Given the way events have been unfolding in recent years, it is no exaggeration to say that Myanmar (formerly known as Burma) may well be the investment opportunity of anyone reading this article’s. It is a country which has long been mired in military dictatorship and socio-economic strife. Luckily for foreign investors though, the troubled nation is changing rapidly. If political and economic reforms continue to happen, Myanmar looks set to become an investor’s dream over the course of this decade and beyond. The only thing for money hungry financiers to do now, is wait for the gates of foreign direct investment to fully open!

 

During an exclusive interview with Business Tianjin, legendary investor and author Jim Rogers pointed out that “in 1962 Burma was one of the richest countries in Asia, then they closed it off, and now it’s probably the poorest”. He also put it to us that “now they are opening up again, just like China did in 1978, and I think it is a very comparable opportunity to investing in China back then”.

 

Only time will tell if Myanmar can produce anything like the same explosive and consistent economic growth that China and other emerging markets have in the last couple of decades. But if history is anything to go by, and it usually is, then early investors will make BIG money over the coming years as the country opens itself up for international trade and financing. 

 

In the period of 1885-1948, the powerful South Asian state then known as Burma was an integral part of the British Empire. During this time it was one of the world’s largest exporters of many popular commodities including; rice, oil, timber products, gems and clothing materials. Prior to the political turmoil of the mid 20th century, the country’s highly literate and hardworking labour force was the key driving force behind one of the continents biggest and most thriving economies.

 

As democratisation and economic liberalisation continue to gain momentum, most analysts are suggesting that Myanmar’s return to the economy glory days of previous centuries seems like a relatively safe bet.   

 

Myanmar’s nickname, ‘the Golden Land’, is well deserved when one considers the potential resource riches this fascinating Asian nation holds within its borders. Stretching from the snow capped mountains of the Himalayas to its glorious Indian Ocean beaches, this is a country filled with an incredible amount of minerals, fossil fuels, farm land, and to top it all off, a large and prosperity hungry workforce.

 

Here are some impressive facts about Myanmar’s incredible resource base:

• The country is home to one of the world’s largest untapped natural gas reserves and also has a plentiful supply of oil and coal.

• Myanmar’s forestry is rich in sought after hardwoods such as teak, Yamane and padauk.

• Its population is estimated to be around 60 million, although official estimates may well be grossly underestimating the actual number of people living in rural areas.

• Reserves of industrial metal ores, including zinc, copper, tin and lead, are much more abundant in Myanmar than in many of the nearby countries who have an increasingly insatiable demand for them.

• It has a superb capacity for clean and cost efficient energy sources such as solar and hydro power.

• The climate and vast amount of arable land are plentiful enough to make Myanmar an agricultural powerhouse in the region.

• The nation’s fishing industry is thriving and is predicted to be become a major industry in the future.

(See www.roadtomandalay.com/business for more information)

 

When it comes to being geographically situated in the best place to find trading partners, build transport links and tap into growing consumer markets for its exportable goods, Myanmar probably has the best seat in the house! Sandwiched between Thailand, India, Bangladesh, Laos and China, and with easy maritime access to the rest of the world, the geographic advantages for the nation’s exports sector are tremendously exciting to say the very least.

It is no surprise that Myanmar’s Asian neighbours have been pouring in the funds for infrastructural development in recent years. Whilst Thailand has long been the country’s most significant trading partner, Japan and China are pumping money into Myanmar on a very large scale. This includes economic boosting projects such as cross country transport networks and the building of a direct oil pipeline leading from Myanmar’s abundant oil fields to China’s resource hungry consumers.

The country’s agricultural and industrial sectors are not the only channels for huge inflows of foreign money over the coming years. Myanmar’s tourist industry, helped by its breathtaking landscape, world class beaches and increasingly convenient air travel routes, is booming at an incredible pace. In 2012 the nation’s hospitality industry was the fastest growing in Asia and isn’t showing any signs of slowing down. 

 

Although the current government seems to be reform orientated, it may still take a long time for direct foreign investment by small and private investors to become easy and legally safeguarded. On the bright side however, last year the Tokyo Stock Exchange, Daiwa Securities Group and Myanmar’s Central Bank announced plans for a stock market some time in 2015. Until that happens though, options for foreign investors is very limited.

 

As always, there is the option of investing in foreign companies that have a significant exposure to Myanmar. The main difficulties in this regard is choosing the right companies and finding them for the right price. Yoma Strategic Holdings, for example, which has a solid position in Myanmar’s booming real estate sector and is listed in Singapore, has seen a seven fold increase in its share price over the last 18 months. Despite the firm’s potential to climb even higher, buying it at today’s P/E ratio of 82.50 would be a buy for the brave to put it very mildly.

 

So for now, not only is Myanmar the most exciting investment opportunity of the 21st century, it is also the biggest financial waiting game. In the meantime, put some capital aside, wait until the country’s financial infrastructure matures from its current state, and then pick out the companies with long term growth potential on the back of Myanmar’s rise to economic superstardom over the coming decades!

By Josh Cooper