Sep 4, 2014

Meet the New Rich…in Myanmar

YANGON, Myanmar — On this balmy Saturday evening at Yangon's Wardan jetty, dock workers have momentarily stopped loading and unloading crates from rickety fishing boats. Vegetable sellers that line the dusty road by the Yangon River are sitting quiet, and trishaw drivers, too, have stopped shouting out at passersby to offer them rides.

Instead, they are watching amused—and confused—as socialites from Hong Kong, London and beyond hike up their flowing skirts and gingerly tread on the dirt track, careful that their heeled shoes stay clear of potholes and muddy patches. Avoiding the oversized rats burrowing through garbage nearby, this sampling of the world's beautiful people is heading to Transit Shed 1, a rusting industrial warehouse whose corrugated iron roof and green exterior blends in seamlessly with the ramshackle jetty that surrounds it.

Yet the scene inside Transit Shed 1—or TS1, as its creators prefer it be called—is a world away from the rest of Myanmar, the poorest country in Asia after Afghanistan and Nepal. Contemporary art work featuring children with Burmese mythical dragons lines one wall, while a Who's Who of Myanmar society—everyone from former political prisoners to ambassadors—sip champagne with a host of young, wealthy, globetrotting compatriots.

It is opening night at the venue, part exhibition space and part retail venture. The brainchild of Ivan Pun, the 29-year-old Oxford-educated youngest son of one of Myanmar's richest tycoons, TS1 hopes to inject a new hip glamour to this decaying city that has undergone a celebrated political and economic transition in recent years after almost six decades of military rule.

And with hip, comes some eye-opening price tags. In an adjoining room, a bench made of teak from Myanmar's Shan state sells for $2,500. Blouses and other gifts carry labels for TS1's signature brand, MyanmarMade. Coming soon: The retail space will host a high-fashion showcase including designers like Proenza Schouler, purveyor of thousand-dollar satchels, and Prabal Gurung, the Nepalese-American fashion designer whose designs have been worn by the likes of Michelle Obama and Kate Middleton.

"We want to see if Myanmar is ready for something like this," Pun said later after the event, dressed in a black T-shirt and skinny jeans. "There is a thirst in consuming and buying that is not being satisfied."

Pun's vision is just the beginning of a new Myanmar, featuring glam and glitz that is funded, spearheaded and enjoyed by repatriates that escaped the country during its days under brutal military control. That dictatorship ended in 2011, when a new, nominally civilian government assumed power, and since then its leaders have loosened restrictions on public gatherings and opened the doors to foreign investment, leading Western governments to lift most economic sanctions. Now that Myanmar is embracing Western-style consumerism for the first time in more than a generation, Pun and his compatriots are playing tastemakers.

It doesn't seem to deter them that the country's gross domestic product per capita works out to only $1,700 per year, compared to $62,400 in Singapore or $52,800 in the U.S., according to the CIA World Factbook. Just behind the TS1 retail space, children prowl through garbage looking for toys to play with.

People in Myanmar "have not yet developed taste as consumers," Pun says. It's like starting from scratch, he says. "Some markets are set in their preferences—like India and Indonesia—but here we can curate our offerings and bring designers that are interesting to fashion editors in London, New York and Paris rather than what is commercially available."

“ This vision is just the beginning of a new Myanmar, featuring glam and glitz that is funded and enjoyed by repatriates that escaped the country. ”
CUT OFF FROM the outside world for so long, tropical Myanmar is following a trail blazed earlier by countries such as Russia, Vietnam and China that unlocked new wealth when they embraced elements of capitalism after decades of isolation. Their openings spawned scores of first-generation millionaires and billionaires—some through legitimate businesses, others through corrupt or illegal means—and experts expect Myanmar to be no different.

