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Tracking the Burmese Tiger: Investment Adventures in Myanmar
August 7, 2013Article by Ray Withers
I’ve been personally tracking the developments in Burma, or should I say Myanmar, for some time. Now the world’s business press is buzzing with excitement about Myanmar’s embrace of its capitalist revolution. Since its liberation from the oppressive military regime, this sprawling nation, renowned for its raw beauty, is opening up as a golden land of opportunity.
Asia as it was before the rise of mass tourism … a real adventure
InternationalLiving.com’s Ellie Dyer recently wrote of the capital: “Yangon has changed since colonial times and you’ll find urban sprawl, but it is still home to tree-lined avenues and lush parks. With few western visitors compared to the packed beaches and towns of Thailand, it is Asia as it was before the rise of mass tourism … a real adventure.”
Living up to its adventurous reputation, Cycling the Land of Temples in Myanmar even features in the USA Today’s top travel adventures for 2013. USA Today tempts us with tales of: “2,000 ancient temples and pagodas in the Ancient Bagan region and the deserted white-sand beaches of the Mergui Islands.”
Highest growth in $324 billion tourism sector
The tourism sector saw the highest relative growth in Southeast Asia, spiking at 52%, last year. Asia and the Pacific region as a whole, received 234 million visitors, generating $324 billion in revenue and representing 30% of the entire, global tourism sector. The Myanmar government alone hopes to draw over 7 million tourists by 2020 and while this might be a small percentage of the whole Asia-Pacific region, it is still a piece of a very juicy pie.
Three new airports are set to open to cater for three international airlines now planning to fly direct to Myanmar. These include Thailand-based Nok Air, Business Air and Singapore-based Tiger Air. Win Ko, managing director for Yangon International airport, tells us he’s had a 500,000 increase in passengers in the past year, from 2.5 to 3 million.
A new blueprint for international development
Bloomberg Business Week is also now reporting on the Myanmar economy, writing: “Barely a week goes by without another multinational announcing a commitment to invest in the country.” It was definitely a hot topic at the recent World Economic Forum, as Coca-Cola’s CEO Muhtar Kent compared the opening of Myanmar’s first bottling facility to the fall of the Berlin Wall.
From a development perspective, Myanmar could be a blank canvas with the potential to go beyond all the traditional emerging-market models. As its economy reopens to large multinationals, now could be the perfect time to explore business partnerships. Does this make Myanmar a blueprint for new kind of international development?
A golden land of oil, law and gemstones
More and more investors from the US, UK, India and Australia are tendering for Myanmar’s offshore oil and gas, attracted by news of 300 new test wells set for drilling in the next five years. I’ve also heard reports of a boom in mining for gemstones, as Myanmar is tipped to be “the next Pakistan” for gem and rock hounds.
With such major investments flowing in, international law firms are also stepping in to provide legal counsel for investor clients. At an international investment conference held in Myanmar at the end of 2012, partners and representatives from 11 major international firms were present.
Commercial rents pushed higher than New York and Tokyo
Commercial property is also booming, as Yangon’s downtown financial centre gets a make-over with new, modern office blocks to accommodate business from overseas. Demand has pushed rental costs higher than rates of increase in New York and Tokyo. Land costs are also skyrocketing up to $800 per square foot and high-grade condominiums are popular developments.
Leading London estate agents setting up in Myanmar are further indications of a boom. Colliers broke ground for international property firms by setting up an office in Yangon. Property advisor LondonDom, which has a reputation for tapping into overseas markets since 2004, is following suit.
Although Myanmar isn’t a stranger to international property investment – it’s a little known fact that Myanmar accounts for a decent 1% of all £2 million plus properties bought in the UK in the past year (to April). This is the same range as buyers from Switzerland and Hong Kong.
Add Burmese investment to your international portfolio
Personally, I’d love to add a charming little hotel or a swanky new office space to my own portfolio and we’re investigating prospective investments as we discover them.