IFC pledges to increase funding to $1 bn in three years

Vivek Pathak, the IFC’s director for Asia Pacific, told Myanmar Eleven during a press conference on Friday that the institution is focusing on three main areas – private sector development, financial reforms, and infrastructure projects, particularly in the power sector.
“The IFC’s support to Myanmar mainly aims at creating a lot of job opportunities for the benefit of the people. Building business-enabling infrastructure and expanding access to finance are critical to reviving Myanmar’s private sector, which will generate much-needed jobs and economic opportunities,” said Pathak.
He added that the IFC plans to invest around $400 million in fiscal 2015, ending June 30. Most of the IFC’s projects aim to improve infrastructure and the financial sector, which will lead to sustainable growth.
Vikram Kumar, the IFC’s resident representative for Myanmar, expressed his optimism over the nation’s boom, as the government’s efforts to ease restrictions in doing business will help attract more domestic and foreign investment that Myanmar very much needs.
He said the nation’s growth would be driven by FDI inflows thanks to the reforms. He said many foreign firms were not in a hurry to invest because they were still keeping an eye on the 2015 presidential elections and calculating the risks.
Kumar also emphasised that as the IFC has committed to increase its support to the country, it would not hesitate to go ahead as planned, regardless of the result of the elections. He expected the new administration that would take office after the elections would continue the current government’s reform process.
According to Kumar, infrastructure and regulatory conditions are the two main barriers for foreign investors eyeing the Myanmar market, and the IFC is working with the government to improve both.
The IFC’s 16 investment and advisory projects currently focus on improving the business climate and helping enterprises to save funds, insure their firms, and obtain loans to grow their businesses. The projects also support critical infrastructure development that will enable the growth of small and medium-sized enterprises, he said.
The IFC is likely to finance Yangon Electricity Supply Board to further support its corporatisation process for which the institution has provided advice. It is also advising the government on a competitive selection process for an independent power producer to build the 250-megawatt combined-cycle Myingyan power plant to encourage public-private partnerships and attract more power developers to Myanmar.
As part of its support to financial sector development, the IFC has been advising Myanmar Oriental Bank and Yoma Bank, and microfinance institutions to improve corporate governance, risk management and trade finance while also providing capital to boost scale and expand services to those without banking connections.
“We hope to help develop the local banks so that they can meet international standards and reach out to more customers. With our support, we hope they can provide loans to local small and medium enterprises,” said Pathak.
At the regulatory level, the focus during the current fiscal year will be to support Myanmar’s central bank in developing at least one credit bureau by June 2016. This will allow lenders to access borrowers’ credit history, better evaluate loan risks, and facilitate quicker funding and on a larger scale than at present when lack of adequate information makes banks reluctant to lend.
The IFC has also been supporting the preparation of a new investment law and regulations that aim to create a level-playing field for local and foreign investors. Myanmar Business Forum, a public-private dialogue platform to facilitate reforms that help companies grow and create jobs, is also one of the institution’s mechanisms. The IFC is also exploring ways to support Myanmar’s agriculture and tourism sectors.
In fiscal year 2014, the IFC committed $80 million to the subsidiaries of Shangri-La Asia Ltd to expand its hospitality business in Myanmar so as to address the shortage of hotel rooms even as international arrivals in the country have been increasing by 30 per cent annually since the economy opened. The project is expected to create about 1,000 direct jobs in addition to indirect ones.
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