Foreign Direct Investment

FDI growth over time– Foreign Direct Investment in Myanmar is expected to be 400.00 USD Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Foreign Direct Investment in Myanmar to stand at 450.00 in 12 months time.

 

 

FDI by sector ––As per the Directorate of Investment & Company Administration, in 2017 Manufacturing and Real Estate were the two major investor attractions, contributing about 53% of the total FDI of the country. Whereas in 2018, Manufacturing and Transport & Communication contributed 69% of the total FDI. In 2019 though Power took the top spot with 46%. The Charts below give a break-up of the total FDI in each sector in 2018 and 2019.

 

Chart 1

 

Chart 2

 

FDI by country –As Myanmar continues to attract FDI, it is important analyze which countries are most invested in its economy. Charts 3 and 4, as seen below, indicate the main investing countries over a two-year period from 2017 to 2018. For regional peers like Thailand the top investor has been Japan, whereas for Myanmar the top investor has been Singapore followed by China. Other countries who contribute a fair chunk to the FDI are Hong Kong, Thailand, Japan. Republic of Korea, USA, UK and Taiwan.

 

Chart 3

 

Chart 4

 

Special Economic Zones – There are currently three SEZs in development: Kyauk Phyu in Rakhine State, Dawei in the Thanintharyi Region and the Thilawa in Yangon Region. In order to carry out their implementation, the Central Body, Central Working Body and Management Committee was formed under the SEZ Law.In the SEZs – free zones, promotion zones and other zones exist.

 

 

Kyauk Phyu Special Economic Zone

  • 120 square kilometre project to be developed by a consortium led by CITIC Group Corporation Ltd., a state-owned Chinese conglomerate taking a 70% stake, and the Myanmar Government owning 30%.
  • Deep-sea port, industrial and estate area zones. Located along the coast line of Bay of Bengal, close to both Bangladesh and India.
  • Strategically located near USD 2.5 billion Myanmar-China Oil and Gas Pipeline. Implementation scheduled in four phases, with approximately USD 7.2 billion in total cost.

Dawei Special Economic Zone

  •  196 square kilometre project developed initially by Myanmar and Thailand, with notable involvement from Italian Thai-Development company (ITD); Japanese government has expressed interest.
  • Planned to include deep-sea port, industrial zone, power plants and residential area, though will start with a smaller first phase.
  • Located at the southern tip of the country touching the Andaman Sea. 350 km from Bangkok.
  • The SEZ will include a two-lane road that directly connects the SEZ to Thailand. Ground construction work is expected to begin 2020.
  • The zone will become a hub for trade with China, Cambodia and Vietnam, by land and sea. In the first step, a small port will be built that can handle ships up to 13,000 tons.

Thilawa Special Economic Zone

  • The first Special Economic Zone (SEZ) in Myanmar fully operated since 2015. Near port area, includes industrial and estate area zones. Located 23 km southeast of Yangon city centre along the Yangon River.
  • 250 square kilometre project developed by a Myanmar-Japan consortium (comprised of Japanese entity Mitsubishi, Maurbeni, Sumitomo, Japan International Cooperation Agency (JICA) together owning 49% and the Myanmar government and private sector owning 51%)..

To read more about the Special Economic Zones refer to the following link:

https://www.dica.gov.mm/en/special-economic-zones

 

Taxation for SEZ-Special corporate income tax incentives under the SEZ law include a tax exemption for the first seven years for investors in a free zone; a tax exemption for the first five years for investors in a promotion zone; 50% relief for the second five years for investors in a free zone or promotion zone and 50% relief for the third five years if the profits are reinvested within one year; a tax exemption for the first eight years for a developer, 50% relief for the second five years and 50% relief for the third five years if the profits are reinvested within one year. There also is an import duty exemption for certain goods.

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