It’s closing in on midnight when our taxi pulls up outside a run-down apartment block on the edge of central business district of Myanmar’s commercial hub and former capital Yangon. The attendant lounging on a chair out front, shows us up a short flight of stairs to the entrance; down the end of the corridor, past an elevator you would think twice about stepping into there is an imposing door. Our guide knocks, and the wooden peephole slides back. It’s opened by a smiling young Burmese barman, the din of late-night chatter from the buzzing crowd clutching drinks swirls over a 1920s jazz soundtrack.
Holding court in the middle of the room is Sophie Barry, a kaftan-clad Australian who worked for decades as a news camerawoman and co-owns the bar with a Bangkok-based Australian. “Don’t you love it,” says Barry, who recently returned to Yangon after seven years running a bar in Kabul, “it’s a real frontier town.”
In the crowd is Alastair Mackay, a tousled-haired 30-something who comes from rural Braidwood in southern NSW. He has a business refitting vintage yachts at a dry dock on the city’s barge-laden Yangon River. “I sailed up from Australia 11 years ago, and I just ended up staying,” he says. At the time, Yangon was one of the few places in the region he could get the kind of docking facility he wanted. When he first arrived Myanmar was still very much in the dark days of the ruling military junta. The place was a lot cheaper, and run down.
Four years after the junta opened up the country, formerly known as Burma, to the world, it is attracting a flood of foreign interest, including from Australia. Major companies such as ANZ and Woodside Petroleum are setting up business while a host of more adventurous Australians are coming to a country that is shaping up as the next Asian frontier.
Hotel prices in Yangon are skyrocketing as foreigners flock in. Asked about opportunities for Australians, Mackay laughs. “You should have come yesterday,” he says. He may be right but Myanmar is still seen as a land of potential. With a population of more than 50 million, it has the biggest landmass in Southeast Asia apart from Indonesia, and an abundance of natural resources.
In 2011, the quasi-civilian government shocked the world by announcing a program of economic reform. It released thousands of political prisoners, floated its currency, removed widespread media censorship and embarked on a national infrastructure improvement program. A worldwide lifting of sanctions followed.
Bill Shorten, then the financial services minister, led a delegation to the country in October 2012, three months after Australia officially lifted its trade and financial sanctions. The following June Australia’s trade promotion agency, Austrade, opened an office. After a visit last August, Trade Minister Andrew Robb said he was struck by the potential and the commitment of the people he met to “political and economic reform”.
Oil and gas has been one of the first sectors to open up to foreign companies. Woodside is the first of Australia’s big resources companies to make a move. Chief executive Peter Coleman was a member of Shorten’s mission. The company now has interests in six different exploration permits in the Rakhine Basin, off the west coast, in varying partnerships with the Myanmar Petroleum and Exploration and Production Company, British gas group BG and South Korea’s Daewoo International. The company’s interests now cover a combined area of 46,000 square kilometres, making Woodside the largest acreage holder in the basin. Speaking after the signing of production sharing contracts for four offshore blocks last month, Woodside’s executive vice president for global exploration, Phil Loader, said the company would begin an active program of exploration in the region this year. “The Rakhine Basin is an emerging oil and gas province that fits very well with Woodside’s proven capabilities in deepwater exploration and development,” he said.
ANZ has been a leader in the banking field. It set up a representative office in Yangon in 2013, the first OECD bank outside of Japan to do so. In October it was one of nine foreign banks awarded a banking licence out of a field of 25 applicants. Under the supervision of representative Rajesh Ahuja, the bank is expected to step up its operations to a full licence in June. Announcing the licence, ANZ’s head of international banking, Andrew Geczy, said Myanmar was “forecast to be one of the fastest growing countries in the region over the medium term” with expected nominal growth rates of more than 10 per cent over the next five years.
Insurance is the next market that could open up to foreign players. The Australian arm of AIA insurance has set up an office in Yangon hoping to get a licence. Running the process is Tom Renny, a Myanmar native who has returned after more than four decades in Sydney and Melbourne. He is one of many so-called “re-pats” helping to bolster the thin layer of skilled talent in the country. When he first spoke to The Deal in November, Renny was hopeful the licence process might get underway in the first six months of this year. However, he says there has been little sign of movement since then. The insurance licences may have been caught, like many economic reforms, in a slowdown in activity as the government prepared to battle popular opposition leader Aung San Suu Kyi in the general election that it has promised for October or November.
