28 Mar 2012 09:13
March 28 (Reuters) - Isolated for decades and squeezed by Western sanctions, Myanmar is courting investors to try to revive its economy under a new government pursuing big reforms after 49 years of military rule.
The resource-rich but underdeveloped country has struggled to spur growth or attract investment under the sanctions.
The West appears keen to ease the embargoes, which could eventually allow multinational firms access to Myanmar's vast oil and gas reserves, gemstone and mineral resources and its nascent banking and tourist sectors.
Here are details about Myanmar's economy and investment.
ECONOMY
Economic data under Myanmar's secretive former military government was notoriously unreliable. It claimed growth of 10-13 percent annually from 2004-2009, but economists dispute that. The International Monetary Fund has forecast 5.5 percent for this year and gives the same figure for 2011.
The government has forecast 6.7 percent for the 2012/13 fiscal year starting in April.
Few financial institutions provide estimates of the size of Myanmar's economy. The U.S. Department of State reckons the economy was worth $40.28 billion in 2011.
TRADE AND INVESTMENT
Myanmar's biggest trade partners are its immediate neighbours and other Asian countries. It does not publish Foreign Direct Investment (FDI) data on an annual basis.
It gives accumulated data, which shows China is the biggest source of investment, followed by Thailand, Hong Kong and South Korea. Some 47 percent of foreign investment went into power generation and 34 percent into oil and gas.
EXPORTS
Gas is Myanmar's biggest and most lucrative export, most of it going to Thailand. When construction of a huge pipeline from the Bay of Bengal to China's Yunnan province is complete, gas and oil exports are expected to surge.
Myanmar's Energy Ministry in January pegged natural gas reserves at 22.5 trillion cubic feet, almost double the 11.8 trillion estimated by oil major BP in its statistical review last year.
Teak and hardwood are also prominent, with China the main customer, as are garments, although the sector has been hit hard by regional competition. Beans, pulses, fish and seafood are also big exports.
Rice is seen as an area with huge potential if the government pushes ahead with reforms. Under British colonial rule, it was the world's biggest rice exporter, shipping 3.4 million tonnes in 1934. Industry officials say 722,000 tonnes was exported in 2011.
BANKING
A major shake-up of the banking system will inevitably follow the lifting of sanctions and currency reforms, but central bank officials and private bankers say it will take time, with a lack of experienced professionals a major obstacle.
The central bank issued money exchange licences to 17 local private banks in November 2011 and granted licences to 11 banks to carry out foreign banking services. Four banks have opened branches overseas, mainly for remittances by Burmese labourers. Several Chinese banks now facilitate cash transfers in yuan.
The central bank has also allowed 20 banks from 10 countries, mostly from Southeast Asia, to set up representative offices. Several Western banks have expressed interest.
PRIVATISATION BOOM
Private sector reforms accelerated from 2009 with the sell-off of about 300 state assets, from real estate, petrol stations and toll roads to ports, shipping firms and an airline. These highly opaque sales appear to have helped businessmen close to the military elite.
CURRENCY REFORM
Myanmar's kyat currency is pegged at 6.4 to the dollar but the black market rate is closer to 800. It has appreciated sharply against the dollar in recent years because of an influx of money into the energy and gemstones sectors, adding to the problems of local businesses.
INVESTMENT DRIVE
Myanmar is trying to attract investment in its oil and gas sector and in hydropower. In January, it awarded 10 onshore oil and gas blocks to eight mostly Asian firms in its biggest energy tender in years and will soon offer six more onshore blocks.
It is also pushing its tourism sector, where there is a chronic shortage of hotel rooms. Data shows tourist arrivals for fiscal 2010/11 at 424,041, but it only has 570 hotels and 160 guesthouses in the country, with a room capacity of 24,692. It is targeting more than 1 million visitors in the next few years.
Myanmar is setting up Special Economic Zones (SEZs) in Thilawa, south of Yangon, and Kyaukphyu, on the Bay of Bengal.
A Thai contractor plans a $50 billion SEZ at Dawei, strategically located on the Indian Ocean, with access to Thailand and beyond. It could become Southeast Asia's biggest industrial zone although doubts have grown about funding and the authorities have vetoed a big coal-fired power plant.
A new foreign investment law is awaiting parliamentary approval. This offers tax breaks and continues to let foreigners set up business without the need for a local partner. Companies must train local employees to ensure they make up at least 25 percent of the skilled workforce after five years of operation.
RISKY BUSINESS?
Myanmar is seen as one of the riskiest places to invest in. Corruption and cronyism are rife, regulation is a grey area and the workforce, public and private sector, lacks skills.
Some economists have warned any imminent lifting of sanctions could be counter-productive as the country may not be ready to handle a sudden influx of foreign capital. (Compiled by Martin Petty; Editing by Alan Raybould and Ed Lane)
Link : http://www.trust.org/trustlaw/news/detail.dot?id=02118253-d82c-4d9f-bc07-974494ae23d5
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