Foreign investment in Myanmar tumbles

Foreign investment in Myanmar tumbles
Foreign investment in Myanmar down last year as China's figure falls, sanctions continue
On Wednesday July 14, 2010, 6:06 am EDT

YANGON, Myanmar (AP) -- Foreign investment in Myanmar, one of the world's poorest and most authoritarian countries, dropped more than two thirds last fiscal year as Chinese investment tailed off and
economic sanctions on the military-ruled nation continued, according to government figures.

A statistical report from the country's Ministry of National Planning and Development that was seen Wednesday said foreign investment in the 12 months through March 2010 fell 68 percent to $315 million from $985 million the previous year.

The main reason for the drastic drop was because of China's unprecedented investment in Myanmar in 2008-2009. It spent $855.9 million in the mining sector, accounting for 87 percent of total foreign investment. China signed an agreement with resource-rich Myanmar for nickel-production in 2008.

Up-to-date information on Myanmar's economy is difficult to come by and the few official figures that become available are often regarded as unreliable. Though a substantial gas exporter, the revenues barely register in the government's accounts, suggesting the cash is diverted into projects favored by its ruling generals, according to Burma Economic Watch, a group based at Australia's Macquarie University that studies Myanmar's economy.

Myanmar, also known as Burma, saw seven new foreign investments during 12 months, four of which were in its oil and gas sector. These resource extraction investments -- three from Malaysia and one from the United Arab Emirates -- were worth $278.6 million and accounted for more than 88 percent of the total investment during the fiscal year.

Thailand spent $15.25 million in the hotel and tourism sector, China put $15 million into the mining sector and Hong Kong added $6 million to the manufacturing sector during 2009-2010, the government report said.

The United States and the European Union have imposed economic sanctions against Myanmar to pressure the military government to improve human rights and release detained pro-democracy leader Aung San Suu Kyi. Sanctions, including banning U.S. companies from investing in Myanmar and banning Myanmar exports to the United States, were first imposed in 1997.

Since Myanmar liberalized its investment code in 1988, it has attracted large investments in hydroelectric power, oil and gas and mining -- mainly from neighboring countries such as Thailand.

Meanwhile, Myanmar's exports rose 12 percent to $7.6 billion in year through March from $6.78 billion the previous year, according to the report. Imports dropped 8 percent to $4.18 billion from $4.54 billion.

The government report said that natural gas exports, which accounted for about 38 percent of all export revenue, increased 9 percent to $2.56 billion from $2.35 billion. Myanmar gas exports go to neighboring Thailand.

Myanmar is believed to have a large amount of unmeasured trade, mostly goods smuggled across its land borders, especially with eastern neighbor Thailand and northeastern neighbor China.