Myanmar’s elected government under de facto leader Aung San Suu Kyi is fast approaching its first anniversary in office on April 1, providing an opportunity to assess its overall economic performance. On the foreign direct investment front, the results have so far been mixed.
New FDI approvals recorded by the Myanmar Investment Commission reached US$3.5 billion for the period spanning April-December 2016, down 28% from the corresponding period a year earlier, which was under the previous quasi-civilian government led by Thein Sein. The commission says overall approvals for the full financial year could reach US$7 billion, which would still be down from the US$9.5 billion received the previous year.
For several reasons, a slowdown in FDI approvals was anticipated. Firstly, the economy slowed to 6.5% growth in 2016 compared with 7.3% in 2015, the World Bank estimates. Earnings from Myanmar’s main export, natural gas, were hit hard by a global decline in oil prices. Prices on rice and pulses were also weak last year. Nor have the country’s few export-oriented manufacturers benefitted much from a decline of about 13% by the kyat against the US dollar over the past four months.