05 Sep Myanmar needs to be more politically and economically transparent
Country continues to offer tremendous investment opportunities and growth
For immediate release
SIIA-SGX Myanmar Investment Forum
Wednesday, 5 September 2018: Myanmar must be more transparent with the international community, said a leading independent think tank at an investment forum at the Singapore Exchange (SGX).
Associate Professor Simon Tay, Chairman of the Singapore Institute of International Affairs (SIIA), said, “There is a pressing need for the Myanmar government to respond effectively to the crisis by increasing access and transparency, and moving ahead with the recommendations of the Kofi Annan report.”
Myanmar has recently come under fire internationally with the release of the United Nations Human Rights Council report on the Rohingya Crisis, as well as the sentencing of two Reuters journalists. Investment into the country has correspondingly slowed in the face of mounting international pressure.
Speaking at the SIIA-SGX Myanmar Investment Forum, Prof Tay noted that Myanmar “expects responsible businesses that will support broader social goals”. To that end, Professor Tay emphasised Singapore’s continued willingness “to think long-term as both an investor and a friend” to Myanmar.
Responding to Prof Tay, the forum’s Guest of Honour Director-General U Aung Naing Oo of Myanmar’s Directorate of Investment and Company Administration acknowledged that the country had learned from 2011 when it had underestimated the impact of the Rakhine crisis on foreign direct investment. Today, Myanmar is sensitive that this long-standing historical issue has been a barrier for many potential investors.
The country is however still striving to create a positive climate for businesses, alongside its efforts to resolve larger political issues. U Aung Naing Oo highlighted the efforts that were being made to streamline regulatory procedures for company administration, and addressed key sectors where investors were needed and would be catered to. He also outlined further measures that were being implemented to encourage investment, in particular, changes that would allow foreigners to hold up to 35% of a company and still be treated as a Myanmar national company.
The event also had a lively panel of speakers drawn from Myanmar’s public and private sectors: Dr Sean Turnell, Special Economic Consultant to the State Counsellor; Melvyn Pun, Chief Executive Officer of Yoma Strategic Holdings; Mark Bedingham, President & Chief Executive Officer of Singapore Myanmar Investco; and Ong Chao Choon, Managing Partner, PwC Myanmar, and Advisory Leader, PwC Singapore.
Dr Turnell in particular responded to Prof Tay’s point and emphasised that Singapore remained an invaluable partner and interlocutor with both the West and China. He noted the challenges Myanmar faced, but highlighted the country’s strengthening fundamentals, and inherent resilience.
Dr Turnell also touched briefly on the potential impact of the upcoming Myanmar Sustainable Development Plan. “The National Economic Coordination Committee, headed by Daw Aung San Suu Kyi herself, has been created and that is a massive step towards more cohesive governance.”
Yoma’s Mr Pun reiterated Dr Turnell’s point on Singapore’s importance as a partner. In addition, he shared about Yoma’s remarkable growth as a testament to the country’s attractiveness to investors: “Yoma Bank has doubled in scale every 18 months; profits have doubled in the previous year and will probably do likewise in coming years. Our digital business, in particular, has grown 20%-25% monthly. That’s a feat that’s hard to find anywhere else!”
Mr Pun concluded by noting that despite slightly depressing headlines, “there are many bright spots and people should not be too pessimistic”. “We had in fact been hunting for acquisitions for some years but valuations were frothy. Now, however, with the slowdown, valuations have become more realistic and we are finding it a much better environment to do deals.”
PwC’s Mr Ong emphasised that Myanmar remained an excellent opportunity that could not be ignored. He cited Myanmar’s four telcos that have thrived, and significant deals such as Kirin’s purchase of a 55% stake in Myanmar Beer, valuing the company at US$1bn; Unilever’s joint venture with EAC, which yielded a combined business turnover of US$150m; as well as TPG’s stake purchase of Grand Royal Whiskey, which it subsequently sold to ThaiBev only two years later, and thereby more than tripling its return.”
Mr Ong added, “TPG, as a one of the largest private equity funds, had evaluated the attractiveness of the business and that is a testament to the viability of investing in Myanmar. If you consider other emerging markets, that puts some perspective on your assessment. Take Vietnam that has had its fair share of ups and downs. Today it’s back to being a market darling again. I’d urge you to see Myanmar similarly as a great opportunity, as one of the last frontier markets left in the region.”
Singapore Myanmar Investco’s Mr Bedingham similarly shared how the company started with no employees and no office; today, it hires 700 staff and operates in seven large and diverse sectors. “Tourism and retail are two of our businesses that have a lot of growth potential. Generally European travellers come to Myanmar for the historical and archaeological features; yet shopping malls are still important, not only for the locals but Asian tourists too.”
In conclusion the panel discussed its wish list, the top priority being banking and financial sector reform. This would enable the economy to throw off significant shackles and allow businesses, both big and small, to truly take off by opening up lending, offering security and financial inclusion.
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