Download the full report and read more about China investments in Myanmar at this link.
The purpose of this scoping study conducted by the Global Environmental Institute (GEI) is to provide a better understanding of the presence and operations of Chinese companies involved in overseas foreign direct investment activities (ODFI) in Myanmar, along with direct and indirect environmental and social impacts associated with investments in target jurisdictions.
This report summarizes the findings of stage one of the scoping study, which focussed on identifying Chinese companies with investment interests in Myanmar and documenting information relating to these investments in mining, hydropower, agriculture, infrastructure and tourism sectors.
The Myanmar government liberalized its trade policy to induce foreign investments in 1988. Since then, China-Myanmar bilateral trade has been growing steadily until the beginning of the 21st century.
In 2001, Chinese government launched the “Go Global” policy, which encourages outward investment of domestic enterprises. Then from 2005-2010, the Chinese Foreign Direct Investment (FDI) in Myanmar increased dramatically. It is illustrated by the amount of FDI change as shown in Table 1 and Table 2. The drastic growth, however, makes Myanmar an outstanding case compared to any other members of the Association of South East Asian Nations (ASEAN). The reason behind the unusual surge of investment is multi-folds. One primary issue is that, China has rapidly become the world’s largest consumer of imported resources. Myanmar, rich in its natural resources, thus suddenly becomes more attractive to China. The lack of competitors due to international sanctions over Myanmar also provides China an ease of access. Besides the above, Myanmar’s strategic location for China is also noted as an important reason. By 2011, China had become Myanmar’s biggest trading partner, while it only held the third place after Thailand and Singapore three years before then.
The enthusiasm from Chinese investors, however, chilled not after long and the investments plummeted. In March 2011, the reformist government took office in Myanmar. Political tensions between the two countries grew as the elite in Myanmar concerns that Myanmar had become too dependent on China. Human rights groups also expressed concerns over Chinese investment projects. Following that, two major investment projects from China encountered serious difficulties – the Myitsone Dam and the Letpadaung Copper Mine. Investments from Chinese companies dropped drastically to $217.8 million in the fiscal year in 2011, while the number was $875.6 million in the previous year. Although the investment amount has grown back steadily and China is still the largest investor of Myanmar, some Chinese companies might still wait and observe the new political development until the election in the end of 2015.