Myanmar’s investment suitors should be prepared to commit long term to the rapidly-opening nation, experts said, as foreign firms weigh the risks of doing business in the former pariah state.
Reforms in the impoverished Southeast Asian country have stirred intense interest from international business, but observers say the country must repel those chasing a quick buck if it is to avoid falling victim to its own hype.
Myanmar businessman Serge Pun said the country was trying to ensure that a first wave of investors would not be subject to extreme risk, but added those with a responsible long term view would “benefit.”
“If you come in thinking, ‘This is a dangerous place, highly risky. I’d better make my money quick,’ I think you stay home,” he told a conference at the World Economic Forum (WEF) on East Asia in the capital Naypyidaw.
“Because this is not a dangerous place, this is a place with a lot of potential.”
Foreign firms are now queuing up to enter the country, which is strategically located, has vast natural resources and a largely untapped market with a potential 60 million new consumers.
Big brands such as Coca-Cola, Ford motors and brewer Heineken have all recently announced they are dipping their toes into a country where investment is needed in every sector.
But with its oil and gas reserves, as well as its history of civil unrest and cronyism, experts warn Myanmar must encourage responsible investment as it looks to avoid the so-called “resource curse” of a natural bounty that fails to benefit ordinary people.
“Myanmar is the perfect candidate for the resource curse. It’s more likely, by every indicator... for the resources to be a conflict exacerbating factor than anything else,” said David Harland, of the Center for Humanitarian Dialogue.
Reforms have widened the web of firms peering into the country, according to Aung Naing Oo, who is responsible for promoting investment in Myanmar.
He said that in the past resource firms dominated investment interest, but now he sees everyone from hoteliers to manufacturers looking to set up factories for garments, electronics and food processing.
Investors have, however, raised concerns about the legal system and poor infrastructure – road and rail networks need major renovation, electricity is inconsistent and mobile and Internet services are patchy.
A lack of experience among the workforce is also seen as a great challenge, with experts warning that the country has “lost” a generation of young people, the victims of junta policies that weakened the school system.
Opposition leader Aung San Suu Kyi urged the private sector to invest in the skills of young people.
“Corporate responsibility is good business,” she told the forum.
She said she understood firms’ needs to make profits, but added: “They must try to maximize our benefits as well.”
Around a thousand delegates from more than 50 countries are gathered for the three-day conference – a regional edition of the annual gathering of business and political luminaries in the Swiss resort of Davos.
Many of those attending are experiencing the country and its sprawling junta-built capital for the first time.
While some newcomers have expressed astonishment at Naypyidaw’s shabby hotel rooms and gaze disconsolately at BlackBerries rendered redundant by a lack of coverage in the country, others with more grounded expectations have been impressed.
One Korean businessman told AFP that he had been “impressed” that Myanmar had pulled off such a large international event.
Myanmar’s dramatic emergence from military rule has astonished the international community, with reforms under a new quasi-civilian government including the release of political prisoners and the welcoming of long-detained Suu Kyi into a fledgling parliament.
Luc de Waegh, founder of Myanmar investment advisory firm West Indochina, which has been working in the country for 20 years, described the changes as “close to a miracle.”
But he warned of “unrealistic expectations” that the economic situation will progress at the same speed as sweeping political changes.
“It doesn't happen like this,” he said.