Mon 19 May 2014
Filed under: ASEAN,Business / Trade,News
2014 is the first year of the second decade of the China-ASEAN strategic partnership and a key year for the upgraded version of the free trade zone.
The China-ASEAN Business Council recently released the “2014 China-ASEAN FTA Quarterly Report”, which helps understand the need for development of the free trade zone and the new trend in the upgraded version of the free trade zone and regional economic integration. Reporters from the China Trade News interviewed officials of ASEAN member states and the Chinese experts on ASEAN to provide a forecast of the economic conditions of some ASEAN members in 2014 so as to help Chinese companies set their trade and investment targets and to promote the common development and regional prosperity of the free trade zone.
Under the broad context of instability and uncertainty in the world economy, ASEAN economies are facing negative pressure. Nevertheless, the region is still regarded as one of the most dynamic regions with the most growth potential.
“Myanmar is a member of ASEAN and a close neighbor of China. We have tried our best to promote friendly and mutually beneficial cooperation with China, especially bilateral trade and investment cooperation. The upgraded version of China-ASEAN Free Trade Zone will be a big success.” – Commerce Counselor of the Myanmar Embassy in China.
In 2013, Myanmar’s foreign trade reached 23 billion USD, a 27% increase from the previous year. Trade with China was 11 billion USD, almost half of the country’s total foreign trade, making China Myanmar’s largest trading partner. In terms of investment, China has ranked first among foreign investors in Myanmar, maintaining 30% of total foreign investment in the country.
Myanmar has now entered a critical stage before the 2015 elections. The democratization process may bring a change of government. A Southeast Asia researcher at the China Institute of Contemporary International Relations, Song Yinghui believes that the minimum wage in Myanmar has doubled while its productivity has shown no obvious improvement; in addition, the rising costs of production have made the economy difficult to sustain.
The World Bank predicts that Myanmar’s GDP growth will reach 7.8% in Fiscal Year 2014/2015 thanks to the construction and service industries and foreign investment. It is believed that Myanmar is a viable choice for international investors in 2014. A research report by the US-ASEAN Business Council shows that 100% of American businesses believe that profits from their Myanmar operations will increase in 2014 and they plan to expand their businesses in the country. Myanmar has made significant progress in improving its legal and policy environment, strengthening rule of law, reforming the functions of the government and fighting corruption. Although Myanmar still ranks 5th in the high-risk destinations for foreign investment, the improvement of its business environment is also evident. Related research institutions believe that based on the current trend, Myanmar will soon drop out of the “high-risk” list.
Xu Ningning (the executive deputy secretary general of China-ASEAN Business Council) pointed out that power shortage remains a key obstacle for foreign investment in Myanmar. The country’s power grid only covers 26% of the population. It is estimated that even if the country doubles its power supply, it would take 5 years to meet current demand and demand is now rising at 12% annually. In addition, investors should pay attention to factors such as low government efficiency, poor implementation and management, etc.