[As seen on Bloomberg]
In a run-down building on a trash-strewn side street of oily vehicle repair shops and steamy noodle vendors, a group of 20-something software geeks are hunched over laptops in a white and red open-plan office, working on projects for everything from a private-jet operator to a mobile-phone network.
This is Yangon, where old and new aren’t so much juxtaposed as living on top of each other.
"There’s just enormous, enormous amounts of opportunities here," says Ye Myat Min, the 25-year-old chief executive officer of Nex, whose clients also include the state postal service. "We’re in a very unique situation where we don’t really need to think about competition at first because there is so much demand."
Those opportunities have blossomed in Myanmar in the past four years as economic sanctions eased after the military government agreed to end direct rule. Just as in China and Vietnam before it, the end of isolation brought an economic dividend, with 8 percent-plus annual growth spawning a property boom, traffic jams, and the telltale patchwork development of urban transformation.
Even with the country on the eve on an election that could produce the biggest political upheaval in half a century, executives like Ye Myat Min are confident that the sheer breadth of opportunity will keep the boom going.
“We really have been frozen in time for 50-odd years,” says Melvyn Pun, CEO of Yoma Strategic Holdings, a conglomerate invested in everything from real estate to Myanmar’s first KFC fast-food outlet. “The potential is very clear. I think we’re living through a golden period.”
Foreign direct investment jumped 10-fold between 2009 and 2014 to $4.1 billion. During that time, the junta transferred power to a military-backed political arm in a 2010 election in an effort to remove the crippling economic sanctions.
That poll was boycotted by the main opposition party of Nobel laureate Aung San Suu Kyi. Next week, a new election will be held in which Suu Kyi’s National League for Democracy has the chance to break military control that stretches back to a coup in 1962.
While some fear that a shift in power, or a fragmented parliament with no clear mandate, would be disruptive for business, Pun says the will to modernize the economy runs across the political spectrum.
"They are all pro-reform," Pun says. "Reform has been beneficial to a large segment of the society, everyone from the current ruling party to the opposition party to the military to the ethnic groups."
There’s a lot still needed, including a stock exchange and new laws on investment, mining, intellectual property, condominium ownership and arbitration. A post-election session of parliament due to begin just a week after the ballot, suggests that the current ruling party will try to pass bills set aside during the 60-day campaign period, including updated companies and investment laws, according to Eurasia Group Myanmar specialist Christian Lewis.
“Whoever becomes the government, it’s important just to improve the economy,” says Khin Shwe, founder of construction firm Zaykabar Co. and an upper-house lawmaker for the military-backed government. The company, which has a caged bear by the gate to his offices on the outskirts of Yangon, is one that remains on the U.S. sanctions list.
Some of the issues Myanmar faces are new to the society, such as soaring real estate prices. Others are recognizable in developing countries around the world that have been starved of investment: poor infrastructure, skills shortages, corruption and opaque regulations.
Foremost for businesses, whoever wins the election, is to continue to hack away at the bureaucracy and stifling legislation that plagued investment for so long, says Aye Lwin, joint secretary-general of the Union of Myanmar Federation of Chambers of Commerce and Industry.
“So many complicated procedures, so much taxation, so much corruption,” he says, comparing doing business in Myanmar to a potato-sack race where everybody falls down before they reach the finish line. It wasn’t the international sanctions, “we sanctioned ourselves.”
Since the previous election in 2010, the government has been trying to cut the obstacles to business, promising to grant approvals within a month, instead of several months.
For mobile network operator Ooredoo Myanmar, red tape has been less of a problem than the country’s archaic infrastructure, especially once you leave the main cities, as it tries to erect cellphone towers and lay 12,000 kilometers of fiber-optic cable across the country.
"In a lot of cases now, we need to first build the road," says CEO Rene Meza, whose company launched its service in Myanmar last year. "It’s an exciting country, an exciting market. Probably the really last frontier market with such potential in the industry."
The biggest fear that hangs over the hopes of investors, reformers and democracy campaigners is the memory of 1990. That was the first time the military leaders tried to reintroduce democracy. The election was a landslide for Suu Kyi’s party, but the junta annulled the result, plunging the country back into isolation and sanctions.
Though a repeat of that is unlikely, the political uncertainty over the past year has weighed on investment, Yoma’s Pun said.
“We do see investors being on the sidelines -- waiting for clearer signs of the future,” he says. “When we see a successful and transparent and free election being conducted, I think that will give comfort to investors.”
Still, he cautions against the euphoria and hype that came immediately after Myanmar’s re-opening. Nearby Vietnam began opening its country in the 1980s and even after more than three decades its economy is still half the size of Thailand, which has fewer people.
“Let’s be realistic, we’re not going to become Bangkok in five, 10 years,” Pun says. The opportunities in Myanmar are “very large, but you have to look far enough."
For Ye Myat Min and his coworkers at Nex, the election just means more business -- they developed an app for organizations monitoring the vote that reports incidents and fraud at polling stations.
In an industrial-chic space more in tune with a Chelsea design studio than a Yangon alley, a small slice of the country’s younger generation are busy tapping at laptops on large communal tables, under signs urging them to “Innovate” and “Dance Like Crazy.”
“We have a lot of foreign companies coming here. That’s great,” said Ye Myat Min, who started the company 2 1/2 years ago with seed money from an Australian angel investor. “But what I really hope to see within the next three, five years is a local Myanmar company expanding into other countries and making a name for themselves.”