Investing in Myanmar

We met with a private equity company while we were in Myanmar and learned a lot about the history and sociology of the country as well as the investment environment.


In 1988m the U.S and Myanmar were very close, with senior military officers studying and training in the United States and active intelligence cooperation.  According to the people we talked to, the CIA even helped Myanmar start its drug trade.  At the time, the U.S. perspective was all about containing China.


When the U.S. changed its policy towards Myanmar, China saw an opportunity and moved into Myanmar in a big way, coming to dominate its economy.  China was easy for Myanmar to engage with because China didn't worry about democracy or human rights, key issues for the U.S.


Now, the government wants Western investment.  There is corruption in Myanmar, but not as bad as in other Southeast Asian countries like Indonesia.  But, you must have the right local partner to do be successful in this country.  You have to be clear that bribery is not something you'll engage in.


To be successful, a company must commit people and time to Myanmar.  If you're not on the ground, showing a commitment to the government or a local partner, you won't get what you need from either to be successful.


Land is almost entirely owned by the government.  In 1962, the Burmese Socialist Party nationalized everything, allowing very few families to keep title to their property. So, today, if you want to invest in a real estate project, you can get a 50 year land lease from the government with 2 10-year extensions, not too different from doing business in China.


It's very difficult to establish title to property since there is no single land registry.  A land title document becomes the asset.  If you want to invest, you must see proof of ownership and the actual dimension of the land you want to buy or lease. 


Myanmar is an entrepreneurial country with lots of small shop owners.  When Burmese ex-pats decide to come home, there will be a tipping point in terms of entrepreneurship.  In the past, large conglomerates have been favored, but now small and medium sized businesses are becoming important.


Coca Cola is creating 6000 jobs in Myanmar and has donated $2 million to women's and children's programs, a lot of money in Myanmar.  While there are some environmental laws, it will be NGO's that have the biggest influence on environmental protections in the future.


Most of the construction materials come from Singapore.  The cost of renovation is cheap, but it's important to closely supervise the work.  Staffing is a big problem since Myanmar is new to the concept of hospitality and customer service.  While there is a small union movement, there is no understanding of what a union really does.


There are the first stirrings of civil institutions and a free press.  The press is just beginning to write about injustice and courts are now being forced to address injustices.  The rule of law is present.


A political transition is taking place.  The 2015 elections will be very important to investors.  There is a big need to create laws to ensure investments are protected.  Aung San Suu Kyi's party is weak and many question if she is able to become a leader, but she is very popular.  The constitution would need to be changed if Suu Kyi were to become prime minister because the current constitution prohibits anyone with foreign ties to hold the highest offices (and Suu Kyi's husband was British as are her 2 sons).  But, this is an exciting time to be in Myanmar and a good time to prepare to invest.