Myanmar’s Path to Trade War Gains Blocked by $120 Billion Hole

(Bloomberg) -- Follow Bloomberg on LINE messenger for all the business news and analysis you need.

Myanmar faces major infrastructure obstacles as it tries to attract manufacturers seeking alternative locations to China, according a leader of its business community.

Aung San Suu Kyi’s government should prioritize reliable electricity and shorter transport times to woo factories as the U.S.-China trade war shifts global supply chains, said Zaw Min Win, president of the Union of Myanmar Federation of Chambers of Commerce and Industry.

Read: Myanmar Expects Factory Investment to Jump on U.S.-China Tension

“We’re in a good position to attract some investment that aims to shift from China, as we’re entitled to trade privileges from the U.S. and the European Union,” he said in an interview Tuesday. “Unfortunately, we don’t have enough infrastructure in place.”

The Asian Development Bank has estimated that Myanmar faces a $120 billion infrastructure investment gap from 2017 to 2030 for transport, energy and telecommunications. Tackling land ownership disputes and boosting workforce skills would improve Myanmar’s outlook, Zaw Min Win said, while adding that elections next year are unlikely to disrupt economic growth.

The federation Zaw Min Win heads is the largest association representing Myanmar’s private sector.

Net foreign-direct investment into Myanmar collapsed to 1.8% of gross domestic product last year from 6% in 2017, World Bank data shows.

That reflected in part a souring of sentiment after the Rohingya refugee crisis flared up in Rakhine state in the second half of the same year.

At the same time, many foreign firms remain interested in gaining exposure to Myanmar’s high levels of economic growth.

For instance, Ayala Corp., the Philippines’ oldest conglomerate, is placing a $237.5 million bet on Myanmar by linking up with one of the country’s best known tycoons, Serge Pun.

The World Bank expects Myanmar’s economic expansion to climb toward 7% by 2022, even as domestic conflicts -- including in Rakhine -- remain downside risks because of their potential impact on investor sentiment.

©2019 Bloomberg L.P.