Thai-Finnish Chamber of Commerce • 25th Anniversary Issue & Membership Directory 2017
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Nation in Motion
Thail IAL!
a
Factsnd
The history of Finland is complex
Game On
Finnish games rule the world
Learning for Life
Finland’s education tops charts
Rebel at Heart
A World Champion who embodies
the Finnish mentality
Myanmar Rising
Liberalization helping companies to get in
Want to Win?
Hire a Finn
Finns love their motorsport heroes
Vision Finland
FINLAND & THAILAND FACTS | CLEANTECH | EDUCATION | ASEAN | MOTOR RACING
| GAMING I
Liberalization, speculative wave and poverty are all part of everyday life in Yangon.
But make no mistake: Myanmar is rising. This is the right time for Finnish companies
to get in, says Finpro’s expert Kai Tuorila.
W
e are sitting on the top floor of a business club
in the glittering capital of Thailand, enjoying the
cool notes of a jazz band playing in the background.
All the while, faultless English tea is being served as
it should.
Central Bangkok is a different universe compared
to Myanmar, where Kai Tuorila is spending more and
more of his time. He is Finpro’s Project Manager in
Myanmar and has been looking after Thailand and
Lao PDR. But just like any newborn baby, Myanmar
requires his attention.
“The atmosphere has completely changed in
Yangon during the last few years, ” Tuorila says.
“That’s why also Finpro sees it being important to
be in Yangon, where we opened a small office last
March.”
Land of Growth
According to World Economic Forum predictions,
Myanmar’s economy should grow 8.6% in 2016,
faster than any other, and should continue growing
until 2030. There is a rush to get in.
“Some companies say it might be too early now,
but in 2 or 3 years it will be too late, ” Tuorila smiles.
He should know. He’s been in the region for decades,
seen governments come and go. He knows everyone
worth knowing.
Only a few years ago, Myanmar was known for
its opium production and natural resources like oil &
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Vision Finland
gas, jewels, jade and teak. Now, it is playing catch-up
with places like Bangkok, where the glitterati rule and
fashionistas abound.
Better hurry up, if you still want to see parts of
the old world. Your favorite guest-house and food
stall will soon be replaced by an international bank or
shopping center.
Land of Missing Infrastructure
Despite the breakneck pace, Myanmar is still one of
the poorest nations in Southeast Asia, suffering from
decades of stagnation, mismanagement and isolation.
Development stopped in the 1960’s when the “socialist experiment” began.
The lack of an educated workforce skilled in
modern technology has been hindering Myanmar’s
economy. Recent reforms and developments carried
out by the new government in collaboration with
foreign countries and organizations, aim to make this
a thing of the past.
Myanmar lacks adequate infrastructure: goods
travel primarily across the Thai border and along the
Irrawaddy River as well as the Yangon sea port; railways are old and rudimentary – few repairs have been
done since their construction in the late 19th century;
highways are missing proper foundations and need
constant repairs.
Energy shortages are common throughout the
country, including in Yangon.
Only a few years ago, Myanmar was known for its opium
production and natural resources like oil & gas, jewels, jade
and teak. Now, it is playing catch-up with places like Bangkok,
where the glitterati rule and fashionistas abound.
Vision Finland
77
Land of Cheap Labor
Still, potential abounds. Myanmar has a young and
cheap workforce, a long coastline, abundant agricultural land and an ideal location, wedged between the
massive markets of China, India and South-East Asia.
Expatriate Burmese are returning in droves, bringing
enthusiasm and professional expertise with them.
“This is the place to be. The whole atmosphere
has changed, ” Tuorila says. Already some Finnish
companies have heard the news. Nokia Networks,
for example, has 200 employees in Myanmar, and
Tuorila expects Finnish companies involvement in the
energy, environment and transportation sectors. He
is also anticipating capacity building projects between
Burmese and Finnish universities.
Foreign Direct Investment is fundamental, for
instance in the power sector. Currently, only about
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3.7m households
– or about 34%
of all residences
– have access to electricity. This is one of the lowest
rates of electrification in the world. Tuorila sees this
as a big opportunity for Finnish companies.
The World Bank estimates that at least 7.2m new
connections for residential and business users are
required to achieve universal access.
The previous administration announced ambitious
targets to achieve access to electricity for 50% of the
population by 2020, rising to 75% by 2025 and 100%
by 2030, either through connection to the national
grid or via dedicated off-grid sources powered by
solar and other renewable energy and mini-grids.
Government estimates put the total investment at
between $30bn and $40bn over the next 15-20 years,
and are inviting the private sector to step in.
Disruptions to supply and insufficient access to
power have limited industrial growth, forcing manufacturers to rely on on-site generators to bridge
shortfalls, adding to production costs.
Land in Need of Repair
One place where the investment needs are most
urgent is Yangon, the biggest city and former capital.
In 1998, the city’s population was 2.5 million; now
it is twice that, and by 2040 it is predicted to hit 11.7
million.
Central Yangon is currently a more expensive
place to do business than downtown Manhattan. At
the same time the average wage is just $2 a day. Doing
the math is easier than anywhere else. Things cannot
stay as they are for long.
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A US$500 million Mitsubishi mixed-use scheme
near the central station is now in the works, which,
according to one source close to the project, will look
like ‘a chunk of Tokyo airlifted into Yangon.’
But even this scheme will be a mere speck in
comparison to what’s being dreamed up next door.
Myanmar Railways is currently tendering a $2 billion
project of high-rise hotels.
Land of Liberalization
A lot of liberalization is in the air. In November this
year, new legislation puts foreign investors on the
same footing as locals, including 100% ownership of
their companies. They will also be able to legally lease
– but not own – property.
As another sign of development, the Yangon Stock
Exchange (YSX) officially opened for business in
March 2016. Foreigners are not allowed to trade yet,
until the Myanmar Companies Act has been amended.
The 2015 Transparency International Corruption
Perceptions Index ranked Myanmar at number 147
out of 176 countries in total. There are genuine moves
to change this – the new civilian government of the
lady Aung San Su Kyi wants to show they are different than the former military rulers.
Finland is worlds apart. It is currently ranked
second in the same list.
Land of Homework
Tuorila sees many possibilities for Finnish companies
in Myanmar. Rapid growth has overwhelmed the
capacity of the existing transportation infrastructure.
Waterways, road and railway networks need improvement. Air and sea ports need to be expanded. There
are several large internationally funded projects
already in the pipeline.
Tuorila is also a realist. He’s seen enough companies come and go. He cautions Finnish companies to
do their homework and find good partners. “Finpro
is in Myanmar to help with advice and opening doors.
It is not the first country you should start your business in Asia, but it will be a good investment in the
long term.”
The World Bank is predicting Myanmar’s economic
growth to be among the fastest in the world until 2030.
Facts support this. According to Knoema’s database, doing business in Myanmar is over three times
harder than in Thailand, and business life is easier
even in Cambodia. But this is changing fast.
Tuorila glances at his watch. Time to get ready for
the early morning flight to Yangon. Tea refill and jazz
encore must wait. Lesser paradise with greater prizes
awaits.
Data sources:
data.worldbank.org/country/myanmar
knoema.com/atlas/Myanmar
en.wikipedia.org/wiki/Myanmar
The Myanmar Times
www.agonpacific.com
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