NAYPYIDAW, Myanmar — Foreign executives who flew into this dirt-poor
country over the past year to tap into what is described as Asia’s last
major frontier market often came away skeptical, befuddled or outright
disappointed.
“Look, listen, learn — and leave” was the catch phrase that described
trips here by executives who saw first-hand the lack of electricity,
terrible roads, eager but very undereducated work force and overwhelmed
government officials.
Now, two years after Myanmar’s civilian government came to power, the
country appears to be moving into another stretch of its journey from
military dictatorship to democratic market economy. Flirtations by
foreign investors are turning into commitments, vague promises into
dollars.
Some of the world’s most prominent multinational companies — Coca-Cola,
Unilever, General Electric, Philips, Visa — have started doing business
in the country.
“We’re prepared to be very patient,” said John G. Rice, a vice chairman
of General Electric, who attended a World Economic Forum conference of
foreign executives in Naypyidaw that concluded Friday. G.E. has leased
aircraft and sold medical machinery and turbines in Myanmar in recent
months and announced it would donate $7 million worth of training to
engineers and health care workers.
The overall scale of the company’s investment remains small. G.E. opened
an office earlier this year with considerable fanfare but it has only
two employees in the country.
“The world is getting used to the fact that Myanmar is no Shangri-La,”
said Peter Maher, the head of Southeast Asian operations for Visa. “This
is frontier stuff,” he said. “We take it on faith that there will be a
market here.”
Since December, when automatic teller machines were reintroduced into
the country, the number of A.T.M.'s accepting international credit cards
has gone from zero to 160 and spending by foreign cardholders in the
country has totaled about $7 million. But as a measure of the still tiny
size of the market here, in neighboring Thailand, which has a similar
population but a much more developed economy, foreign cardholders spent
400 times as much during the same time period — about $3 billion, Mr.
Maher said.
Companies from China and other Asian countries have long had a strong
presence in Myanmar, but with the lifting or suspension of European and
American sanctions, Myanmar is increasingly turning to the West for
assistance in building a country that was impoverished by five decades
of military rule.
One of the biggest tests of the country’s ability to attract investors
is the auction for mobile phone licenses scheduled to be completed later
this month. Fewer than 10 percent of the people in Myanmar have mobile
phones, compared with 80 percent in neighboring Bangladesh.
Jaspal Bindra, the group executive director of Standard Chartered Bank,
said the winners of the mobile phone licenses would need to invest
billions of dollars.
“That’s where you will see investment dollars quicker than later,” he said.
Companies selling food and other consumer goods are also moving quickly.
For decades, packaged food and drinks have been imported — and smuggled
— into the country from Thailand and China; companies are now seeking
to move production here.
Daniel Sjogren, managing director of Carlsberg Myanmar, is presiding
over the construction of a brewery in Bago, a city an hour and a half
outside the country’s commercial capital, Yangon.
With annual consumption of beer in Myanmar about five liters, or little
more than one gallon, per person, compared with 20 liters per person in a
more developed territory like Hong Kong, the brewer anticipates years
of growth.
But Carlsberg’s investment plans also underline some of the challenges
foreign companies face in setting up operations. Yangon, where Mr.
Sjogren is moving with his family, is strained by the influx of
foreigners. He had difficulty getting his two young children enrolled in
an international school and the house he has rented in Yangon is only
marginally less expensive than the apartment he is leaving in Hong Kong,
one of the world’s most expensive cities.
“If you want a decent house in an area of Yangon with secure electricity, you’re talking $10,000 a month,” he said.
Electricity supply is also an issue at the planned brewery in Bago — the
company must install its own electricity supply.
U Soe Thane, a minister and key aide to President Thein Sein, does not
hesitate when asked the most frequent complaint by foreign investors:
“Electricity,” he replies. Only 13 percent of households have access to
electricity, according to a report released earlier this month by
McKinsey, the international consulting firm.
“Without electricity it’s just talk,” said Mr. Rice of G.E. “Just about everything you do requires a plug.”
source: The NY Times
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