Myanmar offers potential and problems ahead: Rogers

By Mark Tay and Anuradha Kanwar

SINGAPORE |
Wed Feb 22, 2012 7:52pm IST

SINGAPORE (Reuters) – Myanmar resembles China before Beijing launched economic reforms three decades ago but poses enormous risks for investors, including opaque laws and a troubled currency, high-profile commodities investor Jim Rogers said on Wednesday.

“They don’t even have a real currency at the moment,” Rogers, a known commodities bull who co-founded the Quantum Fund with George Soros in the 1970s, told Reuters in an interview.

“It is not very easy to invest in unless you go there to make direct investments.”

Rogers was referring to Myanmar’s kyat, which fluctuates considerably against the dollar and trades at multiple blackmarket rates, some as much as 130 percent higher than the official rate that is barely used.

Myanmar has introduced democratic reforms with astonishing speed since a civilian government took office last March after five decades of army rule, releasing more than 600 political prisoners, easing media censorship and seeking ceasefires with ethnic rebel armies.

It has sought help from the International Monetary Fund and Asian Development Bank in tackling its economic problems, particularly the kyat issue, but they say they cannot be solved easily.

The prospect of the end of Western sanctions imposed for human rights abuses has prompted a surge of interest from investors who view the former Burma, with its vast natural resources, tourism potential and urgent infrastructure needs, as one of Asia’s last frontier markets

As big as France and Britain combined, Myanmar sits strategically between India, China and Southeast Asia with ports on the Indian Ocean and Andaman Sea, all of which have made it a coveted energy-security asset for Beijing’s western provinces.

“Myanmar has massive natural resources, agriculture, minerals and energy. They’ve got it all. Fifty years ago, Myanmar was the richest country in Asia, now it is the poorest,” Rogers said.

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It looks increasingly likely the embargoes will start to be lifted in the next 12-15 months as Myanmar’s government pulls out all the stops to convince the international community it has changed, and needs trade and investment bans to be lifted in order to overhaul its long-stagnant economy.

However, lifting the embargoes will not be simple. Though certain political measures can be eased, like travel bans on top officials, both the EU and United States require proper reviews and congressional or parliamentary approval in order for trade and economic restrictions to be removed.

Rogers had a message for Asian investors not hamstrung by those sanctions.

“Get in there quick before the Americans come, because right now you don’t have to compete with America. It is great because the Americans are shooting themselves in the foot again,” he said.

Beyond the sanctions, the barriers to progress in Myanmar are formidable: an incoherent exchange rate regime, woeful infrastructure, weak investment laws, a crippled banking system, decades of mismanagement and a shortage of skilled labour.

He also said he believed it was too late for Myanmar to reverse reforms and likened it to when head of the Chinese Communist Party, Deng Xiaoping, led his country to a market economy in 1978.

“It’s just like … in China after Deng Xiaoping started opening it up again, it was too late to go back,” he said.

Rogers also warned about entering into partnerships with the wrong people. Business deals between foreign investors and Myanmar partners have often involved cronies of the former junta, either as partners or middlemen, and many are on U.S. and EU blacklists.

Those tycoons were among the main beneficiaries of a largely opaque privatisation boom that preceded a 2010 election, during which prime state assets, such as shipping companies, gas stations and real estate, were sold off.

“Myanmar is a great opportunity,” Rogers said. “But if you get involved with dumb people, you’re going to lose money.”

(Editing by Anshuman Daga, Martin Petty and Ron Popeski)

Article source: http://feeds.reuters.com/~r/reuters/INsouthAsiaNews/~3/KtaTcU-7PTw/myanmar-investment-idINDEE81L0F620120222

Tags: Breaking News, World News