Myanmar, Cambodia high-growth investments

by Avelyn Ng

Jan 02, 2012

SINGAPORE - Myanmar and Cambodia have emerged as high-growth investment destinations, with Myanmar recently engaging high-level Western diplomats, while Cambodia is continuing with economic reforms.

Franklin Templeton Investments said the frontier economies are now in the position that emerging markets like Brazil, Russia, India and China were 20 years ago.

By some measures, Myanmar has had a spectacular 2011. Its endorsement as chair of the Association of South-east Asian Nations for 2014 and a visit from United States Secretary of State Hillary Clinton last November marked a new chapter, following reforms that have elevated confidence in an economy barely emerging from years in the dark.

Businesses are set to benefit from further reforms, even though Myanmar still carries the weight of trade sanctions by the US and Europe.

Singapore-listed Yoma Strategic Holdings, which is deeply entrenched in Myanmar, hopes to tap further growth opportunities there. The company derived about 95 per cent of its half-year revenue ended Sept 30, 2011 from property and other investments in Myanmar.

Mr Andrew Rickards, CEO of Yoma Strategic, said: "The country that was held back in terms of development for the last 40 or 50 years, suddenly tries to reintegrate with the world economy; there's an awful lot of catching up to do. So, the challenges range from basic infrastructure, mobile telephones and Internet access to hotel rooms and getting flights. You can imagine that the whole place is creaking a little bit at the seams as it is suddenly on people's radar for the first time."

However, the question is to what extent the reforms will lead to a substantial improvement in the business environment. With Singapore being Myanmar's fourth-biggest trading partner in 2010, industry leaders say business ties count for a lot.

Mr Ho Meng Kit, CEO of the Singapore Business Federation, said: "In the case of Myanmar it will be more difficult, a little bit more unknown. Then again, there are a lot more opportunities, so for some companies which do have links, the intelligence there, the partnerships, those risks can be managed."

Meanwhile, neighbouring Cambodia is also reforming its ways - although it is more established as an investment centre than Myanmar.

Danish manufacturer Jebsen & Jessen says the ease of doing business is propelling a potential US$650,000 (S$843,000) investment in the country.

"It is small for its population, but very much open in its policy to attract new investors and it is easy to settle down there, it is very easy to build up business relationships," said Mr Fritz Graf von der Schulenburg, executive vice-chairman of Jebsen & Jessen.

Mr Ho also said that Cambodia, a member of the World Trade Organisation since 2004, "represents far lesser risk" and more Singapore companies have been operating there recently.

Franklin Templeton's emerging markets specialist Mark Mobius says these frontier markets are now in their "take-off stage" where self-sustaining development is taking place, thanks to high consumer spending at home.