Every day, another delegation, another delegation, another delegation, and no ones putting money on the table, says Tony Picon, associate director of property broker Colliers International Thailand. The business community thats visiting Myanmar must be honest and say Were just looking, were not going to buy, and not leading a false sense of anticipation from the local community.
Investors first hurdle is the sanctions maintained by the US and Europe, which policy makers are preparing to review following by-elections next week that include dissident Aung San Suu Kyi. Even then, restrictions on capital flows, lack of a developed stock exchange, an untested legal environment and rudimentary infrastructure will offer plenty of reasons for holding off putting money in the former dictatorship.
A flow of corporate executives and tourists to Yangon, the former capital and largest city, has astronomically lifted hotel prices in the past few months to as high as $400 per night, according to Picon. At the same time, many businesses are balking at long-term deals, making local agents reluctant to deal with foreigners, he said.
Nobody is putting money anywhere at the moment, said Luc de Waegh, founder of business-advisory company West Indochina who helped set up British American Tobaccos Myanmar operations in 1993. Its a difficult, small market, where people dont have much disposable income. The future looks very bright, but in the meantime there isnt much money there.
Opportunities in the country of 64 million people are clear. Investor Jim Rogers, the chairman of Rogers Holdings who predicted a global commodities rally in 1999, said on February 22 hed put all his money in Myanmar if he could.
Myanmars total land area, second only to Indonesia in Southeast Asia, contains deposits of gold, copper and gemstones. The nation is positioned between India and China, astride maritime trade routes between Europe and East Asia and was in British colonial times the worlds largest rice exporter a title now held by neighbour and one-time enemy Thailand.
Frances Total, Chevron Corp of the US and Malaysias Petroliam Nasional entered the nation years ago to tap offshore energy reserves. Even so, large swathes of its waters sit unexplored, indicating the potential is greater than the proven gas reserves that the BP Statistical Review estimates to amount to one-eighth the size of Malaysias.
Arguably though, Myanmars gas reserves are much higher given the unexplored areas of its extensive coastline, CLSA Asia-Pacific Markets said in a research note this month. The development of Myanmars energy resources, along with the connecting of the Asean transportation network, will boost foreign investment flows into the region.
Myanmars per capita gross domestic product amounts to $2.25 per day, about half that of Vietnam and 14% of neighbouring Thailands, according to International Monetary Fund estimates. The nation attracted about 800,000 tourists in 2010, 20 times less than neighbouring Thailand, as its hundreds of kilometers of coastline sit undeveloped. Total amount of office space in Yangon is equivalent to about a third of that available in Empire Tower, the biggest office building in Bangkoks central business district, according to Colliers.
The relative underdevelopment is a legacy of military rule that eschewed international engagement. The seizure of power and confiscation of private assets took an economy that the World Bank in 1960 said had many elements of strength and turned it into one of Southeast Asias backwaters.
President Thein Sein, who took power after elections in 2010, is now taking steps to loosen controls on the economy, moves the IMF said in January could make Myanmar the next economic frontier in Asia.