The country's economic reforms are creating big new opportunities as authorities issue licenses for everything from banking to oil-and-gas exploration to mobile-phone networks. Wealth-X, a consultancy that specializes in tracking the rich, says there are currently only about 40 individuals considered ultra-high-net worth in Myanmar, with investible assets over $30 million. But it says this number could grow by more than seven times in the next decade—the fastest such pace of growth anywhere in the world, the consultancy says.

Signs of a New Money boom are already appearing. After prohibiting imports of foreign vehicles for years except for top generals, the government has eased restrictions, and now showrooms boast black Rolls Royce sedans and Jaguar sports cars. Residents see Ferraris, Bentleys, Porsches and even a Bugatti Veyron—the fastest street-legal car make in the world—alongside rusty taxis that would look more appropriate on a scrapheap.

Prices for prime real estate in Yangon, Myanmar's commercial capital, are skyrocketing. A modest two-story, four-bedroom house in the exclusive Golden Valley neighborhood rents for as much as $10,000 per month, real-estate agents say. Families with older colonial-era bungalows are tearing them down and replacing them with colonnaded mansions, while their 20-something kids gather in nightclubs ordering Johnnie Walker blue label whisky.

Myanmar also is popping up on the radar screens of private wealth managers and luxury-goods brands hungry for a new source of growth at a time when China is slowing down. Myanmar residents spent only about $1.9 million on wine last year, according to consumer-market research firm Euromonitor International, but sales are expected to more than double by 2018. After that, the sky's the limit. Myanmar is "the last economic frontier in Asia with significant growth potential," Euromonitor says.

"Even I did not realize how much wealth there was here," says the young Pun, whose father, a property and banking entrepreneur named Serge Pun, has seen his estimated net worth swell by $100 million to $600 million over the past year, according to Forbes magazine. "When you look at mass gatherings, weddings especially, and see the lines of Ferraris and BMWs outside—people are not shy to show off."

“ A big question is whether Myanmar can absorb this new wealth without seeding class tensions. ”
A big question is whether Myanmar can absorb this new wealth without seeding the kind of class tensions that at times have threatened to destabilize other emerging markets, including some of those—like Russia and China—that eschewed displays of wealth in earlier times. Just a few years ago, Myanmar's leaders frowned upon conspicuous consumption, and the few families that held significant financial assets mostly tended to squirrel them away in overseas bank accounts rather than flaunt them at home.

Now, locals say benefits from the country's opening are accruing often to elites with ties to the former military junta. Some Myanmar business leaders are still targeted by Western economic sanctions because of alleged ties to drug trafficking, corrupt government contracts or wasteful extraction of natural resources.

"All the black money that people were hiding is now coming out," says Cheery Zahau, a democracy activist from Myanmar's Chin state whose work with the United Nations has been recognized by the George W. Bush Institute. For the rich, Zahau argues, it is a competition—one buys a Ferrari, and the other buys a Bentley, one builds a five-story mansion, and the next family, a six-story mansion. "It is sick. We don't need the World Bank or the IMF, we need these people—these very, very rich people—to spend money in a way that is not ignorant."

The country's newly-rich say the picture is a little more complicated. After all, they say, can people be blamed for wanting to splurge a little after so many years of privation?

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Carl Moe Myint trains his sailing team at his father's sailing club in Yangon, Myanmar Photo by Kaung Htet for WSJ.Money
IT'S A BREEZY DAY in the midst of Myanmar's relentless monsoon season, and 29-year-old Carl Moe Myint is relaxing at the Yangon Sailing Club in a crisp blue shirt and black pants, his skin tanned from years on the waters off South Africa, Singapore and Thailand.

Founded in 1924 during the era of British colonial rule, the Sailing Club on a picturesque lake in the center of Yangon was ravaged during World War II, and again by a cyclone in 2008. More recently, its clubhouse, restaurant, bar and boat sheds have all been painstakingly restored, complete with wooden boards displaying names of past commodores—largely with funding from Moe Myint's family. The club now serves as a refuge for Myanmar's growing number of rich elites and expatriates—its membership increased by 30 percent in the past year—who enjoy relaxing surrounded by perfectly-clipped lawns.

