Daw Aung San Suu Kyi’s Administration says it is pressing ahead with key reforms in energy, industrial and digital markets to spur a COVID-19 economic recovery, acknowledging the frustration of employers and businesses as a result of the lockdown orders in Yangon.
In an exclusive interview with the Myanmar Times, U Thaung Tun, minister in charge of the government’s COVID-19 economic response, defended its record, highlighting gains in foreign investment approvals despite the pandemic.
A raft of reforms in the government’s Myanmar Economic Recovery and Reform Plan are expected to be finalised soon, he said. However, he did not confirm reports that details would be released ahead of the November 8 general elections.
U Thaung Tun acknowledged the frustration of employers in Yangon Region over the government’s last-minute and confusing stay-at-home orders, saying they had to be issued quickly because of the rapid spread of the virus.
The authorities “sometimes do not have the luxury of time” in trying to contain the pandemic but are constantly reviewing the situation, he said.
Known cases of COVID-19 in Myanmar have surged form 887 recorded on September 1 to over 43,000 as of October 25 and the number of deaths have surpassed 1000.
The second wave has severely disrupted the economy, with the commercial capital Yangon and other areas put under lockdown.
Spike in FDI approvals
U Thaung Tun, who is Minister of Investment and Foreign Economic Relations, said the recovery plan would include setting up a land bank to identify state-owned land which could be used for private-sector development, energy projects including wind power, and improving business planning. There would be a focus on transparency to attract responsible overseas investment.
Myanmar approved about US$5.69 billion in foreign direct investment (FDI) proposals over the past 12 months, just under the official target $5.8 billion, he emphasised. This represented the highest annual FDI approvals since the government took office in 2016.
“We had a 37 percent increase in FDI approvals despite COVID-19,” said U Thaung Tun. The strong interest is because Myanmar is seen as a land “brimming with opportunities” and the “last frontier market” in Asia by international investors.
“Many investors looking for a destination prefer to come to Myanmar at this time. Also, it’s because we are seeking responsible investment. This combination has been very positive for us,” he said. “We are also strategically located between the fastest growing economies in the world – both India and China are growing fast and South and Southeast Asia are growing well.”
Urgent need for energy
With opposition parties attacking the government’s economic performance ahead of the elections, U Thaung Tun defended specific initiatives that have come under fire, including a rushed solar tender, special car import permits for officials and a tax amnesty.
The government was stuck “between a rock and a hard place” over the solar tender, he said.
The 1000 megawatt solar farm tender rushed through by the energy ministry in May- the first of its kind – was castigated by business groups and energy investors for what they saw a tough conditions and an unreasonably short timeline, particularly in light of the international flight ban. Twenty eight out of 29 bids were awarded to bidders involving Chinese firms, based on price alone.
The minister cited the urgency for Myanmar to scale up its power generation to meet demand. Solar plants require the least time to be assembled and go into operation, he said, and hence need to be done quickly to save next year’s dry season from crippling shortages.
“Some of the critics say that it [the tender] should be given more time. If you look at the situation, we are in difficult times, we are facing [COVID-19]. And even if we allow an extension of this tender we should still be in the middle of this second wave and wouldn’t be able to achieve our target of providing electricity come summer,” he said, noting that an additional 1000MW in necessary for Yangon by next March.
The government was “pleasantly surprised” at the 155 bids from the tender. He emphasised the winning average bid of US$0.0422 per unit and justified the energy ministry’s decision to award almost all bids to Chinese firms on the basis that Myanmar has got “an excellent deal”.
U Thaung Tun reaffirmed the government’s intention to proceed with a raft of hydropower proposals backed by western and Japanese investors of which no purchase agreements have been signed so far.
Hydropower projects “take a little longer” than other renewables and “careful study” is needed because of potential environmental impact, he said.
Defending unpopular policies
The minister justified a decision to extend a partial tax amnesty introduced a year ago, saying the measure would give support to real estate, retail and other sectors amid the economic crisis. The “reduced tax rates for undeclared income” scheme slashed 15-30 percent tax rates to as low as 3pc, and was extended this year at a higher rate.
Myanmar was “grey listed” by the Paris-based Financial Action Task Force this year for its money laundering and terror financing risks, a decision followed by a similar labelling by the European Commission.
U Thaung Tun said the amnesty would be followed by crackdowns and insisted that “tax evaders will not get away.”
He said the amnesty only applies to undeclared income from legitimate sources, excluding the sales of drugs, weapons or human trafficking, and needs to be invested into capital assets. The policy seeks to draw money hidden in the vast informal economy into the formal market, explained the minister. “That is what we want to do.”
Finally, U Thaung Tun said a controversial scheme to award special car import permits to government employees and members of the security forces was designed for public servants who are about to retire. He estimated the number of permits at “way below” 10,000 but added that the commerce ministry handling the scheme had a better understanding than he did.
Credit: Myanmar Times
