IS IT TIME for Irish businesses to be thinking about looking for opportunities in Burma?
These are certainly days of profound change in the political landscape there. Pro-democracy leader and Nobel Peace Prize laureate Aung San Suu Kyi has claimed a by-election landslide win for her National League of Democracy party, one she hopes will mark a new beginning for the southeast Asian nation also known as Myanmar.
There is certainly a lot of scope for providing consumer goods, and the country is crying out for infrastructure investment.
Even though it was once a regional economic star, its economy has been devastated by five years of military rule and sanctions against that government. Burma’s economy is tiny compared to its neighbours, such as Thailand and China, even though it has a population of between 50 and 60 million (the data is unreliable).
In Rangoon, for example, the cars are right-hand drive, but they also drive on the right, because of an odd ruling in 1970, when military leader Ne Win changed the side of the road to the right, probably for astrological reasons. Most of the passenger vehicles either pre-date the changeover or are re-conditioned imports from Japan, Thailand and Singapore, counting as scrap which sanctions does not cover.
The idea of Burma as the next go-to place for overseas investors will really kick in once the West starts to end sanctions. And this is happening. US Secretary of State Hillary Clinton has indicated now that the US will start to lift restrictions selectively on investment in the southeast Asian nation, as a way of giving some encouragement to the government of Thein Sein.
However, the US won’t lift sanctions until the Burmese government meets all the conditions for normalising ties, such as freeing all political prisoners and ending border wars with ethnic minorities. It will take a long time to unravel the complex web of sanctions imposed on Burma over the years. It could also prove a challenge for Suu Kyi to manage expectations among her supporters.
Templeton Asset Management issued a note last week in which it gave a positive evaluation of Burma’s natural resources, but highlighted the lack of a proper legal structure, the lack of a well-developed banking system, and the lack of solid foreign exchange operations. The challenges are significant but Burma is definitely worth a look.