The greater Mekong Investment Forum was held at the Centara Grand Hotel, Bangkok, Thailand on the 26th of May. Over 600 delegates from Cambodia, China, Laos, Myanmar, Thailand and Vietnam as well as International Businesspersons attended the event which was entitled, “Sustainable Economic Development in the Mekong Sub-region. HE Veerathai Santiprabhob, Governor, Bank of Thailand delivered the opening speech.
The discussions at the forum examined the impact of the slowing Chinese economy, falling exchange rates and declining oil & gas prices on the resource rich Greater Mekong sub-region. Furthermore, the effects of the recent government changes in Laos, Myanmar and Vietnam on the investment climate were given focus in the panel discussions. Challenges and opportunities which will be encountered were highlighted in the following 7 topics:
- I. One Belt One Road and the GMS
- II. Banking Sector Development in the GMS
- III. Recent Developments in Myanmar
- IV. Recent Developments in Vietnam
- V. Achieving a Digital Economy in the GMS
- VI. Unlocking Investment to meet energy needs
- VII. Succeeding Business in Vietnam
The briefing on recent developments in Myanmar was held in the afternoon and moderated by Ms Gwen Robinson, Chief Editor of the Nikkei Asian Review. The speakers were- Peter Brimble, Principal Country Specialist, Myanmar Resident Mission of the ADB; Adam Chandler, Senior Partner, Chandler and Thong-ek Law offices Limited; Dennis Meseroll, Co-founder and Executive Director, Tractus Asia; Andrew Richards, Co-founder and MD, Sandanila. A brief summary of the briefing is as follows. The direction the new administration has adopted towards foreign investments is deemed to be more proactive and conducive towards responsible investors. A spate of legislation has been passed and/or was undergoing extensive revision and reform. The key laws and regulations which has been positively passed or revised were: the changes in arbitration laws; the merging of the two Investment laws; the New companies Law and the Central Bank becoming more autonomous. However, the financial sector still has quite a few challenges to overcome as some issues have yet to be addressed. For instance, there has been little activity in the securities and mortgages sections. Access to credit (without collateral), SME loans and Equity financing are proving difficult to find [and offer]. On the other hand, many foreign financial institutions are trying to rush in to secure first comer advantages. They are facing challenges such as severe shortages in Human resources, infrastructure and the lack of regulations [a minimum set of standards]. At the same time, the existing US sanctions on financial transactions with companies run or owned by certain individuals on the SDN list do present perceived and actual risks. The consensus was that the Myanmar people deserved better and an understanding is needed that there can be no quick fix to the capacity needs.
Peter Brimble from the ADB elaborated that there has been PPP in partnership with the Myanmar government, especially in policy reforms, infrastructure development and agricultural sector loans [concessional loans]. Training and education efforts have also been carried out for capacity building. The private sector development has been aligned towards connectivity corridors within the GMS and ASEAN regions. There has been about USD 1 billion invested in the abovementioned sectors, especially in telecommunications, logistics and connectivity. For example, YOMA Bank is managing the development Infrastructure and Transport systems [for agri and fishery products].
There were also discussions on the need for the private sector to become more involved and take up a larger role. To this end, the working capital needs of the SME’s have to be supported by soft loans as well as financial services reforms. Moreover, the talent gap has to be bridged, by both short term and long term solutions. Some suggestions were centered on mentoring and coaching, undertaken by expats/re-pats working as both consultants and middle to top management.
The pitfalls to watch out for were discussed in the end of the session and Mr. Chandler pointed out the limited capacity of the Civil Service [servants] drawing up comparisons with Thailand. He elaborated that during his 30 years working in the ASEAN region, he has been through 9 coups in Thailand but the country as a whole has progressed owing to the stalwarts of the Civil Service, carrying on with due responsibility despite the power changes at the top. Mr. Brimble stressed that there would be up to USD 120 Billion need within the next 20 years to address the infrastructure needs and how to raise funds, with foreign aid and loans was a top priority. Mr. Meseroll commented that open communications were essential in creating and maintaining an atmosphere of trust in the investment sectors. Finally, Mr. Richards reiterated the necessity of financial reforms for the SME’s to thrive, especially providing solutions to their working capital needs.