to look at the Myanmar market.
“OBOR prioritises infrastructure, and that requires professional services, which Hong Kong is very strong, to take off in Myanmar,” he added, citing services industry and professional services as the city’s strengths.
“We [Hong Kong] are strong in real estate-related services, such as in construction, surveying, engineering, project planning, town planning and so on.
“The focus among Hong Kong investors regarding Myanmar has diversified from manufacturing to a much wider spectrum of interests,” he said, expecting the financial centre to increase its investments in Myanmar in the next few years.
“Chinese investors, international investors and investors in the rest of Southeast Asia can make use of Hong Kong as a platform to invest in Myanmar … Hong Kong uses a common law legal system and Myanmar has a similar legal system with the UK … Hong Kong will be a good arbitration centre for companies investing and operating in Myanmar. This would attract companies to use Hong Kong as a platform.”
Mr Wong expects the territories traditional main investments in Myanmar – electronic products and garment industry – will continue and grow. And what are the potential sectors apart from professional services?
“Agriculture, jade and jewellery are fields which Hong Kong can explore. Hong Kong is a leader in jewellery design and there could be a lot of partnership potential in this regard.”
What does he think the Myanmar government can do more to attract Hong Kong investors to Myanmar?
“I think this is about promotion. The Myanmar government should promote more to international investors about what Myanmar can offer. For example, will new investment laws offer tax incentives, employee benefits or other incentives?
“Instead of dealing with multiple ministries, can there be a one-stop centre to streamline the bureaucracy and procedures? How can the government deal with the problem of the lack of electricity? How can they sort out labour disputes? The government should explain how they can support investors on these issues.”
Using China as an example, Mr Wong showed how the administration can attract investor by helping them to establish their operations and businesses efficiently and without red tape. In terms of manufacturing, Myanmar can learn from the example of China on how to succeed in attracting investments.
“It is about promotion,” he repeated again.
“Many Hong Kong people still have an impression based on the old military regime: Is the government very corrupt? Is the country very backward? Are the people very anti-Chinese?” he said, emphasising the need for Myanmar to promote itself on the international arena more pro-actively. At the same time, he is keen for the HKTDC to organise more trade visits to Myanmar.
Source: Myanmar Times
