It is late September, already at the tail end of the rainy season in Myanmar. A Taiwanese businessman, who prefers to remain nameless, is at Taiwan’s Taoyuan International Airport at 5:30 in the morning arranging for nearly half a metric ton of diesel engine parts to take off with the rising sun. He wants to be first off the mark to provide spare parts for vehicles and heavy machinery damaged during Myanmar’s pounding rains.

He has been doing business this way for 19 years now, since first entering Myanmar in 1993.

The unreliability of the power supply is a frequent target of complaint. Many ordinary people cannot afford the high cost of electric power, and when night falls they do business by candlelight.

Why would anyone be willing to pay the high costs involved in air transport? The businessman explains that it is very difficult to get certification for commercial shipments into or out of Myanmar, not to mention the long delays involved in shipping by boat. Therefore getting the goods onto a flight is the best option to meet the urgent needs of his clients. Since engine parts manufactured in Taiwan are of high quality and durability, and therefore are highly thought of in the marketplace, if you can be the first one to get your product on the ground, you can make higher profits.

But it is not everyone who can bring goods in and out of Myanmar at a profit. Not only do you have to maintain “friendly relations” with airport and customs personnel, there are also a lot of “tricks of the trade” that outsiders would find incomprehensible. “If you want to do business in Myanmar, then you have to get the law of the jungle straight in your head,” says this businessman.

He once owned a small auto repair shop in Hsinchu. Following the failure of his marriage and his business, through an introduction from some friends he packed up his kitbag and came to this exotic land, virtually unknown to Taiwanese, to take a second shot at a business career. After knocking around for 19 years, he has had considerable success, and today his vehicle-parts business has annual revenues of NT$60 million and is growing at 10–20% per year.

“If I had never left Taiwan, I still would be just a grease monkey repairing cars,” he says with a laugh. A lot of his relatives tell him that he can retire now and come back home to enjoy his wealth, but he says: “I’ve been laying the groundwork in Myanmar for such a long time, and now things are finally changing, so now’s the time to reap the harvest.”

Myanmarese are devout Buddhists, and it is common to see monks begging alms. It is said that men in Myanmar spend time as monks in monasteries at least twice in their lifetimes.

In addition to the Taiwanese businesspeople already in Myanmar, there are also many who have been showing great interest since liberalization began. In fact, like hawks circling in the sky searching for prey, leading businesses around the world have been keeping an eye on this country.

This year, flights from Bangkok to Yangon have been filled with a mini-United Nations of passengers dressed in the suits that are the universal uniform of businessmen everywhere. They are swarming in from Europe, North America, Japan, Korea, India, and Southeast Asia to see what’s happening here in Myanmar.

Even the United States, which has not yet fully lifted economic sanctions on Myanmar, organized the first-ever business group to visit the country, back in mid-July of 2012. The group included representatives from Boeing, Google, GE, General Motors, Coca-Cola, Federal Express, and other mega-corporations.

Kristy Hsu, program cordinator in the ASEAN Studies Center at the Chung-Hua Institution for Economic Research, received an invitation in early September to attend the “Myanmar Investment Forum,” personally hosted by President Thein Sein. She notes that 600 corporations from around the world organized delegations to the forum, and finance and economic officials from the Myanmar government engaged in intensive interactions with them throughout their stay. “Everyone is hoping to get out in front on the business opportunities presented by liberalization in Myanmar.”

Naturally Taiwanese businesspeople, who have always been known for their adventurous spirit, are deeply interested in this land that has been called “the last place anywhere in the world untouched by investors.” In 2012 alone, at least 50 groups of businesspeople have visited Myanmar, including representatives of major companies like President Enterprises and the Pou Chen Group.

So what is it about Myanmar that has everyone so fired up?

Rich in natural resources, Myanmar is becoming a new focal point for global capital. The photo, taken at a plywood factory just outside of Yangon, shows government officials marking trees with place-of-origin labels.

Norman Chang, president of Thai-Taiwan Business Association, who has organized groups of Taiwanese investors in Thailand to visit Myanmar, sums it up in a single sentence: “Lots of land, a large population, totally undeveloped sectors of the economy, and abundant resources—there are not many moments in history when a country like this, with so many untapped opportunities, finally opens for business!”

We can start with Myanmar’s geographic location. It sits at the hub of three rapidly growing economic centers: mainland China, India, and Southeast Asia. With an area of 677,000 square kilometers, it is about 19 times as large as Taiwan. Its population is nearly 60 million, making it the fourth most populous nation in the Association of Southeast Asian Nations. It has rich reserves of petroleum, natural gas, and minerals. It also ranks number one in the world for both quality and quantity of rubies, sapphires, jadeite and nephrite. And when you also consider the dense teakwood forests and the fisheries resources of its long coastline, it would be no exaggeration to say that the people of Myanmar are sitting on a mountain of riches.

Another major reason why people are optimistic about Myanmar is that it has a cheap and abundant labor force. In mainland China, basic wages have multiplied several times over, and monthly salaries in coastal cities are fast approaching US$220 per month. In Vietnam, which like Myanmar is a late-developing member of ASEAN, monthly pay has already surpassed US$100 per month. By contrast, basic wages in Myanmar are about US$60–80 per month, a quite competitive rate.

