Written by Wen-Hao Wang, Photoed by Yu-Jong Peng and Wen-Hao Wang, Translated by Amy Feng
One’s first impression after arriving Yangon would be the crowded traffic, and the unbelievable scene of both right-hand and left-hand drive vehicles zooming side by side in an usually right-hand traffic pattern. The rapid honking sound is the common language among the drivers. As soon as there’s a shortcut to take or some room for passing, the drivers will hit the gas pedal hard oblivious to any blind corners. They simply forge ahead!
But it would be wrong to assume that the drivers of Myanmar subscribed to the idea of “must fight to win.” Near their driver’s seats, there is usually a display of an image or a small statue of the Shakyamuni Buddha. When passing by the splendid stupa, many of them slow down and devoutly worship with their hands closed for a few seconds before hitting the gas pedal again to complete the unfinished journey.
When someone mentions Myanmar, people in Taiwan would inevitably think about the “Huaxin Street” in the District of Zhonghe, New Taipei City, where many overseas Chinese from Myanmar stay with a cluster of Burmese restaurants and grocery stores in the area. During the Water Festival held there every April, everyone splashes a bucket full of water at each other. Even the firetrucks join the “water fight” sharing the spirit of the festival that signifies parting with what’s old and welcoming what’s new.
In terms of the international news, however, perhaps many in Taiwan still remember Myanmar as a country under military dictatorship. It is hard to forget the images showing the military and police force brutally repressed the bhikkhu and bhikkhuni in saffron robe in street demonstrations for democracy during the Saffron Revolution in 2007. What’s even harder to forget, perhaps even for the whole world, is the firm and profound expressions of Aung San Suu Kyi, a Nobel Peace Prize winner, who stood against the grandeur military governing machine with her slim and fragile stature as a female in such a long period of time.
But in 2010, perhaps the shock wave from the Jasmine Revolution (also known commonly as the Arab Spring) from the Arabic region reached Myanmar that the Myanmar military government steered away from its usual heavy-handed dictatorship and held conversations with the oppositional leaders such as Aung San Suu Kyi. The Myanmar military government started political reforms, re-established relationships with the Western countries, and opened up its economy and market. As a result, not only that Europe, USA and Japan lifted blockade and embargo that had been in place for more than twenty years, but also that international corporations such as Coca Cola, Toyota Motors, and Samsung Corporation began to scout around in Myanmar.
In the streets of Yangon, besides being attracted to the splendor of every large and small stupa, one’s eyes are caught by the large number of billboards everywhere put up by various international cooperations.
The BRIC Fades While the Golden Stupa Shines?
A well-known investment expert in America named Jim Rogers once described the potential of Myanmar’s economic development as such: ”You should get on the next plane you can and head to Myanmar or North Korea — maybe Angola.”
When Rogers’ 2003 prediction of the collapsing of the real estate bubble in America came true in 2008 when the mortgage crisis occurred, Rogers became famous and his words and movements were closely watched by others. When the news on the BRIC countries (Brazil, Russia, India, and China) speculated by the investment companies had long ceased to be interesting, Rogers thought that Myanmar, being a country adjacent to two of the BRICs, would be the one to offer the most economic growth momentum and investment opportunities in Asia. Rogers was also optimistic about North Korea.
Though Myanmar and North Korea are both among the poorest countries in the world, North Korea has remained closed off and continues its dictatorship while Myanmar has attracted foreign investments and improved relationships with the Western countries since its political reforms led by the military government three years ago.
Among the international cooperations, Samsung is the most aggressive only second to Coca Cola. When one arrives at the Yangon Airport’s custom station, the first thing one sees is not the smile of a custom staff but an eye-catching print saying, “SAMSUNG,” on the computer equipments in the custom stations. It is truly hard for anyone to miss it.
For foreign visitors who are accustomed to getting on the internet at any time using a smartphone, enjoying the convenience of mass public transportation, or shopping at anywhere with just a plastic card, visiting Myanmar for the first time would mean to come to terms with a few things such as credit cards being useless here and getting used to the speed of internet connection that is slower than using a dial-up line. If one rides in a taxi or a bus, forget about asking the drivers to turn on the AC; one has to tolerate the loud humming noise from the diesel engines of these used vehicles that have been taken out of circulation in markets in Japan, Korea, and China.
Having been in isolation for more than forty years, Myanmar’s basic infrastructure, financial system, and the general living conditions are still very lagging. When Rogers entered Myanmar from its border with India two years earlier, there was still no stock market, no internet or network, and no email in Myanmar; it was the world’s poorest country. But Rogers believes that Myanmar has abundant natural resources such as rice, mineral deposits, and natural gas. When this factor is combined with the opening in the political sphere, Myanmar’s future for development is unlimited.
