The Myanmar government’s trade promotion body has signed a deal with the European Chamber of Commerce to boost bilateral trade and investment from European countries.
The Memorandum of Understanding (MoU) was signed during a meeting in Yangon with Philipp Dupuis, head of the Economic and Trade Section of the EU covering Myanmar, Laos, Cambodia and Thailand, and Myantrade, the Myanmar Trade Promotion Organization under the Ministry of Commerce.
The agreement comes as the crisis in Rakhine has stalled potential European investors Filip Lauwerysen, chief executive officer of the European Chamber of Commerce Myanmar, told local media.
Hundreds of thousands of Rohingya, considered one of the most persecuted minorities in the world, have fled from Myanmar’s Rakhine state to Bangladesh since August. The government of Myanmar, a predominately Buddhist country, claims the Rohingya people are illegal immigrants from neighboring Bangladesh and has denied them citizenship, leaving them stateless. The Rohingya—who have their own language and culture—say they are descendants of Muslim traders who have lived in the region for generations.
“The Rakhine crisis has varying level of impact on every organization and all businesses. Obviously, the crisis has affected Myanmar’s tourism,” said Lauwerysen, adding that the crisis has affected Myanmar’s position as an “investment destination.”
The two sides also discussed possible solutions that need more attention regarding World Trade Organization compliance, reports said.
[Read more about Myanmar: Myanmar’s Garment Industry is on a Growth Path]
The MoU marks Myantrade’s first agreement with a foreign business chamber since the government launched its five-year National Export Strategy in March 2015, said U Aung Toe, deputy minister for commerce.
The agreement defines the chamber’s responsibilities and program activities that are funded by the European Commission to expand and develop economic relationships between Myanmar and the EU. It outlines the agreement to cooperate in prioritized and strategic sectors in bilateral trade and investment for the next five years.
Business ties between the EU and Myanmar have expanded significantly since 2011 with the lifting of most economic sanctions and the reinstatement of the Generalized System of Preferences (GSP) for Myanmar exports. In 2013, work began on an Investment Protection Agreement that is now nearing completion.
European Commission data shows that bilateral trade has grown to 1.56 billion euros in 2016 ($1.75 billion) from 245 million euros ($292 million) in 2010.
Most of the growth has been in Myanmar exports, which increased to 993 million euros ($1.18 billion) in 2016 from 223 million euros ($264.8 million) in 2013. Of this figure, 69.6% was textile products, while 5.7% was footwear and hats.
A new joint report from the World Bank and Myanmar’s Ministry of Planning said better allocation of spending and raising revenues can help Myanmar meet urgent needs for investments in infrastructure and services without adding to the fiscal deficit and government debt.
According to the “Myanmar Public Expenditure Review,” economic shocks caused by the decline in commodity prices and exchange rate volatility of recent years, as well as Cyclone Komen in 2015, have constrained the country’s financial resources and investments, including foreign direct investment.
“Government’s commitment to further fiscal reforms that raise resources and deliver public services and infrastructure for inclusive growth is as important as ever in the face of Myanmar’s development challenges,” said Gevorg Sargsyan, World Bank head of operations for Myanmar, Laos and Cambodia. “The country is tapping only a fraction of its investment and growth potential.”