Thursday, January 10, 2013

Hong Kong should get on the Burma bandwagon, says academic

Thursday, 10 January 2013 16:12 Xiao Ting Shirley    

A Hong Kong firm could build an industrial park in Burma as a new hub for foreign investments, says a Chinese-Hong Kong academic.

(Photo: 「WilO」/ Flickr)
“It should be time for Hong Kong to consider building new offshore industrial parks in Burma to replace the old and declining ones in the neighboring cities in Guangzhou,” Thomas Chan, the head of the China Business Centre of Hong Kong Polytechnic University, writing in China’s state-run English newspaper China Daily.

The labor and land shortage and accelerating production costs necessitate Hong Kong firms to switch their investment focus from the Pearl River Delta region in Southeast China to Burma, said Chan.

Compared with other countries in Southeast Asia, Burma, officially known as Myanmar, is the second largest in terms of land size after Indonesia, while also remaining the poorest country in the region. However, experts say it has a relatively friendly investment environment including favorable geographical conditions, rich natural resources, a cheaper labor force and a stronger desire for development.

“The deputy head of the Myanmar Investment Commission supported the idea of having a new industrial park in this country, specifically for firms from Hong Kong, “said Chan.

“In particular in the garment industry,” he added, pointing at a key industry for increasing local employment.

Burma, which has shared with Hong Kong and Singapore the legacy of British colonial rule, was among the most developed economies in Southeast Asia in the 1950s. However, after decades of military rule, its economy has been largely stagnant until now.

President Thein Sein’s new civilian government which took office in March 2011 has embarked on a reformist path, both politically and economically.

The Burmese government passed a new foreign investment law in November which removed protectionist clauses and offered more preferential policies to encourage foreign investors including tax breaks and lengthy land leases.

The reformist government has already designated approximately 20 “industrial zones” surrounding Rangoon, Mandalay and other major cities, including several Special Economic Zones, six free trade zones, and several multi-billion-dollar sea ports.

And the new government’s strenuous efforts to develop the long-isolated country are quickly showing results. Thilawa Special Economic Zone, a $12.6 billion, 2,400-hectare development near Rangoon, has attracted a high Japanese investment and is due to be completed by 2015.

Taro Aso, Japan's new finance minister, confirmed fresh financial aid during his visit to Burma last week when he underlined Burma’s growing importance as a economic partner, and reaffirmed Tokyo’s pledge to waive most of Burma’s $6 billion debt. Instead, Japan has offered an additional loan of 50 billion yen, partly to kick-start construction of Thilawa.

US Senator James Mountain Inhofe confirmed in Naypyitaw on Wednesday that his country seeks deeper bilateral cooperation with Burma in oil and gas, trade, agriculture and energy sectors, a declaration consistent with the recent removal of most of the US’s economic sanctions on Burma.
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