The fallout from the global recession has combined with tightening economic sanctions on Burma to cause an apparent nosedive in foreign investment over the past year, Burmese government statistics show.
A report by the Ministry of National Planning and Development, seen by AP, shows that overseas investment fell 68 percent, or US$670 million, in the 2009-10 fiscal year. This is despite Burma sealing seven new investment deals in that period, four of which were in its lucrative oil and gas sector, AP said.
The Burmese economy is in a phase of wholesale reinvention, with the government selling off swathes of previously state-owned industry to private businesses. It is also busily attracting more foreign investment, largely from neighbouring China, India and Thailand. The majority is focused on its energy sector and extractive industries.
But while overseas investment figures may have fallen, the ruling junta is still waiting for the activation of a number of projects that will eventually net them billions of dollars. The Shwe dual-pipeline project, which will carry oil and gas from Burma’s western shores to southern China, is likely to generate some US$30 billion over the three decades after it comes online in 2012.
Moreover, much of the revenue from these projects is believed to be stashed in foreign banks, mainly Singaporean, and will therefore not show up in government figures, which are commonly believed to be tweaked to avoid close scrutiny of its economic practices. Poor economic indicators also provide ammunition for the junta in its claims that sanctions are hurting Burmese people.
Burma remains one of the world’s least developed countries, despite the swift rise of many of its regional neighbours. Last year it ranked 138 out of 182 countries on the UN’s Human Development Index, while the UN Development Programme said last month that Burma would struggle to meet any of the Millennium Development Goals by 2015.
Given the crutch that burgeoning trade with China in particular has given, much of the Western community is now questioning the worth of sanctions, first implemented by the US in 1997. The boycott had intended to force the regime on a path toward democratic transition, but Burma is now heading towards elections this year that appear set to entrench military rule.
The economic powerhouses of the Asia-Pacific region – notably China, Thailand and Singapore – have refused to join the US and EU in implementing sanctions, while trade with Burma’s giant to the west, India, is gaining in momentum. Burma supplies some 80 percent of Thailand’s gas, while for strategic reasons China is keen to secure the deposits and ports of the Bay of Bengal for its energy needs.
An Economist Intelligence Unit report this month said that economic growth in Burma will accelerate next year, but if one were to discount the expansion of the gas and hydropower industries, the economy will remain weak and growth “sluggish”.