The pace of political and economic reform in Myanmar (Burma) has picked up sharply this year. In April, opposition leader Aung San Suu Kyi was elected to parliament, and later traveled to Europe and the U.S., where she received a warm reception. President Thein Sein, a former general, has consolidated power and begun to overhaul governance, press freedom and trade policy. His democratic reforms are being reciprocated by the U.S. and other Western powers that had imposed sanctions on Myanmar’s repressive former junta. Multilateral lenders are finally returning to Myanmar after a long absence. A further significant step came last month when the Obama administration lifted a blanket ban on imports from Myanmar, a move that coincided with visits by both Thein Sein and Nobel laureate Suu Kyi.
Foreign investors have been paying close attention to Myanmar’s reform process. For many years, Western multinationals were deterred by trade sanctions and reputational risk. China emerged as the largest foreign investor in Myanmar, particularly in natural resources. However, the new government is eager to engage with Western governments and companies. Officials in Nyapyidaw recognize that a more vibrant domestic and foreign-invested private sector holds the key to broader economic growth and, in turn, to shoring up support for the government during a still-fragile transition to democracy.
In June, General Electric became the first U.S. company to conclude a deal in Myanmar, just days after President Obama lifted an investment ban. Under a U.S. license, GE is supplying medical equipments to private hospitals via a local distributor in Yangon, the largest city. It plans to open a representative office in Myanmar by the end of the year, and is pursuing a range of other business opportunities there. Stuart Dean, GE’s CEO for ASEAN, spoke to FORBES about the company’s strategy and the challenges of operating in Myanmar. Dean is based in Kuala Lumpur, Malaysia and oversees operations in the ten member-countries of the Association for Southeast Asian Nations, to which Myanmar belongs.
Q: Which business sectors in Myanmar offer the best opportunity for GE?
A: The perspective is not so much what is the best opportunity for GE but rather how we can work closely with the Myanmar government and private sector to identify what the country needs to transform its economy, now that it has opened up. GE has at present business relationships in healthcare where our national distributor Sea Lion has sold advanced medical equipment such as CT scan and cardiovascular imaging machines in the country through the Ministry of Health and private hospitals.
Apart from healthcare, GE Capital Aviation Services recently announced the leasing of two aircraft to Myanma Airways. We are encouraged by the progress made thus far and opportunities abound for us to work with potential partners to help the country improve its power generation and transportation infrastructure in addition to what we have right now.
Q: How extensive were GE’s pre-sanctions operations in Myanmar? Are there any remaining US sanctions that impact your business?
A: We did not have direct businesses in Myanmar then based on stringent GE policy on how we do business and the opportunities that were present then. On what impacts business now for us, we hope to see resolution in the area of financial transactions and the current process of using only state-owned banks. This affects all US companies and we are confident that the necessary measures will be taken to make it easier for foreign investors to set up a physical presence in the country.
Q. Energy is GE’s largest revenue generator in ASEAN. What is your strategy for this sector in Myanmar?
A. Generally, to look at providing quick, distributed power solutions to support industrial and commercial demand, which can have a significant beneficial impact on Myanmar’s economic development. Also, to advise on long-term planning development, grid investment and how to improve reliability as well as to minimize loss in transmission. Other areas of focus include supporting Oil & Gas exploration and production of new fields.
Q. Potential investors have been waiting for Myanmar to clarify its rules. What is GE’s analysis of the investment law passed last month?
A. The Foreign Investment Law has yet to be passed and the debate so far is healthy. We would prefer to wait for a well thought-out investment law and are encouraged by the progressive efforts of the Myanmar government. Investors, I believe, want to see more clarity on the extent of foreign and local shareholding allowed. For GE, our investment strategy is always for the long-term including the creation of local jobs and talent development in the country. We hope the government will have sufficient measures in place to build an attractive investment environment that is investor-friendly, one that will accelerate economic development, social stability and boost the country’s competitiveness in the region.
Q. In your view, what is the biggest impediment to doing business in Myanmar – infrastructure? political risk, currency controls?
A. I would not say that there are major impediments. What we do see are challenges as we deepen our business in the country, especially legal and banking requirements. The risk of not going in early to help the country far outweighs what some would see as impediments to doing business in the country. Given its population size and huge economic potential, Myanmar is a market that has huge opportunity for growth given the need for infrastructure development, better healthcare facilities and power generation in both urban and rural areas. The time to invest in this country is now and it is for the long-term.
