Where is Yangon going?

We are scared about the news, that Mandalay Golden Wings Construction company unveiled plans to build the country’s tallest building in Yangon’s Mayangone township. (see: http://www.mmtimes.com/index.php/business/property-news/2724-mgw-plans-nations-tallest-
building.html ) The company has started work on the US$60-million, 34-storey Diamond Inya Palace building on a 2-acre block near Inya Lake, and expects to finish by the end of 2015, a Mandalay Golden Wings spokesperson said last week.

We ask the question if Yangon has decided to go the way of its neighbors, where former typical Asian-style of cities have lost their identity by mistaking socio-economic progress with the cementification of the environment , copying the high-rise skyline of New York.

Whereas in NY it has been justified by the limited space of the island of Manhattan, this has not been the case in, for example, Kuala Lumpur, where a streetwalker today can hardly see the sky (see the photo below!). And limited space is neither the situation of Yangon, where there is plenty of space for sustainable urban development. Therefore, Myanmar please wake up and prepare a construction code which preserves instead of destroying Yangon´s unique urban identity!

After four years, Qatar resumes Yangon service.

Qatar Airways resumed flights to Myanmar, Yangon in October . While flights will initially operate
from Doha to Yangon on Wednesdays, Thursdays and Sundays, with return flights on Mondays,
Thursdays and Fridays, the service will increase to daily frequency from October 28.

For more: http://www.mmtimes.com/index.php/lifestyle/travel/2294-after-four-years-qatar-resumes-yangon-service.html

Foreign energy giants line up for tender.

Leading oil and gas companies from the West and Japan, recently freed from US economic sanctions, are looking closely
at Myanmar’s upcoming oil and gas tender, Ministry of Energy sources said last week. U Soe Thein, a minister of the
President’s Office and head of Myanmar Investment Commission (MIC), said he expected parliament to approve the heavily
debated foreign investment law when it meets again in October. “We have set criteria for responsible foreign direct
investment in Myanmar, including corporate social responsibility projects. Concerning the mining and oil and gas sectors we
are looking at joining the Extractives Industry Transparency Initiative, which involves a step-by-step process of transparency
in revenue processes,” he said at the Asia Society in New York on September 27.

For more: http://www.mmtimes.com/index.php/business/2246-foreign-energy-giants-line-up-for-tender-says-official.html

Visa edges closer to re-entering Myanmar.

Initially, Visa plans to target the influx of tourists that Myanmar is already beginning to receive International flight arrivals
jumped 63pc in 2009-2010 and an additional 32pc in 2010-2011. At present tourists find themselves needing to carry
large sums of cash, as the country has no ATMs that accept foreign bankcards. Since Myanmar’s lack of infrastructure,
particularly outside of Yangon, Nay Pyi Taw and Mandalay, it could allow Visa to leapfrog traditional electronic payment
methods like cards and move straight into the mobile banking model in rural areas.

For more: http://www.mmtimes.com/index.php/in-depth/2004-visa-edges-closer-to-re-entering-myanmar.html

STEPPinternational meets with Myanmar  Merchantile Marine Development Association in Yangon

The Myanmar Times, September 24-30,2012. “US eases sanctions. White House dropped targeted sanctions on (Myanmar) President U Thein Sein and Speaker of the Lower House Thura U Shwe Mann.However, prominent businesspeople in Yangon voiced hope that the US State Department would lift more economic sanctions on Myanmar soon, especially the ban on imports.”

The Myanmar Times. September 24-30,2012. ” EU mulls trade boost. Meanwhile, the European Commission on September 17, proposed to reinstate trade preferences with Myanmar to help support the country’s political reform. The proposal would give Myanmar duty-free and quota- free access to the European market for all products except arms and ammunition….The September 17 proposal will be submitted to EU member states and European Parliament for Agreement”.

STEPPinternational. Under the above mentioned EU proposal, the country would brought back under the so-called ” everything but arms” preferential trade regime,from which the country had been suspended in 1997.

The Myanmar Times, September 24-30, 2012. “Partners invited for Mandalay airport. The Ministry of Transport is inviting private investors    to help it to turn Mandalay international airport into a major regional logistic hub.”

“IWT seeks some private investment. Private companies can invest in four areas in cooperation with state-run Inland Water Transportation.” Investments concern “new IWT vessels, repairing old vessels, building warehouses and ports on IWT land.”

