Economy to improve as Myanmar opens up to foreign investment

Myanmar’s economy is forecast to expand to 6.4 percent in the current fiscal year and pick up to 6.8 percent in the next, according to a report on the economy in Southeast Asia released by the Institute of Chartered Accountants in England and Wales (ICAEW) on Tuesday.

The report said that the forecast for Myanmar’s economy is positive as the country’s markets opes up to foreign investment, with the infrastructure, manufacturing and wholesale and retail services sectors expected to be the greatest beneficiaries. After a 14 percent drop in foreign direct investment to US$5.7 billion in 2018, currently foreign direct investment inflows are improving.

According to the Myanmar Investment Commission, foreign direct investment inflows rose sharply with the bulk of investments channelled into transportation, communication, and manufacturing.

Domestically, infrastructure investment are expected to increase over the next 18 months as a result of big infrastructure projects including those under the China-Myanmar Economic Corridor (CMEC) such as New Yangon City, Kyaukphyu Deep Sea Port and Kyaukphyu-Kunming Railway projects.

“While higher infrastructure investment, and increased manufacturing and wholesale and retail services sectors are set to bring major benefits to the economy, we remain cautious of the infrastructure and regulatory drawbacks that will hinder Myanmar’s ability to fully reap the benefits of its low-wage advantage,” said Mark Billington, ICAEW regional director for Greater China and Southeast Asia.

The ongoing humanitarian crisis in the Rakhine State is included a key risk to the economy, with tourism and trade with the European Union potentially experiencing slowdowns.

In addition, while Myanmar is set to benefit from strengthening foreign direct investment inflows, this will greatly depend upon the country’s ability to improve its business environment and the complexity of its current tax system, enforcement of contracts and trading across borders. Looking further ahead, structural reforms are needed to aid firms’ ability to do business in Myanmar, the report said.

Source: Myanmar Times

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