It’s not the Californian gold rush yet, but could soon be. Global excitement about Myanmar keeps building up as the government of President Thein Sein keeps revving up its pace of reforms. Yangon is getting ready to host the 2nd Myanmar Investment Summit next month, calling on everybody to come and explore its new investment frontier and ride the wave of opportunities. One can almost hear the banging on the door.
In some ways, Myanmar reminds me of China in the early 1980s, when the bamboo curtain had just begun to open and the world throbbed with the excitement of discovering a vast, uncharted business wonderland. But there was one difference. In those early days, the Chinese would only listen. Business hunters camping in Hong Kong would go to Beijing, wait out in hotel rooms to be called for meetings, make lengthy presentations to passive-faced officials, and come back without any clue to whether their messages had sunk in. That seems not to be the case with Myanmar.
It’s only a year and a half that Myanmar has emerged from its seclusion to stride the reform path, but so much ground has been covered already, step by steady step, that Washington has decided to ease its sanctions, while the World Bank and the Asian Development Bank (ADB) are gearing up to resume lending to the country. Here are other recent developments that tell us that Myanmar isn’t simply groping in the dark:
A full-fledged payments union is in the making. Banks have started to roll out ATM networks across the country. Point-of-sale debit cards have made an appearance, though in a limited way. MasterCard has already got a licence and Visa is on its way. SWIFT is due for a 2013 launch. Coca Cola and PepsiCo are negotiating with local partners to lay out countrywide distribution networks.
For the first time in 50 years, private insurance companies are allowed to do business and 12 companies have already been cleared. Foreign insurers could be allowed in as early as 2015. JETRO (Japan External Trade Organisation) has set up a business support system in Yangon. The Daiwa Securities Group, along with major Japanese technology firms, is investing $380 million to help develop Myanmar’s information technology infrastructure and stock exchange. Spadework has begun for calling tenders for telecoms licenses.
But the biggest flurry is the approval by Parliament last month of a revised foreign investment law. If it gets Sein’s final nod, which is almost certain, foreign investors can own up to 50 per cent in a joint venture (against 49 per cent proposed earlier). There’ll be no minimum investment requirement ($5 million had been specified earlier). Land can be leased for 50 years initially and renewed for further periods. Locals can’t buy out foreign investors at will. Unconfirmed reports say in sectors like high technology, even 100 per cent foreign holding would be permitted.
Excitement is running particularly high among business communities in Southeast Asia. Myanmar will be everyone’s toast when it hosts the Southeast Asian Games next year, assumes the chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2014, and chaperones the ASEAN Economic Community when it comes into being in 2015. This means Nay Pyi Daw will be keen to keep its doors open, and Thais, for one, are telling their businessmen to hurry up before a crowd forms.
Since Myanmar is starting from scratch, the potential is huge. Its proven oil reserves of 3.2 billion barrels and gas reserves of 11.8 billion cubic feet are, of course, the biggest attractions. Mining and minerals as well as farming are also big lures. But, as there are immense skills gaps, services are undeveloped, and the support infrastructure (soft or hard) is weak, these are the areas that are drawing the most attention, particularly from the Japanese and the Singaporeans. Even hotels, restaurants, resorts, and retail stores are big draws as job creation is the immediate need. And, since the domestic market isn’t big enough yet, the emphasis for the moment is on using Myanmar as a cheap production base for markets elsewhere.
So, as reforms pick up, one has to hurry. Of course, Myanmar still has a long way to go – to establish a credible legal regime, for example, and strengthen people’s faith in democratic institutions – but its intentions are not in doubt, its needs are many, immediate and very real, and going in first will surely make a difference.
The Japanese, for one, know this well. Last April, Japan waived all $3.7 billion that Myanmar owes it and is now working to provide a $900-million bridge loan to help the country pay back its outstanding debts to the World Bank and ADB. When that gets settled and international lending to Myanmar starts flowing again, Japanese businesses would surely have an advantage.