More reforms needed to attract Korean investors

Ambassador Lee Hyuk, secretary general of Asean-Korea Centre, on the sidelines of Myanmar-Korea Investment Promotion Seminor on June 20th (Photo-Khine Kyaw, Myanmar Eleven)

MYANMAR needs to pick up the pace of economic reforms in order to attract more investment from South Korea, said a senior trade official who led a market research mission to Myanmar.

Ambassador Lee Hyuk, secretary general of the Asean-Korea Centre, said in an interview that Myanmar must urgently create a better investment climate to succeed in encouraging more South Korean businesses to invest in the country. “Korean investors feel that the time is not right for them to invest here,” he said, citing the fierce competition in the region.

“There are many challenges and on top of that, all the Asean member states are really competing fiercely to attract FDI,” he said, referring to foreign direct investment. “You have many competitors around.” He said that many Korean businesspeople who came to Myanmar to explore ways of investing in the country found that the investment environment was not as good as they had expected. 

Lee urged the Myanmar authorities to engage more with Korean businesses and to conduct a survey on how other Asean member states are trying to attract as much foreign investment as possible.

 “Government agencies need to be more enthusiastic about attracting FDI. They need to visit Korea and other countries to talk to authorities as well as companies, and come up with good conditions for the companies that are interested in doing business here,” he said.

He considers the lack of infrastructure, insufficient power supply, higher wages, and expensive land prices as major challenges that may deter Korean investors’ interest in Myanmar.

“If you are to operate a manufacturing factory, for example, electronic appliances or textiles, there should be zero chance of electricity blackouts. You should also see a consistency in government policies, particularly investment policies,” Lee said.

“Provided that the government recently enacted the new company law and investment law, the laws are in place. But enforcement of these laws is also important.

“The price of renting apartments is very, very high. It is much higher than even in Seoul, Hanoi or Ho Chi Minh - nearly double. If the living conditions stay like this, it will be very, very difficult for foreign businesspeople to live a comfortable life here. Even a small apartment costs much higher than [that] in many other countries.”

He called on the government to urgently address the high prices for land by building more houses and apartments.

“You need to be more competitive. At least you need to be competitive enough in some sectors, including garments, to attract Korean investments,” he said.

The key to unlocking Myanmar’s potential is the need for low wages, Lee said. He also stressed the need for more vocational schools and training courses to produce a skilled workforce.

He cited the example of Vietnam, which has continued to be the most attractive investment destination in Asean by undertaking “bold reforms”, such as a decision to reduce the extent of increases in the minimum wage over the past few years and by offering special incentives to big companies, including Samsung Electronics. 

Despite the challenges, Lee believes Korean investors’ interest in Myanmar is still there. He considers manufacturing, construction, electricity generation, services, retail, garments and education as the most promising sectors to attract Korean investment.

He expressed the hope that the trade mission to promote Korean investment in Myanmar will bear fruit. Top executives from 11 companies, including AmorePacific Group and Core Electronics Co, joined the trip. The Korean delegation visited the Thilawa special economic zone and called in on other companies on Tuesday. They also attended the Myanmar-Korea Investment Promotion Seminar yesterday.

“When we visited Thilawa yesterday, I sensed a great potential that Myanmar could be a great investment destination for Korean companies,” Lee said. “But it took us about two hours to get there, though it is less than 30 kilometres from Yangon. It is a problem.”