Moe Myint's father, Michael Moe Myint, is a wealthy rare-book collector and sailing aficionado who also helms MPRL E&P Pte Ltd. Co., the largest privately owned oil and gas-services company in Myanmar. When 20 coveted tenders for offshore exploration were given out to foreign companies earlier this year, the elder Moe Myint's firm was a partner for four. (He and his company aren't targeted by Western sanctions, which prohibit business dealings with some individuals over links to the former military government.) The younger Moe Myint is focusing on other passions, he says.

"As long as our family is here, sailing will be here," Carl Moe Myint says as boats glide by in the background. Having returned from the Colorado School of Mines in 2008, where he majored in economics, Moe Myint now is working on an even bigger project than restoring Yangon's historic Sailing Club: helping turn Ngwe Saung, a coastal town four hours away by car, into an international sailing playground.

Central to the plan: the $17 million Ngwe Saung Yacht Club, a resort and yachting center his family launched last year at the far end of Ngwe Saung's nine-mile stretch of pristine sand. Built entirely with family money, it features an infinity pool overlooking the ocean, villa suites with verandas and a nightclub—all in an area where many residents still live in dilapidated wooden homes and only get electricity a few hours per day.

"Money was not the issue, we did this for the sport of sailing, and to make sure that with our revenue, the sport can survive here," he says in a flawless American accent.

Carl Moe Myint says he would like to develop the yacht club into a major marina in the next decade, with sailing enthusiasts from Myanmar and beyond parking their boats there.

"Because of reforms," he says, "there is a lot of wealth splashing around." The shame of it, he says, is that too few of Myanmar's rich want to spend money on developing their passions, and would rather spend it frivolously in nightclubs. Investments in public amenities like art galleries or public parks, much less major philanthropic initiatives, remain scant.

Other well-off residents concur. Patrick Robert, a 67-year-old French architect who has lived in Yangon for more than 20 years, says he has been frustrated by how little local elites seem to care about spending their money well. A former museum curator, he now designs homes, hotels and restaurants for wealthy clients around the world and works on preservation projects.

He is helping restore several of Yangon's decaying, mildewed colonial structures from the early 1900s. But, sitting in his Golden Valley bungalow surrounded by servants in exquisite uniforms of tight-fitted cap-sleeved shirts and Myanmar longyi sarongs, mixing glasses of Hendrick's gin and tonic, he says the demand for his designs is largely coming from expatriates and Western businessmen who want a Yangon base for new business ventures—not Myanmar's local gentry.

In April, Robert says, he helped organize a trip for a wealthy Myanmar man and his wife and two children to Europe—a man, he says, who was recently removed from Europe's sanctions list but is still blackballed by the U.S. Since it was the man's first trip to Europe, he wanted Robert to connect him to all the splendors the continent had to offer.

Robert arranged a private viewing at the Louvre in Paris during early morning hours when it is free of tourists, he says. But this businessman was not interested.

"One week in London, Rome and Paris and everything was buy, buy, buy. Chanel this and Louis Vuitton that, just buy buy buy," he says. The Myanmar millionaire, he says, was most grateful that Robert helped him procure a Hermès Birkin bag for his wife in a single day, rather than the usual wait of anywhere between three weeks to several years for an accessory that costs as much as $80,000.

"This class of new wealthy, they are giving me a lot of problems," he says.

“ Too few of Myanmar's rich want to spend money on developing their passions, and would rather spend it frivolously in nightclubs. ”
IN DOWNTOWN YANGON, Ivan Pun leans back in a brown leather swivel chair at the Pun+Projects office, the firm he founded to work on what he calls "luxury retail concepts," starting with Transit Shed 1.

