With civil unrest in the rear-view mirror and a country still trying to find its way in the global-connected economy, Myanmar is serving as a case study for foreign direct investment.
To an outside observer, the Southeast Asia country, sandwiched between Thailand, Laos and Bangladesh, and with hulking China to its east, is fairly new to the global economy, having started political reform in 2008 with a new constitution, followed by a general election in 2010.
Now, the country, filled with Buddhist relics, is a tourism beacon, with major destinations that include cities such as the capital Yangon and Mandalay.
Historically, the military has been the majority stakeholder in all of the major industrial corporations of the country—from oil production and consumer goods to transportation and tourism. That's now changing with the economic liberalization that gripped the country starting in 2011.
In March 2012, a draft foreign investment law emerged, whereby foreigners no longer required a local partner to start a business in the country, and were able to legally lease property. Also, in 2012, the likes of the U.S., Japan, and the European Union began reducing and/or eliminating economic sanctions to further allow for foreign direct investment.
And with that, investors came, including Thailand, whose ambassador to Mynamar, Pisanu Suvanajata, recently said, according to The Nation, that the Myanmar government "has developed a promising road map for the country's political and economic reform, so the time is right for Thai companies to invest."
The outcome of the November 8 general election is also not expected to impact development plans as the new government is likely to follow the country's roadmap, which has significantly boosted the economy over the past few years, reports the Bangkok Post.
Thailand's proximity to Myanmar is further evidence for why it should be investing more and now. Other global countries are feeling the pull, including Japan, China, South Korea, Singapore, Hong Kong, some EU countries and the U.S.
"Thai investors should hurry otherwise they will have no place to stand as business opportunities shrink," said Suvanajata. "Myanmar has changed and they are more welcoming to foreign investors. Regulations related to trade and investment as well as the financial system have been modernized."
According to the Bangkok Post, foreign investors are able to lease land for up to 70 years and they can hold as much as an 80-percent stake in a joint venture.
The Case for More Hotels
Hospitality investment has huge upside. Tourism in Myanmar is on the rise with the number of foreign visitors increasing year over year. A reported 2.8 million foreigners visited the country last year, up from only 800,000 a year earlier. And there is a dearth of quality hotels to stay in, a reality that should convince hotel companies to jump in and fill the hole.
Back in July, Hotel Management took a hard look at Myanmar and documented what many hotel companies are doing in the country on the development front. Read it here.
These include Starwood Hotels & Resorts' foray into the country, with the development of a 375-room Sheraton property in Yangon. At the time of the signing, Lothar Pehl, SVP of operations and global initiatives, Starwood Hotels & Resorts Asia Pacific, said this of Myanmar: "Touted as Asia’s final frontier, Myanmar presents immense potential for rapid growth and we are excited to share our engaging brand programming and innovative social spaces with the burgeoning nation."
Wyndham Hotel Group is another company seeing the potential in Myanmar. It is going there for the first time with the signing of a franchise agreement for a 260-room Wyndham Grand hotel, also in Yangon. The hotel, part of a mixed-use project, will be owned by Asia Myanmar Shining Star Company.
"With more than three million visitors in 2014, Myanmar is growing in popularity among business and leisure travelers," said Barry Robinson, Wyndham Hotel Group South East Asia and Pacific Rim's president and managing director. "The country's rich culture, political stability and recent tourism efforts, including the expansion of its e-Visa program and the construction of a new international airport, will continue to help draw more visitors, creating greater demand for high-quality, internationally recognized hotel brands."