MYANMAR INVESTMENTS

One choice is Singapore-listed Yoma Strategic Holdings, which has property development and biofuel plantations in Myanmar. Though its market capitalization is just around $50 million, it is thinly traded and also has exposure to China’s property market. Italian-Thai Development PLC, listed in Bangkok, is the lead contractor on a multi-billion-dollar ports and infrastructure project that would make Myanmar an entry point for goods to the region, though progress on the project remains uncertain.

Large multinationals have Myanmar angles but their investments tend to be only a small part of their global operations. These include France’s Total, China oil giant CNOOC, listed in Hong Kong, and South Korea’s Posco, whose Daewoo International unit has operated garment factories there for nearly two decades and has gas exploration interests. Thailand’s oil giant PTT is another name.


http://www.roadtomandalay.com/business/index.htm





Global X FTSE ASEAN 40 ETF /quotes/zigman/4018595/quotes/nls/asea ASEA -0.43% Unbeknownst to many Americans, Cambodia and Myanmar are both ASEAN member states and given where the countries are located, it's not surprising that some of their most important trading relationships are with countries found in ASEA's lineup. Singapore and Thailand combine for over 49% of ASEA's weight, meaning the ETF is an avenue for getting some exposure to Southeast Asia's new frontier without taking on unnecessary risk.

iShares MSCI Thailand Investable Market Index Fund /quotes/zigman/1513715/quotes/nls/thd THD +0.75% Speaking of Thailand, there is the iShares MSCI Thailand Investable Market Index Fund, an ETF for which there are unlimited superlatives. Thailand shares borders with Cambodia and Myanmar, making it an integral trading partner for both countries.

Beyond that, Thailand is arguably the most politically stable country in an area that includes itself, Cambodia, Laos, Myanmar and Vietnam. The more the others choose to emulate Thai economic and political policies, the more Southeast Asia will benefit and reward investors over the long term.

Market Vectors Vietnam /quotes/zigman/625882/quotes/nls/vnm VNM +0.21% One of the top-performing ETFs of the first quarter VNM has struggled in recent weeks, though it appears to be consolidating in a higher range well above its 200-day moving average.

As is the case with Thailand, Vietnam could benefit from proximity to Cambodia and Myanmar, but in the near-term Vietnam's ability to contain inflation will be its most important economic selling point the primary help or harm to VNM's fortunes.

iShares MSCI Philippines Investable Market Index Fund /quotes/zigman/1554532/quotes/nls/ephe EPHE -1.67% EPHE is another fund we've been bullish on for quite a while now and it's worth noting the Philippines is working to bolster ties to Cambodia. Starting later this month, Cambodia will be less than three hours from Manila thanks to new direct flights courtesy of Cebu Pacific Airline. Philippine Ambassador to Cambodia Noe Wong believes the new flights will speed improved trade between the two nations, according to the Philippine Daily Inquirer.

By the way, EPHE is up today on volume that is well above triple the daily average.



Japan’s Economy, Trade and Industry Minister Yukio Edano this week leads a delegation to Myanmar that includes officials from top Japanese companies such as Hitachi Ltd., Toshiba Corp., Mitsui & Co. Ltd., Itochu Corp., JX Nippon Oil & Energy Corp. and Marubeni Corp. Mr. Edano is expected to promote plans to develop Myanmar’s infrastructure, and will offer to send Japanese engineers for technical assistance.

“Economic interest in Myanmar is growing greatly. We plan to move forward with talks, especially on infrastructure development, with various economic committees,” Hiromasa Yonekura, chairman of Nippon Keidanren, Japan’s biggest business lobby, told Reuters.

Japanese small- and mid-sized firms, especially in textiles and fisheries, want to set up production bases in Myanmar, and bigger firms are taking an interest, said Yoshihiro Araki, senior researcher at the Japan External Trade Organization.

“Other countries are rushing in,” he said. “Japanese businesses are thinking they cannot lose this race.”

But opaque foreign investment rules and a weak judicial system could keep some investors on the sidelines.

Don Lam, CEO of VinaCapital, Vietnam’s largest asset manager, for example, sees opportunities in Myanmar’s consumer goods and agriculture industries, but he also sees risks, saying Myanmar is at a similar stage of development as Vietnam in 1994, when the United States lifted sanctions against Hanoi.

“Coming in early doesn’t necessarily mean you actually make money,” he said. “Those who came to Vietnam in the early 1990s actually didn’t make money until the rules and everything were cleared up. Only the second wave of investors, those coming in … 10 years later, they actually made money.”

“The challenge is similar to Vietnam in the early days, which is the evolution of legal structures,” he said. “Once those clear up, major investors, institutional investors, will be more confident investing in Myanmar. At the moment, it’s sort of in limbo.”

Asked if he was ready to invest in Myanmar, he expressed caution. “It’s way, way too early. We’re taking it slow.”

That sentiment is shared by Douglas Clayton, a former hedge-fund manager who is now chief executive and managing partner of Leopard Capital, a private equity fund focused on emerging Asian markets and backed by overseas investors.

