The Asian Infrastructure Investment Bank (AIIB) has issued its first loan in Myanmar.

The AIIB will lend US$20mn to the Myingyan gas-fired power plant, which will also receive US$58mn from the International Finance Corporation (IFC) and potentially US$42.2mn from the Asian Development Bank (ADB).

The 230MW plant will be constructed by Singapore’s Sembcorp Industries, who won what is considered to be the first wholly international tendering process in the country’s sector.

This will add to a gas-powered network which has seen a total capacity of 270MW in 2011, produced entirely by state-run plants, augmented by almost 1,000MW of private plants since.

Development banks are circling Myanmar, hoping to bolster their investments in a country which has lost much of its sheen to commercial investors over the past 12 months.

A long electoral period which eventually saw the National League for Democracy (NLD) sweep to power earlier this year, coincided with a sharp drop in foreign direct investment (FDI) into Myanmar in 2015.

FDI fell from a peak of US$8bn in 2014 to US$3.9bn last year. The NLD, led by Aung San Suu Kyi, is expected to announce a comprehensive economic policy in the coming months, which could serve to assuage investors’ fears, particularly given the US’ surprise decision to lift economic and trade sanctions on Myanmar in September.

The sanctions had been in place since 1989 over human rights abuses. While some 100 companies and individuals remain on a blacklist, many will be fully lifted, although a final deadline has not been set for their removal.

While things are uncertain, then, it could well be down to caution rather than long-term reluctance to trade in or with Myanmar, one of Asia’s frontier markets.

“I’m still quite positive about Myanmar,” Khaing Zar Aung, head of insurer Willis’ representative office in Yangon tells GTR down a crackly phone line.

She explains: “I know FDI is down by 85% and that affects our business obviously. With the new government, we thought investment would be rushing in and everyone would be keen to do business in Myanmar. But in reality, because of a lot of changes in regulation, a lot of investors have held back, a lot of projects have been pushed back until industrial policy has been refocused.”

Aung adds that many companies appear to be awaiting a codification of economic policy before moving. Insurance premiums are down, she says, but that has meant more people are taking them out. For Willis, volume is up, even if the average premium value is down.

Much planned investment in the construction has been put on ice after the government suspended all planned projects in Yangon, the largest city and former capital, with more than nine storeys, including those that are in construction.

In an explanatory note, the government cited issues such as lack of fire-safety systems, lack of parking space, violations of road-to-building rules and breaches of planning permission approval on height.

Meanwhile, the IFC recently said that it would more than double its lending to Myanmar by the end of 2018. The commercial arm of the World Bank plans to have a portfolio of US$600mn by the end of this year, rising to US$800mn by mid-2017 – a huge increase on September’s US$386mn portfolio.

In addition to the Myingyan plant, the IFC has recently announced a US$10mn loan to chemicals company Myanma Awba Group for the construction of a plant north of Yangon. It also lent US$6.5mn to a greenfield poultry breeding farm, Bel Ga Myanmar, in Yangon.