One of the key economic reforms is in the telecommunications market. Licences for two mobile phone networks on international 3G standards have been issued to Norway’s Telenor and Qatar’s Ooredoo. Myanmar-based Australian David Madden sees this as providing an enormous opportunity for technology groups. “Myanmar is jumping right over the fixed-line internet,” says Madden, co-founder of the political activist group Get Up. He has set up a technology-focused non-government organisation in Myanmar called Phandeyaar. It has an enviable top-floor dotcom-style warehouse space in the heart of Yangon’s burgeoning media and film district with sweeping views of the river. Here he plans to house starts-ups in “civic tech” — technology aimed at meeting the needs of civic society. He has been hosting regular talks by technology experts aimed at seeding the local scene.
In a recent report on the nation’s economic potential, titled Myanmar: Asia’s Uncut Gem, ANZ economists cite the technology sector as one of many huge opportunities in the coming 10 years. “This economic catch-up will make itself apparent in one of the fastest industrialisation and manufacturing sector build-outs the Asian region has ever seen,” it says.
Yangon is struggling with creaking, overburdened infrastructure. Its roads are clogged. It can take as much as hour to travel five kilometres at the wrong time of day. The car is king. Motorcycles and scooters, which dodge traffic jams in car-choked cities such as Ho Chi Minh City, Jakarta and Bangkok, are banned. Electricity outages are still regular although not quite as often as in the past. For all the excitement, there’s the daily grind of what is still very much the developing world to temper even the most bullish enthusiast.
Baked in year-round summer temperatures, Yangon is also dramatically short on decent well-priced hotels, apartments and houses. Rents have soared past those in nearby Bangkok and Kuala Lumpur. “The spacious four-bedroom house I used to rent for $US1600 a month is now going for $US16,000 and is occupied by a foreign oil company executive,” Mackay says.
Education is another area of potential opportunity. Eugene Quah, a former lawyer from Melbourne, has set up a company called Edulink that provides English teaching and advises local students on studying in Australia. Quah first came to Myanmar as a backpacker in 2007 “and just fell in love with the country”. His company now employs “between 40 and 50 people”. He argues that the Australian government could do much more to generate education business from Myanmar.
“Myanmar is not an El Dorado,” he warns. “Don’t come expecting to find gold. I learned the hard way,” said Quah. Unlike many expatriates he has done the hard yards and has a startlingly good grasp of Burmese. “I started up for two and half years, had a set back with a business partner, fell down and got back up.” He says it’s been worth the effort. “The opportunity is a lot bigger than most people expect,” he says. “There’s a lack of access to private education and a lack of information.” His advice to prospective entrants is to do their homework, build relationships and carefully choose their partners.
Politically, Australia has punched above its weight in the country, in part because it did not back the full sanctions package imposed by the US. It has also provided significant aid packages under both Coalition and Labor governments. Australia’s former ambassador, Bronte Moules, who left in January after a four-year stint was also widely seen to have done a good job.
In what maybe a reflection of the complexities in doing business in the country, a schism appears to have developed between Australian business groups. There is the Yangon-based Australia Myanmar Business Group and the newer Sydney-based and registered Australian-Myanmar Chamber of Commerce. The Sydney-based group was formed by accountants Lachlan Foy and Michael Phin, who worked with insolvency practice KordaMentha, and Australian-educated La Min Win. Win has close family connections to the military that still exercises substantial control. Last year, the Sydney-based group attempted to register its name in Myanmar but the Yangon-based organisation objected. Government rules mean only one business representative group from each country can legally exist. The Australian embassy has withheld its imprimatur until a peace deal is reached.
The men running the Sydney-based business group own the newly established mining services group Valentis, which has signed a joint venture with Ballarat drilling company Titeline to import drilling equipment. But the finalisation of Myanmar’s onshore mining laws appear even further off than its insurance licences. As Madden puts it: “Don’t come here with a three-year plan or a one-year plan, you will be disappointed. If you come here with a 10-year plan you might find some success.”
Source: The Australian Business Review