A pencil holder is filled with a dozen perfectly sharpened black pencils. Copies of stylish magazines like Monocle and Apartamento lie perfectly arranged on his desk. From his corner office on the 8th floor of the 11-story FMI Center—one of Yangon's only tall office buildings, built by his father to house the head offices of the Serge Pun & Associates Group—the younger Pun overlooks the streets of downtown Yangon, its tattered buildings drenched with rain and the golden Sule Pagoda sparkling in the distance. (Like Moe Myint, Pun's family is not targeted by Western sanctions).

On this Monday, he is chairing a meeting on TS1, discussing every aspect of the project from sales of art to upcoming exhibitions and the logistics of a restaurant—called Port Authority—in the shed just a few doors down from the TS1 space. Scheduled to open soon, the shed is facing a problem familiar in Myanmar: how to get electricity in to power the restaurant. The discussion then veers to how to keep flies out of TS1, a constant struggle since garbage litters the jetty.

He is interrupted three times in 10 minutes by his constantly ringing phone, and at one point in the meeting, he juggles two calls at once—one with the director of TS1's art exhibitions in Beijing, and another personal call on his cellphone. His staff—all in their late 20s and early 30s—clamor for his attention, as Pun signs off on every detail at TS1, from staff uniforms to how much of a discount to give on art as exhibitions come to an end.

Things are especially hectic on this day, Pun says, because he is just about to embark on a three-week trip to Hong Kong, Tokyo, New York and finally Brazil for the World Cup. In the U.S., he says, he will have the opportunity to check in on a pop-up shop in the East Hamptons, where products from his MyanmarMade brand are being sold all summer.

Pun says he has "a certain level of taste" from his time around the world that allows him to bring a variety of concepts to Myanmar. Growing up almost entirely in England, he was educated at the Cranleigh School, a boarding school in the town of Surrey, until he was 18. After making his way into Oxford University to major in Oriental studies, he dropped out in 2007—the major "didn't quite interest" him, he says—to pursue fashion and music. This brought him to Condé Nast in midtown Manhattan, where he worked on special editorial projects at Vogue magazine and another, now-defunct publication run by Anna Wintour.

He returned to Asia in 2009, working for a while in Beijing on a menswear line with some friends. Eventually he was lured back to his homeland of Myanmar in 2011, working for his father's conglomerate, which also has interests in manufacturing, retail and virtually every other major sector in the country. His last gig was in corporate development, before he broke off to set up Pun+Projects.

Last year, he hosted a private screening of the "Great Gatsby" in Yangon attended by his friend, Baz Luhrmann, the movie's director. Next, he says, he might consider inviting Wes Anderson for a similar private screening of his latest movie, "Grand Budapest Hotel," or organize a larger film festival.

When W Magazine staffers made a trip to the country last year to produce a 20-photo spread by photographer Tim Walker, Pun was, of course, in the loop. The series, titled "Gilt Trip," featured model Edie Campbell wearing Lanvin-label clothes near the sacred Golden Rock, a Buddhist pilgrimage site south of Yangon, and jumping with Kayan tribal "long-neck" women with brass rings around their necks.

Later in the day, Pun rides in a large white Toyota 7203.TO +0.16% minivan to TS1, replying to emails on his phone in the backseat—an impressive feat considering that Myanmar's primitive telecom system doesn't support such services in most places. It's OK, though, because the van is kitted out with its own Wi-Fi.

At TS1, he inspects products from its new retail offering, including furniture from the avant-garde, Chinois-style luxury brand Lala Curio, a Hong Kong-based interior designer. He sits on a $16,500 couch and picks up a decorative item of peacock feathers stuck on a wooden block, checking its retail price. It is $65.

His hope, he says, is that he helps create an environment that "isn't just for Yangon, but is about what we believe is cool, and are bringing here to Yangon." And it certainly doesn't feel out of place in such a rough-hewn country, he says.

"It is not too early to start thinking about this" in Myanmar, he says, leaning back in his chair. "Wages are increasing, wealth is increasing—we don't know how long this is going to take, but it will happen.

Source: Wall Street Journal