Based on the latest statistics that I received from the Myanmar Department of Investment and Company Administration. As of the end of the Myanmar financial year 31st March 2015 Singapore is the leading investor in Myanmar. One in every four companies opened by foreigners in Myanmar is from Singapore.
Out of 4,324 foreign owned companies in Myanmar. Singapore dominates in the area of hotel (40%), services (26% this would include law firm, business advisory, consultancy services, F&B, etc), construction (20%), tourism (17%) and banking (14%).
Several reasons can be attributed to so many Singapore businesses opening up in Myanmar.
Primary one would be familiarity with the market as there are many Singapore companies who already have Myanmar employees in Singapore and these Burmese have worked for many years for the same employer in Singapore – expanding to Myanmar is a logical solution as they can transfer their Burmese managers or supervisors over to run the operations in Yangon. This is especially true in the area of construction, engineering and legal services where there is a shortage of professional firms who can deliver work of international standards.
The second reason would be proximity of the market – Yangon is only 2.5 hours away by plane and with many budget airlines servicing the 2 countries it is not an expensive affair to work in Yangon and fly back to Singapore every fortnight.
The third reason would be the historical close link between Myanmar and Singapore. As there are many Burmese who have moved to Singapore over the last 20 years because of education, employment or business – many have become Singapore citizen, permanent resident and even if they are not citizen or PR upon their return to Myanmar they have become goodwill ambassador for Singapore among their countrymen. I was quite surprised that during the Lee Kuan Yew Memorial event that was held on 29th March 2015 at the Sedona Hotel in Yangon – many Burmese who were alumni of NTU and NUS turned up at the memorial event to pay their last respect to Mr Lee. You will find that many of the middle – upper class Burmese have children studying in Singapore or are educated in Singapore and speaks English like a Singaporean. So doing business in Myanmar is not difficult for Singaporeans in general as the Burmese tends to hold Singaporeans in high regard. In the area of engineering, business advisory and consultancy services this is definitely an advantage.
The fourth reason is that as the financial market in Myanmar is still very undeveloped it is easier to get financing or to raise capital in Singapore than in Myanmar. Which is why many foreign companies use their Singapore office to invest in Myanmar.
With the US’s pivot to Asia strategy and the desire by the Obama administration to neutralize the influence of China in Asia. We see prominent businessman like U Win Aung of the Dagon Group taken off the US’s Specially Designated Nationals (SDN) and Block Persons list. More important is the fact that U Win Aung is also the President of the Union of Myanmar Federation of Chambers of Commerce and Industry the first contact point for many US businesses wanting to do business in Myanmar. There are talks that many other Myanmar tycoons will be taken off the SDN list over the next 6 months – so that US businesses have more options in terms of looking for joint venture partners. For example KFC entered Myanmar with very limited options as there was only one Burmese tycoon Serge Pun they could negotiate with as he was the only tycoon not on the US SDN list. So the US is very determined in Myanmar – they want to win in Asia and they want to dilute the influence of China in Myanmar.
With regards to the coming election in November. Most people in Myanmar think that Daw Aung San Suu Kyi’s National League for Democracy (NLD) will win the election. However Daw Aung San Suu Kyi will not be president as the constitution does not allow her to – as her husband and children are all foreigners. However she can be like Sonia Gandhi – she can be the President of the NLD party and appoint a capable person to be the President of the country and to run it. In Myanmar like in Thailand there will always be a role for the military due to the country’s history and number of armed minority groups in the country.
For Singaporeans that are already doing business in Myanmar – they face the problems of high rental and a shortage of skilled staff. However those who are persistent and have built up a strong local team will find that Myanmar is not a more difficult market versus Singapore whereby we also have the same problem of high rental and a shortage of skilled staff due to the government policy of restricting foreign labour. However this is where the similarity ends as Myanmar is just beginning on its road to reform and economic transformation. The IMF forecast that the GDP to grow by at least 8% per annum for the foreseeable future. In Singapore as a mature developed economy we would be very happy if we can get a consistent 2% to 3% annual growth rate over the next decade.
Author: Andrew Tan
About the author: Andrew is a Singaporean and the founder and Managing Director of Consult-Myanmar Co Ltd – a leading business consultancy in Myanmar. Andrew is also an exco member of the Singapore Association of Myanmar.