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Myanmar Opens Itself to Investment

Myanmar is known, if at all, for being a hermit nation. After 50 years of isolation, it had seemed to recede almost entirely from the public consciousness, but in recent weeks it has been thrust

Myanmar is known, if at all, for being a hermit nation. After 50 years of isolation, it had seemed to recede almost entirely from the public consciousness, but in recent weeks it has been thrust to the forefront. A visit from the U.S. Secretary of State Hillary Clinton shed light on the rich investment opportunities the nation could offer to the U.S., China and India.

Military rule in Myanmar has frozen growth opportunities for the nation, which was once the world’s largest rice exporter for over half a century. Today Myanmar is many decades behind in terms of modern medicine and technology with buffalo drawn wood plows and an average lifespan of 65 years according to the Wall Street Journal. The status quo there, however, is beginning to change according to Clinton. The generals that have ruled Myanmar are looking to move their pariah state into the future and beginning to welcome communication and trade with the rest of the world. Myanmar needs money and they have plenty to offer in return. Rich forests and oil reserves remain scarcely touched by the population of 54 million people .

Beyond what they can give, Myanmar is also a captive audience for many U.S. exported goods. The massive agricultural potential creates a potential consumer for construction and mining equipment, medical goods, power and service companies. This could be a boon for companies from Caterpillar (CAT) to Potash (POT) and a number of other agricultural and medical equipment companies awaiting a green light to sell in the nation. Energy leaders like General Electric (GE) may also benefit from the need for infrastructure.

Right now, investment from the U.S. is still stalled even if interest is not. While Clinton’s visit indicates the U.S. is opening itself to ending the reign of military repression and perhaps lifting trade sanctions on the nation, no one is there yet. Significant obstacles remain before investment in Myanmar can be feasible. A complete lack of infrastructure and rules against foreigners owning property or majority stakes in businesses threaten the latent possibilities in Myanmar. Furthermore, a currency 100 times above the black-market rate would have to be adjusted before global trade is feasible.

“ That’s not a deal-breaker,” said Wayne Arnold in Reuters “but Myanmar will need transparent investment and commercial laws to offer foreign capitalists adequate protection.”

American companies being associated with Myanmar in the media have been mum on their potential involvement. U.S. policy barring trade with Myanmar are still in place making the early association a legal risk. When asked by Wall Street Journal, both General Electric and Chevron (CVX), declined to comment. UPS (UPS) and Fedex (FDX) said that they’d be open to involvement when and if it becomes legal. Their public demurring; however, is contradicting the momentum that can be observed in the capital according to a Wall Street Journal report following Clinton’s visit.

“Flights into the country and hotels in main cities are packed with businesspeople from the U.S. and other countries. Americans are ‘running around Myanmar, observing what products are going in and understanding the customer base,’ said Christopher Bruton, the Bangkok-based executive director of Dataconsult, in the piece.

Myanmar’s status as a blank, or crumbling slate, pose a wealth of opportunities and naturally, super powers around the world are vying for a piece of the pie. Housed between India and China, Myanmar, will have plenty of interest from its fast emerging neighbors who have an abundance of economic incentives and the benefit of convenience.  Some fear that investment in the nation would be premature given such risks as a return to corruption from military conservatives and a lack of  a functioning state in which to invest.  Even with these factors though, money and infrastructure can be predicted to arrive with speed and intensity should Myanmar continue to court some of the top global powers and express a desire for change. The possibilities for Myanmar look too enticing to pass up given shrinking global growth rates, even in light of the latent dangers. In the manner of hungry dogs, the nations and company’s  looking to be involved in Myanmar, may race to the food somewhat heedlessly in order to establish their claim.

The saying that there is no such thing as a free lunch is very much true for Robinhood.