29/1/2012 Bangkokpost: :
The civilian government is coming out of decades of isolation, but
along with a wealth of opportunities investors are faced with several
challenges in overcoming the rot of military rule.
As Myanmar trades political reforms in return
for an end to economic sanctions, businesses big and small are queuing
for access to the region's last closed economy. Entry will be dictated
by political connections, financial clout, further reforms and
necessity.
Chief among those necessities will be food and infrastructure _
roads, ports dams, electricity and access to clean water _ but areas
like health are also in dire need of investment. Myanmar was ranked
190th among other countries in terms of its health care, the worst in
the world. Access to capital and appropriate partners are the biggest
stumbling blocks to development in these areas.
"Burma [Myanmar] is one of the few frontier or 'reservoir' countries
left _ Cuba is another example _ that have serious economic potential
due to their resources and proximity to large developed or developing
markets," said Gavin Greenwood, a risk consultant with Hong Kong-based
Allan & Associates.
LOCATION, LOCATION, LOCATION
China, Thailand and Singapore have been active in Myanmar for a
decade while Japan, South Korea, India, the US and Europe have made
recent forays and are easing sanctions. According to one analyst this
was akin to "kicking the tyres" to assess what's possible and
profitable.
Two large ports are already under construction. China National
Petroleum Corp has begun construction of a 770km oil pipeline from
Myanmar's west coast to China with port facilities being built in
Madeira.
That area offers access to nearby offshore oil and gas fields,
existing port facilities which include a naval base, an existing airport
at Kyaukpyu and deepwater and sheltered moorings for docking with an
expected depth of up to 20m. Importantly, the pipeline highlights
Myanmar's strategic importance, providing an alternative route for
China's energy needs to the Malacca Straits.
A massive US$8.6 billion (272 billion baht) port and industrial
complex is also under construction in Dawei in the south by Italian-Thai
Development Co, which has a 60-year concession. The industrial park is
massive, 16 times bigger than the largest of any such project already
built in Thailand.
"Looking ahead 20 years from now, 2030, the economy around the Indian
Ocean would be growing more than it is now given the fact there are at
least two major countries located nearby _ China and India," said
Somchet Thinaphong, managing director of Dawei Development Co.
"Burma and Dawei are in the middle. So this creates a uniqueness for
new investments and we should immediately capitalise," he said. "There
is a route which represents a regional corridor from Dawei passing
through Bangkok to Vietnam. It's a strategic corridor."
More important, he says, will be Myanmar's strategic importance
within Asean which is aiming to become a fully integrated economic
community by 2015. The Dawei Special Economic Zone will become an Asean
hub.
Essentially the goal by 2015 for the community is to have a stable,
prosperous economy capable of competing with the likes of China and
India with the free flow of goods, services, investments and capital _
based on a single market and production base. It's an ambition that has
been incompatible with Myanmar's trajectory in recent decades and
something had to give, especially considering Naypyidaw's ambitions of
serving as Asean chair in 2014.
''The next big story is likely to be the new special economic zones,
including along the borders with Thailand and China,'' said Morten
Pedersen, a Myanmar analyst with the University of New South Wales in
Australia. ''This should include agri-business, which is certainly a big
priority for the government.''
He said from a developmental perspective, with foreign direct
investment (FDI) increasing and broadening, a key issue in the coming
years would be the quality of investment and this would also encompass
human rights and environmental issues.
''It will be a long time before the Burmese government is able _ even
if willing _ to exert proper supervision in this area,'' Mr Pedersen
said.
FROM THE INSIDE OUT
Resource rich with a population of about 60 million, the potential
size of Myanmar's economy is comparable to that of Thailand and Vietnam
but the immediate transitional period is expected to create problems for
an inward looking government and profit-demanding foreigners.
Nevertheless the idea of a politically correct Myanmar will no doubt
tantalise business with potential opportunities thought unimaginable
just six months ago.
''Burma is now entering its age of reconnaissance as companies from
countries that had shunned the country's military regime for decades
examine its potential as a market for their products or services or
source of raw materials or low cost labour,'' Mr Greenwood said.
The list of companies lining up is a who's who of the corporate world.
Chief among Thai corporations are PTT, PTT Exploration &
Production, Ratchaburi Electricity Generating Holding and Hemaraj Land
& Development. These firms are likely to benefit from large
infrastructure and border economic development projects.
Toyota and Honda have expressed an interest in locating a production
base at Dawei as part of a broader strategy to reduce costs. Japan has
also indicated it will help bank roll the project, although it would
also like to restructure debt currently held by the country's military
leaders.