Indeed, with regard to the economics, Myanmar is located next to the two countries that have the largest populations and markets, namely, China and India. Myanmar itself is also a member of The Association of Southeast Asian Nations (ASEAN). At the end of the year 2015, ASEAN will reorganize to become a common market with six hundred million people. With the FTA becoming in effect with ASEAN Plus Three (China, Japan, and South Korea), Myanmar will enjoy the geographic advantage when it comes to exporting its products to India in the west, China in the north, and to any other countries in ASEAN.
Needless to say, Myanmar is important for geopolitical reasons and to ASEAN Plus Three
In terms of international politics, all big nations have been trying to get Myanmar on their side because Myanmar has become the rotating chair of ASEAN this year.
Myanmar controls China’s entrance to the Indian Ocean. For a long period of time, China has had firm de facto control on Myanmar’s political and economic lifelines. Not only Myanmar’s military government relied on China for economic support and followed Beijing’s lead, many Myanmar’s consumer products were dependent on the imports from China because the lack of light industry in Myanmar. One can find a flood of prints in simplified Chinese characters on all kinds of products, from disposable toothpastes and toothbrushes offered in hotel rooms to portable generators in case of a power outage.
Samsung Electronics Everywhere
In Myanmar, even though China and Japan’s presence can be felt everywhere from consumer products to industrial items, Samsung Electronics from South Korea is also establishing its presence. A Chinese writer under the pen-name of Bo Yang once wrote that Chinese people could spread anywhere like mercury could permeate into anything; Samsung Electronics is spreading into Myanmar in the same way.
Even though a worker’s monthly salary is about 1,000 NT dollars in Myanmar, and a most basic Nokia cell phone can cost about 3 to 4 months worth of monthly salary, cell phone is still very popular in this newly opened telecommunication market. One can know this from seeing the plethora of telecommunication stores in the cities.
Inside a telecommunication shop, there are basic cell phone models such as Nokia, China’s ZTE and other generic models. Among the smartphone models, Samsung takes a decisive lead and followed by Huawei. Though one can find hTC brand in Yangon, it is far behind Samsung in terms of brand recognition and visibility.
To what degree the Samsung brand and image has infiltrated Myanmar? In the streets of Yangon, besides seeing telecommunication shops with signs of Samsung, one will find that all of the most visible corners in the street are taken by Samsung’s billboards. When we visited the largest telecommunication shop that had the most complete collection of cell phones for sale in Pathein, the third largest city in Myanmar known for being an important rice exportation center, we also asked the store clerks about what brand of cell phone had the best sales record. Their answer referred to “Samsung,” followed by Huawei.
“What about hTC?” we asked. The store clerk who understood Chinese shook his head and said with a smile: “Samsung is the most popular one here.”
Factory or Market? The perception of “hot on the outside and cold on the inside”
While Europe, U.S., China, and South Korea hold an optimistic view on Myanmar as a place for developing a new market, Taiwanese businessmen who have been investing in Myanmar for a long time have a different view. Guo Kunshi, former president of Myanmar Taiwanese Business & Charity Association and the current general manager of the Known-You Seed, Co. Ltd, Myanmar branch, describes Myanmar as “hot on the outside and cold on the inside.” Having been in Myanmar for more than a decade, Guo says frankly that, even though Myanmar is open to the outsiders now, “it looks hot from the outside but is actually cold on the inside.” He adds, “Even though there were many people coming to take a look at Myanmar, they all left upon seeing the poor infrastructure, such as the lack of supply of electricity, telecommunication system and roads.” After adding up all these negative factors, and comparing Myanmar with other ASEAN countries, such as Vietnam or Thailand that have better conditions, Guo questions who would want to come and invest here in Myanmar.
Guo Kunshi explains further that even though Myanmar seems to have an advantage in low labor cost, it has problems with labor efficiency. In addition, the price of the land in Yangon has been jacked up too much by the financial groups in the past few years. These financial groups are mostly in the jewelry business. When they have money, they perform money laundering through buying land and jacking up the land price. As a result, now the land price is very high. After seeing how scarily high the land price was in Myanmar and learning about the lack of robust infrastructure, those who had an interest in investing in Myanmar all left.
Indeed, one of the hottest topic of discussion regarding Myanmar last year was how business office space and hotel rentals in Yangon had become more expensive than those in New York. A residence of little more than 30 pin in size in a city can cost more than 10 million Taiwan dollars while a worker in Myanmar is considered well-paid if s/he makes about the equivalent of 3,000 Taiwan dollar a month. These workers can never afford buying a house in Yangon in their lifetime, not to mention that the majority of the workers in Myanmar actually makes perhaps less than 1,000 Taiwan dollars a month.
Besides having to deal with the lack of sound infrastructure, such as inconvenience caused by power outage or unstable power supply, potential foreign investors were also held back mostly by the factors including unstable political situation, corruption of the officials, lack of comprehensive laws and regulations, and the large gap between the rich and the poor.