STEPPinternational. It has been up to  President U Thein Sein  to enact the new foreign investment law passed by Parliament on September 7  as it was or to return it with comments to Parliament for further discussion.  The President, in view of the still heated debate, has sent it back for reconsideration. It is hoped that this process will result in a more  reasonable framework for foreign investment rather than giving in to voices favouring old protectionistic approaches, such as the one reported in the local press, which (though hard to believe) says:  “Myanmar must retain policies that treat foreign investors unfairly, that tilt the playing field in favour of domestic firms.”

Myanmar in many ways is still a virgin market for Western investors. With a view to attract outside companies by offering a transparent and attractive business environment, the country’s current opening process goes hand in hand with legal reforms in the economic field aimed at investment promotion and facilitation.

The foreign investment law passed by Parliament on September 7 can be seen as an important building step in this regard. The intense public and parliamentary debate of the draft law before it was passed has resulted in important and in some cases even “radical” modifications, which however are not necessarily welcome by all the players involved. Welcome by the foreign investors community is certainly the abolishment of a minimal capital requirement (in the draft law it was  set as high as US$ 5 million). This not only  brings the country in line with other Asian neighbors as for example the Philippines, Thailand and Laos, which neither have minimum capital requirements for foreign investment, but it also takes out a prohibitive investment condition for medium foreign enterprises.

The approved law also raises the limits of foreign capital participation from initially 49 to 50%.

The decision not to set a minimum investment requirement, however, is at the same time contested by parts of the local medium-sized entrepreneurship, which fears that such easy market entry for foreign companies would endanger their existence.

No doubt, there is no rose without a thorn!

Foreign investment will bring about increased market competition to the inside. At the same time however it will offer opportunities for partnerships, industrial modernization and improved competitiveness to the outside.

There is some basis for the argument brought forward by local business people ” that capital requirements would keep out small and sloppy investors that might come in quickly, make money and then disappear”(Times Business, September 10-16,2012), leaving nothing in return for the country. However,  in our opinion there is even more danger in having high capital requirements which would  allow only big companies to arrive, creating an even bigger threat for medium-sized local enterprises.

It is still  left to President U Thein Sein to enact the law as it is, or to return it with comments to Parliament for further discussion.

We cannot more than agree with what has been written in Thailand’s ” THE NATION” of September 21:

“For the time being,Myanmar , with the reforms happening at a rapid pace, is enjoying its status as the new darling of the region. …  The latest release of more than 500 political prisoners is part of the ongoing reform effort. … At the moment however, Myanmar needs real and tangible reforms that will raise the standard of living fot the vast majority of people. Education, healthcare and rural development are the key challenges facing the once-isolated country.”

STEPP was active in Myanmar ( former Burma) some thirty years ago. Therefore, we cannot help to always compare the new we see in the country , with what has been the situation before. One thing is rather obvious wherever we look: there has been a visible change, despite the years of isolation the country had to endure. There are now traffic jams on formerly deserted city roads, hotel rooms as rare and expensive as precious stones, more chinese and thai restaurants than buddhist pagodas, and beach resorts that make you think you have landed in a hollywood movie. Not only, whatever products the country could not obtain from the West, it was replaced with imports from the ASEAN neighbors.

It seems a fruitless discussion today, to try to answer the question , ” how effective or ineffective Western sanctions have been in influencing myanmar’s way – backward or forward.” The more pressing question instead is another one, namely how to best promote euro-myanmar business to business contacts and attract European investors to the country. But careful: The gradual lifting of the sanctions is certainly a necessary but not sufficient condition for creating a conducive business environment. The country itself is called up to create a friendly, economically viable and stable investment environment, for avoiding opinions like the one we read in a local newspaper on the occasion of the Myanmar Global Investment Forum held on 12-13 September, and which read as follows: “Sanctions kept some countries from investing but… the high cost of doing business and the country formerly unstable political environment, previously made it an unattractive alternative to investors”. Today for different reasons costs are also very high, but the ongoing reform process makes the general environment more appealing.

Reforms in Myanmar(Burma) are stimulating growth in the country. An interesting article and video published by ABC News explains how the country is experiencing positive development and attracting new developers.

ABC News Article & Video Link

U Moe Myint, a friend of STEPP international, explains how he is eager for international companies to begin to make investments in his country so that they can grow and develop.