Companies in Thailand are seeing the benefits of expanding into Myanmar, formally known as Burma, as political fears subside. Thailand’s total outward FDI into Myanmar’s emerging economy, which amounted to US$10 billion in 2013, was the second largest of any country besides China, which invested over US$14 billion in the country.
The main road in Yangon, Myanmar’s largest city, is filled with billboards advertising products from some of Thailand’s large companies. CP Group, Bangchak Petroleum, Bangkok Dusit Medical, PTT, and many more already have begun operations. These signs are seen among those of other multinational companies such as Coca-Cola, Telenor and Samsung.
However, Thai ambassador to Myanmar Pisanu Suvanajata believes that his country will not hold its status as the second largest investor in Myanmar for long. The Myanmar Investment Commission (MIC) has recently approved large projects by investors from Singapore, Japan and South Korea. “Myanmar is not our choice. Indeed, it is choosing who should be allowed to invest here,” said the ambassador.
The large presence of Thai businesses in Myanmar is because of several factors. These include rising wages in Thailand and many of its other neighbors, economic reform in Myanmar reducing many of the barriers of entry into the country, and the establishment of many industrial estates which provide convenience for companies located within them.
Analysts are optimistic about the Burmese economy, and foreign direct investment is booming. Total FDI rose from US$901 million in 2010 to US$6.2 billion in 2013 – a factor of nearly three times. This has helped to propel the country’s stellar GDP growth, which was 8.25% in 2013 and is predicted to be the same amount for the next three years, according to the International Monetary Fund.
Others are even more bullish. At a seminar in Yangon titled “Gateway to the New Construction Era”, Bangkok Bank’s executive vice president told those attending that he expects growth in excess of 10% leading into the next decade. “The IMF expects FDI to Myanmar to grow by $5 billion per annum in the next 5 years. Personally, I expect it to be $8 billion per year, judging from conversation with potential investors who have shown their interest in investing in the country,” he said.
Perhaps even more noteworthy is the selectiveness of the Myanmar Investment Commission, and the fact that many large investments have not even been approved. Large projects from reputable businesses have been rejected, which may have otherwise made the performance of the Burmese economy even more impressive. Whether this is due to the commission looking to take a gradual approach to inward investment, or because of other reasons, is debatable.
Either way, the country’s economic development is progressing well. But there are still risks for companies wanting to invest in Myanmar. Poor infrastructure, an undersupply of office buildings, a lack of skilled employees, and government bureaucracy all lead to major challenges that foreign businesses must overcome.