The civilian government of Myanmar, led by Aung San Suu Kyi, had been proactive in encouraging businesses both foreign and domestic through laws and regulations aimed at attracting investment. Myanmar aimed to become a logistics hub connecting the east and the west through the development of deep-sea ports at all SEZ sites.
Recognising the need for a better transportation system to take advantage of improved trade connectivity, the government of Myanmar had started developing new transport infrastructure, including a new international airport. The existing airports and rail network were also being upgraded. Several new projects are in the pipeline which will create opportunities for foreign investors to participate in infrastructure development. Infrastructure development had been a top priority for the then ruling regime. Sectors that were previously closed to private participation had been opened to both local and foreign private investors.
However, the recent military coup has likely slowed its economic recovery. However, projections remain in positive territory.
Maybank Kim Eng expects gross domestic product (GDP) to grow by 3 per cent in FY2020/21, against an earlier forecast of 4.5 per cent, while growth in FY2021/22 could come in at 4 per cent, from an expected 6 per cent before. Meanwhile, Fitch Solutions cut its GDP growth forecast to an even lower 2 per cent for FY20/21, down from 5.6 per cent before, as well as for FY21/22, down from 6 per cent previously. “We do not think the economy will slip into a recession even if the US and EU impose tough sanctions,” economists Linda Liu and Chua Hak Bin said on Wednesday. The economic impact of EU and US sanctions could be limited by Myanmar’s growing reliance on regional trade, they added. Asia is the destination for more than two-thirds of exports, led by China and Thailand.
So far there has been no sign that China or ASEAN will respond to the coup with trade or investment restrictions or sanctions. Myanmar’s largest FDI investors are Singapore, China and Hong Kong. Myanmar, being one of the last accessible frontier markets in the world, must experience an accelerated pace of development, similar to economic transformations experienced by its Asian peers such as Thailand and Vietnam earlier.
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