May 24, 2015
The longer the conflict in Myanmar’s Kokang region continues, the more it could have a negative impact on foreign investment, which is crucial to developing the country’s economy after decades of isolation.
That’s because the government’s capacity is being stretched thin as it deals with duel crises not only in Kokang, but with the ongoing student protests that recall the days before the country opened up to the outside world.
In any government anywhere in the world, there is only so much available staff and so many hours in the day to deal with crises, and Borderless’ sources say they fret the government is distracted by these crises and is unable to pay the necessary attention to international investors.
Borderless believes the country runs the risk of increasing the level of uncertainty about one of the world’s last virgin markets. In a country where electricity is unreliable and infrastructure is poor after decades of isolation, the country cannot afford bad publicity that can give investors the jitters.
Indeed, while larger corporations may have a more nuanced and sophisticated view of the country, and understand that the conflict is limited to the Kokang region and may not impact Yangon, where the majority of economic activity is taking place, the next potential wave of investors may not get this. Many mid-size investors cannot afford to pay high fees to global risk consultants to analyze the political landscape and tell them which areas of the country are dangerous and which are not. Many companies in the U.S., both big and small, know very little about Southeast Asia as it is, let alone the complexities of conflict in multi-ethnic Myanmar.
As for the Kokang region itself, the conflict will have a direct impact on foreign investments in Kokang’s self-administered economic zone, which was recognized by the Myanmar Investment Commission on October 3, 2014. Chinese investors will also be turned off, particularly after the conflict in recent weeks spilled across the border and drew a stern warning from Beijing that heavily implied China would take military action if it happened again.
“Especially after the Kokang conflict had a spillover effect in China where Myanmar’s air force bombed Chinese villages in Yunnan province, this will give the Chinese investors second thoughts about their investment in the Kokang’s economic zone,” said Hyo Won Shin, who covers Myanmar and Korea for Borderless.
Originally bound to create 20,000 job opportunities for the local community, the economic zone will see a halt in investment, stunting the growth of Kokang’s community and economy, she said.
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