How would you compare the appetite of foreign investors interested in Myanmar before and after the 2015 elections?
MARK BEDINGHAM: Most Asian businesses had little hesitation prior to the elections. If there was any hesitation, it was more about avoiding any complications caused by the US sanctions. These investors were fully committed to entering Myanmar but just didn’t want to make any mistakes in doing so.
On the other hand, Western companies were much more sensitive and needed to be convinced that the structures that had been put in place were not going to cause issues. In general, the newly elected government and the removal of some of the sanctions truly gave investors permission to invest.
However, again, Asian companies were never sitting on the sidelines, but it was the Western companies that really received the go-ahead to invest. Of course, for both parties there was certainly a degree of caution, but it wasn’t necessarily about one or another political party being elected; it was more about investors not knowing exactly what the outcome of the election result would be.
Investor incentive has been bolstered by the Asia Development Bank predicting economic growth above 8% for the next couple of years, the highest rate in Asia. The growth will trickle down into consumer spending as income levels of 54m people continue to expand, evidence of this growth is already apparent in fast-moving consumer goods consumption patterns. Further evidence of investor appetite is seen in approved foreign investment figures, which increased by more than 18% to $9.5bn in FY 2015/16.
What are your thoughts on the impact of the recently updated US “specially designated nationals” (SDN) list?
BEDINGHAM: I think the most important update is the lifting of restrictions on the use of ports and airports. The problem with the SDN system is that it’s completely opaque. People that are put on the list don’t necessarily do “xyz” but have been assessed to do “xyz”. To get taken off the list, it’s not a matter of “if you do such-and-such”. On a broader level, the issue is that many of the people that have the money and resources to transform the country are on this list.
In the next five to 10 years, how do you see the trade dynamic developing?
BEDINGHAM: What Myanmar can certainly do is look towards energy as being a primary export product going forward. In the future I see the government having to make difficult decisions with regards to the way that it interacts with some non-governmental organisations. However, despite its drawbacks, coal would considerably boost the country’s power generation. Similarly, hydropower plants are another method of unlocking the country’s energy potential, and the potential here is potentially transformative for the country and its energy trade.
I also believe that agricultural processing is one of the catalysts that this country can use to propel itself into the future. The sheer variety of environment and potential that the country has in agriculture cannot be ignored, but to tap this, it must develop value-added processing to its portfolio. If you look across the border at China, you can see how they did things. They have the roads and the power necessary for agricultural processing. This has transformed their ability to develop impoverished regions. Similarly, if you look at what they did in Vietnam with original equipment manufacturing, it’s a similar story. The way this can be accomplished is through ensuring that the relevant infrastructure is developed – namely, power and transport.
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