RANGOON — Though Burma is “one of the most exciting new markets in
the world right now,” American companies remain reluctant to invest here
due to the country’s poor infrastructure and outdated commercial and
financial laws, say representatives of a US business delegation.
US-Asean Business Council President Alexander Feldman on Wednesday
lamented the practical hurdles to doing business in Burma as his
delegation wrapped up a visit that brought prospecting executives from
AT&T, Chevron, Cisco, General Electric, General Motors, IBM and
other big American brands to Rangoon.
While an enticing market at the strategically important intersection
of China, India and Southeast Asia, Burma’s poor electricity supply and
road network, as well as high land prices, stand out as deterrents for
investors, according to the Council, a business-funded advocacy group
for American enterprises operating in Southeast Asia.
Acknowledging that some pioneering US companies such as Coca-Cola,
General Electric and Ford have opened operations in Burma, Feldman noted
that others are so far just setting up representative offices in Burma.
“It’s not like nothing has happened,” Feldman said, downplaying the
tentative, wait-and-see approach and pointing out that Burma’s economic
opening-up is still in in its early stages.
He said American health care, insurance and IT companies are
interested in investing in Burma, while financial services providers
such credit card companies are expanding their recently established
operations in the country. Credit card services are now available at
about 150 ATMs and accepted at some 300 hotels, restaurants and shops in
Burma, a relatively new development.
“Last year I had to carry a big wad of cash with me,” Feldman recalled.
General Motors will open a new showroom in Rangoon this year, with a
second to come in Mandalay, said Zaw Moe Khine, GM’s in-country
representative. “Myanmar has so far been mostly a used-car market,” he
said, “but GM will offer left-hand drive automobiles to better serve the
market here.”
The GM announcement was the sole new investment to come out of the
Council’s current mission to Burma, though Feldman said he expected more
deals would be inked later this year.
In the meantime, companies looking at Burma’s low-wage economy and
its market of 50-60 million people will have to overcome other
difficulties. Even finding acceptable office space with necessary
amenities in Rangoon is a challenge, the Council said. “It’s just so
hard to find anything that is suitable,” said Feldman, adding that Burma
compares unfavorably with other Asean economies when it comes to
finding office locations.
And, relaying the views of its members, the Council cited poor
Internet connection speeds and availability as another factor hindering
companies from setting up shop in Burma.
“That’s got to change,” Feldman said, pointing out that Burma’s
Internet infrastructure is scheduled to be upgraded with new fiber optic
cables and the imminent arrival of two foreign mobile network
providers. “We have some big IT companies with us on this mission,” said
Feldman, “and they are interested in Myanmar.”
While broadly praising Burma’s government for the reforms undertaken
so far, the Council said some changes did not go far enough for
investors’ liking. Citing one example, Feldman said insurance companies
sizing up opportunities in the country who would otherwise “love to do
business here” are constrained by the omission of the sector from
Burma’s 2012 foreign investment law.
In July 2012, the US government lifted a ban on companies investing
in Burma, in recognition of reforms undertaken by President Thein Sein’s
government. In May 2013, the two countries signed a Trade and
Investment Framework Agreement to bolster commerce between the one-time
enemies.
According to the Office of the United States Trade Representative,
bilateral trade between the two counties remains small, totaling US$90
million in the first three months of 2013.
source: The Irrawaddy
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