Why investment in telecom being the highest isn’t always a good thing

Posted on April 23, 2017  /  0 Comments

It’s not possible to give people what they want from ICTs (connectivity, quality, low price) without investment. So we are always happy when investment in telecom increases, especially in countries where the sector has been starved of investment for long like Myanmar.

But we have to keep in mind that what the sector produces is not internationally tradeable (except for roaming services). The consumption occurs within the country. It contributes to the advancement of all other sectors, and thus indirectly to growing the entire economy including exports.

But it’s not a good thing, especially for a country that needs to quickly raise the living standards of its citizens, that telecom investment dwarfs everything else. In Sri Lanka, during the war, this was the case. We see the results now, with exports declining to parlous levels relative to GDP.

Foreign investment in Myanmar’s transportation and telecommunications sectors surged to $3.08 billion for the year ended March, a 60% jump. In contrast, spending in the gas and oil industry — which had accounted more than half of the total in the preceding year — dropped to zero from a dearth of new exploration projects. Overall, foreign investment in the Southeast Asian nation decreased 30% to $6.64 billion, according to the Directorate of Investment and Company Administration.

The mobile phone industry was the hottest destination for foreign money. Such players in the field as Myanmar posts and telecom company MPT — a partner of Japan’s KDDI — Qatar’s Ooredoo and Telenor Norway are intensely competing for customers, and they are pouring money into equipment and services.

Manufacturing drew the next largest investment of $1.17 billion, up 11%. Much of it was from textile companies, which are taking advantage of Myanmar’s cheap labor. Japanese fashion manufacturer and retailer Honeys is shifting production from China to Myanmar, with plans to build its own warehouse in Yangon. Chinese and South Korean clothing contract manufacturers are setting up shop in Myanmar as well.

Read the Nikkei.com story here.

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