Mitsubishi, Mitsui and Sumitomo, all from Japan, along with
Malaysia's Petronas, American conglomerate General Electric, Danish
shipping Line Maersk and Indian group Jubilant Energy are also planning
to invest.
And amid the brouhaha that came with the release of political
prisoners over recent months, other announcements were made by the
government which fielded much less coverage.
This included the awarding of 10 on-shore oil and gas blocks, by far
the biggest tenders, to companies that included Petronas, PTT
Exploration & Production and Jubilant.
THE WILD WESTHowever, just like the opening of Vietnam and Laos at
the end of the Cold War, Cambodia once its civil wars ended in 1998 or
Thailand 30 years ago, Myanmar remains a legal and political minefield
dogged by corruption. Transparency International ranks it at 180 equal
with Afghanistan, one spot ahead of Somalia and two ahead of North
Korea, considered the most corrupt country on Earth.
''As far as I know, rules and regulations are one of the biggest
obstacles,'' said one Yangon-based political analyst who declined to be
named.
''Here in Myanmar, there is no investment law, money exchange law,
things like that. Nowadays, businessmen from abroad complain that there
are no clear explanations for obstacles they face because there is no
clear direction,'' he said.
Those laws are expected to be discussed and legislation passed by the
parliament in upcoming sessions and are sorely needed for all levels of
the isolated society. Copyright infringement in the arts is another
major issue. Artists of all types, particularly musicians, have for
years simply copied and sold works from abroad while claiming it as
their own.
Banks are also keen to get involved, in particular the UK-based
Standard Chartered, Bangkok Bank, Siam Commercial and Krung Thai. But
the country lacks an independent central bank, nor has it fully
recovered from the 2003 crisis when 20 private banks or informal
financial companies went bankrupt.
The black market flourishes on the dilapidated main streets of
Yangon. Mr Greenwood said another major hurdle to stepping-up low cost
industrialisation to kick-start a moribund economy is Myanmar's human
limitations.
Myanmar had a history of high quality English-orientated education
but 50 years of military rule resulted in the closure of the best
universities and schools amid fears they would harbour student
resentment and protests. According to Joshua Kurlantzick of the Council
on Foreign Relations this was perhaps the most destructive blow dealt to
Myanmar's economic future.
Mr Greenwood was harsher in his assessment: ''The emerging population
has been effectively uneducated, or even 'diseducated' _ by the regime
in what may be compared to a less bloody variant of the Khmer Rouge
efforts to create supine, isolated and even physically weakened
peasantry,'' he said.
One possible solution touted is the return of educated exiles. But
analysts doubted the release of dissidents, political reforms and the
prospect that freed democracy icon Aung San Suu Kyi will win a seat in
parliament at the April 1 by-elections would be enough to entice those
living abroad with well paid jobs to return home.
POTENTIAL AND PITFALLS
Despite the shortcomings, a business boom is already being talked up.
Last November the country's industry minister declared the government
was expecting an enormous inflow of foreign investment, mainly from
Asia.
The price of industrial land has reportedly quadrupled in parts of
Yangon on the back of a rumour mill running hot on speculation about the
development of satellite cities and large construction projects.
Even up-market travel agents are starting to offer boutique services
out of Bangkok. One group, Khiri Travel, is offering tours around the
country in a private and, of course, luxurious jet.
At $8,500 a head a for four days and three nights, the company's
general manager Edwin Briels was optimistic in describing his target
market as ''high-end clients who want to be treated like millionaires''
undertaking ''one of the greatest little holidays in Asia''.
Currently, Myanmar's main income earners are a little more modest.
Garments and tourism, alongside timber felling _ an abomination among
environmentalists _ and mining have provided limited financial returns
for a government which has already privatised much of the country's
assets among the military.
While comparisons with Thailand and Vietnam are understandable, the
reality is that Myanmar sits squarely behind Cambodia and Laos, which
have been transformed by a decade of unprecedented growth with both
countries establishing stock markets.
''Myanmar could create a stock exchange within a couple of years but
first it has to pass some new enabling laws,'' said Doug Clayton, chief
executive officer of Leopard Capital, an investment fund that focuses on
emerging markets.
Mr Clayton has followed Myanmar's fortunes for more than two decades
and said property, hotels and consumer goods usually led the foreign
investment wave into transitional countries but that such investors in
Myanmar faced peculiar hurdles such as sanctions, uncompetitive foreign
investment regulations and a bizarre official exchange rate system.
''All this may rapidly change as Myanmar's reforms continues but this is the reality as of today,'' he said.
