Frontier Markets: Myanmar, Explosive GDP Growth

The reason I’m revisiting Myanmar is because recently the State Bank of India (SBIN), together with the Vietnam Bank for Investment and Development, Taiwan’s E SUN Commercial Bank (2884:TT), and South Korea’s Shinhan Bank, were all granted permits to operate in that country. Last year, the first round of permits were granted to ANZ Banking Group of Australia (ANZ:AU), Thailand’s Bangkok Bank (BBL:TB), United Overseas Bank (UOB:SP) and the Overseas Chinese Banking Corporation (OCBC:SP) of Singapore, as well as three Japanese banks.

Why the sudden rush to open banking operations? The reason is because Myanmar, one the world’s poorest nations, is about to throw open its undeveloped economy, and those there first will make the best of it.  It’s a pity that no American banks, or for that matter European banks, were among those that applied. US companies such as Caterpillar (CAT) and Ford (F) are already in Myanmar, and I’m sure others will follow as soon as sanctions have been lifted.

Currently, Singapore is the second largest investor at $12 billion, with China at $15.4 billion being the largest. Myanmar is undergoing a surge in infrastructure construction, and as the Nikkei Asian Review article titled “Roads can convert Myanmar from economic void to hub” mentions, “Once regarded as ‘Asia’s missing link,’ Myanmar is undergoing a road construction boom. Seen as vital for economic development, arterial roads are being planned and built with greater urgency, and advances in democratization as well as cease-fires with ethnic minority rebels have sped projects along.”

An article from Frontier Myanmar quotes a World Bank report titled All Aboard: Policies for Shared Prosperity in Myanmar, which says that the country should grow at a rate of about 8% a year for the next five years. This is all very good news for investors, but as I have mentioned before, there isn’t a way for retail investors to get direct exposure to that explosive economy just yet.

Having said that, Myanmar Investments International Ltd is an investment and management company listed on the London Stock Exchange’s AIM market, and is currently raising capital and investing heavily in Myanmar infrastructure, and in particular telecommunications towers and microfinance. Investors seeking to gain exposure to Myanmar’s long-term growth would do well to investigate the company’s website.

I view Myanmar as one of those places that has nothing and needs everything in the way of infrastructure and expanding the private sector. Those countries and investors who are willing to step in early will have the most to gain. Given Myanmar’s location, it stands to become the linchpin between Thailand and the ASEAN region and India and the rest of Asia, which may truly be an opportunity not to be missed.

 

Source: Nasdaq

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