What Goldmines and Landmines Lie Ahead for Investors in Burma?
Link Road Capital Management
By Patricia Higase
April 4, 2012
The new Burma- Economics overriding politics
The events of the last few months in Burma, in particular the country’s decision to float its currency and allow foreign press to observe elections were unprecedented and clearly a divergence from the past. It appears the difference in this election in Burma to previous times is that parties involved are more economically driven. Aung San Su Kyi’s decision to move ahead for the people despite her dissatisfaction with the way the elections were conducted was another signal of a more practical approach to moving the country forward.
What goldmines and landmines lie ahead for investors in Burma?
Human Capital: A sizable percentage of Burmese from Rangoon have traveled outside of Burma for work and education. A relatively sophisticated business workforce exists.
In the last fifteen years, a sizable portion of the young generation of Burmese have left the country briefly to attend either technical schools or colleges in neighboring countries such as Thailand and Singapore. In the winter of 2011 we found the city to be slightly quieter and darker relative to 2004. One of the reasons was the increased exodus of the young to neighboring countries. We believe changes in the country will draw many of these young people back. As these individuals are trained to world standards, they have high adaptability levels and in many cases eagerly await new business ventures in Burma. Furthermore, they are likely to demand reasonable wages and also quickly become the next generation of consumers who demand consumer products and services.
The young Burmese who left the country in the 1980s and 1990s for the U.S and Europe are also now seasoned professionals. They will be the future business leaders of the country. Should these individuals return and lead the country, unlike neighboring Asian countries, Burma may not need a large number of expatriates to bring expertise to the country. Furthermore, these individuals would have high level execution abilities and better than expatriates due to their local knowledge and origin.
It is not uncommon in Burma for people to be bilingual in English and Burmese.
At present, Burmese language skills are necessary to conduct business in the country. But this is unlikely to be an obstacle for long. English is a very familiar language to the Burmese due to a history of British presence. While isolation did take a toll and fifteen years ago the average Burmese’s ability to converse in English was much better relative to today, most of the educated population in the city is able to converse in excellent English. While it may take some time to bring the entire working population’s English skills up to business level, adaptation will be swift relative to most countries in Asia. Language barriers will be very short lived and Burma’s transition will be much easier and swifter relative to other non English speaking Asian countries despite Burma’s years of isolation.
The Burmese culture is one of many contradictions.
The Burmese culture is one of reverence for the elderly, politeness and courtesy. The language also displays all these traits. To speak in polite Burmese, getting to the point is in a round about fashion. The “yes or no” bluntness of the English language cannot be translated well.
Burmese women are traditionalist and matriarchal and very respected in the household. At the same time they are very business minded and influential in the community. The country also accepts and expects women in business. Unlike many Asian countries where women hold secondary positions in the corporate world, we anticipate many of the business ventures will be driven by women.
Nationalism is stronger than ever.
As a by product of the on going fight for what people deem to be a journey towards democracy, the Burmese people are quickly reignited and passionate in the current changes. Despite having to wait fifty years for what they want, enthusiasm and hope for a new and better future is easily reignited across the country. The people of the country are invested in the process and change and hold themselves accountable for moving things forward.
The risks are extremely high for those who do not have adequate local knowledge and are unable to find the right local businesses or entities to partner with and invest into. While interested investors make trips to Burma now, due to the fifty years of isolation, there is very little data and thus understanding from the outside world of how the country has transformed over the years and where the true risk and opportunities lie.
(c) Link Road Capital Management