Less than a year after the Republic of Myanmar (ex-Burma) began an aggressive campaign to attract foreign investors into its mining and energy sectors, the country is said to be preparing a major review, and potential renegotiation, of existing natural resources deals.
According to FT.com (subs. required), the move comes as the South Asian nation gets ready to sign up to the Norway-based Extractive Industries Transparency Initiative (EITI), a voluntary system that sets high standards for financial disclosure, governance and environmental criteria.
However, the country is not closing its doors to foreign investors. Only yesterday the government announced it has opened a long-awaited auction for 30 offshore oil and gas exploration blocks, inviting foreign companies to submit expressions of interest by June 14.
The measure, expected to attract intense competition, follows the opening of an auction for exploration rights to 18 onshore blocks in January this year, and the sale in early 2012 of rights to about 10 onshore blocks to foreign companies including Thailand’s majority state-owned PTTEP and Petronas, of Malaysia.
“This is a very sensitive issue. We must be careful – we have to honour old contracts but we must review them,” U Soe Thane, the minister who oversees foreign investment told FT.com.
Foreign direct investment (FDI) in Myanmar’s oil and gas industry stood at about $13.8 billion for 2011–2012, representing almost 31% of the country’s GDP.
Besides oil and gas, Myanmar is home for vast and untouched reserves of highly demanded minerals and metals, such as gold, tungsten and copper. It is also known by its precious stones and lithium reserves.
Another advantage of the still impoverished country is to be conveniently located between China and India, which are international economic growth’s engines and hungry consumers of raw materials.
According to a study published last year by Global Data, industrial growth in Myanmar could potentially benefit every strata of society, promoting employment opportunities and economic development. However, the report also says this will require the country to adopt holistic development policies in order to compete with other middle-income Asian nations. It’d also need to invest in infrastructure to boost both mining production and its exporting potential.
(Image Myanmar woman by Denis Rozan)