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Myanmar: How quickly things can change

rambo

October 26, 2012,
Yangon, Myanmar.

How quickly things can change.

It seems like just yesterday that Burma was de facto part of the axis of evil. At the time, the military junta was jailing any and all dissidents. The country was heavily sanctioned. Hell, they even based the plot of the final Rambo movie here, the one featuring an aging Sylvester Stallone vanquishing Burmese soldiers at point blank with a .50 calibre machine gun.

(For what it’s worth, the Rambo story is partly true; there has long been an outfit of Vietnam-era US Special Forces troops operating in the country, training rebels, and stirring up dissent.)

Today, though, it’s a completely different picture. At least, officially.

Sanctions have been eased, leading dissident Aung Suu Kyi is an elected official, and Burma is being welcomed back into the global community. Both British PM David Cameron and US Secretary of State Hillary Clinton have visited the country, solidifying the newfound goodwill.

What this ultimately means is that the country is now open for business.  Sort of.

If you ever saw the movie ‘Big’ with Tom Hanks, you may recall the story– a young boy wakes up one day as a fully grown adult and is forced to face the big, mean world. That’s sort of what’s happening in Burma.

This is a place that has been so backward, so isolated, you could scarcely find an ATM machine anywhere in the country just a few months ago. For the longest time, this has been a largely cash-based society, and international banking transactions were just a distant fantasy.

DSC 0015 300x199 Myanmar: How quickly things can change

DSC 0040 2 300x199 Myanmar: How quickly things can change

 

 

 

 

 

 

This is all starting to change. Slowly. Like the Hanks movie, the country and culture aren’t particularly equipped to dive head first into the world. It will take time. They badly need telecommunications and IT infrastructure. And they need a proper financial system to facilitate payments and trade. It’s very difficult for real business to get done without these resources.

But right now it’s a chicken and egg game. A lot of big companies are watching and waiting for everyone else to jump in– just because sanctions have been eased and the market is opening up doesn’t mean that it’s a favorable business environment. So the deals are very slow going.

Long-term, it’s going to be a great place to invest. This is a hugely resource-rich nation with a population of 60 million. That’s practically the size of neighboring Thailand… yet the GDP per capita is a fraction of the size. There’s a ton of room for growth. And you can expect the foreign investment to come pouring in over the next few years.

The new stock exchange is scheduled to come online in 2015, and this will greatly advance the ability to raise capital and bring foreign investors into the country.  But for now, the deals tend to be private. I know a number of foreigners with boots on the ground who are trying to get in early with a business or fund.

If you really want Burma exposure now, there are several Singapore-listed companies which have substantial operations in the country.  Interra Resources, for example, has onshore oil rights, while Ginnacle Import-Export is heavily invested in Burmese teak plantations.

I’m not much into public companies and am looking at a few private deals here… so I’m not formally recommending these stocks. But if you’re interested, you can take a position by opening an account online with Boom Securities out of Hong Kong.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

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Comments on this entry are closed.

  • http://www.OnOurOwnPath.com/ Kyle Crum

    I’m glad you’ve jumped on the badwagon of investors in Myanmar. Hopefully you will expand your investment portfolio beyond natural resource extraction so that you are actually benefiting the people of the country and not just taking their resources (oil and teak were mentioned).

    If you really want to do some good, invest in operations that will give badly-needed jobs such as textile and manufacturing. If you value your sovereignty so much, it would be best to help others by giving them a chance economically to have sovereignty as well.

    • tu_ne_cede_malis

      Why don’t the people benefit from natural resource extraction? If I discover gold on my land and sell it to the highest bidder, do I not benefit?

      The only way the people in Myanmar will not benefit from resource extraction is if the Burmese government steals their land first and auctions the rights of extraction off to foreigners. I don’t know the situation on the ground in Burma but history would indicate this is a likely possibility.

      • http://www.OnOurOwnPath.com/ Kyle Crum

        I lived there for a year and a half and it is the latter situation. The government has repeatedly sold natural resources to foreign firms, even employing foreign labor instead of training local labor to do some of the jobs. Most of the natural resource rights are held by cronies from the old days when land concessions were given to insiders to consolidate power.

        I can’t think of one situation inside Myanmar where an individual has sold natural resources from his/her land for that person’s betterment. It just doesn’t work that way there.

  • John Pitt-Rivers

    “The conduct of international affairs resembles the Mafia. The Godfather does not tolerate defiance, even from some small storekeeper.”
    — Noam Chomsky.

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