Myanmar coup’s impact on Hong Kong economy limited, business groups say

About 200 Hong Kong companies have invested in the Southeast Asian country, but two-way trade in 2020 amounted to 0.04 per cent of city’s total

No idea what will happen next, says director of Singapore construction firm

Reading Time:3 minutes

An empty road in central Yangon on February 1. Photo: AFP

Published: 7:30am, 2 Feb 2021Updated: 7:34am, 2 Feb 2021

The future of Hong Kong investments in Myanmar was uncertain following a military coup on Monday, but its impact on the city’s economy would be limited, business groups and industry watchers have said.

About 200 Hong Kong companies have invested in the Southeast Asian country, and their investment represented 26 per cent of total foreign direct investments (FDI) that Myanmar received in the 2019-20 financial year. This makes capital from the city a top source of funding, especially for sectors such as energy and infrastructure, according to data from the Myanmar government and the Hong Kong General Chamber of Commerce, the city’s largest industry body.

“While news [of the coup] poses great uncertainty about the future investment environment in Myanmar, the overall impact on the Hong Kong economy, so far, is likely to be limited,” George Leung Siu-kay, the chamber’s chief executive, said in a telephone interview. The industry body’s 4,000 members employed more than 1.3 million people last year.

Myanmar’s military declared a 12-month state of emergency on Monday and assumed power from a government led by state counsellor Aung San Suu Kyi. The military refused to accept the results of a general election held in November last year, citing irregularities. Suu Kyi and her National League for Democracy party won the election by a landslide.

Leung said Myanmar had become a hotspot for investment by Hong Kong companies since its opening up in 2011, and the beginning of Beijing’s Belt and Road Initiative. The city’s firms invested US$9.8 billion in Myanmar between the 1988-89 and 2019-20 financial years, data from Myanmar’s Directorate of Investment and Company Administration shows. In 2019-20 alone, they invested US$1.4 billion.

A road leading up to Myanmar’s parliament in Naypyidaw on Monday. Photo: AFP

“While Hong Kong is a key source of FDI in Myanmar, the impact of the latest political situation in the country on Hong Kong remains limited, in terms of total commitment,” Leung said, adding that two-way trade between the city and the country amounted to HK$3.6 billion (US$460 million) in 2020 – or only 0.04 per cent of Hong Kong’s total trade.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x