South East Asia is one of the regions with the greatest figures of economic growth in the world. Within in this context, Myanmar’s GDP grew 7.4% in 2016 and around 6% in 2017, and the expectation is that in 2018 the country will recover a growth of around 8%. What do you think should be the foundation of Myanmar’s economic development?
The ongoing reforms will be the foundation of the country’s economic growth. We are addressing those areas in the private and public sector that were not working in the past in order to implement changes. Our ministers involved in the economic committee are open and transparent in all senses and they are determined to implement the required measures: we are like a plane running on a runway, and we are going to have to take off this year, as our ministers say. As part of the private sector, I am not following the process in detail, but I am confident and I believe in this government.
The current investment law was created in 2012. However, international investment has decreased in recent years. According to your own figures, in 2010-11 it reached 20 billion USD, while in 2016-17 foreign direct investment has been around 4 billion. How can you reverse this tendency?
We are aware that foreign investment was less than expected, especially in 2016, but with the new investment law there are certain changes that are good not only for private and domestic investors, but also for international business people. The two laws that used to regulate foreign and local investments in a different way have been merged, and therefore we are consolidating a more efficient legislation that gives equal treatment to all investors regardless of nationality. This law also provides incentives in terms of taxes for the development of different under-developed zones around Myanmar.
With this new law we want investors to feel comfortable doing business here. We aim to increase trust, which is key as the foreign investors risk their capital and technology. Myanmar is undergoing a transition and it is a country with a complicated past, but we encourage business people to come here.
The Union Minister of Industry, U Khin Maung Cho, is focused on supporting small and medium-sized enterprises. However, despite the fact that 99% of all business in Myanmar is classified as an SME, the impact of these companies on the economy is moderate. As an example, their contribution to the GDP in all of ASEAN ranges from 30% to 53%. How is it possible to combine the arrival of large-scale international enterprises with the development of local SMEs?
The current government is doing whatever is possible to support SME’s, especially in terms of financing. SMEs in Myanmar urgently need financing: one of their main handicaps is the lack of access to credit because to get bank loans from private entities they need collateral, like property or land, and the government is working to remove all these barriers.
The competition between the big enterprises and SME’s is not a complex issue; as long as SME’s are working in an area where there is a need, they will manage to create successful businesses, and they also can provide support services and products to the big companies. Both sides must work together, connected with each other.
The geographical location of Myanmar is one of the advantages of the country in order to become a trading bridge between China, South Asia and South East Asia. However, many countries claim that they have potential as commercial hubs, but not all of them are able to take advantage of their geographical positions. What is the strategy to make Myanmar a trade hub in the region?
Our advantageous location allows as to access huge markets like India and China. What we need right now is to develop a proper infrastructure to connect all those points in the country that can serve as a starting point for transnational trade. Despite the efforts of the government in this regard, we are asking the private sector to engage in infrastructure, the building of the country. We need to add value to our strategic location.
International investors play an important role as well, and from MIDA we work to encourage them to come to Myanmar by providing them knowledge, expertise and information from inside the country.
According to your data, China, Thailand and Singapore lead foreign investment in Myanmar. In fact, the construction of the three Special Economic Zones in Myanmar is being implemented by a Myanmar-Japanese joint venture, a Singapore based consortium and an Italian-Thai Development Company. How can you promote investment from other regions?
The three Special Economic Zones have been established and promoted, so in the end is up to the different countries to see the opportunities. As an example, international companies from Singapore, Thailand, Italy and China are working here, and companies from other countries can do the same. Our role is to promote the opportunities and to provide assistance to those that decide to come. We organize different forums, send the information to the investors overseas and engage with them throughout the whole procedure.
In the process of promoting Myanmar as an investment destination, what are the fundamental sectors that you encourage investment the most from MIDA?
We have two sectors in mind: hospitality and infrastructure. When it comes to infrastructure, certain companies in MIDA have industrial zones, so they are looking for outside business people to come and join with them, and, in the tourism sector, the opportunities that Myanmar offers are unlimited. In addition, our Chairman is also leading the private banks in the country, so we also work with the business people in such a central sector as banking.
HBR readers are the business leaders and top decision makers around the world. If you had a meeting with one of them tomorrow, how would you convince him to come to Myanmar to do business?
We would sit down with him to answer all his concerns, especially to differentiate the real risks from the unjustified fears, we would assess whether his perceptions are well-founded or not. We have the insights of Myanmar’s market and a broad business and administration experience, so we can enhance clarity in his decision-making process and give him the necessary information.
From MIDA we offer a vision for investment and can bridge the gap between local companies and outside investors to help both of them to take advantage of these opportunities. In addition, the current government is working to create the right environment for them.
Our theme is that Myanmar is one of the best destinations for investors. They have resources both in natural and human terms. Our people are very eager and they can easily be trained, while production costs continue to be low.