Please Daddy Can I Play Too?

Myanmar is moving swiftly ahead, opening the country up to foreign investment. Recent draft legislation reveals a new investment law enabling “foreign devils” to own 100% of a business. Foreigners will no longer require a local partner in order to set up a business in the country, and those same foreign devils may be granted a 5-year tax holiday from the start of commercial operations.

Myanmar Kyat

Plans also appear to be moving forward to free-float the Kyat, and amongst other reforms are the scaling back of some of the counter-productive legislation which has solidified the country in poverty for my entire lifetime.

These are rules such as a prohibition on selling products manufactured by foreign firms in Myanmar, ensuring all these products go to export. This piece of legislation has ensured goods in Myanmar remain ridiculously expensive for locals. I expect this to now begin dramatically benefitting locals.

China did the same thing in the early 80’s, scaling back counter-productive legislation and allowing the market to operate more freely. They experienced something almost unimaginable, with living standards and per Capita GDP literally going through the roof.

Foreign capital is already pouring into Myanmar and Yangon’s streets are brimming full of foreign businessman. The country is seriously struggling to cope with the surge in visitors, with hotels packed to capacity and flights booked out months in advance.

Real estate has gone absolutely berserk. Prices in Yangon now rival those in Kuala Lumpur. Stupid, destructive regulations have forced captive capital into certain sectors of the economy, and while the opportunities seem to be enormous I’m not convinced buying real estate at such prices makes any sense.

I’ve seen this sort of thing take place before. Regulatory changes, which incidentally seem inevitable, will likely allow this captive capital to flow into alternative outlets, and a bust will ensue. I’m not saying it’ll happen, but I’m very wary and will be spending more time on the ground later this year to hopefully get a better idea of what makes sense for my capital.

Of course none of this matters much right now for Americans, as they are still unfortunately left sitting on the sidelines waiting for Big Daddy to allow them to join the other kids in the sandbox. I suspect if we were able to see the background behind recent registrations of BVI companies, you’d find a host of American businessman putting capital to work in the country regardless.

That those mindless ants in Washington can choose what individual citizens can and cannot do with their own capital is mind blowing. Invade whole countries on lies… sure, murder innocent women and children in Afghanistan… no problem, drone strike a bunch of innocent Pakistani villagers… yessir! Invest your own hard earned capital into a productive business in a foreign country… No way!

This will likely change in due course, but for those that are not encumbered by a US passport, they’re not sitting by idly.

The Chinese, under no such restrictions and happy to be investing in the world’s longest running civil war, have been hard at work positioning themselves within Myanmar for the past few decades. Off the north western Arakan coast they’re building pipelines to transport oil and natural gas from Africa, the Bay of Bengal and of course the Persian Gulf, straight through to Kunming.

The Chinese aren’t stupid. These pipelines will reduce China’s reliance on the Strait of Malacca. It’s more than mere economics, it’s a geo-political move as well.

We’ll be watching very closely as this story develops. Myanmar has immense resources, anywhere from 40 to 70  million eager hungry people (nobody really knows) who will all be vying for production jobs that have lifted countries such as Vietnam, China and Thailand out of poverty.

It’s going to be an interesting ride, and I’ve no doubt fortunes will be made and lost here. We intend to do our damndest to be in the former group.

– Chris

“Myanmar is in the same place China was in early 1979, when Deng Xiaoping said we have to do something new. Myanmar is now opening up.” – Jim Rogers


This Post Has 3 Comments

  1. Naresh

    Hi Chris,

    There are some exciting ruby mines in Mogok. Foreigners can’t go there because you need a permit to go there and last heard the permits are not being issued. The pigeon blood red rubies are amazing and traders from Bangkok visit Burma regularly for buying rubies off auctions. Last year I thought of visiting Mogok with my uncle however the plan didn’t materialise. Other things that are good are prawn farming. Burmese shrimps do not catch the disease that other shrimps catch because Burma is an untouched and unsullied enviornment. The shrimp export business sounds good with seafood prices rising around the globe. Soon burmese seafood will be a delicacy like kobe beef – premiums will be paid for safe burmese seafood.

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