Myanmar: the new Asian investment frontier

MasterCard and Visa have already entered the country, together with multinationals such as Nestle, CocaCola, Uniliver, Total and Suzuki.

When Nobel prize laureate Aung San Suu Kyi arrived at the Italian ministry of foreign affairs this week after visiting the Pope, she walked into the room with six little roses in her hair and many question marks over the future of her country of 60m inhabitants. She always calls it by the pre-regime name of Burma, crystallising in five letters her role as opposition leader and her 15 years spent under house arrest.

Only a week before, a delegation of the country’s officials that included foreign minister Wunna Maung Lwin were in the same building to illustrate the economic reforms aimed at attracting much-needed foreign investments into the nation they instead called with the official name of Myanmar.

The different choice of name was echoed in the western suits and ties of the government representatives, followed by the traditional Burmese dress worn by Ms Suu Kyi. “It is easier to change dress than mindset,” she said, stressing that “there are no economic reforms without political reforms”.

So, what’s for foreign investors out there? The pile of papers illustrating the economic measures enacted since 2011 contained the CVs of the delegation, with no intention to hide their links to the military.

Nobody seems to be too bothered either by the call by international observers in the room to link reforms with a fully democratic process. According to a representative of the Organisation for Economic Co-operation and Development, a member of the delegation defined The Lady – Ms Su Kyi - “an inspiration”.

The source of the inspiration, however, warned the international community over the danger of overestimating the democratic opening the country is experiencing and urged to call on the  Myanmar government to change the constitution, which prevents her from running for president as a mother of foreign children. Currently, 25 per cent of seats in Parliament are reserved for the military.

For now, the government has set a target of almost 9 per cent growth by next year, saying it will prioritise poverty reduction, industrialisation, the development of the energy sector, telecommunications, education and the health sector.

MasterCard and Visa have already entered the country, together with multinationals such as Nestle, CocaCola, Uniliver, Total and Suzuki.

Italian energy giant ENI was among the winners of several onshore energy blocks and is already considering  Myanmar  its “new Asian frontier”, thanks to its strategic position and richness in raw materials, especially natural gas.  

“There have been only 150 explorations in the country so far, as much as in the  US  every two days,” ENI ‘s chief executive Paolo Scaroni said during the conference.

“Half of the population has no electricity and there is no economic development without it. Now, after decades of isolation,  Myanmar  could become a bridge between Southern Asia, the Asiatic Southern East and  China,” he added.

The main challenges however relate to uncertainty over future political stability and the possibility to proceed with the creation of a safe business environment. Doubts that have only began to ease following the endorsement in 2011 of the United Nations Guiding Principles on Business and Human Rights.

Myanmar delegation presented its packet of certainties offering a five-year tax holiday, the same rate of income tax between foreigners and  Myanmar  citizens, no taxes on imported machinery or raw material. The government also ticked the box of no nationalisations or expropriations, together with the right to repatriation.

Enough for the multinationals that have already expanded into Myanmar, while the challenges are still significant for smaller enterprises and range from an undeveloped banking system and a lack of capital market, to poor infrastructures and an inadequate insurance system.

In the words of the Myanmar delegation, this is not a nation ready-made for investors, but a bet on the future. A bet that UK investors are already supporting: if China tops the ranking, Britain is the fifth foreign investor and the first Western country, with twenty times the enterprises of the second foreign investor France and some 7 per cent slice of the total cake. 

As more stakeholders take the first steps into post-sanctions Myanmar, the focus ahead of the 2015 elections is not so much if the name, but if the mindset will change and who will benefit most from the forecast economic growth. 

 

Aung San Suu Kyi during a press conference in Italy. Photo: Getty

Sara Perria is the Assistant Editor for Banking and Payments, VRL Financial News

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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