International businessmen are queuing up to get into Myanmar, sensing enormous economic opportunities as the country opens up after decades under a military dictatorship, but there are also voices warning against unrealistic expectations.
"Myanmar could become the economic engine of the region," Ajay Chhibber, Asia director of the United Nations Development Programme, says in the capital Naypyidaw. The International Monetary Fund, for one, believes, that the country "has a high growth potential," he says. Industry Minister Soe Thane hinted at eight tax-free years for international investors during the World Economic Forum in Davos in January to lure investors.
The Hamburg-based trading company Jebsen & Jessen, which has been active in South-East Asia for more than 100 years, in July entered into a joint venture in Myanmar, JJ-Pun. Chief executive Philipp Hoffmann aims to market steam turbines, pumps, cranes and similar large machinery made by major European, US and Japanese manufacturers.
"High-tech products have considerable potential here," he says from his Yangon office with a view out over one of the country's best known landmarks, the golden Shwedagon Pagoda. "There is a great deal of interest in German expertise. People here are happy to have an alternative to Chinese products."
For decades, doing business in Myanmar has been the preserve of Asian companies, which have not had to contend with the sanctions imposed by many Western countries led by the European Union and the United States. According to the local newspaper Eleven News, a third of all foreign investment originates from China, which with 14 billion dollars recently overtook Thailand as the largest investor.
Singapore is another major investor. These Asian countries have built power stations, pipelines, roads, hotels and industrial zones, while Western companies have been kept out. Now those would-be investors are pressing for the restrictions to be eased or lifted. Evelin Petkov of the investment consultancy BaganCapital, which specialises in Myanmar investments, talks of "golden opportunities in the golden land Myanmar."
She refers to "many promising sectors, but in terms of areas that can be accessed most quickly we would suggest tourism, hotel construction, resources (particularly oil and gas), fisheries and light manufacturing such as textiles." Petkov holds out the possibility of investments "in excess of 25 billion dollars that could be digested over the next five years." This figure includes large projects like economic zones and investments in oil and gas.
Tourism is the most promising sector in the view of Sean Turnell, a specialist on the country and a professor at Macquarie University in Sydney. "In terms of immediate investment, it is tourism first, second and third," Tufnell says, noting that the country played host to just 300,000 tourists last year. "Many providers of tourism services are small scale, and with little connection to the government. Of course, tourism is also very labour-intensive, so the employment prospects here could be very positive." Despite the obvious potential, there are warnings against gold-rush fever. The country has a ponderous bureaucracy, and the infrastructure is decayed. Electricity blackouts and slow internet access test the patience of foreigners.
Everything needs a licence, and this opens the door to corruption at all levels. "I fear for this country," one Western investor says. "I see great greed." Axel Mueller knows the local economy well. The German businessman has managed the MTCDigital textile business in Yangon since 1994. Using high-tech machines, his staff of 80 women embroider shirts, T-shirts, caps and bags, as well as providing computer designs for embroidery patterns.
"Myanmar's cost advantages are severely limited as a production site," he says. "This is because of sky-high prices for energy, rents, telecommunications, logistics and fees." Hoffmann also warns against euphoria. "You need to undertake proper market research and find a local partner with international experience if you are to be successful," he says.
Turnell also foresees a rude awakening for over-eager investors. "In a sense, it's happening already. Rangoon's hotels are full of business people, looking for what they can do. But it is very striking that few actual deals are being made," the Australian professor says.