In addition, Myanmar boasts one very unique advantage, which is that crime is very low. The main reason is that the people of Myanmar are devout Buddhists, and believe in karma and fate. Moreover, since the country has opened to the outside world relatively late, people are still not very materialistic, and cases of theft or robbery are extremely rare.

A number of Taiwanese businesspeople have said that each time payday comes around, even if the company accountant goes to the bank alone to bring back the entire payroll in cash, there is little concern of anything untoward happening. Still less is there any need for Taiwanese businesspeople in Myanmar, unlike those in the Philippines or Indonesia, to hire bodyguards to accompany them wherever they go.

Taiwanese businesswoman Michelle Hou, who runs a jewelry business in the Bogyoke Aung San Market, the most popular tourist destination in Yangon, says that she quite often leaves her employees to put away the extremely valuable jadeite and nephrite in the shop at the end of the day, and she has never once had to worry that anyone would try to take any home with them.

This new shopping center symbolizes Yangon’s growing prosperity, but behind the bright façade lurks the threat of inflation.

Another important reason why foreign businesspeople are optimistic about Myanmar is the large domestic market. This is especially the case for manufacturers who specialize in consumer products for daily use or food products, and they are moving particularly fast.

Taiwanese businessman Jason Kao, who first arrived in Myanmar in 1992, started off by importing building materials and also got involved in food processing (such as snack foods), but profits were limited. But at the end of 2000, using personal contacts through the family of his wife Pu Qiulan, a Myanmar native of Chinese ancestry, he crossed over into the tobacco business, and only then did his company operations really take off.

“Don’t assume just because per-capita income is low that there is no consumer demand!” declares Pu. For example, in Myanmar cigarettes, milk tea, and betel nuts are daily necessities that nearly all people consume no matter how poor they are. It is for this reason that starting this year, the Kaos also moved into the market for pre-mixed powdered milk tea.

Kao points out that milk tea remains a very popular beverage in Myanmar, an enduring legacy from the era of British colonial rule. Right now, the general custom is to stop on the street and buy a cup of fresh-brewed tea from a vendor. “But in the future, as Myanmar develops into an industrialized society, the number of office workers and office buildings will grow, these street stalls will disappear from the main roads, and anyway people will be working inside most of the day. Premixed powdered tea, which you can have any time by just adding water, is just the product needed to satisfy the demand for tea in the absence of street stalls.”

Taiwanese businesspeople have also taken steps to enter other sectors, including instant noodles, chicken farming (with a unit price of NT$6–7 per egg in Myanmar, profits are astonishing!), and even livestock breeding. The bottom line is that although the gap between rich and poor in Myanmar is enormous, everyone still needs consumer products to get through daily life, so there are excellent prospects for companies that can cast their net to cover the greatest number of consumers across different social strata.

Everyone wants to get a bite of the sugarcoated Myanmar market. But while on the surface the opportunities appear virtually limitless, there are serious investment risks lurking in the undercurrents.

Caught between tradition and modernity, isolationism and openness, the new Myanmar government will be tested by the influx of foreign capital, the gap between rich and poor, and the growing pains of reform.

For one thing, the mind-bogglingly high prices can be a splash of cold water in the face for the overexcited potential investor. It turns out that Yangon, despite low income levels, is ranked as the 35th most expensive city in the world to live in according to a recent survey released by Mercer, a US-based global consulting firm. In fact, it ranks higher than Milan, Paris, and Rome!

As one Taiwanese business person warns: “When you come to Myanmar, the first thing you have to do is dump the notion that low incomes mean low prices!”

Myanmar has virtually no industry of its own, relying on imports for many daily necessities, and things are more expensive than one would expect. The military had no policies to keep prices down, and a simple bowl of noodle soup from a street vendor costs NT$40–50, while the influx of foreign visitors has driven a room in a two-star hotel with no amenities up to US$85 per night.

The sharpest price increases have come in real estate, which has skyrocketed since foreign investors began pouring in.

A Taiwanese businessperson who first started doing business in Myanmar 20 years ago suffered losses year after year because of fluctuations in Myanmar’s exchange rate. (In 1993, the kyat traded against the US dollar at 120:1. By 2009 the rate had fallen to 1400 to the dollar. At present it has recovered somewhat, trading at about 850:1.) But his fortunes have turned around overnight, thanks to the sharp rise in the price of real estate in Yangon over the past two years.

He says that the price of residential housing in Yangon has increased 10 times over in the past year alone, while the price of industrial land is now three to five times what it was. And sometimes even if you have cash in hand there is no land to be had: For example, at the most well-equipped and popular industrial parks like Mingaladon and Hlaing Thayar, every square inch of space has long been rented out occupied.

Recently the Myanmar government, taking note of the real estate bubble in Yangon, has raised the tax on property deals to 37% in an attempt to slow the rise in housing prices.

Traffic jams are getting worse by the day in Yangon, while billboards advertising multinational corporations are popping up all over the place as foreign capital pours into Myanmar. Everywhere are signs that the times are a-changing.

