Insurance, banking and electricity to see more investor interest

While the oil and gas industry has the seen the most interest from investors, banking and financial services, telecommunications and the manufacturing industries are expected to be the focus in the years ahead as the country’s economy grows.

Data from the Directorate of Investment and Company Administration (DICA) shows that since 2016, the manufacturing industries and telecommunications have seen the most interest from foreign investors.

DICA data showed that the manufacturing industries have seen between US$1 billion and US$2 billion in investments per year while telecommunications have received US$2 billion per year in the last three years.

U Aung Naing Oo, permanent secretary of the Ministry of Investment and Foreign Economic Relations, is expecting investor interest in the services, manufacturing industries and telecommunications to continue improving in the coming year.

YGA Capital managing director U Thura Ko Ko concurred that telecommunications and financial services will be areas that attract investor interest. “It’s about whether the government has sound policy; telecommunications has good policy backing,” he said.

U Aung Naing Oo noted that banking and financial services, and in particular insurance, will be one industry to watch since the country liberalised the insurance market by granting licenses to five foreign players in early April.

“The insurance sector is one of the hot sectors that will surely grow in the coming year and this will facilitate capital flows into the country and create many new job opportunities,” U Aung Naing Oo said.

U Myint Zaw, managing director of AYA Bank, reckons the banking sector as a whole is looking more competitive and promising now that foreign banks have been allowed to open branches and provide financial services in the country.

“The banking sector has been undergoing reform and is now stronger than before, which is important for growth and development in the country,” he said.

In comparison, although the oil and gas industry continued to rank at the top in terms of total investments from foreigners, there have been no large-scale investments in the last three years.

According to DICA, investments in oil and gas peaked at US$9 billion in the 2015-16 fiscal year. However, the total value of investments in the industry has been stagnant, with 154 businesses registering investments worth US$22.41 billion in May this year compared to the same number of businesses and investment value in May 2016.

U Kyaw Kyaw Hlaing, chair of the Smart Group of Companies, pointed out that oil and gas remains an important industry and should investments fall, the country’s revenue may be affected. “Its been quiet but we expect to see interest as tenders have been invited,” he added.

The Ministry of Electricity and Energy recently announced that it plans to invite tenders for 33 oil and gas blocks this year.

Industry watchers believe the electricity sector also has growth potential following the recent tariff hikes, which took effect on July 1. While investors have shown interest in electricity generation in the past, they had been reluctant to make commitments because electricity rates were lower than the production cost. Now, businesses are betting that interest may return.

In order to speed up economic development, the government has also committed to a higher spending budget in the coming 2019-20 fiscal year, including on electricity and transport.

U Aung Naing Oo said adequate physical infrastructure remains the immediate need in Myanmar. “Without the necessary infrastructure, we are going to struggle to grow and that is why private sector investors are needed as the government cannot afford to build this infrastructure on its own,” he said.

Source: Myanmar Times

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