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GE Shifts from Thai Banking to Myanmar Infrastructure

Date: 20/11/2012
Source: The Motley Fool
GE Shifts from Thai Banking to Myanmar Infrastructure

While GE moves away from banking and finance, it is looking to expand in Myanmar. After 60 years of crippling isolation from the U.S. and much of the E.U., sanctions have been lifted in the past year. Within days of President Obama giving the green light to American firms to invest in Myanmar, GE inked a $2 million deal to provide X-ray machines to a local hospital.

Myanmar has a population of approximately 60 million, has lived in isolation for more than 22 years, and is extremely under-developed in virtually all sectors. With $13 billion in investments, China is the biggest source for FDI in Myanmar, followed by Thailand with $9 billion. Opposition leader Aung San Suu Kyi visited US on Sept. 8, but she was quick to reassure her country’s long time ally that her visit should not “in any way be seen as a hostile step towards China.” Nonetheless, Myanmar offers tremendous opportunities for growth for US firms in every sector, particularly due to its gas reserves and raw material assets. The Asian Development Bank has predicted that its per capita income (PPP) could triple by 2030. The severe lack of infrastructure means a shortage of skilled labor but it also represents nearly virgin investment territory.

Other companies are also resuming their operations in the country. Coca-Cola (NYSE: KO) has sent its first shipment to the country since 1962 while Pepsi (NYSE: PEP) has signed an agreement with Diamond Star Co. to distribute its branded products to the country. Coke was preparing months in advance for the opening up of Myanmar. Both Coke and Pepsi will find strong demand not only for soft drinks but for bottled water. It is a verity in these frontier markets that fresh water is a rare commodity. Water purification will be one of the first industries to gain traction.

A month ago, GE opened its first office in the country. On 24th September, the company announced that it is leasing two jets to Myanmar’s national airline. However, that growth in Myanmar is going to be “very slow;” therefore investors shouldn’t expect any significant gains coming from there in the near future. This is a long-term investment at the infrastructure level.

Topic: FDI in Myanmar
Did You Know?
Myanmar is very rich in natural resources like petroleum, timber, tin, antimony, zinc, copper, tungsten, lead, coal, some marble, limestone, precious stones, natural gas and hydropower. ... More

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