His sentiments were echoed by Mr Pedersen who added the economics in
the early days of development of such countries was more about politics
and Myanmar had the potential to become a serious regional competitor in
areas like garments once sanctions are lifted.
''But this will take some significant progress in day-to-day
governance, below the changes in high politics and governance approach
that we are seeing at the moment,'' he said, adding that small investors
were likely to see a quick rise in demand off the back of tourism.
However, he added it would take some time before an expat community
was established, if at all, to support the levels of Western-style bars
and restaurants seen in the other major cities around the region that
often find support among the foreign donor community and NGOs.
''In fact, I am not sure this will ever happen _ the Burmese are much
more self-reliant and likely to continue to limit the role of aid
agencies. And that's a good thing, I think,'' Mr Pedersen said.
Either way, analysts agree that Myanmar as a development story could
run for decades, the process will be long, at times arduous _ and the
returns could be great for Myanmar and business alike _ if the reforms
initiated by the civilian government after it came to power in November,
2010, remain on track.
Additional reporting by Piyaporn Wongruang
THE ECONOMY: KEY FACTS AND FIGURES
An International Monetary Fund delegation visited Myanmar earlier
this month to discuss economic development and the outlook for the
country with leading figures. The following are some of their
projections and key identified areas of reform.
REAL GDP GROWTH
2011-12: 5%
2012-13:6%
Increases are expected to be driven by commodity exports and higher
investment, supported by robust credit growth and improved business
confidence.
INFLATION
2011-12: 4.2%
2012-13:5.8%
Rising food prices are expected to be the key driver of inflation.
CURRENCY
The parallel market for the kyat has seen it appreciate by about 32%
since the end of 2009-10, caused largely by foreign inflows. If
sustained, exchange rate appreciation could undermine Myanmar's already
limited external competitiveness.
On the upside, the recent easing of foreign direct investment
restrictions, increase in private sector credit and continued progress
towards lifting exchange restrictions and unifying the exchange rate
could bolster growth.
SUGGESTED REFORMS
Special Economic Zones to allow more foreign direct investment to
improve competitiveness. This would reduce both informal market activity
and prices.
The Central Bank of Myanmar (CBM) is already studying ways to reform
the complex exchange rate system to lift constraints on economic growth.
Modernisation of the financial system, including; expansion of bank
networks in rural areas, nurturing stronger commercial banking through
price competition, interest rate liberalisation and allowing joint
ventures with foreign banks, to prepare for Asean integration in 2015.
Reform of the agriculture sector through increased bank lending to
farmers and micro finance. Planned land reforms should also allow
farmers to use their land titles as collateral. Investment in rural
infrastructure, including through community driven development
initiatives. Spending on health and education are also essential.
5:09 PM
Waa Haa Haa
စင္ကာပူႏိုင္ငံသို႔ ခ်စ္ၾကည္ေရး ခရီးသြားေရာက္ခဲ့ေသာ ႏိုင္ငံေတာ္ သမၼတ
ဦးသိန္းစိန္၏ ခရီးစဥ္ကာလအတြင္း စင္ကာပူ-ျမန္မာ ႏွစ္ႏိုင္ငံၾကား
စီးပြားေရး၊ လူ႔စြမ္းအား အရင္းအျမစ္ႏွင့္ ျပည္သူ႔ အုပ္ခ်ဳပ္ေရးက႑ တိုးတက္
ဖြံ႔ျဖိဳးေရး ကိစၥရပ္မ်ား ပူးေပါင္း ေဆာင္ရြက္ရန္ သေဘာတူညီမႈမ်ား
ရရွိခဲ့ေၾကာင္း စင္ကာပူ ႏိုင္ငံျခားေရး ၀န္ၾကီးဌာနမွ ထုတ္ျပန္ေသာ
သတင္းမ်ားအရ သိရွိရပါသည္။
Myanmar's
opposition leader Aung San Suu Kyi, pictured in 2011, will travel
outside Yangon on the campaign trail Sunday with a visit to a southern
city to promote her party ahead of April's by-elections. 
Myanmar's opposition leader Aung San Suu Kyi greets supporters upon
her arrival in Myanmar's Dawei. Huge crowds lined the streets to greet
Suu Kyi as she hit the campaign trail Sunday ahead of by-elections seen
as a key test of the regime's commitment to reform.
Posted in: 
Pakistani
president Asif Ali Zardari (left) meets with Myanmar democracy icon
Aung San Suu Kyi at her house in Yangon. He presented her with an award
in recognition of her long struggle for democracy. 
