This presentation is targeting international private sector companies with an interest in investing in new markets but which are hesitating to invest in fragile and conflict affected states (FCS) due to the risks involved. This presentation demonstrates that despite the challenges present in Myanmar as an FCS, there are significant opportunities to be gained as evidenced by the growth of the telecoms sector, and the PSW, particularly MIGA and it’s CEFEF, provide an effective starting point for entering this market.

1. Myanmar
Open for private sector investment

2. The Context
• Affected by fragility, conflict, and violence, Myanmar had been
among the least connected countries in the world for many years.
• Myanmar is one of the poorest countries in Southeast Asia, with a
per capita income of approximately US$832 in 2011 (IMF 2012).
• Poverty in Myanmar is concentrated in rural areas, where poor
people rely on agricultural and casual employment for their
livelihoods. Many live near the poverty line and are sensitive to
economy-wide shocks.
• According to the World Bank (2017) among ASEAN countries,
Myanmar has the lowest life expectancy and the second-highest
rate of infant and child mortality. Just one-third of the population
has access to the electricity grid and road density remains low at
220 km per 1,000 km2 of land area.
• Its economy suffers from unstable inflation, a rigid interest rate
regime, and a distorted exchange rate which translates into a high
risk for private sector investment

3. The need for Private Investment
The universal Sustainable Development Goals (SDGs) bring together
economic, social and environmental priorities. These goals are ambitious, and
they demand equal ambition in using the “billions” in Overseas Development
Assistance (ODA) to attract, leverage, and mobilize “trillions” in investments
of all kinds: public and private, national and global, in both capital and
capacity.
The private sector plays a pivotal role in economic development, supporting
the creation of pathways out of poverty that are essential to achieve the SDG
(IDA, 2016).
– Private investment underpins economic growth, know-how and
technology transfer, job creation, and productivity gains.
– Functioning, self-sustaining private sector markets that respond to
economic demands are central to the sustainability of development
gains.

4. The Challenge
• Myanmar is in the midst of a dramatic political and economic transition.
• The nation of 54 million people has moved from military rule to
democracy, from a centrally directed economy to a market-oriented
economy, and is making strides from decades of conflict toward peace.
• But Foreign Direct Investment in Myanmar is volatile, as the most recent
World Bank reports indicate a sharp downturn in the first three quarters of
FY17.
• Overdependence on extractives in the case of Myanmar has left the
economy vulnerable to external shocks. Nearly 80 percent of foreign
investment is concentrated in Myanmar’s oil, gas, power, and telecom
sectors, with manufacturing accounting for only about 7 percent.
• Aware of the risk, the government now wants to diversify investments,
and is working with the World Bank Group to respond to the recent
downturns in commodity prices.

5. Business case for investment
• Market
– Myanmar has great, untapped economic potential. Bordering Bangladesh,
China, India, Laos, and Thailand, Myanmar sits among 40% of the world’s
population. The neighbouring economies account for about $15 trillion (World
Bank, 2017).
• Priority Sectors
– As the largest country in mainland Southeast Asia, Myanmar has one of the
lowest population densities in the region, with fertile lands, significant
potential for increased agricultural production, and a rich endowment of
mineral wealth and natural gas.
• Regulatory support
– The Government of Myanmar has embarked on a series of reforms to
improve the business and investment climate, facilitate financial sector
development, and further liberalize trade and foreign direct investment
– In 2017, the government will begin implementation of a new investment law
designed to stimulate and streamline domestic and foreign investment,
increase investor protections, and ultimately create jobs and help diversify an
economy heavily concentrated in agriculture and extractive industries.
• Funding and risk mitigation support available through the International
Development Association (IDA) Private Sector Window (PSW).

6. Making the first move
The IDA Private sector window offers 4 facilities to crowd in private
investment:
1. a Risk Mitigation Facility to provide project-based guarantees without
sovereign indemnity to crowd-in private investment in large
infrastructure projects;
2. A MIGA (Multi-lateral Investment Guarantee Agency) Guarantee Facility
to expand the coverage of MIGA guarantees through shared first-loss
and risk participation via reinsurance;
3. a Local Currency Facility to provide long-term local currency investments
in countries where capital markets are not developed and market
solutions are not sufficiently available;
4. a Blended Finance Facility to blend PSW support with IFC investments to
support small and medium enterprises (SMEs), agribusiness and other
pioneering investments.
The Conflict Affected and Fragile Economies Facility ("CAFEF"), is a multi-
donor trust fund that permits MIGA to prudently expand its exposure in
conflicted-affected economies, while also mobilizing reinsurers.

7. Progress in practice
• With the liberalization of the telecommunications sector in Myanmar in
2013, mobile and internet penetration has increased significantly from
less than 20% and 10% in 2014, to 60% and 25% respectively.
• In parallel, less than 15% of the population had access to a mobile phone
in 2014 but in just two years, over 70% of the population had a cell phone
(MIGA, 2017). However, Myanmar still lags far behind when it comes to
fixed line and internet services, particularly in rural areas.
• The establishment of a credible and consistent policy and regulatory
environment in the telecommunications sector has helped to ensure
steady private investments and growth.
• In Jan 2017, MIGA announced a guarantee of $105.74m for Bank of China
(Hong Kong) Limited's loan to Myanmar Fiber Optic Communication
Network Co Ltd, Myanmar's largest fiber optic cable ("FOC") infrastructure
provider, for rolling out 4,500km of FOC. When completed later this year,
the Project will have connected 66 cities and towns in 10 states and 6
metropolitan areas across the central and southern parts of the country
(MIGA 2017).

8. For more information
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused
exclusively on the private sector. We help developing countries achieve sustainable growth by financing
investment, mobilizing capital in international financial markets, and providing advisory services to
businesses and governments. Our investments leverage the power of the private sector to create jobs,
spark innovation, and tackle the world’s most pressing development challenges.
For more information, visit www.ifc.org
About IFC Private Sector Window
(PrSW) is implemented and managed by the IFC to provide innovative financing aimed at increasing the
commercial potential of small and medium-sized agri-businesses and farmers by connecting them with
local, national, and global value chains. It aims to crowd-in private sector investment funding by
supporting projects with a different risk/return profile. The Private Sector
Window sources proposals from private sector firms for financing for private sponsors and MDBs
throughout the year, as well as reviewing the IFC's own pipeline.
For more information on eligibility for funding, visit: http://www.gafspfund.org/content/private-sector-
window
About MIGA
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment
in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer,
breach of contract by governments, expropriation, and war & civil disturbance; and offering credit
enhancement to private investors and lenders.
For more information, visit www.miga.org