Nyunt Win
corporate risk
Passport Myanmar: New investment shines for the golden land | Canadian Insurance

Passport Myanmar: New investment shines for the golden land

The rain had started only a few minutes ago, but many areas of Yangon were beginning to be inundated by the downpour. Scraps of garbage were carried away with the flood and blocked the ditches—which sheds light on how ruined the urban infrastructure of the city has been.

My taxi driver began to curse the government, while slowly driving his car, not because of poor visibility in heavy rain but because the traffic slowed down to a crawl. Since the car import policy overhaul four years ago, people who can afford a vehicle have been able to import newer cars at cheaper prices, but traffic is worsening day after day. In monsoon season, the former capital’s already poor road system becomes a nightmare.

On the flip side, anyone who hasn’t visited Myanmar in years would be taken by surprise after they land at Yangon’s international airport. (Yangon, it’s worth noting, is the proper name for the major city; the colonial British mangled the syllables and promptly dubbed it “Rangoon,” but that’s still wrong.) Myanmar, often known by its old colonial name of Burma, also earned the nickname “the Golden Land” because of its glittering Buddhist pagodas coated in gold leaf. Isolated by political sanctions and deeply backward in terms of infrastructure and technology, you’d see rusting 1970s cars on the road and could hail a trishaw for the equivalent of pennies to carry you across town. Now there are constant waves of international visitors, new airlines, newer-model cars, new high rises and shopping malls for a sprawling city that’s home to seven million people.

These changes came after Myanmar saw its first major political and economic reforms in March 2011. To everyone’s surprise, the small nation suddenly became a darling of the West, leaving its frozen relations behind. China no longer seems to have a chance at monopolizing the country’s lucrative business sectors, and an influx of foreign investments from the West has prompted some to dub it one of Asia’s last economic frontiers.

“Many, many things have changed in the past few years, some are good and some are bad,” says Stuart Deed, who runs Myanmar Real Estate, which helps people find accommodation and office space. “The proliferation of cheap mobile telephones and the accompanying Internet is wonderful, but I’m less of a fan of the explosion in the number of cars on the road, which makes getting around much slower and unpredictable, even if it means you can do so in comfort. On balance the changes are better. I think most people would appreciate that life is better than before.”

Deed, a former business editor with an English-language newspaper in Yangon, has lived here almost a decade, through the darkest and toughest years under the military dictatorship.

“I think the economic environment in Myanmar is a daily challenge,” argues Deed. “Many things that are taken for granted elsewhere, such as fast Internet or electronic payments, can be slow and inefficient here. But there are opportunities available in Myanmar that are unique—if you have a good idea, you can probably make it work here.”

His optimism isn’t without foundation. With 52 million people, Myanmar sits at the crossroads of China, India and Southeast Asia and provides access to a consumer market of three billion. It has rich natural resources and a young, cheap, but unskilled labor force. Despite its blessings, however, it remains one of the poorest countries in the region due to its long history of conflict, isolation and economic mismanagement. Two thirds of the population live in poverty, and the World Bank estimates the country’s per capita GDP at $1,105 U.S. About 70 per cent of the poor rely mostly on subsistence farming.

“Always Prepare Plan B to Z”

Like Deed, Wichit Pakdeepipattanapong also sees potential in the business development of Myanmar. News of the incredible changes in the country inspired him to quit his job with a Thai media firm and fly to Yangon with his brother. The pair co-founded Wired Media Myanmar, a hybrid creative media agency that promotes businesses in the local market. Now Wichit travels back and forth between his two offices in Bangkok and Yangon. “That excited me very much, doing something differently, so I quit the [former] job.”

But Myanmar is still far from creating a healthy environment for investment and commerce. Because of poorly established property rights, land confiscation and contested ownership remain concerns for potential foreign investors. The criteria for approving foreign investments are vague. Then there’s the poor physical infrastructure, the unreliable and inadequate electrical power, the heavily cash-based economy, the burdensome red tape and rampant corruption.

One of the inevitable drawbacks of opening up the economy has been a huge surge in the costs of living for ordinary people, particularly in cities like Yangon and Mandalay. Rents for an 80-square metre room in downtown Yangon can be as high as $4000 U.S. per month. Subscribing to broadband Internet costs $200 a month, while buying a brand new Volkswagen Gold 2.0 TDI car costs around $75,000. According to a recent Mercer Global survey, Yangon is the 28th most expensive city for foreigners, well above New York and Paris, and only second to Singapore in South East Asia.

“Yes, Myanmar is yet to become business and investor friendly,” says Tin May Thein, CEO and executive director of Asia21 MJ Co. The firm provides liaison and logistical services to foreign business delegations, NGOs and companies coming to Myanmar. “We still don’t have clear-cut policies in many areas. It is not quite clear, for example, how they do all those tax calculations for companies.”

Tin May Thein, who used to work for the American Center in Yangon, lived in the U.S. for seven years before she returned home while the big changes were unfolding. Her connections in America are now her major clients, and balancing their demands against an outdated system is a challenge for her.

