Myanmar has embarked on a campaign to revive flagging interest among European investors, after focusing mainly on Asian countries -- the source of almost all the country's foreign investment in the last two years.
"We are on the cusp of a new era of development," Union Minister of Investment Thaung Tun told a large group of businessmen in London, at a forum organised by the Myanmar chapter of the British Chamber of Commerce and sponsored by the UK Department of Trade. "Myanmar is a premium investment destination in Asia, with abundant opportunities for UK investors."
Important changes have been made to policy and government administration, he said, that would help streamline the process for potential investors and make doing business in Myanmar easier.
He acknowledged that excessive red tape, corruption and weak infrastructure had discouraged foreign investment in the last couple of years. But this was changing, he said.
Left unsaid was the concern many European investors and governments have expressed about the human rights situation in Myanmar. The civilian government led by Aung San Suu Kyi has been powerless to rein in the military, which is blamed for an "ethnic cleansing" campaign that has caused some 800,000 Muslim Rohingya to flee the country.
Investors also have many questions about how to get businesses up and running in the country. Myanmar ranks 171st out of 190 in the World Bank's Ease of Doing Business index -- well below Cambodia, Laos and Vietnam -- while Thailand ranks 27th.
"This has to change and will change," Thaung Tun told Asia Focus on the sidelines of the conference. "We have to at least move Myanmar into the first half of the list of countries, and with the reforms that have been introduced, and those that are in the pipeline, this will happen."
Thaung Tun, who also heads the Myanmar Investment Commission, is the main architect of the revived promotion campaign to boost investment -- both from local businesses and from abroad.
The London event reflects the government's desire not to be overly dependent on one region or country, in particular China. All previous roadshows have been held in Asia -- China, Japan, Hong Kong, Korea and Thailand -- under a "Look East" policy.
"We need to be engaged on all fronts," Thaung Tun told Asia Focus. In certain areas, businesses in the West -- especially the UK -- have unique advantages, experience and expertise and Myanmar would welcome, he said. The country offers a predictable, transparent and open environment with a level playing field, he insisted.
"The pace of change has been remarkable," said Peter Benyon, chairman of the British Chamber of Commerce Myanmar and the country chairman of the trading house Jardines. The business opportunities are abundant, in his view. "It's a question of time, of investing for the future," he said. But businesses must be based on solid ground, he advised the audience.
A strong delegation of Myanmar business leaders and government officials attended the event, and all echoed Thaung Tun's upbeat approach. "This is by far the most pro-business government Myanmar has ever had," said Melvyn Pun, CEO of Yoma Strategic Holdings, part of the SPA conglomerate.
Most of the other Myanmar participants, though, felt that Thaung Tun and Set Aung -- the deputy planning and finance minister -- had exaggerated the progress made to date, though they acknowledged that increased liberalisation is in the pipeline.
"They are politicians," reflected a senior Myanmar banker who declined to be identified. "So they are bound to talk up developments and the prospects for investment."
Businesspeople say that while the government has been constantly talking up its reform policy and plans, the promised changes have been very slow to materialise. They suspect substantial resistance within the bureaucracy and the financial sector, which is a critical target for liberalisation.
"Some people are slow to change, but that is only a temporary obstacle and it won't derail the implementation of the central bank's financial reform plans," Bo Bo Nge, deputy governor of the Central Bank of Myanmar, told Asia Focus.
Substantial reforms are in the pipeline, he said, including the liberalisation of interest rates, reform of foreign-exchange regulations and foreign participation in the financial sector.
Bo Bo Nge also hinted at plans to issue banknotes of larger denominations -- perhaps 30,000 and/or 50,000 kyats to make cash transactions less cumbersome. The largest-denomination notes at present are 5,000 and 10,000 kyats while the exchange rate is around 1,500 kyats to one US dollar.
At the same time there is a drive to promote digital and mobile money transactions, which are already popular in Yangon and other large cities. The government sees China, Japan and Singapore as role models for digital money and the use of QR codes for financial transactions.
"It's amazing how the QR code is used to facilitate payments -- even hawkers and small stall holders have their QR code and prefer not to accept cash as payment," said the deputy central bank governor.
Government representatives have also stressed the revolutionary impact that the new Companies Law is having on the business environment and encouraging foreign investment. Under the law passed last year, foreign companies can own up to 35% equity in a local company without the firm losing its national identity, which has implications for taxation and management control.
The new rules could have an enormous impact on Myanmar's financial sector, opening up the banking and insurance industries to foreign participation. They will not necessarily be restricted to a maximum of 35%, Bo Bo Nge told Asia Focus, since foreign investments in the financial sector come under the purview of the central bank and not the Companies Law.
The insurance sector is already in the throes of change. Three new life insurance licences -- for foreign companies -- have been tendered for and will be announced on March 29, Set Aung told the conference. Insurance industry insiders believe AIA, Prudential and a Japanese firm are the front-runners.
But the Myanmar insurance industry appears lukewarm about the potential for growth of life coverage, which appears to be of limited interest to the local population at present.
"Other products -- health, accident and fire and theft policies -- are much more attractive," Myo Min Thu, managing director of AMI (AYA Myanmar Insurance), told Asia Focus. "Now with the liberalisation of the industry these can developed."
These are products that will be sold through banks such as AYA Bank, of which the insurer is a subsidiary, he said, adding that many local firms are in talks with foreign insurers about partnerships that will help the sector improve.
But it seems the banking sector may be the first to see foreign participation. At least two local banks are in advanced discussions, according to industry sources, with Asian banks the only suitors so far.
Three Japanese banks -- SMBC, Mizuho and MUFG -- are involved in negotiations, according to the sources. SMBC is believed to be in talks with KBZ, MUFG with CB Bank and Mizuho with AYA. How advanced the talks are is not clear.
There are also other attempted forays into Myanmar's banking sector. The Singapore sovereign wealth fund GIC Private Limited has held preliminary meetings with Yoma Bank. Bank of Ayudhya -- Thailand's fifth-largest lender and a subsidiary of MUFG -- has also shown an interest in Myanmar Oriental Bank. The Korean bank Hana, which already has an interest in a local microfinance operation, is also in talks to buy into a bank.
But these discussions are not likely to bring about major change in the near term, as it will take time for reforms to make their way through the system. At the London conference, foreign investors were urged to be patient.
"Reform is not a one-off event," Set Aung said. "Reform is an ongoing process: one which the government is committed to seeing through to the end."