Foreign Investors Mull Next Steps Following Myanmar’s Elections

by Chee Yew Cheang, APAC Editor

Foreign investors, including those in the petroleum industry, are mulling over the next steps in Myanmar after the opposition National League for Democracy (NLD) – led by Nobel Laureate Aung San Suu Kyi – cruised to a landslide victory in the Nov. 8 parliamentary elections.

As the laborious vote counting process drew to a close, two weeks after the polls, results showed that the NLD had captured 225 of the 440 seats contested for the House of Representatives (Lower House) and 135 of the 224 seats in the House of Nationalities (Upper House), figures compiled on Nov. 24 by Myanmar Times (MT) indicated.

The new parliament, including military appointees, will select Myanmar’s next President – most likely a NLD candidate given the party’s majority – in early 2016 to succeed incumbent Thein Sein. President Thein Sein has to some extent facilitated the opening up of the impoverished country to foreign investments from around 2010 following decades of military rule.

Still, the cloud of uncertainty in the run up to the Nov. 8 elections had a dampening effect on external funds flowing into Myanmar.

Foreign direct investment (FDI) fell slightly to $3.7 billion in the first seven months in the financial year (FY16) ending March 31, 2016, down from $3.9 billion a year ago, MT reported Nov. 26, citing data from the Directorate of Investment and Company Administration (DICA).

DICA’s Director General Aung Naing Oo told MT the FDI slowdown in months prior to polling day was due to investors holding back because they wanted greater political clarity before committing to any new projects.

That may change now given widespread global support for Aung San Suu Kyi’s NLD, Economic Adviser to the President Aung Tun Thet told MT, adding that “economic sanctions may well be lifted, after which the country will gain many opportunities … It is an opportunity to take advantage of this change”.

But questions still linger on the policies of the incoming NLD government, including its economic plan. Moreover, investors are interested to know who will be the key government appointees as well as the reaction of Myanmar’s military establishment as it adjusts to the changed political order.

“Nobody really knows what to expect from her (Aung Sang Suu Kyi) and the new government … It’s up to her to show in the next six or seven months that she actually has an economic policy and can bring in enough qualified people to govern,” Giulia Zino, a senior analyst for Southeast Asia at Control Risks in Singapore said, as cited in a Nov. 17 report by Bloomberg.

Still, the report added that NLD’s six-point economic framework, as stated in the party manifesto, called for the adoption of policies “in line with international norms and standards to increase foreign investment.” That could enhance Myanmar’s business appeal, including petroleum firms keen to venture into the under-explored country or increase investments there.

After all, oil and gas featured quite significantly in Myanmar’s investment landscape. The sector remains the country’s largest source of FDI in the first seven months of FY16, accounting for $2.05 billion or almost 54 percent of the total.

Meanwhile, it’s oil and gas exploration season in Myanmar currently. BG Group plc and Australia’s Woodside Energy Ltd. – two successful foreign bidders in Myanmar Offshore Bid Round 2013 in which 20 blocks were awarded – will commence offshore exploration in Myanmar in late November, state media said in a statement, as reported by MT Nov. 19.

BG will deploy the Ramform Sovereign vessel for 3D seismic surveys in Blocks A-4 and AD-2 in the Rakhine Basin off the west coast of Myanmar from November 2015 to April 2016, while partner Woodside will carry out similar work using the Ramform Titan vessel in Blocks AD-5 and A-7 during the same period.

“The four blocks cover a total area of nearly 11,583 square miles [30,000 square kilometers], which is why the seismic surveys will take around six months,” an official of state-owned Myanma Oil and Gas Enterprise (MOGE) told MT.

Myanmar Petroleum Exploration & Production Co., Ltd. (MPEP) an affiliate of MPRL E&P Pte Ltd., is the local partner of BG and Woodside in these four offshore blocks.

In late October, Chevron Corp.’s unit Unocal Myanmar Offshore began exploration activities in Block A-5 in the Rakhine Basin with the Viking Vision, and 3D seismic surveys are scheduled to be completed toward the end of January 2016.

More exploration work in the country is expected, especially in 2016 and 2017, as winners in the Myanmar 2013 Offshore Bid Round undertake seismic work in the 20 shallow-water and deepwater blocks.

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