Myanmar’s military junta expects investments from Asian countries to continue despite growing condemnation over its coup last month and the violent suppression of ensuing pro-democracy protests.
While the U.S. and its partners are taking actions such as sanctions against the military, and some regional companies have scaled back operations, Asian neighbors largely have refrained from turning away from the country and the current leadership sees long-term regional partners staying engaged.
“Given the situation, we expect traditional investors will continue to do business here,” Aung Naing Oo, Union Minister for Investment and Foreign Economic Relations, said in a telephone interview. “Their respective governments do not tell their companies not to invest or do business in Myanmar, so we expect investors from these countries will continue to come here.”
After investment interest from the West declined following allegations of genocide against minority Rohingya Muslims starting in earnest from 2017, Myanmar pivoted to countries in Asia like Singapore and China in search of foreign investment.
Aung Naing Oo, who was permanent secretary at the ministry during the civilian government that ruled from early 2016, said the government expects to see a “slight impact” on foreign investment, but had already factored that in before the military takeover.
“Actually, we have anticipated it and experienced such pressure in the past,” he said. “International pressure was there on Myanmar during the previous governments, even in the NLD-led administration,” referring to the National League for Democracy led by Aung San Suu Kyi.
The comments come as the military confronts a strike by civil servants and the general public that’s stunting public services and economic growth. The crisis has prompted some foreign companies to dial back operations in Myanmar, while the military extended “full martial law” in Yangon after more than 30 factories built with Chinese investment reportedly were vandalized.
“Assurance of security and protection for investment projects is our priority,” Aung Naing Oo said. “That’s why security forces have been deployed in those affected industrial zones to ensure better security. We will keep protecting them from destruction.”
Responding to a question about the attacks, Chinese Foreign Ministry spokesperson Zhao Lijian said March 15 that economic and trade cooperation with Myanmar “is based on the principle of mutual benefit” and “delivers benefits to the local people.”
Some in state media took a different tone, with state broadcaster CGTN warning in an opinion piece that if Myanmar authorities “cannot deliver and the chaos continues to spread, China might be forced into taking more drastic action to protect its interests.”
According to the Assistance Association for Political Prisoners, some 250 protesters have been killed by security forces since the coup and more than 2,600 have been arrested, charged or sentenced to prison.
Human rights concerns about Myanmar already have taken a toll on Western investment. From the 2016-17 fiscal year through January 2021, investment from the U.S. and Europe amounted to $2 billion, or less than 8% of total FDI inflows into the country. The largest chunk of investment during that period — 45% — came from Singapore, followed by China at 14%.
In early March, foreign ministers of the 10-member Association of Southeast Asian Nations, which includes Myanmar, issued a statement calling on “all parties to refrain from instigating further violence,” but did not mention detained civilian leader Aung San Suu Kyi or use the word “coup.”
Singapore Prime Minister Lee Hsien Loong has said sanctions would only hurt Myanmar’s population.
“You can ostracize them, condemn them, and pass resolutions or not, but it really has very little influence,” Lee told the BBC on March 2, according to comments distributed by his office. “We have to express disapproval for what is done, which is against the values of many other countries, and in fact a large part of humanity. But to say that I will take action against them, where does this lead?”
Enterprise Singapore, a business support arm of the trade ministry, said last month the city-state’s companies continue to make investment decisions in Myanmar “guided by commercial interests” and accompanying risks. It wasn’t immediately able to respond to requests for comment for this story.
South Korea became the first Asian country to take meaningful action against Myanmar earlier this month, suspending new defense exchanges and cooperation, cutting the export of military supplies and putting development assistance under review.
Even before the coup, the International Monetary Fund expected Myanmar’s economy to expand just 0.5% this fiscal year as virus cases drag on growth. Still, Aung Naing Oo said the government hasn’t changed its projection of $5.8 billion in FDI, even if it might now be more “challenging” to reach the target.
The regime approved just $700 million in foreign investment in the first quarter, but there’s another $3 billion in the pipeline that may soon be realized, largely in the power and manufacturing sectors, Aung Naing Oo said.
“We understand some companies started preparing to invest in Myanmar already a year or two ago, so we expect there’s no way back for them due to the Feb. 1 takeover,” he said.
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