Myanmar is considered “the last frontier of Asia”. The nation, which has abundant resources, opened its doors to the world economy after years of being held back by the military-run regime.
Taking advantage of the now open Myanmar economy, Vietnam has been actively promoting investment activities through both its public and private sector.
The year 2010 marked an important milestone in the development of cooperation between the two countries. Last year, two-way trade reached almost $480 million, increasing, by two times as compared to two years earlier.
The governments expect the figure to hit $500 million mark this year and plan to accelerate collaboration in sectors of agro-forestry, fisheries, finance, banking, telecommunications, transport, oil and gas, and tourism, among others.
Myanmar has agreed to allow the Bank for the Investment and Development of Vietnam (BIDV) to open a branch, the Vietnam National Oil and Gas Group (PetroVietnam) to expand oil and gas exploration, and the military-run telecom provider Viettel to set up a joint venture with Yantanarpon Teleport of Myanmar.
It has also called for more support from Vietnam in its rubber and food production industries while seeking investment for its three new economic zones.
Myanmar, home to some 60 million people, is hungry for consumer goods and industrial products. However, most of the items are imported, generating plenty of opportunities for Vietnam, to plug the gaps in the supply.
Latest data provided by Myanmar’s commerce and industry authorities showed that its trade deficit rose nearly 90 per cent in the 2014-2015 fiscal year ending March 31. It imported over $16 billion while exported some $11 billion in goods.
The nation’s gross domestic product (GDP) is anticipated to grow at 8.3 per cent in the 2015-2016 period, up from 7.8 per cent in the 2014-2015 fiscal year, according to the Asia Development Bank. To successfully integrate development policy framework for Myanmar, the bank said, it will need to consider comprehensive development and reform planning and phasing.
Also read: Myanmar opening banking doors
Vietnam is not alone in investing in Myanmar. One in four Asian enterprises are said to be planning to expand into Myanmar, this year, according to the United Overseas Bank’s Asian Enterprise Survey 2014. Meanwhile, nine foreign banks have been licensed in the country.
From the first days of investment
Taking the leading role in Myanmar investment, chairman of the BIDV Nguyen Bac Ha was appointed chairman of the Association of Vietnamese Investors in Myanmar (AVIM).
“Myanmar has enter a new area of innovation, opening its economy and encouraging more foreign investment,” Ha said.
Vietnamese companies, which have invested or are seeking investment in Myanmar, operate in a broad range of sectors including, finance, transportation, mineral, agriculture, telecommunications, real estate, pharmacy and manufacturing.
In 2012, property developer Hoang Anh Gia Lai Group planned a $400 million trading centre complex project in Yangon, the former capital city of Myanmar. It was the largest real estate project in terms of value in Myanmar. This is expected to be inaugurated in the third quarter of this year.
In the pharma industry, the $20 million joint venture between ASV Pharma Corp (Vietnam) and Myanmar Entrepreneur Investment Group produces antibiotic drugs, injections and infusions.
However, the most active sector might be the agriculture business, which has seen the forays of Viet Trang Import and Export (Viettranimex); VinaCapital, An Giang Plant Protection JSC, the Vietnam Rubber Group and the Vietnam National Coffee Corporation planning to develop rubber planting, etc.
New areas for exploitation
Up to date, Vietnam is among the 30 largest investors in Myanmar, taking the eighth place in terms of investment scale, having seven projects worth a total $513 million as of February.
The AVIM hopes that by the end of this year, the total investment of Vietnamese companies in the country will mount to $1.5 billion, bringing Vietnam to the fifth largest investor.
Earlier this month, Vietnam’s Hoa Binh Construction Corporation implemented the topping-out ceremony for the GEMS Apartment project in Yangon. The corporation plays as the construction management party of the project, while Myanmar’s Capital Development Limited is the project owner.
GEMS is the first realty project in Myanmar for which, a Vietnamese contractor provides construction management services.
“In fact, Myanmar is a promising market, but few Vietnamese construction or real estate firms, have a foothold in this country,” said Hoa Binh Corporation’s chairman Le Viet Hai.
As the Myanmar government has just opened its door, it is challenging to access this market, added Hai.
With GEMS project providing the initial foothold into Myanmar, Hai hopes that his company will expand further, by getting into larger projects involving high-rise building.
Prior to Hoa Binh Corporation, interior designing firm AA Corporation had received a number of interior design contracts from Myanmar firms, including the five-star Novotel Yangon Hotel, through its local-based subsidiary AA Interiors Myanmar Ltd, which was set up in 2013.
“Tourism, high-class restaurants and hotels will continue to grow in Myanmar, and we see this a great opportunity,” said the designing company chairman Nguyen Quoc Khanh.
In addition, Hoang Anh Gia Lai Group’s magnate Doan Nguyen Duc said that the real estate market in Myanmar, particularly in Yangon, is still in a supply shortage.
According to the Ho Chi Minh City Investment and Trade Promoting Centre, Myanmar is one of the target markets of Vietnamese businesses in the fertiliser, processed food, plastic and cosmetic sectors.
In addition to manufacturing products, Vietnamese companies have also forayed in the Myanmar service sector, including the Vietnam Posts and Telecommunications Group (VNPT), Viettel, and FPT Group in the telecom and information technology fields.
Meanwhile, the new area for investment is in television/radio broadcasting, as Myanmar’s minister of information U Ye Htut, in an exchange with Vietnamese officials, has said to seek ways to let foreign investors partner with operators to provide more services to the domestic market. Vietnamese organisations are invited and can contribute up to 30 per cent of the joint venture. In the media and publishing area, Vietnamese enterprises will be able to own up to 95 per cent, while they can look to acquire an entire business in the education sector.
Image: The Vietnam Ministry of Industry and Trade