FDI: Myanmar will soon beat us
A 16-man delegation from the Republic of the Union of Myanmar was here in Cebu last week. They were here at the instance of the Extractive Industries Transparency Initiative (EITI). EITI is a “global standard to promote open and accountable management of natural resources.” It seeks to “strengthen government and company systems, inform through public debate, and enhance trust”. In principle, “in each implementing country it is supported by a coalition of governments, companies and civil society working together.”
So far, there are 48 implementing countries, 16 of which are still noncompliant with the EITI requirements. The Philippines and Myanmar are two of the noncompliant countries. Fortunately, though we are still noncompliant, we are way ahead compared to Myanmar as far as our initiatives towards compliance of the EITI requirements is concerned. That’s the primary reason they were here. To learn how we started.
We (me, Provincial Treasurer Manny Guial and PENRO Chief Atty. Chad Estella) had the opportunity to share our experiences in this initiative and how far we’ve been. Yes, we realized that we are way ahead as far as compliance with the EITI requirements is concerned. However, as far as investment in general, there seemed to be something really disturbing. Curiously, I did ask as to how they intend to develop their mining sector. The answer was so straightforward. Lacking in capital and technology, they allow 100% foreign ownership. A 100% foreign company may operate through a sharing agreement with the Myanmar government, or, in us, through Mineral Production Sharing Agreement (MPSA). The only difference is, we only allow until 40% foreign ownership. As we went further, we realized that they are not only limiting themselves in the mining sector as far as attracting foreign investment is concerned but in almost all significant fronts. This openness, it seems, is there way of making themselves relevant in the ASEAN.
Indeed, transforming the ASEAN into one ASEAN Economic Community (AEC) by the end of year 2015 is imminent. It simply means freer trade of both goods and services among the ASEAN countries. Consequently, we shall be among an economic market of about 600 million people or about 8 percent of the global population. This will be an aggrupation of countries whose size can possibly leverage against first world countries and some dominant countries or other unions of countries like China and the European Union, respectively. However, though the very essence of the integration is cooperation, which necessitates that member countries complement each other, competition within is still inevitable. In preparing for it, countries like Singapore will have approaches totally different from ours. Undoubtedly though, each country’s ability to generate foreign direct investments (FDIs) will be brought to fore.
As far as FDI is concerned, in us, it would seem an uphill climb. For one, in the ASEAN right now, Singapore is cornering the biggest chunk. Secondly, our government’s unbending stance as far as amending some economic provisions of the constitution as well as the removal of some restrictions in the Foreign Investments Negative List (FINL) have made us the least preferred destination of FDIs. Consequently, we are among the laggards in the ASEAN in this respect. Historical data will help us sort this out. As reported by the World Bank through the East Asia Pacific Economic Update earlier this year, the ASEAN region, has been the largest recipient of FDIs, in Asia Pacific. However, since 1952 until 2012, “Singapore accounts for more than half of total FDIs to the whole region at 52%. Thailand ranks 2nd with 13%, followed closely by Indonesia at 3rd with 11%, at 4th is Malaysia with 10%, Viet Nam (the once war-torn country) ranks 5th with 8%, and the Philippines is 6th with a miserable 3%”.
Though, in absolute amount, we increased our FDIs this year when compared against last year, still, among foreign investors in the ASEAN, we are least likely chosen. We continued to be among the least preferred countries in the ASEAN in terms of FDIs. The fact is, weighed against that of other key countries in the ASEAN, ours will still pale in comparison. Take 2013 for instance. We were billions of dollars away from our Southeast Asian neighbors. With just US$3.859 billion in net FDI inflow, we were among the laggards at a consistently disappointing 6th place. Singapore, Indonesia, Thailand, Malaysia and Viet Nam grabbed US$60.645 billion, US$18.444 billion, US$13.000 billion, US$12.297 billion, and US$8.900 billion, respectively. Lest we forget, Myanmar is just a breath away at 7th place with US$2.620 billion.
As we see it now, at 6th place, it means that though we may not be among the first five, at least, we are the sixth man. However, if we remain adamant as far as amending the economic provision of our constitution is concerned, Myanmar will surely overtake us at 6th place. Relegated to 7th place, we will perennially be among the second stringers or benchwarmers.
- Latest