“Many Americans investing in Vietnam usually say that they prefer Myanmar to Vietnam because the latter is a hard place to work. But after they see situations here, finally, they end up choosing Vietnam, Cambodia, or even Laos instead of Myanmar. Vietnam is a Communist state, but they have more American businesses, while Myanmar is officially a market-oriented democracy, but we have more Chinese here. Something is wrong.”

Wichit has a similar view. A task he could accomplish in an hour back in Thailand can take three hours in Myanmar—even longer if the Internet is needed. “The thing I always need to explain to my foreign clients is that we cannot afford to charge service fees for the same rate (or slightly higher) as other countries. The operation is much more difficult than people outside the country could imagine. Expect the worst and always prepare Plan B to Z.”

One of the most feared problems for foreigners to deal with is a lack of transparent and consistent policies. A change in the position of a minister or a highranking official can cost you a business deal. You may have to start over, despite the fact that you’ve already reached an agreement with a former official.

But every person from the business sector I spoke to unanimously says the most difficult problem for foreign companies is Myanmar’s unskilled workforce, thanks to many years of neglect from the country’s education system. There was a time (back in the 1950s) when an education in Burma was one of the best in the region, and Yangon University even attracted international students. After 50 years of under-investment and muddled policies, coupled with the economic spiral, Myanmar’s universities today produce graduates with degrees but no skills.

“A lot of people here are willing to have jobs, work hard and learn,” says Emmanuel Maillard, country director of Building Markets Myanmar, a Western NGO that helps connect entrepreneurs and create jobs in the country. “A lot of people here are young and motivated, but very few have a lot of professional experience. Very few come from an educational background that is solid. I think the education system here will need a lot of improvement. And probably one of the priorities of the government is basically to produce a generation of workers, and it’s a very big challenge.”

Yangon’s once sleepy streets are now bright and busy in the evening.

With the arrival of big multinationals, a handful of skilled workers with English fluency have, of course, gone to the big companies that offer a more handsome salary and other incentives.

If improving education is a long process, political stability and successful democratization will have an immediate effect on the economic development of Myanmar. At the moment, the signs are not encouraging. On November 8, the country will hold its first open general election in 25 years, but attempts to amend the military-drafted constitution were voted down in the nation’s parliament, and the peace process with the country’s numerous ethnic armed groups has a long way to go. It was a stunning development when the regime did away with the media censor, which once inspected every book, every newspaper and every magazine in Myanmar. But there’s been a recent chill on freedom of expression again.

Add to this the ugly persecution of the predominantly Muslim Rohingya people in the country’s western coastal Rakhine State. More than 100,000 have fled on ships, desperate to leave repression and ethnic violence. In June, the US-ASEAN Business Council, during its fourth visit to Myanmar, declared there were still barriers to more American direct investments in Myanmar, with violence and human rights being their areas of greatest concern.

Both Deeds’ and Wichit’s message to potential foreign investors in Myanmar is that doing business here requires patience and a cool head. Compared to Bangkok, life and business both move in the slow lane. “We cannot get attached to our cellphones all the time,” says Wichit. “With the slow Internet, it gives us an opportunity to talk more with others, to appreciate the surrounding and living more cautiously… You must be a very good problem solver here in this market in order to [gain] success. There will always be never-ending new experiences for you to deal with, [so] be open-minded and alert to the unexpected situations.”


For many Westerners, Aung San Suu Kyi is Burma. She’s won the Nobel Peace Prize, she’s inspired movies, and having spent almost 15 years under house arrest, she achieved a kind of international political sainthood that was once only enjoyed by Nelson Mandela. When she was under guard, Burmese used the code phrase, “The Lady” to refer to her in private conversation. But the Lady is now free, and unlike Mandela’s narrative, the regime that gave her so much misery is still in power and won’t let her be president.

In the five years since her release, Suu Kyi has gone from being an icon to her people to an all-too-human and flawed politician. A young, sophisticated generation in Yangon has been appalled by the conduct of certain “mad monks,” fringe leaders in robes who have called for Rohingya to be marginalized. This isn’t Buddhism to them, not the religion that’s supposed to have a spirit of compassion. But what baffles them more is how Suu Kyi has stayed silent on the issue. And when she’s commented at all, it’s been weak beer indeed. She told the BBC in 2013 that “both sides” were to blame for violence. Her failure to condemn the persecution has even prompted Bishop Desmond Tutu and the Dalai Lama to call on her to do more.

But the Wall Street Journal reported recently that she hasn’t even bothered to campaign for the November election in the Rakhine state, home to most Rohingya. Such is her concern over possibly alienating her traditional, older base support. When it comes to the ongoing issue of this repressed minority, the Lady vanishes…

–Jeff Pearce

Copyright 2015 Rogers Publishing Ltd. This article first appeared in the Fall 2015 edition of Corporate Risk Canada magazine