Tuesday, 29 April 2014

Power, construction sectors expect boon

Myanmar's efforts to remove barriers to foreign direct investment (FDI), starting at its three special economic zones (SEZs), is expected to widen opportunities for the power and construction sectors.

Speaking at a Kasikornbank seminar in Thailand yesterday titled "Opportunities and Challenges towards the Emerging Economy", Charles Schneider, the International Finance Corporation's resident representative in Myanmar, said the government in cooperation with the World Bank was removing many barriers to FDI, such streamlining customs documentation. The government is also drafting a new investment law, which will be important in attracting FDI in the long term.

He believes the first signs of such improvements will be seen in the manufacturing, oil and gas, and mining sectors, as once the manufacturing sector expands, power supply will have an essential role in accommodating foreign firms.

Myanmar is inviting tenders for independent power producers (IPPs). Schneider said the country was going in the right direction by inviting foreign companies to join in the infrastructure investment as this would help increase the nation's competitiveness.

Nopdej Karnsuta, chief financial officer at Amata B Grimm Power, said on the sidelines of the seminar that the company was interested in bidding for IPP projects in Myanmar, but needs local partners.

The company aims to set up two power plants with a combined capacity of 500 megawatts. For the first phase, the capacity is set at 250-300MW, requiring investment of around Bt12 billion to Bt14 billion. The financing source will be banks including KBank, he said.

Takashi Yanai, president and chief executive officer of Myanmar Japan Thilawa Development, said at the same seminar that the SEZs in Dawei, Thilawa and Kyaukpyu were clear signs of Myanmar welcoming foreign investors. The government is exempting income tax for the first five years and offering 50-per-cent income-tax relief on the profits of the business if foreign companies in the SEZ maintain it for reinvestment in a reserve fund.

Many foreign investors from Japan, Thailand, Europe and Hong Kong are interested in setting up plants in one of these SEZs because they do not require local partners, unlike doing business outside such zones, he said.

About 19 Japanese companies are ready to invest in Myanmar's SEZs, both for export enterprises and those serving local consumers, Yanai said.

Siriporn Nurugsa, executive director of the International Affairs Bureau of Thailand's Board of Investment, said the expected increase of FDI in Myanmar was a potential opportunity for Thai companies, especially construction firms and real-estate developers. However, her office recommends that initially, investors should begin with light industries such as food and consumer products.

"Japanese firms that are constructing five- and six-star hotels in Myanmar prefer quality foods, which is an opportunity for Thai food-company operators," she said.

Speaking on the sidelines of another KBank seminar, "Embracing Myanmar's Boundless Prosperity in the New Economic Era", Teeranun Srihong, president of the bank, noted that many Thai investors were interested in joint ventures with Myanmar companies, that could help reduce risk from high costs of land rental.

source: The Nation
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