Opportunities galore in Asia's last major frontier market

In 2015, Myanmar's graduation from military pariah to semi-democratic success will face its toughest test.

The ruling Union Solidarity and Development Party, the successor to the old regime, is staring down an electoral barrage. Its sparring partner, Aung San Suu Kyi's National League for Democracy, is likely to spark a ballot-box stampede, and ethnic minority parties are queuing to take care of the rest.

The outcome of this election late in the year will show just how far the country's political development has come. It is also easy to get excited about Myanmar's economic prospects.

Over 50 million people make it Southeast Asia's fifth largest country by population, spread across a patchwork of hills, valleys and plains nestled in the shadows of China and India.

A jaw-droppingly attractive place, Myanmar has great prospects as a tourist destination. Foreign visitor numbers jumped to 3 million in 2014. Regular flights from every corner of Asia have been scheduled to meet the new demand. The long border with Thailand, and the shorter one with Bangladesh, set off a coastline that, in its best corners, simply defines tropical paradise.

Over the horizon are the off-shore oil and gas fields, some of which are already pumping. In the past three years these exports earned the country more than $11 billion.

But Myanmar's decades of relative isolation have meant that elsewhere in the economy there is work to be done. People remain poor, among the poorest in Asia, but also proud of what their country can offer.

The fact is they struggle with substandard infrastructure. The country has only one real highway, and it was built in such an erratic fashion that every second corner has the wrong camber. Elsewhere, the wet season erodes the hard-won integrity of roads, bridges and railways. Existing airports struggle with the rapidly increasing number of passengers.

Even today, electricity only reaches about one third of the population. Fixed-line telephones and dial-up Internet connections never got beyond the big cities but a new boom in mobile telecommunications is trying to fix the huge hole in connectivity.

Mobile phones are now cheaply and widely available, with Norwegian and Qatari companies building state-of-the-art networks to meet demand. They are soon to be challenged by a Myanmar-Vietnam joint venture that promises to add even more competition to what is becoming a crowded telco market.

Foreign banks are also receiving permission to launch local businesses. ANZ is the sole Australian player for now. It is joined by major Chinese, Thai, Malaysian, Singaporean and Japanese banks; all eager to find a way to make money in what analysts suggest is Asia's last major frontier market.

It is at Myanmar's edges that this economic potential is most apparent. Hydroelectric projects are earmarked to support the new industries being imagined for far-flung Special Economic Zones. Myanmar's mines are already renowned for the quality of their precious resources, with jade and rubies of the very highest quality, but mining practices are basic.

There is a clear need for smarter and safer practices, and for future developments to more fully appreciate the needs of nearby communities. Getting it wrong in Myanmar has consequences.

Chinese investors have already faced major protests against their developments. Postponements and delays have been the order of the day. Over time, such issues are likely to be resolved but the expense and aggravation can't be ignored.

This is particularly apparent at the government level. The new capital of Naypyitaw has been carved out of scrubland and paddy field over the past decade.

Like a Southeast Asian version of Canberra, but on steroids, the new city is the place where decisions are made and deals done. The power brokers who created conditions for Myanmar's international rehabilitation are still eager to find opportunities for foreign businesses, but they are also wary of big promises.

Their experience of trying to get the economy moving while juggling an incomplete political transition has meant they want to see real commitment from international partners.

The main players in Naypyitaw have each taken significant risks to get where they are. Even after 2015, when there might be a new and more democratic government, fear of being exploited by aggressive outsiders will remain.

Happily, Australian investors enjoy a good reputation. The Myanmar Times, which is the country's best newspaper, publishing weekly in English and Burmese, has long been a Myanmar-Australia joint venture. Its editorial suites echo with Australian accents.

Woodside has a growing range of major investments, and Australian legal, accounting and advisory firms are also jockeying for position.

From the Myanmar perspective Australia is judged a good partner: technologically proficient, culturally aware and economically ambitious. It helps that a succession of Australian governments has worked diligently to support Myanmar's chances of greater peace and prosperity. Our diplomats have set a standard for brokering strong and effective relationships.

There is now genuine affection for Australian input, which will only grow in the years to come. A new wave of enthusiastic Australian students, development workers and entrepreneurs are seeking out opportunities to make their mark.    

As Myanmar opens up, it would be unwise to ignore the possibilities.

Dr Nicholas Farrelly is Managing Partner of the Southeast Asia practice at Glenloch Advisory (www.glenlochadvisory.com) and a Fellow at the Australian National University. He spent the first half of 2014 in Naypyitaw, leading a research project about Myanmar's new parliament.