Deal-making opportunities galore as Myanmar targets $11b FDI by 2030

Photo: Juliet Shwe Gaung.

Despite mounting political tensions in Myanmar’s Rakhine region, Maung Maung Win, deputy minster of the Ministry of Planning and Finance is targeting an inflow of $11 billion in foreign direct investment per year by 2030.

Myanmar’s optimism stems from the frontier market attracting FDI worth $6.64 billion in 2016-17.

“With an aim to become investment destination, we have been making all our efforts to create a favorable investment environment along with sound macroeconomic reform measures,” said the deputy minister, at the Euromoney Conference last week, which saw attendance from a host of seasoned investors, private equity fund managers and heads of institutional investors.

As of August, foreign investment commitments have touched $3.69 billion with the government targeting the number to extend up to $6 billion per year by the next three years.

One of the key regulatory changes, the revised Myanmar Companies Act, with the assistance of ADB, is expected to be introduced by the year-end which defines foreign-owned companies as those in which overseas investors ownership exceeds 35 per cent. Also the Foreign Direct Investment Plan (FDIPP) has been implemented with assistance of JICA.

Infrastructure: The big play

Myanmar is placing bets on infrastructure to play a key role in driving investment flows into the country, particularly in the areas of power, real estate and transport.

“Power supply is one of the major challenges in Myanmar to boost investment and therefore, the government of Myanmar has identified electricity as top priority for our country development,” said Win.

Few players who have already made inroads into the market include a consortium consisting of U.S. companies APR Energy and Ace Resources Group for a 300 MW power plant in Yangon using heavy fuel oil. U.S-based Convalt Energy, a portfolio of private equity firm ACO Investment Group, has also secured the approval to commence a 300MW solar power, at an investment of  $480 million.

Industry sources say, there are enough opportunities in the micro-grid power generation space (2 MW) in about 26 townships in the country where the respective regional governments are open to any power source.

The Myanmar National Electrification Plan is targeting  100 per cent electrification by 2030 with a total capacity requirement of 2,400 MW.

Existing investors bullish

Private equity major TPG has invested close to $200 million in Myanmar in Apollo Tower and Myanmar Distillery while a $250-million loan facility from Overseas Private Investment Corporation was disbursed to the Apollo Towers Myanmar Limited in mid-2016.

TPG is looking at the infrastructure space for a possible investment in the next couple of months to hit a deal size similar to its previous investments.

Jardine Matheson, a diversified Asian group, is hoping to expand into more sectors in Myanmar if opportunity permits, said Peter Beynon, country chairman of Jardine Matheson’s Myanmar and Cambodia businesses.

It already has five businesses running in Myanmar, starting with its lift and escalator business of Jardine Schindler in 1999.

Beynon said, they are “on the runway, ready to take off.”

“Myanmar is well on the way to accelerate the development curve,” said Beynon during the sidelines of the Myanmar Global Investment Forum 2017.

Jardine operates Pizza Hut Myanmar franchise, a JV with Win Win Tint from City Mart Holdings, holds distribution rights to Mercedes-Benz, Fuso commercial vehicles, EvoBus and Mazda.

“In majority of the business here, the financial information and reporting, of the business is so porous that there’s nothing you can rely on,” said Beynon. Jardine has done business with local companies in which  International Finance Corporation (IFC) has invested in.

“The reason being IFC has done a level of due diligence,” said Beynon. Jardine’s vision is “towards a long term.”

Vikram Kumar, country manager, IFC Myanmar, opines, investments that come into Myanmar need to develop sustainably.

Other possible opportunities for investment

A number of local companies are open for partnerships in sectors such as  LPG, LNG storage and distribution, industrial zone development, low cost housing, dry port, airport services, airfreight cargo, small airports and hotel projects.

An industry source said, the telecom tower sector was ripe for consolidation even as other industries such as private education, hotels and insurance are attracting the interest of overseas investors.

Also Read:

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Myanmar: Investment firm MIL explores listing on Asian bourse, two new deals

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.