Growth, Investment buoy transition five decades in the making
Government needs to manage expectations, keep generals onside
Aung San Suu Kyi seems in no rush to reveal her plans for governing Myanmar.
Five
months after her National League for Democracy party swept historic
elections, two months after her lawmakers took control of parliament and
a week after her proxy was sworn in as president, the former political prisoner has yet to provide a clear strategy for how her party will run the country. QuickTakeMyanmar's Transition
The
NLD needs to make clear what it plans to to achieve in its first 100
days and beyond and just who will be setting economic policy, said
Romain Caillaud, senior director in global risk and investigations at
FTI Consulting in Singapore, which provides risk analysis on investing
in Myanmar.
"Will key economic decisions also be made by her, or
will she delegate ministers and key parliamentarians the necessary
authority to define and implement decisions?" he said. "Will there be
advisers, local and foreign involved in shaping policies? Will wider
public consultations be undertaken prior to reforms being adopted? These
questions remain unanswered."
Suu Kyi’s government will be tasked with everything from luring more foreign investment,
to ending long-running ethnic insurgencies and halting human rights
abuses as Myanmar moves beyond half a century of outright and indirect
military rule. At same time the government will have to manage soaring
voter expectations, allay investor concerns about its inexperience, and
placate a still powerful military
that is guaranteed 25 percent of the seats in parliament and has a
controlling stake in many of Myanmar’s most important economic
enterprises.
Foreign Investment
She inherits one of Asia’s
fastest-growing economies, which is set to expand more than 8 percent
this year fueled by foreign direct investment that reached a record of
almost $9 billion in the fiscal year ended in March. That’s more than a
twenty-fold increase since military rulers began opening the economy
less than a decade ago. Even with that progress, Myanmar remains among
the poorest countries in Southeast Asia where less than a third of the
population has access to the electricity grid.
Rather
than laying out a vision for developing the country, Suu Kyi, 70, spent
much of the transition trying to persuade the army to consent to
changing a constitutional rule that bars her from becoming president.
When that failed, she nominated her former classmate and longtime
confidant Htin Kyaw, though she has said she would rule above him.
Party
executive Nyan Win said last week that policy priorities would be
announced "after the transfer of power," but on Monday another executive
Win Htein said he couldn’t comment on what those priorities would be.
China Talks
One
area where Suu Kyi has been quick to act was engaging China, Myanmar’s
largest trading partner, which accounted for more than half of Myanmar’s
total trade in 2014, meeting Tuesday with Chinese Foreign Minister Wang
Yi.
The $3.6 billion Myitsone dam project that aims to provides
power to southwest China, became a symbol of the country’s growing
economic influence and sparked protests from local residents. The
outgoing government froze the project, and Wang said Tuesday after the
talks with Suu Kyi that the two sides would to work to resolve “all
existing problems” through negotiations.
The NLD’s first act after
being sworn into power, was to craft a new role of "state councilor"
for Suu Kyi that would give her formal power to advise the government.
New Role
Opposed
by the army, the position allows Suu Kyi to "manage and instruct both
executive and legislative bodies" without needing to amend the
constitution, said Than Soe Naing, a political analyst in Yangon. He
said it was a way of using the "existing clauses from the constitution
for national reconciliation.”
Earlier this week, less than five
days after she was sworn in as minister for foreign affairs, the
president’s office, energy and education, came the abrupt announcement
that Suu Kyi would give up the latter two. No reason was given.
All of this highlights Suu Kyi’s top-down approach, with all decisions coming from her, said Gregory Poling, a Southeast Asia specialist at the Center for Strategic and International Studies in Washington.
Myanmar investors from students to seafarers have flocked for a frenetic first plunge into the stock market since the military grabbed power more than 50 years ago and launched its Burmese Way to Socialism.
The Yangon Stock Exchange boasts only one company
and a capitalisation of only 751bn kyat ($630m), as it prepares to pause
for a new year holiday break next week. But the much larger than
expected swell of investors during a volatile first fortnight's trading
shows the pent-up demand for new ways to profit as the country opens up.
Officials
claim they can avoid the fate of near-moribund markets in neighbouring
Cambodia and Laos, drawing parallels instead with Vietnam; a market that has had a few wobbles of its own.
“Myanmar people are searching for new forms of investment,” said
Kensuke Yazu, an adviser to the Myanmar-Japanese joint venture."One
happy thing is that this country has 50m people and huge internal
consumption."
