South Korea eyes Myanmar investments in manufacturing, infrastructure
South Korea is eyeing expansion opportunities in manufacturing and infrastructure in Myanmar. At the Myanmar-Korea Investment Promotion Seminar in Yangon on Thursday, a delegation of 13 South Korean countries met with officials from the Ministry of Transport and Communication and Ministry of Electricity and Energy (MOEE), seeking opportunities to invest in the two sectors.
“We selected the most promising South Korean manufacturing and infrastructure companies to explore investment opportunities in Myanmar, where the government is also focused on developing these two sectors,” said Mr Kim Young-sun, Secretary General of the ASEAN-Korea Centre, which promotes economic and socio-cultural cooperation between ASEAN and Korea.
The South Koreans are betting on Myanmar’s need to develop better infrastructure as the country strives to achieve its target of 6 percent-9pc GDP growth under its National Comprehensive Development Plan for 2011-30. “Korean companies have the right experience and technological know-how in developing a wide range of infrastructure and they are willing to help Myanmar develop its roads, railways and ports,” Mr Kim said.
During the seminar, U Kyaw Kaung Cho, Chief Engineer in the Ministry of Construction, welcomed South Korea cooperation in six ongoing highway projects, which includes the $1.9 billion, 460 kilometer Mandalay-Myitkyina Expressway and the $2 billion, 811 km Pathein-Monywa-Shwebo Road. There are also opportunities for the private sector to contribute to highway upgrading and bridge construction.
U Min Min Oo, Assistant Secretary at the MOEE, said investments across the entire Myanmar oil and gas supply chain are needed. Notably, construction of new power generation plants, particularly from liquefied natural gas and renewable energy, is in demand, “We have so many opportunities for South Korea to invest in the energy sector, such as in power generation, transmission and distribution. We would also like to welcome business partners from Korea to develop Myanmar’s clean energy sector,” he said.
A garment factory in Sittwe, Rakhine. South Korean manufacturing companies are looking to set up garment factories in Myanmar. Photo – EPA
The Koreans are also interested in the local manufacturing sector. “There are companies which are now operating labour-intensive factories in China and Indonesia, but with wages rising drastically in those countries, they are now looking to produce goods such as wigs, garments, footwear, furniture and processed-food in Myanmar because of the country’s competitive and diligent workforce,” Mr Kim said.
Troublesome setbacks now stand in the way though. “One of the challenges when setting up factories here is the bureaucracy and lack of coordination between the government and municipalities. Having an agency that provides a one-stop service to help in the setting up of factories is very much necessary to incentivise companies to invest here,” he added.
As a solution, Korean companies have opened factories at the Thilawa Special Economic Zone (SEZ), where such services are provided. “There are currently six Korean factories in Thilawa, including food company CJ Cheiljedang and Yojin Construction & Engineering,” Mr Kim said.
Meanwhile, the Korea Land & Housing Corporation (LH), in partnership with the Ministry of Construction, is now also building a $120 million, 2.4 sq m industrial complex in Hmawbi township, Yangon Region. “We hope the Korea-Myanmar Economic Cooperation Industrial Complex will be allowed to provide the same one-stop service the SEZs now enjoy. This is very important as many Korean manufacturing companies are now interested to expand here,” Mr Kim said.
South Korea has also invested $98 million to construct an international-standard logistics hub at Shwe Lin Ban Industrial Zone in Hlaing Thar Yar township, Yangon region. HUBS MK Co Ltd from South Korea and the Myanmar Trade Promotion Organisation under the Ministry of Commerce signed an initial agreement for the project last month.
Mr Kim Young-sun, Secretary General of the ASEAN-Korea Centre: South Korea and Myanmar have a special relationship that will our investments here to flourish. Photo – Supplied
The Koreans are expanding in Myanmar just as other Asian countries such as China, Singapore and Japan are channeling more FDI into the country. “Competition for projects from other countries is heating up but we believe South Korea has a special relationship with Myanmar that has yielded long term opportunities for our firms in the past,” Mr Kim said.
For example, South Korean oil and gas company Posco Daewoo has been producing gas at the Shwe offshore gas field in Myanmar since early 2000 and also obtained rights to use prime land near Inya Lank in Yangon for the five-star Lotte Hotel over the next 70 years. When the rights were obtained in 2012, it marked the first long-time deal for a foreign company in Myanmar.
“Myanmar’s relationship with China and Japan may be impressive but with Korea, the relationship is more equal and comfortable. The other countries may have their own geopolitical agendas when investing big in Myanmar, but we do not impose any conditions when we invest here,” Mr Kim said.
“Our aim is to generate success stories of our companies that have invested in Myanmar, so that more companies will come here and our partnership will continue to flourish.”