KUALA LUMPUR – There are no specific indications of Malaysian businesses pulling out of Myanmar following the coup early this month, but some might rethink the decision if the situation worsens, said Malaysian Economic Association vice-president Evelyn S. Devadason.
The University of Malaya professor said Myanmar is also highly unlikely to be an investment choice for new investors, at least during the year-long emergency period, due to uncertainties in the wake of the coup.
“I would think that if the situation gets worse, there may be a capital flight out of Myanmar. For now, we cannot fathom the military’s game plan. Even if the coup is aborted after a year, international investors in Myanmar will have to consider the issue of political uncertainty that follows in the post-coup environment,” she said in an interview.
Evelyn said existing international businesses in Myanmar must anticipate some changes, such as a new regime and new policy changes, which may become unfavourable to the investment climate in Myanmar.
“There is the possibility of the investment environment becoming more hostile. Additionally, the coup-empowered government may not be favourable to companies that ventured into the Myanmar market based on its move towards democratic rule,” she said.
Evelyn said Malaysian businesses and investors in Myanmar also need to be prepared for tougher sanctions by the United States on Myanmar companies if situations continue to deteriorate.
“That is going to indirectly affect bilateral trade. It will not just undermine investor confidence, but if the sanctions involve Myanmar companies with heavy investment ties with Malaysia, that could pose a problem for Malaysia’s trade relationship with Myanmar,” she said.
Evelyn noted that Malaysian businesses in Myanmar are engaged in oil and gas, real estate, manufacturing, hotels and tourism, and agriculture.
She opined that things may not change much for trade in the immediate term given current patterns, but warned that if investments are affected on a large scale, bilateral trade with Myanmar will eventually slow down.
In 2019, Malaysia was among the top 10 largest investors in Myanmar, with approximately US$2 billion (RM8.1 billion) worth of investments.
According to the United Nations Comtrade database, bilateral trade volume grew by 4.8% between 2012 and 2019, from US$888 million in 2012 to US$931 million in 2019. Malaysia remained a net exporter to Myanmar.
Last Thursday, US President Joe Biden issued an executive order to impose sanctions in response to Myanmar’s military coup against the democratically elected civilian government.
It targeted 10 individuals and three entities connected to the military apparatus responsible for the coup.
On the question of the coup’s effects on the region, Evelyn said even though existing economic linkages within the bloc are not going to change much as “democracy has not been necessary to membership to Asean,” it will detract the move towards the long-awaited economic integration of Myanmar with Asean.
Evelyn said Asean’s response as a bloc to the coup also affects the bloc’s own integration with extra-regional partners, particularly the US and other countries that have strongly condemned the military takeover.
The coup, she noted, comes at a time when the United Nations Conference on Trade and Development had just revealed a sharp contraction of 31% in foreign direct investment in Southeast Asia.
“From that perspective, this coup may cause some damage to Asean’s efforts to strengthen its relationship with external parties,” she said.
On February 1, the Myanmar military launched a coup and detained State Counselor Aung San Suu Kyi, President Win Myint, and other senior members of the National League for Democracy (NLD).
They also announced a year-long state of emergency in the country after they alleged voter fraud during the November 8 general election, which the NLD party won.
Since then, protests have been ongoing in major cities around the country demanding that the military restore the civilian government.
International media reported that more than 384 people have been detained since the coup. – Bernama, February 16, 2021
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