An online magazine of news and opinions from the Asia New Zealand Foundation

Interest grows in Myanmar market

Myanmar - located between regional giants India and China - is emerging as a focus of attention for New Zealand businessmen and policymakers. After decades of minimal contact, New Zealand has moved to normalise relations in the wake of  moves by Myanmar’s leadership towards reform. 

Prime Minister John Key visited Myanmar in November 2012, meeting with both President Thein Sein and opposition leader Aung San Suu Kyi and announcing a NZ$6 million dairy development project. The visit was reciprocated in March 2013, when President Thein Sein visited New Zealand with a delegation of 12 ministers.

New Zealand’s Ministry of Foreign Affairs and Trade is in the process of establishing a diplomatic presence in Yangon. 

Women walking a long a street in Yangon

While New Zealand’s exports to Myanmar are modest, they are growing.  For the year to April 2013, exports were valued at around NZ$22 million, with dairy products about 90 percent of the total. Imports from Myanmar were valued at around NZ$1.5 million. Myanmar is rich in precious stones, oil, natural gas and other mineral resources.

“Myanmar is intrinsically a very attractive market of 60 million people at the heart of Asia,” says Jimmy Walsh, technical director of New Zealand-headquartered international engineering consultancy Beca Group, which has had a presence in Myanmar for 15 years. “It’s the crossroads between India and China and has massive potential.”

Myanmar has seen major moves towards reform, initiated by the military leadership that controlled the country from 1962 until 2011, when the junta was officially dissolved. General elections were held under a new constitution in 2010. Since then, a series of reforms have included the relaxation of media censorship, the amnesty of several hundred political prisoners and the release from house arrest of pro-democracy leader Aung San Suu Kyi.

Some experts are still skeptical about the military’s commitment to reform. Writing in the Foreign Policy magazine, Bertil Lintner predicts there will be more conflicts and power struggles within the ruling military elite. The future of Myanmar lies with the elite, rather than in the parliament or the government. 

Much rests upon the outcome of general elections due to be held in 2015. 

What is not in dispute is that the reforms succeeded in international sanctions being lifted, and have triggered significant international investor interest. However, longtime observers note that Myanmar is still a frontier market, with minimal infrastructure development. Investors need to cope with major challenges, including inefficient telecommunications and rising prices for scarce business resources such as office space. Those wishing to do business need to be prepared for the long haul.

A major challenge for Myanmar is that it is starting from a very low base compared to its neighbours. It needs to build up not only a functioning physical infrastructure of road networks and reliable power supply, but also the basic financial, regulatory and banking infrastructure to attract investors. 

Denis Win Thein, who heads Winmein Ltd, is a Myanmar-born New Zealand businessman who has been active in promoting business in Myanmar. Winmein Ltd is involved in English language schools, acts as an agent for a satellite provider, and is also exploring solar power development. Win Thein points to opportunities for New Zealand exporters in dairy products, engineering consulting services, IT and tourism development. In addition, Myanmar’s phone systems are incapable of meeting demand, meaning there are good opportunities in the telecommunications sector, where New Zealand company Oceanic Communications is already active. 

“If you partner with the right people, there are opportunities.” 

Walsh says Beca Group is acutely aware of the infrastructure opportunities. “In tourism, for example, the potential is massive,” he says. “We have a very strong portfolio in engineering services for hotels and tall buildings.” He adds that one recognised area of expertise New Zealand can offer to seismically active Myanmar is its skill in earthquake engineering. 

Peter Witton, Director of Anthem Asia, an investment fund focused exclusively on Myanmar, says the country is at a similar stage to Vietnam and Indonesia in the early stages of their development. 

“Our general view is that development is absolutely going to happen,” says Witton. “The challenge is to find smart people with small companies and grow them into medium-sized ones.”

Beca’s Walsh notes that Myanmar has a long tradition of a highly educated population and has good potential to build a solid skill base.

“I would be pretty confident that they will be able to manage the change and come out the other side.”

Gary Wigmore, head of Asia project finance for United States law firm Milbank, Tweed, Hadley & McCloy, said Myanmar was 20 to 30 years behind its neighbours, but was moving fast to try and catch up. Milbank recently advised China Mobile on its bid with Vodafone for two mobile licences, which eventually went to other companies, and described the process as transparent and fair. 

“They have adopted several new laws, including laws on arbitration and foreign investment, and they have plans to amend or enact 200 to 300 more laws in the next year or two,” he says.

David Porter is a communications consultant and writer with extensive experience in Asia. Any views expressed are those of the author. 

October 2013