Myanmar opening its door…invests or not invests?

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After being frozen in place for half a century by a repressive military junta, Myanmar is now opening up to the world. Myanmar had been under control of military rules for 50 years. It is called as the Asia’s final frontier. Burma is a sizeable country, so that its domestic market is big enough to survive. Since it has never officially allowed any foreign company in its market, once the door is open, a number of foreign investors are keen to share this piece of pie. Burma has plentiful natural resources, including oil, gas and minerals. Moreover, lower costs of resources and labors and also sizeable market are the key attractions to attract foreign investors.

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Burma has grown 8% annually since 2011 mainly because it diversifies from agriculture to manufacturing, tourism, mining, and telecom. The per capita GDP is expected to increase from $1,300 in 2010 to $5,100 in 2030. In 2012, there was a million people visited Burma. Tourism is one of the key industries that Burma focuses. Tourism solely generate $500 million in 2012, increase from $315 million in 2011. Its airport and hotels are being developed in order to serve three million by 2015 and seven million by 2020. At present, Burma has five five-star hotels, six state-owned hotels in Yangon and 762 private-owned hotels around country. In 2011, the Ministry of Hotels and Tourism announced that the Myanmar Investment Commission has granted permission for up to $2 billion worth of investment in hotels and tourism.

Not only its president Thein Sein sent out message of Burma opening its country in 2011, but also Burma the very first time played host to the World Economic Forum’s Asia Summit. There were 900 participants from 55 countries attended. Lot of CEO from well-known corporations was attending this Summit, including Chevron, Mitsubishi, Visa, and General Electric.

In 2012, Coca-Cola re-entered Burma with bottling plant close to Yangon and planed to invest $200 million to improve its production and distribution system in Burma. This investment is projected to create over 22,000 job opportunities along the chain and 2,500 direct jobs.

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While this undeniable opportunity lying ahead, the number of investors cautiously consider from the sidelines. Right after opening its door, Political and democratic have been reformed, however, the old military guard is still very influential in Burma. Therefore, political instability is still one of the most concerns among those foreign investors. Burma needs to build creditability among investors to increase its FDI.

From my point of view, I would consider investing in construction supplies or telecom industry since the infrastructure all over Burma really needs to be developed to serve all demands in both short and long run. Moreover, I also think Burma Government will support all infrastructure projects so that there is less risk focusing on these industries.

Reference: http://news.nationalgeographic.com/news/2013/08/130817-myanmar-burma-tourism-democracy-culture/

http://www.foodserviceconsultant.org/region/asia-pacific/burma-open-for-business

http://www.bbc.com/news/business-22721804

http://www.csmonitor.com/World/Asia-Pacific/2012/0330/Reforms-in-Myanmar-4-reasons-the-military-changed-course/Leaders-protecting-themselves

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