Once upon a time

DOWNTOWN RANGOON swelters with the heat of a major southeast Asian city and buzzes with the energy of the multicultural metropolis it is. What stands out most is what is not there.

There are no McDonalds or Starbucks, no David Beckhams staring from every billboard, no Samsung advertising hoardings, no iPhones, no Hyundais or VW SUVs patrolling the streets, no Taiwanese pop singers warbling out of speakers, no Singapore property developers building skyscrapers.

Burma, or Myanmar as it is officially called, used to be the world’s biggest rice exporter, but now it is one of the very poorest countries in Asia, an international pariah since the military junta seized power in 1962, and has been the victim of various sanctions since then. In real terms it is probably only investment in its mineral resources by China that keeps the economy from collapse.

However, these icons of international commerce may be on their way as tentative reforms could signal an end to Burma’s 50 years of isolation. There are signs of change. Brand new advertising signs for Ariston white goods and Yale locks can be seen above shops and outlets.

The government sold off more than 300 state assets last year in areas like property, shipping, aviation and banking. With anything between 50 and 60 million people (figures are very unreliable) and strategically located between India and China, Burma is a major investment opportunity and also rich in natural resources. Advocates say Burma is as choice an opportunity as Thailand was 20 years ago.

Sanctions have made it a thorny market to deal with, and no multinational wants to be seen as a sanctions-buster, although China and Thailand have managed to make some headway despite the blockade by the international community.

Burma is getting ready to open for business. Opposition leader and Nobel Peace Prize laureate Aung San Suu Kyi has called for Western countries to invest in Burma, which was suffering from “reputation risk”, and she is saying she expects elections during her lifetime.

The 66-year-old iconic advocate of democracy in the country told the BBC she expected “a full democratic elections in my lifetime . . . but then of course I don’t know how long I’m going to live. But if I live a normal life-span, yes.”

In the lobby of the Traders Hotel in Rangoon, a group of German businessmen is exchanging business cards with a delegation of locals wearing the traditional sarongs, the longhis, which are worn by both men and women. The hotel is more than full – 120 per cent occupancy at nearly all times, one waiter tells me. In the function room upstairs, beside the bar where you still have to pay in US dollars, there is a fashion show taking place.

In the bar, those dollar bills need to be big denomination, and the staff won’t accept them if they are creased. Everyone seems to be a consultant, especially in oil and gas, telecomms and consumer goods.

The Shangri-La group, which operates Traders, owns land around the hotel and reportedly decided to expand hugely a few years ago, but plans were shelved.

This stop-start development is typical of many foreign companies who work in sectors not covered by the sanctions who have made the leap into Burma, and it can be a frustrating place to do business.

But this underdevelopment makes for great opportunities, from building basic infrastructure to providing widespread mobile phone coverage to introducing more flights.

Rangoon isn’t even officially the capital, that title now goes to a purpose built administrative capital, Naypyidaw.

No one is going to rush back in to Burma in a hurry. In 1988, about 3,000 pro-democracy student protesters were killed in a crackdown on popular protests against the junta calling for democracy. Suu Kyi, the daughter of national hero General Aung San, was placed under house arrest and elections in 1990, which her National League for Democracy Party won, were cancelled.

Burma became even more isolated and US and European Union sanctions were intensified. Then US president Ronald Reagan suspended aid and banned arms sales after the crackdown, and these measures have remained in place in varying degrees ever since.

There is a certain irony here, because China did the same thing as the military government in Burma a year later when it cracked down on democracy protesters, but it soon became the darling of the international investment community.

Now in Burma, people on all points of the political spectrum are feeling hopeful for the first time in years, based on reforms introduced by the country’s president, Thein Sein. The former general freed Suu Kyi from house arrest, introduced limited elections, handed over power to a nominally civilian government, freed political prisoners and has now allowed the NLD to re-register as a political party.

Suu Kyi did this recently. The party boycotted general elections in 2010 because of restrictions that would have prevented Suu Kyi from running, but the election did see the current reformist government installed. It may be full of former generals, but it has eased restrictions on politics and other matters, and is seen as the forum for change in the country.

The party will contest a by-election at some point soon – the date has yet to be announced, but it is expected to be early next year.

Another move, which underlined optimism on reform, was a decision to suspend the unpopular Myitsone Dam project on the Irrawaddy River, which was being built by Chinese companies and would supply electricity mostly to Yunnan province in neighbouring China.

Burma has been named chair of the Association of South-east Asian Nations for 2014, a sign the country’s neighbours are ready to welcome it back into the international family.

Suu Kyi has been busy meeting world leaders to underline her confidence that Burma is changing.

