Myanmar: the biggest emerging market story since China in 2001

By Lars Henriksson Apr 11, 2012  ...

About five years ago I had the fortune to take a month-long tour through Myanmar with a group of Burmese and Japanese friends. For the most part, we travelled on buses – relics from Word War II that were crammed with people throughout our trip.
Our fellow passengers offered us miniature wooden stools placed in the middle of the aisle to sit down on. And we stared out the window at the strange country that rushed past.

Myanmar absolutely mesmerised me. It is blessed with lush paddy fields, dramatic mountain ranges and people who seemed untouched by the modern world. We’d pass women and children with exquisite white-painted faces from thanaka cream. And almost every corner had an ancient Buddhist temple where local people asked for alms to paint or repair it. I was considering learning Burmese and staying.

For the last month, Myanmar has been back in the spotlight. On 1 April, the country held a landmark by-election, which could soon sweep the recently freed Aung San Suu Kyi to power. If the election is deemed fair, the EU and the US will lift some of their long-standing trade sanctions. Myanmar is also set to float its currency, the kyat, to attract investments and reduce corruption.

These reforms could bring decades of international isolation to an end. And the country has been swarming with foreign businessmen and politicians in recent weeks. Western companies are queueing up to get into the country, sandwiched between China and India and offering huge potential in energy and tourism. Even David Cameron has announced his intention to visit.

But you can forget China, India – and certainly David Cameron. Because Myanmar is part of a far more interesting investment story. In fact, I think that this will be the most exciting story of the next five years. And it promises to deliver some explosive returns for early investors.

What does Myanmar offer?

You can call it Myanmar or Burma (it doesn’t matter all that much to the locals I speak to), but this country has long been the subject of colonial interest. A century ago, the British used the Irrawaddy as a back door to the markets of China. Unfortunately the river - which starts in the perennially snow-covered Himalayas and descends a thousand miles to empty into the Bay of Bengal - passes through massive mountain peaks which were inhibited by hostile tribes. 

But it still emerged as a major exporter of commodities: hard wood, gems and rice (the world's biggest exporter until the onset of the World War II). However, following independence in 1947 and a flirtation with democracy, Myanmar turned inwards and pursued a mixed ideology of Buddhism and socialism, leading down an economic cul-de-sac it has yet to escape.

Today Myanmar has three things going for it. First, it is a regional transport hub providing an alternative shipping route from Asia to the Middle East, India and Europe, by-passing the Malacca Strait. Second, the development of Myanmar’s natural resources will provide energy and food to much of Southeast Asia. And third, rising incomes in Myanmar and the expansion of the transportation network from Bangkok (east-west and north-south) will become a magnet for foreign direct investment inflows to the region.

Those factors place Myanmar right at the heart of the most exciting development in emerging markets since 2001.

 http://www.moneyweek.com/investments/stock-markets/emerging-markets/moneyweek-asia-investing-in-myanmar-burma-stocks-21500