United Overseas Bank (UOB) sees opportunities for Singapore companies to invest in Myanmar and ride on its rapid growth.
The bank, which opened its first branch in Yangon in May, says its clients plan to invest US$300 million (S$404 million) in the country over the next 12 months.
UOB expects Myanmar’s manufacturing, hospitality and infrastructure sectors to expand and offer investment opportunities to foreign companies.
Mr Ian Wong, UOB’s managing director (group strategy and international management), outlined the bank’s outlook for the emerging nation in a phone interview with The Straits Times.
“Based on market research and our own internal analysis, we believe these sectors should contribute to 70 per cent of Myanmar’s gross domestic product by 2030,” said Mr Wong.
DEMAND HIGHER THAN SUPPLY
At this point, demand probably exceeds supply in most of the critical areas, whether it’s power or infrastructure or hospitality or industrial parks.
MR IAN WONG, UOB’s managing director (group strategy and international management), on the opportunities in emerging Myanmar
“At this point, demand probably exceeds supply in most of the critical areas, whether it’s power or infrastructure or hospitality or industrial parks.”
Mr Wong said low-cost manufacturing firms will relocate to Myanmar in the coming years as costs rise in North Asia.
The number of tourists and business travellers will also double over the next few years as Myanmar opens its borders and its economic activity increases, he said.
The nation’s infrastructure will expand to support this increase in economy activity, he added.
The Singapore bank said investments lined up by its clients for the next year are primarily targeted at the manufacturing and hospitality sectors. Its clients include multinational and regional companies based in Europe and Asia.
In manufacturing, some clients are seeking to build automotive showrooms, service centres and distribution facilities.
There is also interest in manufacturing and distributing beverages for mass consumption.
In hospitality, some aim to build hotels for business travellers.
Mr Wong expects to see clients invest more in Myanmar’s infrastructure and energy sectors.
Making decisions on investing in these sectors requires more time as regulatory approval is required and larger investment amounts are involved, he said.
“Building a power plant and infrastructure takes a lot more regulatory approval on the ground, and project size tends to be a lot bigger, so those projects will take a bit more time to come to reality.
“The discussions are happening (though),” he said.
The bank offers client services such as corporate loans, cash management and trade financing. Its foreign direct investment advisory unit in Myanmar helps clients explore business opportunities.
According to UOB’s research team, Myanmar will attract US$163 billion in foreign direct investment over the next 15 years.
Source: Straits Times