Chinese, Japanese investors show interest in Rakhine
While Western investors have shied away due to human rights violations related to the northern Rakhine crisis, Chinese and Japanese investors showed visible interest in the state at the Rakhine Investment Fair on February 22.
State Counsellor Daw Aung San Suu Kyi, who attended the fair, said economic development could be the answer to much of Rakhine State’s woes, where communal conflict in recent years has turned away investors and damaged growth.
Rakhine Chief Minister U Nyi Pu said at the fair that economic development supported by local and foreign investors was “the best solution for sustainable peace and development in the state”.
More than 700,000 Muslims fled northern Rakhine to Bangladesh since late 2017 after a crackdown by the military, which followed attacks by the Arakan Rohingya Salvation Army. Almost all of those who fled are still living in border refugee camps.
In light of the alleged atrocities in the region, the UN-mandated Fact-finding Mission on Myanmar (UNFFM) recommended that companies ensure their operations are compliant with the UN Guiding Principles on Business and Human Rights (UNGPs) when conducting business in Rakhine.
Rakhine State is rich in natural resources and has potential as a transit route to China from the Indian Ocean. But foreign investments are scarce, mostly limited to Daewoo’s offshore Shwe Gas project, China’s development of oil and gas pipelines running to Yunnan province, and tourist developments on southern beaches like Ngapali.
Yet, Chinese and Japanese investors, who showed visible interest in Rakhine during the fair, continue to support Myanmar. According to reports, China and Japan were the most interested in investing in Rakhine, followed by Singapore and Korea.
Japan’s ambassador to Myanmar Ichiro Maruyama said at the fair that the country will grant official development assistance (ODA) for much needed infrastructure such as roads and electricity. Japan has provided assistance in the form of ODA for areas such as education, health and transportation.
According to the Kofi Annan-led Advisory Commission on Rakhine, which was set up by the government, sustainable economic growth would also depend on improved inter-communal relations, freedom of movement and closure of camps for displaced people, apart from improved infrastructure. There remain restrictions on movement of Muslim communities in Rakhine right now.
Japan External Trade Organisation deputy managing director Khun Tura toldThe Myanmar Times that Japanese investors were mostly interested in the re-export sector, especially of marine raw materials, to Japan and other countries, as well as the tourism sector.
“Currently, there is not much investment from Japan in Rakhine State but I think Japanese investors will be more interested than before as Rakhine opens its door,” Khun Thura said.
Meanwhile, the Kyaukphyu Special Economic Zone comprising an industrial park and seaport has the backing of Chinese firms with plans to link the zone to the Belt and Road Initiative championed by China’s President Xi Jinping.
U Aung Naing Oo, secretary of the Myanmar Investment Commission, noted that there were twice as many attendees in the fair compared to other fairs, with many from Japan, Korea and Thailand. He said the fair will give the international community a better view of the situation in Rakhine State. “I believe good results will come out in the future,” he added.
In Rakhine, investments in the past year have largely been in the oil and gas (O&G) as well as hotels and tourism sectors. Research on investments in the state showed that hotels and tourism; agriculture; livestock and fishery and; energy sectors drew the most interest from investors.
The Ministry of Electricity and Energy will also be calling tenders for onshore and offshore O&G projects in the coming months. Energy is also a main income source for Rakhine State.
JTB Polestar chair U Kyaw Min Htin said investors will continue to invest if there are opportunities. “The Rakhine tourism numbers are increasing and the sector has good potential. But the international community needs to know about this and we need systematic arrangements for that,” he said.
Oceanfront Investments CEO Pascal Gerken said besides developing a sustainable seaside resort in Ngapali, his company was also interested in agriculture projects. “We are interested to continue investing,” he said.
Despite the investment push, observers said that land grabs and segregation of communities present major obstacles for responsible investors and manufacturers to do business in northern Rakhine.
The fair saw 28 contracts inked worth a total US$4.9 billion with most investments in the hotel and tourism sector. “These businesses will invest within a year,” Rakhine’s Finance, Tax, Planning and Economic Minister U Kyaw Aye Thein said.