The market’s arrival after an aborted launch in the 1990s mirrors the country’s long haul from dictatorship to the civilian-dominated government
that took power last week. State-owned Myanmar Economic Bank, the
exchange’s majority owner, is still under military junta-era US
sanctions although the restrictions were eased in 2013.
Dozens of small investors gathered this week to watch the electronic
price board at the exchange, based in a historic Yangon building that
had been occupied by an outpost of India’s central bank during British
colonial days, and where the internet connection remains patchy today.
Nyan Lin Htet, a 19 year-old student, said he had already cashed out a
profit of more than $650 after shares he bought on the first day rose
more than 25 per cent in a week.
“I researched on the internet about the US stock exchanges, about
Nasdaq and Dow Jones,” he said. “So I think in Myanmar the Yangon stock
exchange will be successful like this.”
His brother, Ye Min Aung, a 24 year-old merchant seaman, was buying
his second tranche of shares after netting almost $250 on his first dip.
He highlighted how the exchange offered an alternative to other
investment classes that have either flattened out or priced out all but
the super-rich since the military junta stepped down in 2011.
“Myanmar people like to invest in real estate and cars,” he said. “Now the latest business style is stocks and shares.”
YSE officials eagerly brandished a table showing how early trading
had beaten forecasts by a factor of more than 10 and outperformed the
debuts of both the Laos and Cambodia bourses, although both those
countries have much smaller populations.
Choice is also limited in Yangon. First Myanmar Investment, a
hospitals-to-aviation conglomerate, is the only company quoted so far,
with shares costing more than $25 apiece at the opening. The exchange is
targeting at least five listings by year-end and wants eventually to
open the market to foreign investors.
FMI delighted early buyers by climbing from its opening 31,000 kyat a
share to 41,000 within three days, but had dipped to 32,000 kyat by
Friday’s close.
While many investors are wealthier and better travelled than most in
what remains one of the region’s poorest countries, some are investing
significant portions of savings that might previously have been sunk
into gold.
Rudi Rolles, managing director of KBZ Stirling Coleman Securities, a
stockbroker whose riverside office drew queues snaking from the door
during the first days of trading, said his business encouraged customers
to place price limits on orders to restrict potential losses. “We have
to educate investors a lot,” he said.
In the brokerage’s busy reception area, new investors included Khin
Maung Cho, a 58-year-old retired pharmaceuticals merchant looking for
better returns on $4,000 of savings than he would get from bank
interest. He was confident his trading background would give him an
edge, while his life experience made him relaxed about any possible
reverses.
“I used to do meditation, so I know nothing is everlasting,” he said. “Everything is uncertain, so I am not worried.”
Yi Mon wants to give something back to her home country, Myanmar
Yi Mon is targeting US schools including UNC Kenan-Flagler and Boston Questrom
Yi Mon wants to make a social impact in her career. Born and raised in
Myanmar, she sees an MBA as the perfect way to give something back.
The ambitious young professional currently works there as a marketing
executive for global skin care company Beiersdorf AG; the firm behind
the Nivea skin care brand.
As Myanmar transitions into a new era under a democratically elected
government, Yi Mon too hopes to start afresh and transition into a
career in management consulting focusing on emerging markets before, one
day, founding her own Myanmar-based social enterprise.
She studied in the US at undergraduate level and plans to move back
there for her MBA. She's currently applying for full-time programs at
UNC Kenan-Flagler and business schools at Boston University, Indiana
University, Ohio State, Arizona State and the University of Notre Dame.
What do you hope to gain from an MBA?
I’m looking to gain global experience and a more in-depth understanding
of business functions, strategies and market dynamics in developing
markets especially.
An MBA will provide valuable networking opportunities and will
definitely be a helpful door-opener in an increasingly competitive
field.
What are your future career plans?
I want to focus on business management consulting in emerging markets.
I’m drawn to Southeast Asia in particular because I see great potential
there with improved political and economic stability. In the long-term,
I would like to found a social enterprise in my home country, Myanmar.
Why is making a social impact important to you?
It’s difficult to grow up in Myanmar and not be moved to make a difference.
I myself was able to get a great education in the US because of people
who were moved to improve the social conditions in the country. I would
like to extend the same opportunity to others.
