The government has said that the coup in Myanmar would not affect the Thai economy but companies here remain wary of possible international sanctions, and one giant has already halted its investment in the neighboring country.
Myanmar is only the 10th largest recipient of Thai foreign direct investment (FDI), with an average of USD 281 million per year between 2015 and 2019, the Bank of Thailand said.
The value accounts for just 2.3 per cent of Thailand’s annual FDI. Total investment outstanding from Thailand to Myanmar stood at USD 4.99 billion as of the end of 2019, the central bank data shows.
Bangkok said on 3 February that it was suspending Thai investments in the Dawei Special Economic Zone but talks will resume once there is a new government in Myanmar.
Deputy Prime Minister and Minister of Labour Supattanapong Punmeechaow, who provided the comments on the investment in Dawei, did not specify what kind of government that should be.
Myanmar has been under a state of emergency since the military seized power on 1 February and detained Aung San Suu Kyi. The military chiefs have alleged irregularities in November’s elections, which Suu Kyi’s National League for Democracy (NLD) won by a landslide that threatened to erode the junta’s role in government.
The move by Thailand to suspend investments in Dawei came after the zone’s management committee last month told Bangkok-listed Italian Thai Development (ITD) that they will terminate seven concession agreements with companies that ITD partially own.
Private companies have also reacted to the coup with SET-listed Amata Corporation, the Thai industrial estate developer, the first to react.
The company’s chief executive, Viboon Kromadit, said last week that his company is stopping its 140-million-baht investment on the first phase of the 5,000-rai industrial park project in Yangon Amata Smart and Eco City until there is a new election in Myanmar.
Amata was already building and installing infrastructure such as utilities for the first phase of the project which cover 500 out of the 5,000-rai that was granted by the previous elected Myanmar government under a 50-year land lease contract.
Viboon said the majority of around 20 foreign companies that have shown interest in the project are Japanese and European companies and the plan was to sell at least 200-300 rai to their customers this year before the previous administration was overthrown by the military generals.
He said the coup could impacts the investment decision of these companies because they are normally against such “political intervention”.
On 5 February, Japanese beverage giant Kirin said in a statement that they would terminate its partnership with Myanmar Economic Holdings that is owned by Myanmar’s military because pf the military’s “recent actions” was against the company’s “standards and human rights policy”.
Suzuki, a Japanese car giant, has also indefinitely halted its operations at two factories in Myanmar. The company has a 60 per cent share of new car sales in Myanmar and they sold 13,200 vehicles in the country back in 2019.
Another Thai giant, Thonburi Healthcare Group (THG)’s representative told Thai Enquirer on Tuesday that the group’s current plans in Myanmar are on hold due to “an uncertain political situation” there.
THG is a partner of Ga Mone Pwint, a Myanmar-based real estate developer, which together build a 200-bed hospital worth $75 million in Yangon. They were planning to invest on the expansion of the hospital later on this year before the coup was conducted.
Pun Paniangvait, president office manager of Thai President Foods, the manufacturer of Mama instant noodles, told business publication Manager last week they are reconsidering the plan to move production from Yangon to Mandalay. Apart from that, they are not concerned about anything else, he said.
Other larges Thai companies that are investing in Myanmar including Charoen Pokphand, Thai Beverage, Siam Commercial Bank, PTT, Siam Cement Group, Siam Makro and Berli Jucker have yet to publicly comment about the coup in Myanmar.
In total, the Federation of Thai Industries (FTI) said there are currently 150 Thai companies that are investing in Myanmar right now.
Krit Ungwithoonsathit, Thai-Myanmar Business Council, told Krungthep Turakij last week that Thai companies are worried about possible international sanctions that will impact Thai companies in Myanmar.
He said Thai investors in Myanmar are mostly importers and companies that have set up factories in the neighbouring countries to cater to the demand of Burmese consumers so the direct impact from the possible sanctions on these companies would be minimal.
However, the possible sanctions will impact Myanmar’s economy which could lower their domestic demand in the long run, he added.
He also said that the council is worried about ongoing deals between Thai companies and the NLD-led government because it is still unsure whether the new government will cancel any of the deal.
Local brokers said consumer-product companies could also be affected by the disruption in trade from the coup, such as Osotspa (OSP), Carabao Group (CBG) and Mega Lifesciences (MEGA).
About 45 per cent of MEGA’s income came from sales in Myanmar followed by 10 per cent for OSP and 5 per cent for CBG.
Companies within in the energy and oil groups that have concessions with the previous, elected government of Myanmar such as TTCL, Scan Inter (SCN), East Coast Furnitech (EDF) and Meta Corporation (META) could also be affected if their projects there are cancelled by the new government.
Avin Sony, head of institutional sales at Asia Plus Securities, told Thai Enquirer that if there are no sanctions, there will not be any material impact on Thai companies that are investing or operating in Myanmar.
However, the impact could be “quite bad” for extraction company PTT Exploration and Production (PTTEP) if the sanctions are “full scale”. About 12 per cent of PTTEP’s income comes from Myanmar.
“A full-scale sanction will be similar to Venezuela which means no transactions from Myanmar and PTTEP sells gas from its two fields in Myanmar,” he said.