Feb 22, 2013

Vietnam businesses eyeing Myanmar

The Vietnamese real estate developers, who have bogged down in the domestic market because of the weak domestic demand, seem to have found the way out for themselves when realizing the great potentials in Myanmar.

While the domestic weak demand has forced Vietnamese real estate developers to halve the apartment sales prices, the demand is very high in Myanmar, while the supply is short. The foreseeable sharp investment increase in the South East Asian country in the near future would certainly lead to the higher demand for offices.

Analysts have reported that the office leasing fee and apartment prices would increase by three folds this year in comparison with 2012.

Hoang Anh Gia Lai Group, a conglomerate which has invested in many different business fields, from rubber plantation to real estate development, is moving ahead with its $300 million project on a complex in the ancient capital city of Yangon.

The owner of Hoang Anh Gia Lai Group, Doan Nguyen Duc, is a well-known Vietnamese businessman in the world, who stated that he wants to become a billionaire by 2014 at the latest. Though 2012 was really a very tough year for the businessman, his business did not go bankrupt as people thought.

Meanwhile, CT Group is following legal procedures before it kicks off the construction of the two projects capitalized at $150 million in total.

Tran Kim Chung, President of CT Group, said the business has built up a firm distribution network in Myanmar to get well prepared for the landing of foreign goods in the market.

The group now serves as the exclusive distributor for 50 Vietnamese enterprises in the potential market, believing that Vietnamese products would be selling well there, because they have high quality and reasonable prices.

After Myanmar approved the new foreign investment law, international investors have been eyeing the market with great interests. A lot of the investors, including Vietnamese, have come there to explore the market.

Myanmar, in the eyes of international analysts, like any other new emerging markets, still lacks a perfect legal framework, while the infrastructure system remains very poor. Meanwhile, the low readiness of people and the business circle is still a big challenge to investors.

However, it is the problems which could turn into the opportunities for Vietnamese businesses to grab.

“This would be a great opportunity for Vietnamese businesses to exploit to push up the investment in Myanmar. Vietnamese have got used to the risky investment environment with changeable policies when doing business in the home country,” said Pham Chi Lan, a well known Vietnamese economist, meaning that Vietnamese businesses would be able to manage in difficult circumstances.

A report by the Ministry of Planning and Investment showed that in 2012, Vietnamese businesses invested $1.2 billion abroad, but Myanmar was not a choice for the investors.

However, things would be quite different in 2013 with Myanmar being expected to become an attractive investment destination. The county has cultural similarities with Vietnam, advantageous geographical position, while local people have great sympathy with Vietnamese.

Therefore, Vietnamese businesses are believed to be able to compete on par with international investors in the fields of consumer goods, machines and equipment, building materials, farm produce and infrastructure development.

Source: Vietnamnet Bridge