By Myanmar Eleven
The total of foreign direct investment (FDI), overseas direct assistance (ODA) and official remittances in 2012 was US$2.7 billion or about 4.5 per cent of gross domestic product (GDP). Following the lifting of sanctions and political and economic reforms, flows from these sources are expected to rise significantly. In the 2014-15 fiscal year alone, the FDI amounted to $8.01 billion.
In the report “OECD: Multi-dimensional Review of Myanmar” released last year, it was estimated that to sustain economic growth of 6.5 per cent per annum from 2013 until 2035, Myanmar needs to ensure that the investment to GDP ratio reaches 27.3 per cent on annual average.
If the average growth rate is to be 8.5 per cent, the average investment share must be 30.4 per cent. Cumulative investment share in 2035 would then reach 43 per cent of GDP.
In April, three international organisations - the European Union, World Bank and Nippon Foundation – announced their schemes designed for Myanmar.
The Japanese-based Nippon Foundation announced five new restoration projects for parts of Myanmar that have suffered from armed conflicts. This increased the number of projects it has initiated in Myanmar to 38. The foundation’s cash and in-kind assistance to the country has been worth US$53 million.
"Our operations had widespread popular support from the Myanmar people who are now going through a democratizing process," said foundation Executive Director Shuichi Ohno at a press conference last week.
The Tokyo-based private, non-profit organisation previously undertook leprosy eradication with the World Health Organisation and the Health Ministry. Since launching operations in Myanmar in 1976, the foundation has undertaken several projects including:
- Nine projects in the health sector since the beginning of 2012, with support of cash and technical assistance worth over $14 million
- More than $4 million in assistance for projects for Myanmar's disabled persons
- Sixteen projects in the human resource sector worth about $20 million as well as distributions of food, medicines, nets and solar lamps worth about $11.6 million made in conflict areas
- The foundation has most recently built more than 100 elementary schools in Myanmar.
Also last week, the European Union announced the assistance worth 660,000 euros, to help Yangon – the biggest commercial city – deal with the worsening traffic condition. Two townships including Tamwe are selected as pilot areas. The project will include planning for efficient traffic control, improving research and data collection, sharing of technology and solutions as well as educating the public.
Also assisting the Yangon City Development Committee on this project is CESVI, an independent Italian group that assists countries with international aid projects.
Earlier in April, the World Bank’s board of directors endorsed the Country Partnership Framework which involve up to $1.6 billion of credits, loans and grants as well as technical assistance and knowledge from the International Development Association (IDA). IDA, the World Bank arm dealing with poorest countries, will provide the assistance between 2015-2017.
Myanmar also will receive up to $1 billion in investments and $20 million in technical assistance from the International Finance Corp (IFC). Private lenders and investors in Myanmar will also benefit from political risk insurance offered by the Bank's Multilateral Investment Guarantee Agency (MIGA).
It is estimated that about 3 million pregnant women and children would benefit from improved health services, and six million people will have better access to electricity and other basic services under the scheme.
"The new Country Partnership Framework for Myanmar is based on priorities developed in close consultation and engagement with stakeholders in Myanmar," said Ulrich Zachau, World Bank Country Director for Myanmar. "The Framework focuses on reducing rural poverty, providing basic services, and stimulating the private sector in an inclusive manner, so that especially the poor and vulnerable share in the benefits of reform. We look forward to working in partnership with the government, investors and civil society groups for the prosperity of the people of Myanmar."
"Myanmar's priority is to advance development and cut poverty in our country," said Myanmar Finance Minister Win Shein. "Financing and innovative ideas from the World Bank Group can help create jobs, end poverty by 2030 and build Myanmar through growth that reaches everyone in Myanmar, especially the poorest people."
The CPF is the World Bank Group's first full strategic framework for Myanmar since 1984. Drawn up on extensive consultations with a wide range of stakeholders and lessons learned since the institution began re-engagement in Myanmar in 2012, the framework seeks to help Myanmar's development plans in three main areas.
To reduce poverty, in the next three years, 3.5 million people will gain new or better access to electricity, with an additional 2.5 million people benefiting from improved rural infrastructure and access to public services.
To strengthen education and public health, the government's goal to achieve universal healthcare access by 2030 will be assisted. In addition, 30,000 students will receive stipends to stay in school.
To stimulate job creation, World Bank's support aims to increase the number of people, micro-enterprises, and small and medium enterprises using financial services by 200,000, and to facilitate financing of up to $40 million by 2017. It also aims to help the government mobilise $150 million in private investment by creating a business environment conducive to private sector investment.
Further increases in ODA are expected, as donors have started to re-engage with Myanmar. Total ODA commitments have increased from $246 million in 2007 to $273 million in 2012.