Isolated for decades, its vast wealth and potential out of reach for international investors, Myanmar is now undergoing generational reform aimed at modernising its economy and catching up on decades of lost opportunity.
Strategically located at the crossroads between China, India and Southeast Asia, with vast reserves of onshore and offshore natural resources and favourable demographics, Myanmar is poised to be one of the brightest stars among frontier markets for the foreseeable future.
The country of 51 million people is now led by a nominally civilian parliamentary government. Significant reform over the past few years has been aimed at modernising the economy, strengthening civil institutions and introducing more accountable and democratic governance.
For Australian businesses, these efforts translate into a gradually more stable and predictable operating environment, allowing the country’s vast potential can be explored with more confidence.
However, Myanmar is still very much a developing frontier economy despite these positive movements, whose institutions and business practices are yet to rival those of its more economically mature neighbours in Southeast Asia.
Myanmar is still the hardest country in which to do business in Southeast Asia, according to the World Bank, though improvements are being seen – the country jumped 24 places in one year in the ease of starting a business, for example. Until more reform is delivered, Australian companies must deal with the typical challenges of doing business in a country at Myanmar’s stage of development. These include weak institutions and legal frameworks, political risk, and insufficient or nonexistent infrastructure.
Bureaucracy and red-tape in obtaining permits and approvals processes, electricity and power consistency issues, and the competency of locally-engaged staff are fairly common issues to overcome in Myanmar.
Resolving much of this comes down to managing expectations, being patient, and gradually becoming comfortable operating in a much different and less developed environment than Australia. Spending time in Myanmar and familiarising yourself with the country, its nuances, and the unique challenges and opportunities in your sector is also crucial.
First published on pages 18-19 of Autumn 2017 International Business Today.