OPEN SEASON: Myanmar (Burma)
opposition leader Aung San Suu Kyi talks to the press as Australian
Foreign Minister Bob Carr looks on.
Source: AFP
AS THE investment boom hits Burma, eager Australian companies have
been given the green light to enter the race to invest in the
impoverished South-East Asian nation.
Last week's announcement by Foreign Minister Bob Carr to lift all
remaining travel and financial sanctions signalled the starting gun for
Australian investors to stop jostling on the sidelines and join the
hordes of foreign firms entering Burma.In the rundown economic capital, Rangoon, lobbies and bars of high-scale hotels have transformed into impromptu offices for hordes of foreign investors seeking fortunes in the resource-rich country.
"Right now, (Burma) is a blank canvas," one investor said. "And we're the artists."
Bringing Burma into the 21st century is a challenge. It needs new roads, train lines, ports, electricity grids and telecommunications networks.
"There's been interest from a Brisbane-based property development and construction company specialising in modular building systems which could possibly service (Burma's) huge demand for hotel and service accommodation," the consultant said. He said BHP Petroleum representatives recently visited.
"BHP has been revisiting the previous onshore opportunities in the oil and gas sector and no doubt is eyeing off the lucrative offshore market," he said.
Australia's mining expertise, he added, could provide essential technology to help exploit Burma's rich-resource reserves.
Nestled between the booming economies of India and China, Burma has proven natural resources, including oil and gas, minerals, gems, forestry plus vast potential for new agricultural projects which once saw it labelled the "rice bowl of Asia" at the height of British rule more than 50 years ago.
But decades of economic mismanagement and restrictive international sanctions have crippled Burma's economy, making it one of the most under-developed countries in South-East Asia. However, recent political and economic reforms by President Thein Sein's Government have have been rewarded as many Western nations - including the US, Europe and Australia - eased, suspended or lifted sanctions restricting trade and investment and stepped up aid and development budget commitments.
Australian economist and Burma expert Professor Sean Turnell from Macquarie University in Sydney said Australian expertise in areas such as agriculture was in high demand.
"Australia has a lot to offer Burma, as we are a big, rich resource/agricultural-led economy while Burma is a big but poor resource-rich agricultural economy," Prof Turnell said.
Prof Turnell said Australia could step up its presence in Burma as a regional superpower and as an alternative to Chinese investment.
"The biggest players here are other Asian countries and, in that, there is a bit of an upside for Australia," he said. "There's a real hankering for connections with the West - mostly the US, because it's the most visible - but, in a sense, Australia could profit from that."
But, he said, many investors were surprised by how difficult it was to do business in Burma with its limited infrastructure and its restrictive legal and economic conditions being the main hindrances.
Khoo Kay Peng - a business analyst and founder of i3M Group, a market research, business advisory and investment management firm that focuses on Burma - said foreign firms should do their homework.
"Market research is essential and crucial for a new market such as (Burma)," he said. "It is smarter and more prudent to spend a few thousand dollars on market research than to spend millions to find out if a business works on not."
A draft copy of the Burmese Government's new foreign direct investment laws states foreign investors can provide up to 100 per cent in capital for new projects, or have the option to forge a joint venture with a Burmese business partner.
However, a Rangoon-based business consultant warned eager Australians to be prudent when considering entering into a joint-venture arrangement with Burmese companies.
During the decades of military rule, access to Burma's business circuit was controlled by a small, elitist circle of business tycoons with close ties to Burma's former military regime, who still control the majority of private enterprise.
"And, as Burma opens up for business, foreign investors invariably have to deal with the tycoons who control access to the country's crippled economy," the consultant said.
"Past indiscretions could catch up with unsuspecting new investors and entering into joint ventures with these companies could be viewed by the international community as condoning the excesses committed," he said. "Therefore new investors should choose their bedfellows carefully."
Former Austrade chief economist Tim Harcourt says Australian investors have much to offer Burma.
"Australia could help Burma develop its rural industries as well as in education and training in tourism in much the same way as in Vietnam, Laos and Cambodia," he said.
"The emphasis will be in capacity building and helping Burmese people reach their full potential. But it would be a 'softly, softly' approach provided the pro-democracy reforms continue."
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