US secretary of state Hillary Rodham Clinton is the biggest name to visit during this recent round of rapprochements. British foreign secretary William Hague, the first foreign secretary from Burma’s old colonial overlords to visit since 1955, was in Burma this month to encourage the government to continue on the path of reform and said that if the process is completed, sanctions might be lifted.

Japan’s foreign minister, Koichiro Gemba, visited Burma and agreed at meetings in Naypydiaw to work towards a bilateral investment pact between Japan and Burma.

Late in December last year, legendary hedge fund manager George Soros came to call. His Open Society Foundation spends around €1.6 million a year on aid projects in Burma, and probably would spend more if sanctions allowed.

Burma is run by an oppressive military junta, and yet it lacks the austere environment and much of the climate of fear you experience in other totalitarian states. This is, after all, southeast Asia, not North Asia with the gloom of North Korea or even China three decades ago.

The junta has not succeeded in quelling the spirit of the people.

There is a feeling of tolerance in the way religious diversity is celebrated.

Despite some concessions on press freedom, Burma’s government is ruthless in crushing dissent, and there are hundreds of political prisoners still languishing in jail. The US has said that full and unconditional release of political prisoners is a necessity before it will consider lifting economic sanctions on Burma.

The Burmese government has said that it wants to diversify the small group of foreign investors who dominate its natural resources, building and electricity sectors – primarily China and Thailand, and to a lesser extent India and South Korea.

Thai banks, and Hong Kongs Standard Chartered Bank, are all lining up to get in to Burma. In 2011, nearly €16 billion in foreign investment was promised, which is nearly two-thirds of gross domestic product.

Suu Kyi says she trusts the prime minister, Thein Sein, another cause for optimism.

“The most important thing about the president is that he is an honest man . . . He is a man capable of taking risks if he thinks they are worthwhile,” she said.

Thein Sein must be taking a major risk by overseeing this kind of opening up, and should it fail it is hard to see his fellow military leaders not intervening. The question of motivation, as to why the junta has decided to open up now, has not really been answered satisfactorily. Thein Sein is clearly keen that the political risks that he is taking be rewarded by an easing of sanctions and increased investment.

He is looking initially at Burma’s Asian Tiger neighbours. At a recent investment conference in Cambodian capital Phnom Penh he told and business executives from Vietnam, Cambodia, Thailand and Laos how Burma encouraged private-sector investment.

“We are creating a pro-business environment in order to work together to get much more business and investment in the region,” he said.

There is a huge amount of work to be done before Irish companies can start investing in Burma. Questions remain about the role of Than Shwe, the reclusive former military dictator, who some believe still has behind-the-scenes influence in Burma.

The legal structure is massively underdeveloped. The country’s foreign investment laws still require a significant amount of work before western investors can commit to large projects or setting up manufacturing facilities.

Burmas per capita GDP of just €299 in 2009 works out as less than 10 per cent of neighbouring Thailands (€3,060). It is even less than that of Laos (€695) and Bangladesh (€432) according to the UN, and by some estimates 40 per cent of the annual budget is spent on the military.

By some estimates, Burma produces 60 per cent of the world’s heroin.

It has the second worst health system in the world. Burma once had a literacy rate among the highest in the world, and one of the most common complaints among Burmese today is that the generals destroyed the education system, by shutting universities and slashing school services so that class sizes are impossibly large.

Moe Kyaw, the British-educated managing director of MMRD market research, complains how the sanctions affect so much of what you need to do to do business.

“If you do a TT bank transfer with the world Myanmar on it, it will be frozen,” he said.

His company used to operate with the market research company Nielsen, until they too had to leave because of tightening of sanctions, but despite the setbacks over the years, he believes change is going to happen, and quickly.

To get to his office you pass through a bustling, but badly stocked, market. There are two lift attendants, always a sign that there are more people than jobs doing the rounds. Once you get into the office, you take off your shoes and you are in a high-tech, swish oasis a million miles away from the chaos on the streets below. Moe is also involved in publishing the local Yellow Pages and is a member of the local chamber of commerce. His office is on an upper floor, and has a view of the tallest building in the city, the 2,500-year-old Shwedagon Pagoda Buddhist temple. You sense the big property companies of Hong Kong, Singapore and Tokyo are licking their lips at the prospect.

“I believe something has been put in place properly, and I dont believe in slowly, slowly,” he said. “But you need roads and you need infrastructure. The lobby groups outside Myanmar have done a great job of ostracising the country. I used to think a few years back that we could give Thailand a run for its money, but now its going to take two generations,” he said.

Kyaw believes the first step will be to allow Burma access to aid from the Asian Development Bank, the International Monetary Fund and the World Bank, as that will help build roads and infrastructure. But he has no doubt that Burma’s future is looking bright.