Businessmen lick their lips at the untold riches in Myanmar, but even the process of sending an email can take days. Finbarr Bermingham reports on an ancient trading land’s problems in embracing modernity.


If Rudyard Kipling were to wander through modern-day Myanmar, parts of it would be unrecognisable from the land he described in idolised tones in his 1892 poem Mandalay – a sleepy place, “where the flyin’ fishes play, an’ the dawn comes up like thunder outer China, ‘crost the Bay!”
These days the thunderclaps coming from China are more likely to be caused by the convoys of construction vehicles, making their way from Yunnan province to dig holes in the ground, to send buildings soaring to the sky and to drill to the depths of the ocean in search of black gold. Yangon is a mess of cranes and scaffolding, and today’s Myanmar is one of special economic zones and representative offices housing the richest and most powerful banks and companies on earth.

Yet, the evangelical tones remain – even if these days, they’re more likely to be whispered from the mouth of a smartly-suited businessman. A shoebox office in the erstwhile capital Yangon’s CBD will set you back up to US$5,000 a month, with no guarantee of a working phone line or internet connection. Little business can be transacted here, with finance and insurance being agreed offshore, and those on the ground making sure the correct relationships are managed correctly. But there’s a reason why those with the money to spend are licking their lips so voraciously at the prospect of an opening Myanmar. In fact, there are many.

Here is one of the Earth’s last and most bountiful frontiers. A country with a population of around 60 million, which has almost doubled in the past 30 years. Despite only having 50 million proven barrels of oil and 10 trillion cubic feet of gas in reserve, the suspicion remains that Myanmar is a Shangri-La of natural resources. Licences have been doled out to energy majors in recent years to drill offshore, while the country has been quick to set up a supply line to Thailand in order to start flogging the gas it can already access.


Open the floodgates

Since western sanctions began falling away in 2012, progress has been swift. In 2010, there were 30 foreign companies registered in the country. Today there are more than 1,000, with the amount of overseas money being pumped into Myanmar rising from US$300mn per year to US$4bn over the same period.

Eight foreign banks now have licences to operate in Myanmar: BTMU, United Overseas Bank, Oversea-Chinese Banking Corporation, SMBC, Bangkok Bank, Maybank, Mizuho and Industrial and Commercial Bank of China (ICBC). The country has inked a visa-free agreement with Thailand, meaning citizens with ordinary passports can make visa-free visits of up to 14 days, while the government also signed an agreement to co-operate with Singapore in banking and legal matters (many businesspeople divide their time between Singapore and Yangon) in July.

“Major progress has been achieved over the past three years across a range of infrastructure areas including energy, telecommunications and transport,” says Winfried Wicklein, the ADB’s country director for Myanmar. The likes of Coca Cola and Unilever were quick to open plants, seeking to capitalise on a young and cheap workforce, while Emirati giant Ooredoo and its Norwegian counterpart Telenor were awarded contracts to develop the country’s nascent telecoms network. But that doesn’t seem to have made communicating with those in Myanmar all that easier.

“I’m guessing at quite a lot of what you’re saying, because the line is so bad,” says Khaing Zar Aung, the head of insurer Willis’ rep office in Yangon, when asked how the telecoms network has improved. “You’re lucky you can hear me. As soon as it rains, we can’t talk on the phone. Internet barely works. But compared to last year, it’s totally different. We now have limited internet access, but it’s still very slow. Anything bigger than 1MB and you can’t download the file. We can do business here, but you need lots of patience.”

Patience is a virtue Aung seems to have in abundance. Insurance policies for Myanmar cannot be issued for the international market from within the country, so they’re done through Willis Singapore. Staff in Singapore then send the application to Myanmar Insurance, the government monopoly, via the only generic email address available. Staff in Myanmar Insurance print the email out and sit it on the managing director’s desk for approval. The process can take a working week, and is repeated for every single email and reply that goes into and out of the public body. Bureaucracy in Myanmar is a cat’s cradle of entanglement.

“Our office is next to Myanmar Insurance. To speed it up, we print off the email and run over to the insurance office and get it agreed. That’s a lot faster. That’s how we do business,” says Aung, sounding impressively sane as she explains that she often runs between the two offices four or five times a day, before the line drops out and our call is cut prematurely short.


Holding out

Banking is mainly done offshore, and according to Andrew Tan, founder of Consult Myanmar, “the banking system in Myanmar is still very rudimentary and lacks depth”. He adds: “Getting bank financing is difficult as the local banks lack experience and expertise and the foreign banks lack the capital base to handle big project financing. Most major project financings are still being done offshore as a result.”

The ADB expanded its trade finance programme to the country in 2012 and is now working with three state banks and seven commercial banks to help meet the need for capital – but the gap is large. “Government statistics show total trade volume of US$28.1bn in 2014-15 and is projected to reach almost US$30bn in 2015-16. However, there are significant barriers to the growth of trade finance: collateralisation requirements for customers and banks, the lack of foreign currency availability and lingering uncertainties regarding the effects of OFAC policy on US bank financing in Myanmar,” Wicklein says.

The country’s growing need for power – it has just 30% electrification – and construction projects will mean huge levels of finance are required, and while much will come from the development financial sector, commercial banks are chomping at the bit to get involved. There is a feeling, though, that everything is on hold for now. No more big projects will be signed off until the results of the upcoming elections are clear and, despite confident analysts predicting an opposition landslide months ago, people don’t seem so sure any more.

“Even less than three months to go until the elections it’s hard to make a forecast with much confidence,” Tim Powdrell of the Risk Advisory Group tells GTR. A week before we spoke, the parliamentary speaker Shwe Mann was removed from his role as the chairman of the ruling party, showing that even weeks before the vote, political allegiances are being redrawn.

The iconic Nobel Peace Prize winner Aung San Suu Kyi is unable to run for the presidency, due to a tenet in the constitution barring those whose spouse or children are an overseas citizen from leading the country. Both Aung’s children were born in the UK. Despite this, her National League for Democracy (NLD) looks likely to win the most seats, but this does not mean they will secure control of the government.

“The failure to amend the constitution means that the extent to which the polls are ‘free and fair’ is already curtailed,” Powdrill say. “And the case of Shwe Mann shows the willingness of more conservative elements of the Union Solidarity and Development Party (USDP) and military to assert control over political rivals and over the progress of reform. Although this was essentially an internal party matter, it does demonstrate that the military and the USDP will act to protect their position – which might cast some doubt over their ability and willingness to deliver wholly democratic elections in November.”

Consultant Tan says the country “will not see a US-styled or British-styled democracy, but what we will see a Myanmar-styled democracy where the president is a compromise candidate acceptable to all parties”. Either way, it reeks of a military junta unwilling to let go. The pace of economic and political reform has slowed since the slew of concessions that led to sanctions’ removal, leaving people wondering whether the leopard in control can ever truly change its spots.

As for trade, those eyeing Myanmar are hoping for a modicum of stability, in a country in which everything can change overnight. At Willis in Yangon, Aung must surely be going out of her mind under the burden of red tape. “It’s frustrating, sure,” she says, breezily. “But Myanmar is exciting. This is an exciting place to be.”