Myanmar’s newly open economy may have earned the country the status of
the next global investment darling, but one hurdle stands in the way of
Myanmar’s growth: its lack of stable energy. Electricity is only
available to 25 percent of the country’s population currently. If
foreign investors like Telenor and Ooredo, the companies that were
awarded the coveted telecom licenses, are to make headway in Myanmar,
that number will have to grow fast.
The country has a number of other challenges, such as the need for an
independent judiciary and property rights, corruption and the lack of
human capital, but a dependable supply of electricity is listed by
domestic and foreign businesses as the greatest stumbling block,
according to Invest Vine, a news portal that covers Southeast Asian business opportunities.
Myanmar is actually well-endowed in energy resources. It has 7.8
trillion cubic feet of proven natural gas reserves, worth about $75
billion at current UK benchmark prices, according to Bloomberg Businessweek,
accounting for 1.9 percent of known deposits in Asia. It also boasts of
four main rivers that could potentially provide 100 gigawatts in
hydropower, only 10 percent of which is being tapped.
Myanmar holds the 34th position in the global energy reserves ranking
and is one of the five major energy exporters in Southeast Asia, but
most households in the country still rely on timber as a primary source
of energy, according to Invest Vine.
“Myanmar’s energy sector has suffered from decades of
underinvestment,” Stephen Groff, vice president of the Asian Development
Bank for South Asia, said. In addition, the government has committed to
economic and political reforms.
The country is now identifying ways to exploit its natural resources,
in order to supply for the projected rise in energy demand, as foreign
companies pour into its market. The two largest dams in Southeast Asia
are located in Myanmar, but both projects have been put on standby, due
to the controversy over the displacement of indigenous people.
The government is also creating free trade zones, Invest Vine says, so that it can assure investment protection and favorable tax regimes.
While the energy sector is beginning to attract considerable foreign
investment, Myanmar still lacks an effective legal framework that could
bring investment and technology to the country.
“Unless Myanmar’s own policy frameworks are robust and reliable, the
country needs deep macro-economic policies and institutions, as well as
an effective taxation regime, if Myanmar wants to attract foreign
investors,” U Myint, chief economic advisor to President Thein Sein,
said.
The new national energy policy is a step in the right direction. The
policy has identified four main goals to go along with Myanmar’s
economic and political development: energy independence, wider use of
new and renewable sources, energy efficiency and conservation, as well
as the promotion of alternative fuels, Invest Vine reports.
The contribution of energy and mining to Myanmar’s GDP is projected
to expand to $21.7 billion by 2030, from $8 billion in 2010, according
to Bloomberg Businessweek. At the time, Myanmar’s total GDP was just over $54 billion.
source: International Business Times
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