Myanmar attracted $4.3 billion of foreign direct investment or FDI in 2017. Not only was that a 45% increase compared to the previous year, it also topped the list of the world's 47 "least-developed countries", according to a report by the United Nations Conference on Trade and Development.
UNCTAD defines LDCs as those with a per capita income of around $1,200 or less and that also score poorly on criteria such as infant mortality and literacy. While most of these countries are in Africa, the Asian list includes Afghanistan, Bangladesh, Bhutan, Cambodia, Laos and Nepal as well as Myanmar.
The full report raises some interesting points. First is that the crisis over the Rohingya refugees and the international condemnation that Myanmar has faced have had no discernible effect on the willingness of international corporations to invest there. I suspect this is partly due to the fact that FDI projects are usually planned long in advance and cannot be put on hold easily once they have been started. So any impact from a plummeting political reputation may still be to come.
It is also worth noting that for many years now a third or more of all FDI into Myanmar has come from China (and Hong Kong) and Chinese businesses are likely to care less about reputational issues. But interest from Japanese companies has risen sharply too and most of the big western consumer goods groups are establishing a presence -- at least in Yangon -- in an effort to serve a population of over 50m that is growing rapidly. So the signs are positive that the country will continue to modernise, whatever the political backdrop.
Another promising indicator is the shift in the nature of the incoming investment. Over the past 30 years, around half of all FDI has gone into the resources sector (primarily oil, gas and mining) with about a fifth in telecommunications and just over 10% in manufacturing, according to government statistics. Last year, however, telecoms jumped to 30% and manufacturing to 18%, evidence that the country is moving up the value chain.
Furthermore, unemployment is virtually non-existent and despite a history of military rule and state control, local private companies are being established in significant numbers. While many barriers remain - from red tape to a lack of available credit - the country now has a sprinkling of entpreneurs that have attracted international attention, such as the ones that have made the list compiled by Forbes Asia.
All this helps explain why Myanmar has overtaken Laos, Cambodia and even Bangladesh in the eyes of multinational investors. And one of our goals at scoutAsia is to bring our clients enhanced coverage of Myanmar and its private companies in 2019.