“A lot of individual investors arrive hoping to buy a house in Yangon or some cheap beach land, and then discover that property can’t be owned directly by foreigners. As Myanmar reforms its foreign investment laws, there’ll be a wave of foreign direct investment into major sectors like banking, electricity, telecoms, Internet services and hotels,” he said.

“Other investors will come looking for natural resources like mining and agricultural land. Myanmar simply needs everything.”


.But the government has a lot to do, he said.

“Myanmar needs to harmonize its foreign exchange rates and create a foreign investment code similar to other countries in Southeast Asia. The laws should be changed to facilitate foreign investment in real estate, for example. The government should make it as easy as possible for foreign investors to move through the investment approval process, and provide tax incentives comparable to other developing countries.”

“Investing now is essentially speculating that a package of reform measures will be implemented, which will help make Myanmar’s economic revival sustainable. More cautious long-term investors will prefer to wait for new laws to be passed.”

One early mover in the agricultural sector is Escorts Ltd., a US$135-million Indian farm machinery maker.

“Farming conditions are similar to India, and we … have found ways to appoint a distributor/dealer,” said Nikhil Nanda, joint managing director. “In terms of business, it’s currently very small, but in terms of the future, Myanmar is a market that can have a decent demand prospect for us.”

But there is some jostling for pole position to tap one of Asia’s final frontier markets.
As big as France and Britain combined, Myanmar and its 60 million people sit at the crossroads between China, India and Southeast Asia, with ports on the Indian Ocean and Andaman Sea, making it a vital energy security asset for Beijing’s landlocked western provinces and a priority for Washington as U.S. President Barack Obama strengthens engagement with Asia.

“Those who were not likely to look at Myanmar as a business destination are now beginning to study business opportunities there,” said D.K. Sarraf, managing director of ONGC Videsh Ltd., the overseas arm of India’s state-run explorer Oil and Natural Gas Corporation Ltd.

“As far as our interest is concerned, it would depend on how soon sanctions are lifted.”
ONGC Chairman Sudhir Vasudeva told Reuters on Friday that his group, which has two gas blocks in Myanmar with production due to start in 2013, was looking at further opportunities in Myanmar. “It’s an area of interest to us. It’s close to home.”

Western sanctions could begin being rolled back this year, possibly as early as April after Suu Kyi contests by-elections. If the April 1 election goes smoothly, and remaining political prisoners are freed, some expect the European Union to lift its sanctions later that month.

“The substantive release of political activists is probably the last real issue which needs to be resolved before Western trade, investment and development aid can be resumed,” Derek Tonkin, Britain’s former ambassador to Thailand and now chairman of Network Myanmar, a civic group, wrote in a recent report.

Some companies aren’t waiting.

Stockbroking analysts in Bangkok expect at least three Thai companies — Italian-Thai Development PCL, PTT Exploration and Production PCL and Ratchaburi Electricity Generating Holding PCL — to see a boost in their share prices this year as Myanmar develops its southern city of Dawei as a port and special economic zone in partnership with Thai firms.

“Myanmar’s Dawei Special Economic Zone will present decade-long investment and growth opportunities for Thai companies if it gets going,” said Citibank analyst Suchart Techaposai.

Italian-Thai, Thailand’s top construction company, expects to sign loan agreements this year worth US$12.5-billion to build a deep-sea port, industrial complex and power plants at Dawei.

Japan Bank for International Cooperation would likely provide most of the funding for the port along with road and rail links from Dawei, less than 300 kilometres west of Bangkok, Italian-Thai Chairman Premchai Karnasuta told reporters on Dec. 26.

Despite that project, shares in Italian-Thai slid by more than a fifth last year. Ratchaburi did better, gaining 15%, and analysts see Dawei further boosting its stock price, which trades at 10.8 times forecast 2012 earnings, cheaper than China’s Yangtze Power Co. Ltd.’s 11.6 times and India’s Reliance Power Ltd.’s 15.4 times, Thomson Reuters StarMine data show.

Many Japanese firms were slow to join a first wave of foreign investment in Myanmar in the mid-1990s led by Singapore, Malaysia, Indonesia, Hong Kong and Taiwan. Japanese firms opened offices there near the end of the boom in 1998. The economy then withered as the United States and Europe tightened sanctions, leaving neighbouring China as the dominant investor.

Takashi Fujino, a Keidanren official who visited Myanmar last year, said its big population and rich resources — from jade to offshore oil and gas and hydroelectric power — make it attractive to Japanese companies.

Myanmar has awarded 10 onshore oil and gas blocks to eight firms in its biggest energy tender in years, and is now offering nine offshore blocks, two Yangon-based sources with direct knowledge of the deals told Reuters on Friday. The winning firms were mostly from Asia, including PTT Exploration and Production and Malaysia’s Petronas.

South Korean state-run Korea Resource Corp. is looking to develop Myanmar’s rare metals, which a spokesman describes as “an untapped and niche market,” and some large listed South Korean companies are studying opportunities in resources development and infrastructure, said an official at the Korea Trade-Investment Promotion Agency.

http://business.financialpost.com/2012/01/09/asian-firms-shine-investing-spotlight-on-myanmar/


posted by Dil at 1:47 PM