Myanmar: fertile but contested soil for Vietnamese investment

Late last month, local private diversified group Hoang Anh Gia Lai inaugurated its $440 million five-star Melia Yangon, a part of Hoang Anh Gia Lai Myanmar Centre compound.

Simultaneously, state-owned banking giant Bank for Investment and Development of Vietnam (BIDV) officially launched its Yangon branch within the same compound.

Tran Bac Ha, chairman of the Association of Vietnamese Investors in Myanmar (AVIM), said that local telecom giant Viettel is making the final procedural preparations to expedite a joint venture (JV) project in Myanmar’s telecom sector, putting a total $735 million into the project.

This sum makes up 49 per cent of the JV’s total capital contribution.

If the JV project is licensed, Vietnam’s total investment value in Myanmar could surpass $1.43 billion, turning it into the seventh largest foreign investor in the country and the second largest ASEAN investor in Myanmar, following Thailand.

To date, a slew of leading Vietnamese players have planted a foothold in Myanmar, including Viettel, Hoang Anh Gia Lai (HAGL), BIDV, and tech giant FPT, to name but a few.

Many members of the Vietnamese business community took part in a recent networking forum “Four countries-One destination” in Myanmar, in search of development opportunities.

Myanmar is dubbed as the last ‘fertile soil’ for investors in the region, but doing business here is by no means easy.

Though that country has just opened its doors to foreign investment, leading global players have already started establishing themselves.

Besides, Myanmar’s government has introduced strict regulations to safeguard local producers.

For instance, in the field of banking all foreign branches must deposit fairly big sums with no interest rate at the Central Bank of Myanmar (CBM). In addition, foreign banks can only operate restricted services in the country, and are not allowed to serve individual or corporate local customers, unless they have cooperative ties with CBM.

Meanwhile, Myanmar operates an expansive banking network consisting of four state-owned banks, 24 local banks, and 13 branches and 49 representative offices of foreign banks.

Competition among market players in other fields has also been stiff.

Accordingly, when Viettel steps into Myanmar’s telecom market, besides local telecom giant Myanmar Posts and Telecommunications, the telco must go head-to-head with Norway’s Telenor and Quatar’s Ooredoo.

Last year, Viettel reaped about $2 billion in revenue from Myanmar, while Telenor earned more than $3 billion and Ooredoo nearly $9 billion.

Before Viettel worked its way into Myanmar, the streets there were already overwhelmed with advertising billboards of the two rival foreign telecoms.