AFG Venture Group Dispatches

Corporate advisory and consultancy in Australia, South East Asia and India.

Myanmar, The Darling of the Media Commentators. Can the Change be Maintained?

There has been an increasing amount of column inches devoted to the changes which have occurred in Myanmar, and as one who has had a commercial contact with the country since 1994 when we opened our first office in Yangon, and in 1998 when we first produced the Myanmar Business Guide, the changes which have occurred over the last several years are certainly worthy of comment.  This particular article addresses some of the issues which may be a interest to those who wish to evaluate the commercial opportunities in the country.


PagodaFor a country that is so physically beautiful, and people who are so gentle, accommodating and pleasant, the history of the country is quite chaotic and violent. It was after the Second World War that Myanmar, then known as Burma, gained its independence. For almost 20 years the country enjoyed significant economic growth; however the military coup in 1962 marked the transition to military leadership in a form which was called the “Burmese way to Socialism”. It was a period of intense repression and violence, and the potential unrest as several ethnic groups sought independence from the control of the central government. This added to the violence in the country. In 2008 the long promised new constitution was implemented by way of a referendum, A bicameral parliament of, the lower house [Pyithu Hluttaw] and the Upper House [Amyotha Hluttaw] in which 75% of each were to be democratically elected and 25% of the seats were reserved for military appointments. This is probably a useful transition process as it had been successfully applied in other countries in Asia, particularly Indonesia and Thailand, and the previous colonial ruler The United Kingdom still retains a fully elected lower house of 650 members, and a fully appointed upper house of approx 800 members. The national election in 2010 was the first visible sign of democracy in Myanmar, and while the Aung San Suu Kyi boycotted them, and there were severe and probably deserved criticisms of the process, the country did hold the elections, and since then, they have begun the task of an accelerated opening of the economy and reconciliation with dissident groups and the wider global community.

The by-election conducted on April 1 2012 to fill the vacancies created by ministerial appointments has been regarded as the most promising exhibit for real change as the ruling SPDC party were soundly beaten by Aung San Suu Kyi’s party the NLD. The election was overseen by 150 invited foreign observers, who reported that the election was clean.

Myanmar’s Place in the World


Most of the western world had implemented some form of sanctions, which makes business challenging, but not impossible, however as a direct result of the relatively clean bi-elections, most countries have now moved to soften or extinguish the sanctions. Australia was one of the first to do so. The move to acceptance is evidenced by the visit by Hillary Clinton and the surprise visit by the Prime Minister of UK in April 2012, the visit to many countries, including the USA by the President, U Thein Sein.

Myanmar is hosting the 2013 South East Asian Games [SEA Games] which are under regulation of the International Olympic Committee (IOC) and the Olympic Council of Asia. This will of necessity bring the country and its administration very much under the spotlight.

The 22nd World Economic Forum on East Asia is being conducted in the capital during June 2013. About 900 delegates from more than 50 countries are in Naypyitaw for the three-day forum, as Myanmar woos foreign investors.

The ASEAN members have approved Myanmar to hold the position of Chairman of Asean from 2014, and this is seen as a significant acceptance, as they were scheduled in 2006 and it did not occur.

The country is being almost overrun by trade missions, investment visits and fact finding missions by business people, investors and politicians. The tourism sector is struggling to keep up with demand.

Commercial Changes Made


The rate of change at the policy level has been quite phenomenal and has been a surprise to many, including those in Myanmar. The most sweeping was the Presidential appointment of 6 advisors to form a who were selected on the basis of merit, to create a “think tank” to oversee and advise policy changes to the President.  This has been a bold, but sound move as these advisors can promote policies which would never be formulated within a traditional and somewhat hidebound bureaucratic process, and it seems to be working. Some of the actions taken or decisions already made include:

  • The fact of the national elections in 2010 was really significant.  It would have been easy for the authorities avoid holding them in violation of the Constitution;
  • The fact of the clean by-elections in April 2012 to fill the vacancies caused by the elevation of ministers etc is significant;
  • Political prisoners have been released, although there were some suggestions that some prisoners other than political ones were also released.  This has heartened the human rights groups;
  • The censorship of the media has been lifted;
  • The Central Bank, previously under Parliamentary control has now been being divorced from the government and placed under the control of an independent board;
  • The Foreign Direct Investment laws have been rewritten with a view of making investment in the country much easier, adding incentives for investors and a series of sovereign guarantees;
  • Other laws under discussion for revision include the Commercial Law, Land Tenure, Mining and other extractive industries;
  • The currency controls have always been a real problem for a foreigner. There were two simultaneous exchange rates; the official one was 6 Kyat to the USD and the unofficial black market rate was variable but was close to 1000 Kyat to the USD. An official managed floating exchange rate has been established, and currency exchange can occur openly and officially. At this stage the currencies with which are available are USD, Euro and Sing Dollars, and the rate, is approx 950 Kyat to the USD [June 2013];
  • The banking system is being remodelled;
  • The SWIFT international banking interchange system has been introduced;
  • An ATM system has been introduced;
  • Credit cards have been introduced (though are not yet widely accepted);
  • An anti-corruption committee has been formed;
  • Peace talks with ethnic groups have commenced, but still have a long way to go;
  • A stock exchange is to be developed using Japanese technology and processes. It is scheduled to be operational in 2015;
  • Myanma Insurance Company’s announced that they will issue Licenses for Private Insurance Company later this year; and
  • A new airport for Yangon is up for tender and there are many other infrastructure projects in final stages of planning.

