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2 European
firms face Myanmar catch-up By
Chris Stewart
If China turns out to be the
big winner in a growing Myanmar market place,
companies from other Asian countries also aim to
thrive there. Malaysian air-conditioner maker
Acson is already entrenched in Yangon, Mandalay
and elsewhere in Myanmar.
The poor state
of Myanmar's education system for the largely
rural population (some 75% is involved in
agriculture) means a low-skilled workforce and
under-funded technical and academic institutions -
New Light of Myanmar last year highlighted the
donation of colored paper to one school; Education
Minister Mya Aye told MPs in February that there
was no plan for universities to have their own web
sites but he confirmed that all universities have
now been equipped with Internet access.
Even so, Japan's NTT Data, the world's
eighth-largest software
company with $14 billion
in annual revenues, said on Thursday it plans to
set up a subsidiary in Yangon in September for
development of computer systems, with as many as
500 employees within five years.
Low
education standards are, however, fine for
factories making low-end goods gobbled up by the
likes of WalMart, many of them run by
manufacturers in China and elsewhere in Asia
looking for lower-cost production locations.
Thailand's clothes makers are racing to
take set up shop in neighboring Myanmar, where
labor costs are one-third of those at home. Up to
10 garment manufacturers, including Thailand's six
largest, plan to set up plants around Yangon this
year at an average cost of $10 million, according
to the Thai Garment Manufacturers Association. The
new plants will be larger than their other
factories in the region as Myanmar "is the
highest-potential destination for investment", The
Nation reported last month, citing association
president Sukij Kongpiyacharn.
The EU
sanctions had removed Myanmar from the Europe's
General System of Preferences "GSP", which
exempted garments made in the country from import
duties.
A return to the GSP could create
up to 25,000 new jobs this year in the textile
industry alone in 2012, Myanmar's Garment
Manufacturers Association chairman Myint Soe told
Associated Press. A further easing of sanctions
(they have so far been relaxed only slightly) by
the United States, which used to buy 75% of
Myanmar's textile products, could prove even more
beneficial, AP reported.
US hotel groups
aiming to target Myanmar's tourist and business
accommodation sector will have to contend with
local big business outfits, such as Max Myanmar
Group, as well as Asian leaders. Max Myanmar is
run by the well-placed and hitherto sanctioned Zaw
Zaw, who accompanied former leader Than Shwe on
his state visit to China in September 2010.
Zaw Zaw, who owns a quarter of Dawei
Development, a planned $8.6 billion deep-sea port
and industrial zone in the southeast of the
country, plans "to shift his strategy" to banking,
hotels and tourism, Reuters reported this month.
Construction is a "big headache", he said. "We
have to look at which business is good for the
future, which business we can partner with foreign
companies." [7]
Incomers will also have to
tie up with the government and/or compete with the
well-established outfits such as Singapore's
Sedona Hotels, a unit of Keppel Corp, the world's
biggest oil-rig builder, and hotels run by
Malaysian Robert Kuok's Shangri La and Traders
Hotel chains.
Less classy hotel chains
from around China and the rest of Asia are also
familiar with the Myanmar market. Singapore last
year was leading foreign investment in Myanmar's
hotel sector with $598 million, followed by
Thailand ($263 million) and Japan ($183 million),
according to Xinhua.
When it comes to food
and beverage without accommodation, Western
multi-nationals will have to compete with the
likes of Malaysian noodle and snacks maker Mamee
Double Decker, established in Myanmar since the
1990s and used to seeing off Western rivals. While
holding 48% of the potato product market in
Malaysia, it claims to have taken over from Mr
Pringle products in stores as far afield as
Australia.
Still, early arrivals are not
guaranteed an easy ride. A unit of Italian-Thai
Development, Thailand’s biggest construction
company, last year received a 30-year concession
to export coal from a new mine in the northeast of
the country at Monghsat, near the Thai border. [8]
But the parent company has run into problems in
the Dawei development, of which it is a lead
company. The government recently scrapped
Italian-Thai's original plan to use coal for a
proposed 4,000 megawatt power plant that would
drive new factories in the area while also
exporting power to Thailand.
Myanmar's new
civilian government plans to offer eight-year tax
exemptions to foreign investors, Minister for
Industry U Soe Thein told reporters in Davos in
February. His claim that "our people know the
English language, it is easy to communicate", may
also help attract businessmen, though newcomers
might find "our people" applies to only a few,
albeit essential, counterparts - that is, those
just released from EU sanctions.
Eight
years ago, under Senior General Than Shwe, at the
time head of the ruling junta, all senior army
officers seeking promotion had to pass
examinations in English - redundant when shooting
protesters or kicking peasants off the land but
the lingua franca of the international business
world. [9]
One restraint on commerce Soe
Thein and his colleagues will find harder to fix
is laws in some countries, including the United
States, that prohibit bribing officials. Myanmar
rates as the world's third-most corrupt nation on
Transparency International's Corruption
Perceptions Index of 183 countries, rating 1.5 out
of 10 (10 being least corrupt and 0 being highly
corrupt) as of 2011. That should ensure that
creative accountants are one group of
professionals certain to make a killing in the
Myanmar gold rush.
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