Firms See Myanmar as Next Frontier
Foreign businesses are ramping up interest in the long-isolated but potentially lucrative market of Myanmar, as signs of a thaw between its government and Western leaders raise hopes of a possible end to Western sanctions. For now, the push is confined mainly to Asian companies that aren’t covered by tough sanctions imposed by the U.S. and Europe since the late 1990s to punish Myanmar for its poor human-rights record. Some investors held back because of concerns about risks to their reputations, while others doubted the opportunities were worth pursuing and now are changing their minds.
Meanwhile, Western companies are looking for ways to get back in, though few are willing to discuss plans in public or in depth because of a possible backlash from customers who remain skeptical about recent reforms in the country. U.S. officials say they don’t intend to lift sanctions until they see more changes in Myanmar, including more transparency in the country’s dealings with North Korea. Myanmar’s potential is too great for some investors to ignore. One of the last, large frontier markets in Asia, it is rich in oil, gas, timber and gems and has the potential to be a major rice and seafood exporter. Its tourism industry can rely on 900-year-old temple complexes and beaches to rival nearby Thailand, which attracts 15 million or more visitors a year. Myanmar also has low manufacturing wages, and Myanmar’s intellectual class speaks English, with a legal system rooted in British common law. The obstacles, however, are large. Electricity is spotty, roads and ports are crumbling and the financial system is immature. Precise data on Myanmar are hard to come by and government statistics are treated with skepticism inside and outside the country. The United Nations estimates Myanmar has a population of 50 million, around the size of South Korea. The International Monetary Fund says Myanmar has the second-lowest per capita gross domestic product in Asia adjusted for local purchasing power, after Afghanistan.
Among the Western brands making early inroads: consumer products giant Unilever, which quietly began to sell goods through a distributor in Myanmar late last year. The company’s products were being smuggled in by third parties anyway, according to a spokesman, who said the company sells “soup and soap” in Myanmar via its Thailand operation and doesn’t maintain an office in Myanmar. Another Western company with business in Myanmar is U.S.-based Caterpillar Inc. According to the state newspaper New Light of Myanmar, government officials met in August with businessmen affiliated with Caterpillar to discuss sales of engines and other heavy machinery. A company spokesman didn’t confirm the report but said, “Caterpillar and some foreign subsidiaries may, under some circumstances, sell products to independent dealers that resell to users in this country.” He said the company “has no facilities in Myanmar,” and is “in full compliance with all applicable laws.”