Jakarta. Myanmar today is like a young lady dressed up and ready to compete after many years of being controlled by her previous reign. Now development is fast-paced and if you blink you may miss the latest changes. It takes strong nerves to handle the challenges, but Noble Twin Dragons, a new rising Myanmar company together with Indonesian State-own contractor, is well-placed to catch the wave of change. By Elsid Arendra
During Myanmar’s decades of control by the firm ruler, it wasn’t easy for its people to travel abroad. After years of diplomatic isolation and economic and military sanctions, relations with other countries have thawed since the reforms following elections in 2010.
With few young people having the opportunity to get an education abroad, skills and even vision are in short supply. Ye Myat Thu, son of a prominent businessman in Myanmar, is one of the lucky few.
Educated in Singapore and Canada, after completing his studies he decided to return home rather than work or set up business abroad. Some of his school friends questioned his decision – most had never been to Myanmar and had only negative perceptions about the country which was the backwater of Asia.
That kind of misconception was common a few years ago. The foreign media was kept out of the country, left to spread only the unfavorable news, of which there was plenty.
Myanmar was an isolated country, tightly controlled by the strict government. Political turmoil, restricted freedoms, poor personal security and economic backwardness made the country unattractive to up-and-coming young professionals and entrepreneurs from elsewhere in the region. Now Ye and Myanmar’s younger generation are determined to change all of that.
In March 2012, a draft foreign investment law emerged, the first in more than two decades. Not long after that, the Asian Development Bank (ADB) began to formally re-engage with the country, financing infrastructure and development projects. The United States, Japan and European Union countries began to reduce or eliminate economic sanctions and allow foreign direct investment.
The global investment community jumped at the chance to get in on the ground floor of a prospective building boom in which the Southeast Asian state was tipped to finally jump from the 1950s into the 21st century.
The bonanza that many believed offered untold wealth for businesses has proved to be a minefield. But despite the challenges the country is forging ahead. Rich in jade and gems, oil, natural gas and other mineral resources, growth is exponential, with the rapid development opening the market for jobs and bringing yet more foreign investment into the country.
The ADB reports that Myanmar’s economy is on track to grow by 7.8% in both fiscal year 2014 (ending 31 March 2015) and 2015. Growth is supported by rising investment propelled by improved business confidence, strong commodity exports, rising natural gas production, buoyant tourism and strong credit growth – all complemented by the government’s ambitious structural reform program.
Ye saw the opportunity for his country to catch up with the rest of the world. Just three years ago the banking system was primitive and ATMs were unknown in Myanmar. Then came the first elevated road in Yangon, the largest city in Myanmar.
Not content to sit back and watch as Myanmar was flooded with foreign investment and multinational companies, Ye wanted to catch a part of this golden opportunity. The third of four siblings also wanted Myanmar natives themselves to host business in their own country. He founded Noble Twin Dragons, one of the first high-end property company in Myanmar, collaborating with a partner from Indonesia, Jennifer Janeth, who already had experience in the property field. Together they are building one of Yangon’s prestige high-rise building.
The cramped flat experience
Ye left Myanmar as a teenager and went to Singapore. Accustomed to living in a large house on a spacious landed property in Yangon, it was a shock for him to face the reality of sharing a small flat, yet the convenience and complete facility captured his attention. He realized how expensive property could be in a small country. The idea was born of returning home and building a property business.
Noble Twin Dragons (NTD) is a young company, but with venerable parentage. Ruby Dragons was founded by Ye’s father, U Nay Win Tun, one of the affluent person in Myanmar. Its main business is in jade, gems and other mineral resources.
But Ye does not want to just coast on his father’s name. He runs NTD like any other business. “The connections are there, but how we use them, it all depends on our accountability,” he told GlobeAsia.
“If I can not use (the connections) properly, then it means nothing. I was able to meet with reputable people for advice, (so) I can not say that there was no influence of my father, but how I negotiate and how I manage those connections, that is fully my responsibility. It’s a different challenge.”
Ye and Jennifer are very hands-on and try to be as close as possible to their public. They do not hesitate to serve customers who want to know about their real estate business.
“We are aware that customers do not know much about Noble Twin Dragons. Pyay Tower and Residences is our first portfolio. Therefore we should be very close to the customer to explain and convince them about Noble Twin Dragons and the projects that we do,” said Jennifer, talking of the company’s 2 Acres mixed use development.
