Myanmar’s recent history as a dictatorship-turned-kinda-democracy, its economy’s high growth rate, and the general perception that it is moving in the right direction have motivated some giant companies to invest here, with even more eyeing the prospect.
But according to Reid Kirchenbauer, the 25-year-old mogul behind InvestAsian, however, these companies are making a mistake for three major reasons.
First, Myanmar’s pro-investment laws fail to influence reality. Although a company can open in Myanmar by investing $50,000 for a service-based business or $150,000 for a manufacturing business, Kirchenbauer points out: “The government needs to manually approve each foreign investment. It’s a process which usually involves bribes, incompetency, frustration, and lots of waiting.”
Furthermore, the World Bank’s most recent Ease of Doing Business Index rates Myanmar the worst place to do business in Asia with a ranking of 170 out of 190 countries.
The second big reason to second-guess a decision to invest in Myanmar is that foreigners can’t own property. Even though the 2016 Condominium Law allows foreigners to own up to 40 percent of the floor space in a single condominium, individual properties need to be registered under this law, and according to Kirchenbauer, none are.
Finally, Kirchenbauer says the opportunity cost of investing in Myanmar is too high, and people looking to invest in frontier markets should look elsewhere. Making money off a Myanmar investment takes considerably more time and effort than investing in Cambodia or Mongolia, where growth rates are similarly high and bureaucracy is way more navigable.
Kirchenbauer writes: “Myanmar’s made a lot of progress. For all we know, it could be Asia’s best country to invest in a decade.”
Why should we trust Kirchenbauer?
He writes: “Well, I learned how to buy assets in Asia at low prices. I found people who were determined to sell quickly. They often just needed more liquidity. One time, a bomb exploded down the street from the seller’s apartment.”