Soaring investment from South Korea has pushed it to fifth place in the list of countries pouring money into Burma, Chinese press has reported.
Its foreign direct investment has increased ten-fold, or some US$2.658 billion since 1988 when moderate easing of financial restrictions occurred, Xinhua said. In comparison, Thailand, who tops the official list, has invested US$9.6 billion in the past 22 years.
Such investment growth has made the last quarter of this financial year the best on record for foreign direct investment (FDI) in Burma, with a reported US$15.84 billion since June.
The bulk of the investment came in the extractive industries and power generation, notably in Burma’s gas sector, which is thought to be the country’s largest ‘official’ export industry, although leading Burmese economist, U Myint, estimates that unofficial exports are probably of equal value.
One possible thrust behind the startling rise in Korean investment is the ongoing construction of the Shwe gas pipeline, which will transport gas from Burma’s lucrative offshore reserves in the Bay of Bengal to southern China. Two South Korean firms, Daewoo Heavy Industries and Hyundai Heavy Industries, are very much involved in the pipeline.
Wong Aung, of the Shwe Gas Movement (SGM) campaign group, notes that Hyundai Heavy Industries is involved in producing the steel pipes and gas terminals; he hastens to add that the current South Korean President is a former CEO of Hyundai Heavy Industries.
Much of the Korean investment is in the non-sustainable extractive sector, as well as hydropower projects for sale to energy-hungry foreign markets. China also has a keen eye on exploiting Burma’s energy capabilities, and its Datang company recently inaugurated a new 240 megawatt hydro-plant. Meanwhile, Burmese continue to struggle with regular electricity shortages as much of the country’s power resources are sold off.
Whilst business may be buoyed by the growth, there is a superficial element to the figures, with the polarised nature of investment in the country a continuing concern.
Statistical information for Burma is available from the fiscal year 1938-39, when the country was a British colony and when agriculture accounted for around 47 percent of GDP. At this time, Burma exported roughly 3.3 million tons of rice per year.
Today agriculture accounts for around 43 percent of GDP and the country’s rice output is a fraction of its colonial hey day, with an average of 249,000 tons exported per year in the 1990’s – 7.5 percent of that which was exported in 1938, when global population and consumption was less than half of today’s.
Industrial contribution to Burma’s national GDP remains extremely low, at 19.9 percent; in contrast, figures for neighbouring Laos are currently at around 30 percent in a country that has seen the share of agriculture’s contribution to GDP shrink by around 20 percent in the past two decades, as other sectors grew in strength.
Questions therefore remain as to the benefits of FDI in Burma, a country where the military are key benefactors from such projects and where the trickle-down effect is reliant almost entirely on the altruism of businesses, many of which are state-owned.
Some Chinese projects however do seemingly hold the potential to help with internal infrastructure such as roads, as Chinese FDI has achieved in parts of Africa.
But whilst Burma’s natural bounty is sold off with little tangible advancement in the country’s development or living standards, there will persist a feeling that the people or indeed the nation are being severely short-changed from the endowment that the earth has left for them.