What opportunities for new business do you think will emerge under Myanmar's newly-elected democratic government?
There are opportunities in every sector because the market is still
essentially untapped. The main issue is that for a lot of new businesses
the barriers to entry are quite high with inadequate infrastructure,
high start-up costs and inefficient regulations.
With the new democratic government, I think these issues will be
addressed and there will be better policies and trade relationships with
other countries.
What are the most important factors to you when choosing a business school?
Ranking, class size, global experience, leadership development, career
services, diversity and cultural fit are all important factors. I
graduated from a small liberal arts college and the learning environment
was fantastic. For my MBA, I want to be in a bigger city but I still
would like to have an intimate and collaborative learning experience.
What has been the biggest challenge in the application process so far?
The GMAT was the biggest challenge because of the limited resources
available in my country. I had anticipated the application essays to be
the most challenging but they turned out to be a very enjoyable part of
the process.
How did you prepare for the GMAT?
I took a GMAT review course. I focused mainly on the quant section
because its structure was relatively new to me. I also downloaded the
Prep4GMAT app on my mobile so I could study whenever I had free time. It
was also a great way to assess my strengths and weaknesses.
How do you plan to fund your MBA?
With my own savings, scholarships and loans.
What advice do you have for others considering an MBA?
Have sound reasons for why an MBA is the right investment. Know
specifically what you are looking to gain from the program and give
yourself, and your recommenders, plenty of time to fine-tune the
applications.
China is confident it can resolve business disagreements with
Myanmar through friendly talks, Foreign Minister Wang Yi said after
meeting his counterpart Aung San Suu Kyi, amid pressure from China to
resume a stalled US$3.6-billion (2.54 billion pounds) dam project.
Chinese Foreign Minister Wang Yi (L) shakes hands with Myanmar
Foreign Minister Aung San Suu Kyi (R) after a joint press conference in
Ministry of Foreign Affair at Naypyitaw April 5, 2016. REUTERS/Thar
Byaw
BEIJING: China is confident it can resolve business
disagreements with Myanmar through friendly talks, Foreign Minister Wang
Yi said after meeting his counterpart Aung San Suu Kyi, amid pressure
from China to resume a stalled US$3.6-billion (2.54 billion pounds) dam
project.
The talks with Wang in the Myanmar capital of Naypyitaw
were Suu Kyi's first official meeting since her appointment as foreign
minister.
Last month, China said it would push Myanmar's new
government to resume the controversial dam scheme, saying the contract
was still valid.
Former Myanmar president Thein Sein angered
Beijing in 2011 by suspending the Chinese-invested Myitsone dam project,
about 90 percent of whose power would have gone to China.
Other
Chinese projects in the former Burma have proved controversial, among
them the Letpadaung copper mine, which has repeatedly sparked protests
from people living nearby, and twin Chinese oil and gas pipelines across
the country.
With close trade and economic ties between the two
countries, it was natural there would be "certain problems", Wang said,
according to a statement by China's Foreign Ministry late on Tuesday.
"Myself
and Foreign Minister Suu Kyi reached a consensus, that all problems can
find an appropriate resolution via friendly consultations," it quoted
Wang as saying, without mentioning specific projects.
Myanmar's
new government wants to develop the economy and improve livelihoods, and
China is willing to invest more in the country, including in
infrastructure projects, he added.
"We will guide Chinese
companies operating in Myanmar to respect Myanmar's laws and rules,
respect local customs, pay attention to environmental protection ... and
fulfil their responsibility to society," Wang added.
In a sign
the business relationship remains on track, Chinese state-controlled
commodity trader Guangdong Zhenrong Energy Co has won approval from the
Myanmar government to build a long-planned US$3-billion refinery in
partnership with domestic parties, including the energy ministry.
China
has been at pains to ensure its formerly close relationship with
Myanmar's one-time military rulers continues under the new government,
one of the reasons for Wang's visit.
The Global Times, an
influential Chinese state-run tabloid, said in an editorial on Wednesday
it hoped the Myitsone Dam could be revived.
"A stable Myanmar
under new systems with predictable national policies is in accordance
with China's national interests," said the paper, published by the
ruling Communist Party's official People's Daily.
Clashes between
the Myanmar government and ethnic rebel groups in recent years have
pushed refugees into China, much to Beijing's anger.
(Reporting by Ben Blanchard; Editing by Clarence Fernandez)