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February 06, 2013 at 07:52 AM
Previously best known as Burma and for its rubies, Myanmar is now presenting international investors with ripe opportunities as the country evolves. Myanmar has labored under a totalitarian military dictatorship for decades, and in 2008 the rubies were banned from importation into the U.S. because of human rights violations. In the wake of recently lifted sanctions, though, the country—renamed to the world as Myanmar in 1989 by its governing regime—has emerged from the shadows to take its place in the public eye. With the enactment of the Foreign Investment Law, international commerce is not far behind.
The law, passed on November 2, opens the gates that once barred entry of foreign companies—either through requirements for large capital investments or by limits on foreign ownership. The International Monetary Fund (IMF) has projected the amount of direct foreign investment in Myanmar could increase by 40% in 2012, hitting $3.99 billion—a new record. Many opportunities beckon, from credit and energy to telecommunications and mining. But while the country is still known for its rubies, they’re still banned from the U.S.—and that indicates the mixed bag of opportunity and caution that constitutes investing in Myanmar today.
It hasn’t taken long for eager companies to take initial steps on the way to Burmese prosperity. Foreign banks are still not allowed to operate in Myanmar, although in July the country’s central bank gave its approval for domestic banks to embark on joint ventures with international banks. However, both Visa and MasterCard have already partnered with local banks in the country—Visa signing licensing agreements with domestic banks Kanbawza, Co-operative and Myanmar Oriental on November 3 and MasterCard initiating ATM services through Co-operative Bank’s ATMs on November 15. The availability of credit and debit card services is seen as a boost to both tourism and business travel, and further changes to Myanmar’s banking sector are expected to follow.
Energy is another area with considerable potential, and Gazprom has already seized the opportunity. According to its website, it is pursuing discussions with the government to engage in various energy projects. Also, by the end of the year, the government plans to auction its largest-ever quantity of exploration blocks for oil and gas. India’s Oil & Natural Gas Corp. is expected to bid; Total SA of France has said that it’s already purchased 40% of an offshore license.
