Aung San Suu Kyi’s landslide election win might be bad news for Myanmar businessmen like construction magnate Khin Shwe, who lost his parliament seat and remains barred from doing business with U.S. nationals due to his ties to the former junta.
Or maybe not.
Sitting comfortably on a beige leather sofa in his plush Yangon office next to a large portrait of himself, Khin Shwe says he is in a pole position to team up with the global investors who will be lured by Suu Kyi’s clean image and a renewed reform push.
“When the investments come in, there is no one else apart from us, the ‘cronies’, who will be able to work on the same level as the foreign investors,” Khin Shwe told Reuters, in a rare interview with an international media organization.
Myanmar’s junta ceded power in 2011 to President Thein Sein’s semi-civilian government, beginning a reform drive that delivered record foreign investment and improvements in key sectors of the economy.
Four years on, however, Myanmar’s telecoms, tourism, construction and banking sectors are still largely in the hands of some 20 wealthy and well-connected families with ties to military-backed enterprises.
A new influx of investment could boost their coffers, making it harder for start-ups and nimbler competitors to grow and compete and ensuring many of the old order maintain their sway over large sections of the economy even after their political representation in parliament was all but wiped out.
Khin Shwe, who lost a battle for re-election to parliament on the ruling Union Solidarity and Development Party (USDP) ticket, is on a U.S. blacklist due to his ties with Khin Nyunt, a once-feared former intelligence chief and prime minister.
But, after staking a part of his foreign policy legacy on supporting Myanmar’s democratic transition, U.S. President Barack Obama may now ease some of the remaining sanctions.
Sat behind a desk cluttered with golden statues and surrounded by certificates of charitable activities, Khin Shwe said he expected sanctions to be relaxed.
“If they keep the sanctions on the people, who will they form joint ventures with when they come in?” he said. “The investors can’t come and negotiate with a street vendor over business. They have to remove us from the blacklist.”
STRONG GROWTH SEEN
With Western investors mostly on the sidelines, companies from Asia have led the charge into Myanmar, boosting foreign direct investment to $8 billion in fiscal 2014/15, more than five times the flows recorded just two years earlier.
That may now accelerate after the clear mandate for change delivered in the Nov. 8 election, the first free poll in a quarter of a century.
“Many investors slowed down investments before the election,” said Thitipong Tangpoonphonvivat, CEO of Thai-based General Engineering Pcl, which is building a steel pipe factory in Myanmar with Millcon Steel to capitalize on expected demand for infrastructure projects.
“But after the election, there is more clarity about the political picture that reflects Myanmar is willing to open the country. We can see strong growth in GDP and trade numbers.”
The handful of Western multinationals that have set up in Myanmar include PepsiCo Inc, Coca-Cola and GE, which are working with local distribution partners. More may soon follow.
To be sure, many potential investors are uncertain about Suu Kyi’s economic policies.
Thant Zin Tun, executive director of Carlsberg Myanmar and director of LOTTE MGS Beverage Co, producer of Pepsi in Myanmar, said there were also concerns about the lack of business experience in her team.
“She will work with her own organization, she will work with her own administration, she will work with the top management people,” he said. “But I just want to know, how many does she have?”
Still, Sean Turnell, an expert on Myanmar’s economy at Sydney’s Macquarie University, thinks Suu Kyi’s decisive win that allows her to govern without needing to build coalitions will have a “hugely” positive impact.
“This is someone who is very Western-minded, very much attached to the rule of law, sound institutions, property rights and all that and she’s calling the shots now,” said Turnell, who also informally advises Suu Kyi’s National League for Democracy (NLD) on economic policy.
“This brings stability that would be favorable exactly for that kind of investor who stayed on the sidelines until now.”
Khin Shwe’s Zaykabar Ltd conglomerate reported about $20 million in profits last year and opened a new office tower in Yangon about a month before the election.
Apart from owning a prime real estate portfolio, Zaykabar runs the upmarket Karaweik Palace – a gold-painted barge that dominates a lake at the heart of Yangon and was the restaurant of choice for Myanmar’s generals during the junta years.
Khin Shwe is related by marriage to former USDP boss Shwe Mann, who was purged by President Thein Sein in August, and the two men have close business ties.
Like Shwe Mann, Khin Shwe is now distancing himself from the outgoing president, who he says became “afraid of the cronies”, and is seeking to build bridges with the democracy champion, calling her “A ma gyi” or “Big Sister”.
“This is an outcome vital for correcting our poor image as an investment destination. Everybody around the world knows her face, so we can’t miss this opportunity,” said Khin Shwe.
“That’s why I put my trust in Aung San Suu Kyi. I am genuinely happy that the NLD is forming the new government.”