Myanmar is on the radar for possible investment by Vietnamese companies, particularly now that western powers appear ready to lift some important sanctions on the once-isolated country.
The European Union last week proposed lifting almost all sanctions except an arms embargo. Washington may soon lift a ban on exports of US investment and financial services, starting with agriculture, telecoms, banking and tourism.
While large amounts of foreign capital are forecast to pour in as sanctions are lifted, many foreign businesses remain cautious and will likely gauge the government's performance on its reforms before deciding to commit big sums.
However, Vietnamese companies have few qualms about doing business in Myanmar and hope to take advantage of fledgling opportunities.
Last month in Hanoi, authorities announced a US$100-million agricultural processing plant investment by Vietnam's An Giang Plant Protection, the asset manager VinaCapital, and Eden Group, Myanmar's largest construction company.
Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam, encouraged his countrymen to pursue investments in other areas of "the last golden destination in Southeast Asia".
The BIDV opened a representative office in Yangon last year and will seek a permit to open a joint-venture or 100% foreign-owned bank in Myanmar as soon as the country opens its banking sector.
Also thinking big is the Vietnamese property developer Hoang Anh Gia Lai JSC, which has announced a $300-million project to build a shopping, office and residential complex in Yangon.
In the telecommunication sector, state-owned giants Viettel and VNPT are considering seeking licences to operate in Myanmar, which is expected to grant four new telecom licences by the end of this year.
Tran Phuoc Anh, the Vietnamese trade counsellor in Myanmar, says Vietnamese enterprises should increase their business dealings with Myanmar or risk losing out to foreign rivals.
Mr Anh said foreign investors now could obtain investment licences in only two weeks instead of six months as previously. Tax exemptions offered to foreign businesses are being increase to eight years from five, and land leases are being extended to 50 years from 30.
Myanmar President Thein Sein, during a visit to Hanoi in March, agreed with his Vietnamese counterpart on a goal to lift bilateral trade to $500 million in 2015 from $167 million last year.
Vietnam had 15 investment projects worth $514 million in Myanmar at the end of 2011 and it is expected to increase direct investment to $2 billion by 2015.
Vietnamese companies have so far organised many fact-finding tours to Myanmar but very few projects have been granted licences by the government.
In the telecoms sector, no foreign operator is allowed to offer direct telephony services in a sector still monopolised by the state-owned Myanmar Post and Telecommunications.
However, a few Thai and Chinese companies (Huawei and ZTE) are active as equipment suppliers, according to research by Nomura Securities.
Wireless penetration in Myanmar is just 4%, fixed-line penetration is 3% and internet penetration less than 1%. The country aims to increase wireless penetration to 50% by 2015.
Nomura identified Singapore's SingTel, Malaysia's Axiata and Thailand's Samart as potential suitors in the Myanmar market as their strategies favour investments in low-penetration and high-growth markets, though admitting the timing is uncertain.
China Mobile, Viettel and VNPT have all also expressed interest in direct network investments.
Viettel, the 11th largest mobile operator in Asia with 68 million subscribers, has a presence in five countries outside Vietnam: Laos, Cambodia, Mozambique, Haiti and Peru. Though it views Myanmar as a very good investment destination, it also is wary of bottlenecks in its current legal system.
However, Myanmar's telecoms market is set to open up to foreign investment through a new communication law that will create four licences, available both to local and foreign investors.
The new law was sent to Myanmar's attorney general in February and is awaiting his approval.
However, the deputy director of the Post & Telecommunications Department, Than Htun Aung, told the International Financial Law Review that he did not expect the law to take effect for six to 12 months, as it also required approval from the cabinet and parliament.
Source: Bangkok Post