The building is being developed by Indonesian state-owned company PT Wijaya Karya through a $125 million contract.
Setting the standards
In Yangon, old and poorly maintained buildings are everywhere. Most Yangon buildings look and are outdated, with few upgrades for decades. Yet for the same price as a rundown property in Yangon, companies can rent office space in Singapore’s premium Marina Bay Sands district overlooking the central business district. Only four buildings in Yangon are considered of international standard with quality offices. There are no skyscrapers as in other capital cities in the region.
Yangon has the highest average monthly rent for prime office space in the Southeast Asian region, according to Colliers International, with an average rent of $87 per sq m as of the first quarter of this year, 21% higher than in Singapore, which claims second place.
There is a regulation in Myanmar that states that a building should not exceed the height of the largest temples in Myanmar – the Shwedagon in Yangon and Shwemawdaw Paya in Bago, 50 km northeast of Yangon – which are 98 meters above sea level. This emphasizes the country’s vision to maintain their culture.
That has possibly saved a few mishap, since most buildings in Yangon do not meet safety and environmental standards. The building authorities are now improving what regulations are needed for multi-story buildings of international standard.
“We cooperate with the local city council to ensure that our buildings follow the required building codes and we invite our contractor PT Wijaya Karya from Indonesia and all our consultants from Singapore to work hand in hand with us.” Jennifer stated.
“The city council is very cooperative and encourages us to work closely with them. I believe cooperating with them is one of the key factor to the success of this project,” adds Ye. He has visited Jakarta several times and learned how laws and regulations on multi-storey buildings have been implemented. He was impressed with the Sudirman-Thamrin business district, he admits.
“I want to emulate such development as in Jakarta and Singapore. Our neighboring countries already have safety standards, environmental standards and other property regulations. In Myanmar, we are still adapting, trying to learn,” he said.
“Our government has also sent many officials to learn how buildings standards are implemented in China, Singapore, Indonesia and other neighboring countries. Now they are very open and willing to learn and catch up.”
Jennifer notes that a lot of development is taking place in Yangon. However, we are the first developer that emphasize on our design. The mix of our two buildings which include Grade A office, exciting retail component and residential also creates unbeatable convenience for our office and residential tenants.”
Strategically located along Pyay Road, one of the major thoroughfares in the heart of Yangon city, Pyay Tower and Residences still tries to maintain the character and culture of Myanmar. “We offer modern luxurious offices and properties by blending luxury with indigenous and cultural aspects. To provide comfort and environmental sustainability with world standards is definitely a challenge,” notes Ye.
Adds Jennifer: “The majority of offices in Yangon occupy one- or two-story houses. Not many local people feel they need office buildings with services and security standards. What we are doing at NTD is setting a new benchmark in mixed developments.
“Our project brings together upmarket retail stores, prime office spaces and luxury condominiums that meet safety and environmental standards. We are optimistic that the demand is still high, and that supply will not meet demand over the next five years.” She is convinced that foreign investors and entrepreneurs don’t want to compromise and will welcome the arrival of NTD’s world-class facilities. “Our Freehold land gives us competitive advantage.” Jennifer added.
The Kra Isthmus canal plan
Jennifer and Ye have a vision that Noble Twin Dragons will become one of the major players in the regional real estate business. They want to take NTD to the level of a multi-national player, not just a single-market presence.
They have hopes that a project that will change the map of Asia will help them on their way. According to a report in the China Daily Mail, Chinese state-owned companies Liugong Machinery Co. Ltd. and XCMG, together with private company Sany Heavy Industry Co. Ltd., will be involved in the construction of the Kra Isthmus canal in southern Thailand.
The 100-km canal would connect the South China Sea and the Gulf of Thailand on the eastern side and the Indian Ocean on the west. It would cut travel time by more than 2,000 nautical miles, making it unnecessary for shipping to take the long way round through the Singapore and Malacca straits.
If the Kra Isthmus canal could be built, logistics costs would shrink and increase the competitiveness of products from North Asia. A new route would be opened linking the west coast of Thailand, Myanmar and Sabang in Aceh, creating new economic channels and helping boost demand for properties.
While a canal across the Kra Peninsula has been talked about for years but never happened, Ye and Jennifer seeing a potential bonus if it does come to fruition. In the meantime, they have plans to help build more prestigious property ventures in the new Yangon over the next decade. The building is being developed by Indonesian state-owned company Wijaya Karya through a $125 million contract.
Source: Jakarta Globe