The Presidential Election of 2015: a turning point for Myanmar and Taiwan remains calm
Myanmar will hold its presidential election next year. From restaurants to grocery stores in big cities and remote villages, one can see pictures of Aung San Suu Kyi everywhere attesting to her popularity among the people in Myanmar. If you ask citizens of Myanmar, almost no one – regardless of their ethnicity of Burmese, Chinese, or others – doubts that Aung San Suu Kyi will be elected as the president if she runs for it. However, whether or not Aung San Suu Kyi can run for the presidency, and whether or not the military government will be willing to transfer power after she has won remain to be questions in need of answers in Myanmar’s future political and economic development. Though the political situation is still murky in Myanmar, there have been substantial activities from China, Japan, and South Korea in both government and private sectors because Myanmar have become the rotating chair in ASEAN this year and ASEAN Plus Three free trade zone will take shape next year. In contrast to these actions of optimism, responses from Taiwan’s official and private sectors appear to be lack of enthusiasm.
Taiwan External Trade Development Council (TAITRA) responded to investment opportunities in Myanmar by setting up “Taiwan Trade Center Yangon” in November last year. The chairman of TAITRA is also very optimistic about the future development in Myanmar stating that it is not too late for Taiwan business to develop in Myanmar, and that Myanmar may offer Taiwan a way out of its current stagnate state of economy. However, compared to the systematic and organized visits and investigations made by officials and large corporations from China, Japan, and South Korea, Taiwan’s engagement with Myanmar remains in a style of figuring it out as one goes along. The investigations made by private corporations are also not organized.
Unlike the picture painted by some financial magazines implying a continuous stream of flights from Taiwan to Yangon, [in reality,] China Airline’s Boeing 737 from Taoyuan International Airport to Yangon was not even seated in its full capacity. In addition, Eva Airline had to stop its flight route to Yangon last year because it was unable to increase the number of passengers.
Even though the consumer market in Myanmar has not amounted to something significant, Samsung from South Korea has been very active in its development. In contrast, hTC – Taiwan’s pride in consumer electronics – has only started to set up in Myanmar last year partially because its CEO, Zhou Yongming, was a Chinese-Burmese from Mandalay in Myanmar. It was not until then that hTC’s billboards began to appear in the streets of Yangon. The telecommunication software developed by hTC for Burmese in Burmese language received a lot of praises because it was rare for electronic products to have an interface in Burmese.
In Guo Kunshi’s opinion, however, the marketing force of hTC is too weak compared to the ways in which Samsung and LG of South Korea have been cultivating their share of the consumer market in Myanmar. Besides, hTC attempts to compete in medium/high price range where their smartphones cannot outrank Samsung’s models in this level in Myanmar. If they go for the medium/low price range, they are not as competitive as China’s Huawei and Zhongxing. There is a lot room for improvement in hTC’s marketing strategy.
Myanmar, a “virgin land” for agriculture and an opportunity for Taiwan
So, where is the opportunity for Taiwan in Myanmar? In terms of the manufacturing industry, Myanmar does not have sufficient power supply or basic infrastructure; in terms of the service sector, there is still a wait for Myanmar’s overall consumption to rise. But “the opportunity is at investing in agriculture in Myanmar; and this happens to be Taiwan’s strength,” said Guo Kunshi.
Agriculture is the most major economic activity in Myanmar; rice is the main food product and export item. In the 1960s, Myanmar was once the largest rice exporting country in the world. It was not until Myanmar suffered economic sanction because the military government began its totalitarian rule, and its overall agricultural technology remained stagnate at the level of the end of WWII period, that its position as the number one rice exporting country was taken over by Thailand and Vietnam.
Though the proportion of agriculture in Myanmar’s GDP had been decreasing year by year, Myanmar’s agriculture still occupied as high as 36% of its GDP in 2010 according to the statistics provided by Asian Development Bank. Those engaged in agricultural activities represented 70% of the entire employed population in Myanmar. 25%-30% of Myanmar export value was made up by agriculture.
Guo Kunshi thinks that Myanmar will have a great opportunity to export its agricultural products when ASEAN Plus Three free trade zone takes shape in 2015 when all countries within that region will open up their markets. This is especially true for rice and grains because of their competitive prices. In addition, Myanmar’s government is doing everything it can to develop rice and grain export by exempting agricultural materials, machineries, fertilizers and such from taxation. With the cost also being low, there will be a lot room for Taiwan to develop agricultural technology in Myanmar.
On the other hand, Guo Kunshi also cautions corporations that if they are considering to make investment in Myanmar, it is the best to investigate the circumstances in person instead of listening to reports or to word of mouth. One needs to weigh many factors carefully to see if the investment environment in Myanmar is more attractive compared to that in other nations. One also needs to pay attention to detail, especially to laws and regulations, basic infrastructure, administrative efficiency, and so on and so forth. Setting up a dummy investment can also be problematic most of the time so one needs to be especially cautious about doing it.
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