There are many changes under discussion, some of them significant, others which are more subtle, and of course there are the enabling changes which are made in order for other changes to be made.

The actual changes need to be enacted through the bureaucracy and the other institutions and it may be expected that it will take much longer to be effective because of the normal inertia and the potential for deliberate slowdown by unwilling executives.   This does not appear to have been the case.  The speed at which changes have been enacted has been breathtaking, and even those which required significant technical input were not delayed.

Sustainability of Changes


Made It is always difficult to predict the future, however, several points are worthy of mention.

The change in attitude of many people is by far the biggest change. There is now an air of confidence for the future, enthusiasm, and a preparedness to get on and make things happen. This attitude has not been evident in the past and it is definitely the most significant change which is discernible in the country.

The attitudes of the various political groups are going to be paramount. It will certainly take a higher level of cooperation, negotiation, compromise, and vision by all political groupings to allow all issues to be resolved. Given the history, there will be confrontation from time to time, and it is hoped that it will not derail the reform process. The indications are that these challenges can be managed.

It is inevitable that the existing government (SPDC) is still seen as being controlled by the military, but hopefully this will decline as time progresses and more private sector people take political positions. Having said that, the attitude of the senior authorities in the SPDC is one of incredible openness and willingness to make the great changes which are required to bring the country back into the fold of the international community.

The attitude of the international community seems to be one of support. As a result of the clean election on 1st April 2012, the EU lifted most of the sanctions, Australia and UK indicated that selected sanctions would be lifted, and the USA lifted sanctions on humanitarian based projects. All countries have expressed support for the progress in the democratic movement.

With such significant changes to be implemented it is expected that the bureaucracy and other institutions within the country may well have difficulty keeping up with change. Coupled with a high probability that there will be people within those institutions who will be reluctant for the changes to occur and may well be in a position to slow the process down. So it is to be expected there will be “potholes and speed bumps” along the way, and these will need to be allowed for, negotiated around, and overcome.

The infrastructure is in a poor, perhaps even in a parlous state. Power outages are regular; the telecommunications don’t work in some areas at all, and is frequently unavailable in others; the roads are well overdue for a major makeover; and, other transport facilities within the country are decayed. All of this can have a detrimental and inhibiting effect on investment, and the potential investor will have to look very carefully at the availability and sustainability of the facilities.


Similarly, the services are in need of major overhaul and upgrade. Banking is being addressed but it will be some time before full and sustainable services are available. But education, health, tourism, insurances, most normal services which are generally supplied by both government and private sector are in need of a technology upgrade, and must be seen as prospective projects.

Because there are so many changes being slated, and more being called for and placed on the agenda, particularly in the regulatory framework of the country, that means that changes are going to be occurring on an ongoing basis, and the investor must be prepared to accept that changes will continue, and that there may be a time lag before the implementation process becomes clear.. Those organisations that are used to dealing with ambiguity will have no difficulty, but those organisations which seek a rigid framework in which to work, may find some difficulties.

Despite those problems the objectives of the regulators seem to be keen to continue the opening up process, for the development of the country, the benefit of the population, the benefit of the investor, and so the country may join the international community. While it is possible there could be a U-turn in policies, everything points to a continued and expanding policy of an open market.


Myanmar is a potentially prospective opportunity for investments, but the research must be undertaken to ensure the economic and commercial viability of the project the management style must be sufficiently flexible to adapt to a changing environment, and also the investor must be prepared to contribute to the development of the country and its people.


Population: 60+ million
Capital: Naypyidaw
Largest City: Yangon (4+mill)
GDP (ppp): $83 Billion
GDP/Capita: $1400
Structure of GDP: Agriculture 41% Manufacturing 22% Services 37%
Exports: $9 Billion Minerals & Gas 55% Agri 25% All others 20%
Imports: $6.2 Billion Petroleum Products 23% Machinery & Spares 14% Iron & Steel Products 8%
Borders: India, China, Thailand Laos, Bangladesh (40% of the world’s population)


About the Author

Glen Robinson has spent the last 21 years focusing on the establishment and development of cross border alliances, joint ventures, mergers and acquisitions, particularly in the manufacturing, processing and distribution areas, and particularly targeted to Asia.

These corporate advisory activities are based on more than 20 years’ experience in management consultancy, and he has worked with a wide range of industries from agriculture, government through to manufacturing, distribution and service industries.

Glen initially gained his Asian experience as chief executive officer for the Asian subsidiaries and joint ventures of a major international manufacturing and marketing organisation. He sits on the board of many Asian related business organisations and has for many years advised a number of Foreign Investment Boards in the Asian region.