KBZ Group: Don’t wait too long to invest in Myanmar’s growth
Western investors have been patiently observing Myanmar's growth story – but wait too long and you'll miss out, say KBZ's Nyo Myint and Zaw Lin Aung
After 50 years of isolation under military rule, Myanmar’s economy has been slowly opening up in the past few years. That may pick up pace now that Aung San Suu Kyi’s party has won the election. Nyo Myint, Senior Managing Director of KBZ Group, and Zaw Lin Aung, Deputy Managing Director of KBZ Bank, say that now is the time to invest – before Myanmar’s new ASEAN partners take the opportunities for themselves.
World Finance: After 50 years of isolation under military rule, Myanmar’s economy has been slowly opening up in the past few years. That may pick up pace now that Aung San Suu Kyi’s party has won the election. With me to discuss the investment opportunities moving forwards is Nyo Myint, Senior Managing Director of KBZ Group of companies and Zaw Lin Aung, Deputy Managing Director of KBZ Bank.
Well Nyo Myint, if I might start with you: what sort of changes have you seen to Myanmar’s economy recently?
Nyo Myint: Myanmar’s economy has seen significant growth. Every year since 2010 the economy has grown at least eight percent. And in the 2014-15 fiscal year, the country recorded foreign direct investment of $8.1bn. That was more than $300m the country received in 2009-10, before the liberalisation occurred.
There has been the same internal economic growth for the last few years. However, the growth for this year, 2015-16 is projected to moderate to 6.5 percent due to the severe floods that took place in the country.
World Finance: And Zaw Lin Aung, over to you now. So the financial sector: what’s been the knock-on effect for you?
Zaw Lin Aung: In the last four years there have been significant developments in the financial services sector. The major development was the awarding of the authorised dealer licences to four private banks in November 2011. And KBZ Bank is one of the licence holders in the industry, so we can engage in international banking and trade finance business.
In December 2011, ATM machines were allowed to be installed; within four years, over 1,000 ATMs have been deployed across the nation. Our KBZ Bank has the largest ATM network in Myanmar. Now Visa and Mastercard can be used in the country.
The other development was in the last year. Nine foreign banks were awarded banking licences, which encouraged healthy competition and improved our financial sector as a whole.
World Finance: And Nyo Myint, Aung San Suu Kyi has of course recently won the election, so what’s the business sentiment surrounding this?
Nyo Myint: Most of the multinational companies are believed to be prepared to invest in Myanmar. Apart from the financial aids and grants to be contributed by international institutions. So we look forward to moving business more vigorously during the tenure of the new government.
The winning party also said they are committed to financial sector reform, which may lead to a lower inflation rate, steady the local currency, more autonomy to certain banks, greater transparency, and so on.
World Finance: And Zaw Lin Aung, what would you say are the biggest growth opportunities for enterprises today?
Zaw Lin Aung: There’s a huge opportunity in the emerging economy like Myanmar, not just fundamental sectors like infrastructure, but knowledge-based industries, as well as education and hospitality.
In the short term there are many opportunities in the tourism industry. The communications industry is very promising with the loss of potential. The mobile phone industry has seen massive growth, but it’s still in its infancy in Myanmar.
Developments in other forms of communication are needed much more.
I can recommend business opportunities in four key areas: especially in infrastructure, manufacturing, communications and education, for the quick win.
World Finance: And Nyo Myint, how important would you say it is for companies to focus on social development?
Nyo Myint: Of course, social development is central to this transformation that is happening in Myanmar. There is no point in having the economic liberalisation if it doesn’t filter down to all people in the country, and allow everyday people to live better lives.
Formerly I was part of the public sector, and for 15 years now I have been in the private sector. I have now witnessed first-hand the significant contribution of the private sector to social development.
The Brighter Future Foundation, which is the social arm of our Kanbawza Group of Companies, is the biggest private donor to the country, and has been conferred the best philanthropic foundation award in Myanmar for 2015 by the President of Myanmar for our latest contribution to society.
Apart from being the highest taxpayer for four consecutive years in the history of the bank and the group of companies.
World Finance: And Zaw Lin Aung, finally, what sort of trends do you forsee impacting Myanmar’s economy over the next 12 months?
Zaw Lin Aung: Myanmar’s business over the next 12 months will be business as usual. The growth rate for the last five years has been consistently very positive. I can forsee the growth rate continuing even more in the near future. But I understand western countries are taking a wait-and-see approach for the next six months, during the political party handover and the sitting of the next parliament.
But many countries are within our reach, including Japan, China, South Korea, India, as well as our ASEAN countries have been doing business in Myanmar for many years, and will surely increase their operation in the next 12 months.
So I urge western countries not to wait too long and miss out on the first mover advantage.
World Finance: Zaw Lin Aung, Nyo Myint, thank you.
Nyo Myint: Thank you.
Zaw Lin Aung: Thank you so much.