Like all countries in the earliest stages of development, Myanmar has a very poor infrastructure.

For example, electricity is in short supply, giving rise to a popular pun among Chinese, for whom the country name (“Miandian” in Mandarin) has the same pronunciation as “no power.” Most power in Myanmar is hydroelectric, and since there are dramatic differences in precipitation in different seasons, electricity supply is correspondingly unreliable. Not only does virtually every household have its own generator, each and every electrical appliance has to have a surge protector so that they do not get damaged when electricity flow fluctuates.

Albert Fan, a researcher at the Taiwan External Trade Development Council (TAITRA), visited Myanmar in mid-July. He says that Myanmar is not yet suitable for industries that require a reliable, large supply of power. Because power generation is simply too expensive, such industries would be unable to turn a profit. In addition, there is no running water, so that manufacturers that need high-quality water—such as those making flat panel displays or doing textile dyeing—are not the kinds of firms who should invest in Myanmar.

On top of power and water issues, companies should also consider the poor quality of the roads and the primitive port facilities when mulling whether or not to set up a factory in Myanmar.

Liu Chao-fu, general manager of the plywood division at Chin Su Myanmar Company, says that it takes at least two months for wood to get transported from where it is chopped down, to the sawmill in Bago just north of Yangon. And when you also consider that local labor is habitually inefficient, “The nominal per-day costs may look cheap, but when you consider how much time things take, Myanmar must have the highest transportation costs in the whole world!”

The ferry boat approaches the quay, and people jump off the crowded vessel helter-skelter and hurry off in various directions. What will be Myanmar’s next port of call?

Besides problems with the overall investment climate, Taiwan businesspeople who are thinking of coming to Myanmar must pay particular attention to the “special situation” here.

Myanmar has been receiving aid from mainland China for a long time now, and is by no means inclined to be friendly to Taiwan. There has never been any development of bilateral relations between Myanmar and Taiwan, and there are no representative offices in either country.

Without the support of the government, Taiwanese firms have had to go it alone in Myanmar. It was only 10 years ago that the first organization of Taiwanese businesspeople—the awkwardly named “Myanmar Golf Development and Charity Friendship Association,” which today has about 100 members—was set up. (A member of the group explains that the former repressive military regime was extremely averse to any kind of non-governmental organization, so the Taiwanese businesspeople opted for this moniker to avoid unnecessary problems.)

Because the two governments have no formal relationship, Taiwanese businesses have always had to use indirect methods to invest here—either operating under someone else’s name, or investing via a third territory. There have, as a result, been endless disputes over nominal owners seizing property belonging to the actual investors.

George Tseng, vice-chairman of the “golf association,” makes it a special point to advise potential investors not to use the old model of operating under someone else’s name. He recommends that they first prepare sufficient capital, then build up tight interpersonal relationships with influential people in Myanmar, and only then invest. Even then, they should stick only to industries with which they are very familiar. Otherwise, you could easily end up like so many who have come before, of which it is said, “A hundred come, ninety-five go back home.”

Looking to the future, as Myanmar slowly opens up to the outside world and liberalizes its domestic policies, there is hope that the economic restrictions faced by Taiwanese will dissipate. Thus, says Kristy Hsu, who has conversed many times with officials, “Myanmar has already taken note of the wealth that Taiwanese businesses have brought to Vietnam, and they hope that Taiwanese will reproduce that experience here.”

Henry M.J. Chen, the ROC representative in Thailand, says that recently they have been actively helping Taiwanese businesses in Myanmar to “straighten out the name problem,” and at the end of this year the “golf association” will formally be renamed to clearly identify it as the umbrella organization representing Taiwanese businesspeople. In addition, TAITRA, which helps Taiwanese firms expand into markets worldwide, plans to set up an office in Yangon, and Taiwanese businesses can look forward to the day when they no longer feel “orphaned.”

Foreign investors are always impressed by the honesty and friendliness of the Myanmarese. The photo shows two women working in a plywood factory.

Myanmar’s Foreign Investment Law, which governs the rights and interests of foreign capital in the country, is currently being reevaluated and amended. Because President Thein Sein was not satisfied with the most recent amendments produced by the legislature, believing them to be still too conservative, he has returned the bill—for the fourth time—to the parliament.

Kristy Hsu relates that most foreign firms are waiting until the new legal framework is in place, and the rules on joint ventures, capital limits, and incentives are clear, before deciding how, and how much, to invest. “There is still an ongoing struggle in Myanmar between the forces of conservatism and liberalism, which is why the amendment process has been extended again and again. But frustrating as this is, from another point of view, isn’t the adoption of a law through a formal legislative process rather than by the will of a strongman a positive sign that Myanmar is making progress toward democracy?”

So, is this the best moment to make your own move into Myanmar?

Naturally all business decisions include an element of risk. Myanmar is lifting its veil of mystery, and is like a Cinderella waiting for some princes (of industry, that is) to transform her. Of course there is one big difference with this metaphor: Myanmar-as-Cinderella has her own vast dowry of resources and potential markets! In any case, if you want to be a successful suitor, you had best be well prepared, for, as in all transformative eras, it can be the best of times, and it can be the worst of times.

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