Japanese investor interest in Myanmar still high despite lower FDI

The Japanese remain interested in expanding their presence in Myanmar despite lower investments in recent years compared to before and a refugee crisis unfolding in northern Rakhine.

At the 13th Joint meeting of the Myanmar-Japan CCI Business Cooperation Committees in Yangon on October 23, the new Investment Law, development of small and medium enterprises (SMEs) in Myanmar and opinions and evaluations for the current projects conducted by Japanese companies were discussed.

Japanese investors also asked for more tax incentives and stressed that a quicker and easier system, particularly in dealing with the Myanmar Investment Commission and the respective ministries, is needed to facilitate new investments.

Tax incentives are one way to encourage Japanese investors to come Myanmar, if interest in the Thilawa Special Economic Zone (SEZ) , which gives such incentives to its investors, is anything to go by, said Mr.Yichi Kobayashi, Chairman of Jp-Mekong Biz Cooperation Committee.

“Japanese government and private sector are keen to invest in Myanmar and help develop SMEs in Myanmar. And, the party that won in the recent election is the same party of previous term, which means it will continue to support Japanese contributions to the growth of the Myanmar economy,” he said.

Daw Saw Thazin Hnin, deputy director general at the Directorate of Investment and Company Administration, said although Myanmar “cannot compare with Thai incentives of tax relief from 13 to 15 years, Myanmar is giving 5 to 7 year tax relief for investors in the promoted sectors and the new Investments Law is giving more incentives compared to the previous one,” she said.

Meanwhile, Myanmar must continue to incentivise foreign direct investments (FDI) into the country, particularly into the agriculture sector. This is because although Myanmar is an agriculture based country with 70 percent of the population relying on income from the sector, FDIs into the sector is less than 1pc of the total FDI into Myanmar.

U Soe Tun, vice chair of the Myanmar Rice Federation said if Japan can invest more in the agricultural sector, it be the main trigger to economic growth. Currently, Japanese businesses and entrepreneurs are more interested in raising issues and questions in the automobile sector and other businesses.

“As the agricultural sector is less profitable and more risky, many investors won’t like to take risks including Japanese investors. Myanmar still needs to fulfill a lot of infrastructure requirements for the sector to attract foreign in agriculture sector,” he said.

In contrast, Japanese car factories were based in Myanmar since quite long time ago so the interest is higher as the sector is already settled with a strong market share in Myanmar, U Soe Tun said.

For example, Suzuki will open a car manufacturing factory in Thilawa SEZ starting from 2018, U Soe Tun added.

In the 2015-16 fiscal year, Japanese investments in Myanmar hit its highest level at $220million, said U Kyaw Win, Union Minister of Planning and Finance.

“But FDI from Japan has slowed down after the 2015-16 fiscal year. So I think this meeting could find out the ways to boost more Japanese investments into Myanmar,” U Kyaw Win said.

As of the end of September 2017, FDI from 96 Japanese corporations totaling $717 million has been permitted by Myanmar Investment Commission.

Under the Myanmar Investment law, 49 countries have invested in 12 economic sectors with 1378 investments valued at $ 74.5 billion as at end-September 2017. Japan stands at no.11 in the chart which is led by China, Singapore, Hong Kong and Thailand.

“The most important sector for the economic growth in Myanmar is investing in infrastructure projects. Japan and Myanmar are working together for further infrastructure development,” U Kyaw Win said.

Source : Myanmar Times

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