Myanmar has extended the welcome mat and the world is beating a path its door.
But not many companies from Australia are joining the rush.
Glenn Robinson, the Chairman of the Australia-Myanmar Chamber of Commerce, is with the largest commercial delegation to yet visit Myanmar from Australia.
He says even Australian mining companies which are used to working in developing and difficult countries are being cautious.
“They’re here learning what’s going on, talking to a whole series of people, working out who would be sensible to work with and who it would be sensible to avoid”.
Australia’s Department of Foreign Affairs and Trade advises caution.
Australian business still cautious
That’s because the problems are real – there’s lots of new laws but many more are in the works, the judicial system is untested, the financial system undeveloped, office space is twice the cost of New York City, work skills are low and corruption remains high.
Per capita income is less than $US1000 a year.
Trade Commissioner Mark Wood says only 20 per cent of the country is connected to the power grid so it’s difficult to operate a factory.
Mr Wood says his view might be seen as “bleak” but its realistic. “I think there’s been some reporting recently about here being a gold rush in Myanmar. I think that is overstating the opportunities there,” he said
“There is a lot of potential but there are a lot of issues that still need to be sorted out in the country … regulatory issues, financial issues, probity issues I guess, issues around corruption and bribery and so on.”
Austrade is especially focussing on encouraging Australian businesses interested in education, as well as agribusiness, oil and gas development and infrastructure.
Bluescope Steel and Woodside Energy were among the Australian companies showing interest early.
Tory Shenstone has been working in Myanmar since 2008 in her capacity as a Director of the oil and gas service company, Elgen Energy.
She told an Austrade business briefing last month that Asian companies are doing well in gaining licences to explore.
Australia needs to ‘make decision it wants to invest offshore’
“Myanmar is used to doing business with Asian countries and I think they might be just having a gentle gentle approach to doing business with western countries particularly in the oil and gas space as well,” she said.
The Myanmar government estimates its energy reserves as high as 2.5 trillion cubic metres of natural gas and over three billion barrels of crude oil.
Dozens of offhsore development licences are up for grabs this year.
With some of the biggest names in the business, Australian companies, including Woodside are lining up for a share.
“Other countries have definitely got in first,” says Robinson. “We’re almost at the point now of being too late. Its no good saying the regulations are not good enough, we’ll wait till they’re changed. By the time they are changed the Swedes, Norwegians, Fins, Danes, Germans, Italians, French, they will all be here and we’ll have no show of getting in.”
The signing this week of a cooperation agreement between the Australian Chamber and its Myanmar counterpart should help prospective investors, especially smaller ones.
Service industries in Myanmar will need foreign investors but of about thirty international banks to have opened offices, only one, the ANZ, is Australian.
Glenn Robinson says the ANZ has only recently opened a representative office in Yangon.
“But to get a banking licence they will have to elbow 30 other banks aside and those other 30 banks have been here a year and know who to talk to and who to stay away from.
“Commercial Australia has to make a decision it wants to invest offshore. And it hasn’t made that decision. Australian businesses have to regard themselves as global and start operating that way.”
Source: Australia Network News