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Gold rush to Mandalay

Date: 12/02/2013
Source: TTR Weekly
Gold rush to Mandalay

MANDALAY, 11 February 2013: Myanmar’s government has allocated land for foreign investors to build 100 hotels and for local investors to build 192 hotels at the new Tada-U Hotel Zone near Mandalay.

The hotels will be part of a massive industrial park and business district that will be built from scratch. Foreign investors will be encouraged to build factories to tap low labour costs. Mandalay is the nearest gateway city to Bagan famous for its ancient temples and chedis.

Myanmar Tourism Federation said foreign-invested hotels will be built on 236.5 hectares and hotels built by domestic investors will cover 410 ha.

The Tada-U Hotel Zone covers about 2,221 ha and is expected to draw US$560 million in investment.

“It will be developed by Myanmar Tourism Development Co Ltd, a company established by the federation,” the official said.

In addition, shopping malls will be built on 24.6 ha, while 13 ha has been set aside for a banking and financial services.

The project also includes bus stations, train stations, harbours, golf courses, vocational training schools, a night market, handicraft village, entertainment zone, and sewage treatment factory.

After recent political changes, Myanmar’s new government has been making attempts to reform existing investment legislation to promote the tourism industry. There is a gold rush frenzy to grab business opportunities in almost every sector including mining, oil and gas, transport banking, hotels and tourism.

Currently, tourism is booming mainly on the back of business travel demand that has prompted hotels to treble daily rates in Yangon. That trend will continue as long as there is a shortage of rooms.

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Myanmar has a competitive advantage due to its rich natural resources and a strong cultural heritage that remains intact.

Its land-lease law may be extended to 70 years. It could start at 50 years and then offer two extensions of 10 years each. The existing law allows a lease of 60 years, starting at 30 years and then two renewals of 15 years each.

In the big picture, hotel companies from Thailand have invested US$263.25 million (Bt8.3 billion) in Myanmar, to build 1,896 rooms in 11 hotel brands, including Andaman Club, Kandawgyi Palace, Nikko (Chatrium), Mandalay Hill and Pearl Laguna.

Investments from Singapore are the highest in the hotel industry at about US$597 million, followed by Thailand, Japan with US$183 million, Hong Kong with US$77 million, Malaysia with US$20 million and Britain with US$3.4 million.

In terms of investment from Thailand, the power sector ranks the highest with about US$6 billion, followed by oil and gas at US$2.19 billion, manufacturing at US$630.84 million and the hotel and tourism industry.

Myanmar currently has six domestic airlines flying from Yangon to Nay Pyi Taw, Bagan and Mandalay.

It also has 759 licensed tour companies, of which one is wholly foreign owned, 15 are joint ventures and 743 are local firms.

At present, there are 16 international airlines flying to the country – 15 to Yangon and one to Mandalay.

Topic: FDI in Myanmar
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