US Firms Eye Burma Business Opportunities with Ambivalence

[News_Editor]

Zaw Moe Khine, General Motors’ representative in Burma, speaks in Rangoon on Wednesday. (Photo: Simon Roughneen / The Irrawaddy)

RANGOON — Though Burma is “one of the most exciting new markets in the world right now,†American companies remain reluctant to invest here due to the country’s poor infrastructure and outdated commercial and financial laws, say representatives of a US business delegation.

US-Asean Business Council President Alexander Feldman on Wednesday lamented the practical hurdles to doing business in Burma as his delegation wrapped up a visit that brought prospecting executives from AT&T, Chevron, Cisco, General Electric, General Motors, IBM and other big American brands to Rangoon.

While an enticing market at the strategically important intersection of China, India and Southeast Asia, Burma’s poor electricity supply and road network, as well as high land prices, stand out as deterrents for investors, according to the Council, a business-funded advocacy group for American enterprises operating in Southeast Asia.

Acknowledging that some pioneering US companies such as Coca-Cola, General Electric and Ford have opened operations in Burma, Feldman noted that others are so far just setting up representative offices in Burma.

“It’s not like nothing has happened,†Feldman said, downplaying the tentative, wait-and-see approach and pointing out that Burma’s economic opening-up is still in in its early stages.

He said American health care, insurance and IT companies are interested in investing in Burma, while financial services providers such credit card companies are expanding their recently established operations in the country. Credit card services are now available at about 150 ATMs and accepted at some 300 hotels, restaurants and shops in Burma, a relatively new development.

“Last year I had to carry a big wad of cash with me,†Feldman recalled.

General Motors will open a new showroom in Rangoon this year, with a second to come in Mandalay, said Zaw Moe Khine, GM’s in-country representative. “Myanmar has so far been mostly a used-car market,†he said, “but GM will offer left-hand drive automobiles to better serve the market here.â€

The GM announcement was the sole new investment to come out of the Council’s current mission to Burma, though Feldman said he expected more deals would be inked later this year.

In the meantime, companies looking at Burma’s low-wage economy and its market of 50-60 million people will have to overcome other difficulties. Even finding acceptable office space with necessary amenities in Rangoon is a challenge, the Council said. “It’s just so hard to find anything that is suitable,†said Feldman, adding that Burma compares unfavorably with other Asean economies when it comes to finding office locations.

And, relaying the views of its members, the Council cited poor Internet connection speeds and availability as another factor hindering companies from setting up shop in Burma.

“That’s got to change,†Feldman said, pointing out that Burma’s Internet infrastructure is scheduled to be upgraded with new fiber optic cables and the imminent arrival of two foreign mobile network providers. “We have some big IT companies with us on this mission,†said Feldman, “and they are interested in Myanmar.â€

While broadly praising Burma’s government for the reforms undertaken so far, the Council said some changes did not go far enough for investors’ liking. Citing one example, Feldman said insurance companies sizing up opportunities in the country who would otherwise “love to do business here†are constrained by the omission of the sector from Burma’s 2012 foreign investment law.

In July 2012, the US government lifted a ban on companies investing in Burma, in recognition of reforms undertaken by President Thein Sein’s government. In May 2013, the two countries signed a Trade and Investment Framework Agreement to bolster commerce between the one-time enemies.

According to the Office of the United States Trade Representative, bilateral trade between the two counties remains small, totaling US$90 million in the first three months of 2013.

Source: Irrawaddy.org

[manhattan55]

Infrastructure and political uncertainty leading up to the 2015 elections will curb MNC involvement for the next 2-3 years.