News 24 Jun 2019 Updated 01 Jul 2019 Singapore is largest investor in Myanmar The Edge Pauline Wong Share: Business owners in Myanmar have seen for themselves the change and the potential in the market. "To get to the pot of gold at the end of the rainbow, [one has] to be here, in Myanmar," says Gerald Lee, managing director of Myanma Food For Thought (MFFT), "If you come here [looking] to make a quick buck by putting the systems in place and hiring lots of people, but operate from overseas, that isn't going to work." MFFT, which owns the master franchise for Singaporean F&B brand Ya Kun Kaya Toast in Myanmar, was started in 2013, and now has eight Ya Kun outlets there, in addition to many other F&B outlets in the country. Lee, whose background is in finance, says there are many opportunities in Myanmar, which is still growing, but commitment is key, A major challenge is the mostly unskilled labour force, who, while eager to learn, require a lot of training and are experiencing some degree of culture shock from the rapid changes. "They went from not having any SIM cards or mobile phones to suddenly everyone having one. Hardly anyone knows how to use a computer, but everyone is on Facebook or Instagram," Lee says, "The way I see it, the new government came in at a handicap, but it is trying to make good on whatever the previous regime left behind," he adds. Having seen the regime change from the Union Solidarity and Development Party to the National League for Democracy, Lee says it was easier to conduct business during USDP rule, but that is only because "everyone knew what to do already". "When the new government came in, there was a period when everyone was kind of at a loss as to what to do - how to set things up, how to get a new business started, or even who makes the call," he recalls. The confusion, however, has had little impact on his business, he says. David Chen and Peng Jingkai of agriculture firm Golden Sunland have tried setting up business in Myanmar — twice. They first ventured into rice production in 2013, but did not proceed because of the political situation then. They re-entered the market in 2016, and focused on the development of high quality non-GMO rice seeds and premium rice products, but it was no walk in the park either. "As a fully foreign-owned company in the traditional rice sector, there were numerous initial considerations regarding setting up our business based on how the locals had always done it, or based on what we felt should be the right way that was more acceptable internationally. Most of the time, we did things the way we felt was right, which usually meant more time-consuming discussions with government officials and efforts to educate farmers," says Peng, the company's chief financial officer. Even in 2016, they, like everyone else, found optimistic investors, but poor infrastructure and support. "For example, the implications of the different land statuses were unclear and permitted uses were vague. While the politicians have changed, the bulk of the government staff were the same and still relied on traditional norms. For a foreign entity, it was confusing, as each government department seemed to have a different answer to the same question," Peng adds. The situation has improved with the revamp of the Myanmar Investment Commission in 2016. Meanwhile, the Rohingya situation has had little impact on business, Chen says, "First, our operations are not in the conflict zone, Second, the smallholder farmers we work with are producers of the staple crop (rice) and are mostly detached from political and religious issues. Instead, they are focused on fulfilling essential needs and the betterment of their livelihoods. Regardless of politics and religion, rice remains a staple." Chen has this piece advice for investors: "This is a developing nation; investors should expect no less than a steep learning curve with a hands-on approach." Government agency Enterprise SG says Myanmar remains a viable investment location for Singapore companies. Audris Tan, regional director for Myanmar, tells The Edge Singapore that Myanmar's strategic location, young and highly literate population and increasing income levels make it a market with plenty of opportunities. "We see opportunities for Singaporean companies in agriculture and aquaculture, infrastructure — especially in utilities, power and urban development — as well as the manufacturing and consumer sectors. The education sector, covering preschool to higher education, also holds potential, given Singapore's track record in this sector," says Tan. Physical infrastructure will also be in high demand as the population grows and urbanisation increases. "This results in opportunities in the real estate space, such as master-planning, design and development, as well as the utilities space, such as water and power solutions. Singapore companies can leverage our experience to bring affordable power and water solutions to the masses," says Tan. She points out that power outages are a perennial problem. Indeed, in a new report, the World Bank has estimated that up to US$2 billion ($2,7 billion) worth of investment is needed in the electricity sector annually, as power consumption is expected to grow at 11% a year until 2030. "The government is in the midst of putting in initiatives and policies to improve the situation, and Singapore energy companies could capitalise on these initiatives to participate in Myanmar's power projects," says Tan, In March, Sembcorp Industries officially opened its 225MW combined-cycle gas-fired independent power plant in Myingyan, Mandalay, to great fanfare, Indeed, Singapore is now Myanmar's largest investor, outstripping even China. Myanmar is part of the ambitious Belt and Road Initiative; there are some 4 0 projects under the China-Myanmar Economic Corridor initiative, including in infrastructure, agriculture and technology. "We still see keen interest in Myanmar from Singapore companies despite the diverse ethnicities, religions and political parties," Tan notes. Nevertheless, companies should keep a close eye on the upcoming elections. "It is to be expected that there will be preparatory work by the Myanmar government in the run-up to the 2020 elections," Tan says. "Larger projects that require more local stakeholder involvement may be affected in terms of timeline and decision-making processes." Singapore’s direct investment in Myanmar YEAR $MIL 2017 4,890.1 2016 4,649.8 2015 3,253.4 2014 1,941.5 2013 332.2 From October 2018 to February 2019, Singapore had the highest FDI into Myanmar at US$20.6 billion, accounting for 26% of the total foreign investment. In 2017, the bulk of Singapore’s investment in Myanmar was in the information and communications sector (73%), followed by manufacturing (14%) and real estate (4.6%). Notable investments include Sembcorp industries’ US$310 million power plant in Myingyan. As the Singapore government agency championing enterprise development, Enterprise Singapore (ESG) works closely with regional governments and business communities to support the entry of Singapore companies into the region through its 8 overseas centres across ASEAN - Bangkok, Hanoi, Ho Chi Minh City, Jakarta, Surabaya, Manila, Kuala Lumpur and Yangon. Source: The Edge. Reproduced with permission.