Malaysian companies moving into Myanmar – The Edge Review

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Malaysian companies eye-up Myanmar

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YANGON – Malaysian builders are lining up for a piece of Myanmar’s hoped-for overhaul of its rickety infrastructure, with Naypyitaw calling for foreign investors to help lay roads and railways, as well as build more houses for a growing urban population.

Malaysian companies, backed by Putrajaya, see an opportunity. “A lot more Malaysian companies are now coming in to see about the development of Yangon and Myanmar as a whole,” said Sadat Foster, an assistant trade commissioner at Malaysia External Trade Development Corporation (Matrade), the state trade agency, during an interview in Yangon. “Myanmar is the last frontier in ASEAN,” he added, “In terms of opportunities, it so big.”

Malaysia was listed as the seventh-biggest source of foreign investment into Myanmar by the end of January 2014, with Malaysian companies listed as putting in just over US$1.6 billion – a cumulative amount dating to 1988.

Among the better-known Malaysian brands already present in Burma are Marrybrown, Maybank and Petronas, and with construction companies eyeing up a possible RM400m worth of deals, according to Matrade, Malaysia’s business footprint in its Southeast Asian neighbour looks set to deepen.

Among the projects under consideration is a new road from Myeik in Myanmar’s far south to the Thai border. The routeway, if it comes off, would give easier access to Myanmar’s pristine and untouched southern beaches and islands for Thailand’s mammoth 20 million visitors a year tourism market, in turn boosting Myanmar’s tourism.

Malaysia’s pitch is not the first national government and business alliance to push together for access to Myanmar. Japan has written-off billions of dollars of Myanmar’s debt, granted loans, brought business leaders to Myanmar, and is backing a key project in Myanmar’s economic overhaul – the Thilawa Special Economic Zone outside Yangon, the run-down commercial capital where power outages and high land prices are deterring some investors.

Malaysian-built or backed foreign construction projects – such as the airport at Siem Reap in Cambodia, the F1 circuits in Abu Dhabi and Bahrain, and the world’s tallest building, the Burj Khalifa in Dubai – were mentioned during a Malaysia-backed investment conference run by Confexhub and held in Yangon last week, where nine Malaysian construction companies pressed the flesh and where delegates paid up to US$1800 to join the proceedings.

Myanmar’s Deputy Construction Minister Win Myint addressed the gathering – a last minute replacement for Construction Minister Kyaw Lwin. After Win Myint’s speech, delegates sat outside a side room in Yangon’s Traders Hotel – built by Malaysian-Chinese businessman Robert Kuok – and waited their turn for a few minutes alone-time with the Deputy Minister.

During Myanmar’s military era, construction projects went to businesses tied to the ruling junta – wither the army owned Union of Myanmar Economic Holdings (UMEHL) or one or other of the ‘cronies’ – the business elites who lived parasites off the old regime and some of whom are still under US sanctions. In those days, work commissioned by the Myanmar Government was often paid for by granting the crony some lucrative concession or other – be that in mining or logging or some other attribute of Myanmar’s strikingly-rich natural resources.

Looking back at the pre-2011 era, when the army ruled in an opaque and intimidating manner, a newly-published OECD Investment Policy Review of Myanmar said that “Investments by state economic enterprises, often in joint ventures with foreign multinational enterprises (MNEs), in extractive industries and the energy sector provided little tangible benefits to local populations and were often seen as contributing to human rights abuses.”

Now, though the system is more open and projects come up for tender, the OECD says that the onus is on the Myanmar Government to update some key laws, mentionig the 1914 the Companies Act. ‘Others – adopted under the military junta in the past – are often ill-suited to an open economy and not in conformity with international standards,” the OECD reported.

Jason Kon, the Myanmar country manager for Malaysia’s Muhibbah Engineering— among the companies shortlisted for the proposed new 12 million passengers a year international airport,  a contract which was first awarded to Korea’s Incheon but has since been re-opened for new bids – said that Myanmar’s hazy land laws and ownership system are another conundrum for companies wanting to build on Burmese terrain.

“The main challenges here would be the land which mainly unclear of the exact land owner and the land title,” Mr Kon outlined.

But risks be damned, Myanmar received US$3.6 billion foreign investment during the first 11 months of the 2013-14 fiscal year, almost double the entire 2012-13 total according to the Directorate of Investment and Company Administration (DICA), part of the Ministry of National Planning and Economic Development.

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