Dear Investors and Friends,
As part of our continuing on the ground research, Ruchir Desai, Co-Manager of the AFC Asia Frontier Fund, traveled to Myanmar recently to attend an investor tour. Photos are by Asia Frontier Capital.
There was a lot of excitement in 2011/12 when Myanmar initially opened up to the outside world after almost 50 years, which was followed by the 2015 election victory for Aung San Suu Kyi’s National League for Democracy Party. This led to a lot of investor anticipation with respect to further opening up the economy in terms of reforms and regulations. Though long-term prospects for the country are still very bright, like with many developing markets, reforms and regulations have been relatively slow to materialize.
However, things appear to be moving in the right direction, with the insurance sector having opened up to foreigners and foreign banks now allowed to lend to local businesses. Despite the slower pace of economic/market reforms and the unwanted publicity related to the refugee crisis, the country continues to attract attention due to its geographic position, natural resources, and untapped consumer base. Looking at its location on the map, Myanmar appears to be evolving into a country where a “Great Game” is being played between China, India and Japan, with the three countries seeking to leverage Myanmar’s location for logistics, resources and greater geopolitical clout. Japan in particular has taken a keen interest in the country with investment in industrial parks and ports, while Toyota recently announced that it would build its first assembly line in the country. Foreign direct investment is increasing, with the first half of 2019 witnessing a 77% increase to USD 2.3 bln.