More than three months ago, on April 21, amid great fanfare, Japanese Prime Minister Yoshihiko Noda at a Japan-Mekong summit pledged $7.4 billion in development aid to five Southeast Asian nations in an effort to promote cooperation with countries in the Mekong region. The prime minister also said Japan would forgive $3.7 billion of Myanmar’s debt as a way to support the democratic and economic reforms in Myanmar (aka Burma).

Understandably, Japanese companies — from construction and engineering to consumer products — and development and aid agencies celebrated the news, and the opportunity to enter or expand efforts in Asia’s newest frontier market. Japanese support for a special economic zone near Yangon, also known as Rangoon, could well also give Japanese firms a head start in winning business.

For Japanese and now Western companies no longer constrained by economic sanctions or public sentiment against operating in the once pariah nation, the question remains, however: Is this a “Burma bubble” or the start of a “Myanmar miracle”?

Fifteen years ago, the world’s eyes turned to Southeast Asia as what would become known as the Asian Financial Crisis unfolded across the region, ending a period of business euphoria about the so-called Asian miracle. How soon we forget.

In Thailand, after a decade of economic growth averaging 9 percent per year — by some measures the highest rate for any nation in the world at that time — the bubble was bursting. Without sufficient foreign currency reserves to defend the Thai baht, the Thai government in July 1997 was forced to float its currency. From a peg of 25 Thai baht to the U.S. dollar, the Thai currency fell to 55 Thai baht.

A once booming economy was brought to its knees. Construction projects halted, businesses closed shop, and thousands lost jobs. The crisis spread, as the value of currencies and equities in Indonesia, South Korea and elsewhere plummeted, and companies reassessed investments and operations in the region. Japan too — including Japanese companies with operations throughout the region — did not escape the slowdown.

Today, Southeast Asia has mostly recovered. Yet, 1½ decades on, there is a new euphoria emerging, with again Bangkok at its heart. This time, though, the focus is west of the border in Myanmar.

With Thailand serving as a key gateway to Myanmar, more and more Japanese, and now Western, companies are clamoring to find their way to Yangon to talk business. They hope for the start of a new chapter in the tale of Asia’s economic growth, a “Myanmar miracle” so-to-speak — one to complement earlier chapters on Singapore, Taiwan and South Korea. The opportunities that companies from China and other countries unconstrained by sanctions once dominated may well now be within reach.

Just recently, General Electric signed a medical equipment deal with two hospitals in Myanmar, becoming the first U.S. company to restart business in the nation since Washington eased sanctions.

Representatives from business and the development world are rushing in to scope out opportunities for involvement. International finance institutions and aid agencies are also rushing in, at times with little sense of cooperation or coordination.

One can understand why. In an initial assessment by staff of the Asian Development Bank (ADB), the multilateral financial institution on whose Board of Directors I once sat, the message is clear: The infrastructure of a once rich nation was left to deteriorate through the decades. The 1962 adoption of a “Burmese Road to Socialism” was a road to ruin, with the economy coming to a virtual standstill.

According to the ADB staff assessment, significant opportunities exist today across the board to invest in and upgrade Myanmar’s energy, transport, urban development and water, agricultural and natural resources, and education sectors. Mining, hydropower development and forestry are also identified as priority sectors with a caveat.

In these areas, a compromise, the ADB assessment argues, will need to be reached between the country’s overall economic development and long-term conservation of its resources.

Much has been written about the extensive role of China in Myanmar and the rise of large emerging economies Brazil, Russia, India and China — the BRIC. Yet, as elsewhere, it is not just China or India that Japanese companies must contend with. Businesses also face what I have termed a new “bric” (lower-cased) that poses perhaps an even larger challenge — bureaucracy, regulation, interventionism and corruption.

New entrants in Myanmar face an uncertain bureaucracy, regulations that are unequally applied or enforced when they exist at all, interventionism by government at the expense of market forces, and crony capitalism, if not outright corruption. The reemergence of ethnic and religious tensions also suggests the added challenge of sectarianism. Yet, as the saying goes, without risk, there are no rewards.

Whether in infrastructure or financial services, how can Japanese or Western multinationals invest in a way that helps ensure the long-held dream of doing business in Myanmar doesn’t become a nightmare?

How also to invest responsibly, when there are so many gray areas, and so few rules and procedures in place?

While at the ADB, I spoke regularly on the importance of a focus on the “3 Ps of responsible development,” namely a focus on people — on results and on ensuring that development efforts and dollars ultimately reached the people most in need; on planet — on ensuring that development efforts did not short-change the future for the present, particularly when it came to natural resources extraction; and on partnership — on ensuring that development efforts were done in coordination not just with other development agencies but also increasingly with civil society and the private sector.

My view that the private sector played a critical role in a country’s emergence from poverty was not without its detractors. The pushback though was often less about the role of the private sector in theory, but the behavior of a few businesses in reality.

As the Asian economic crisis spread from Bangkok 15 years ago, new scrutiny came to bear on the roles of governments and of private sector players, including financial institutions and speculators, in building and bursting an economic bubble in Thailand.

Now with companies poised to descend in ever increasing numbers on Myanmar, it would serve them well to think through not just their business approach to, but also how best to manage their risks in, what remains very much a frontier state with weak institutions and governance.

At the end of the day, executives, shareholders and stakeholders in Japan and elsewhere must think through not just how much money is to be made in Myanmar, but also how that money is to be made.

Curtis S. Chin is a senior fellow and executive-in-residence at the Asian Institute of Technology, and a managing director with RiverPeak Group. He served as U.S. Ambassador to the Asian Development Bank (2007-2010). He is a commentator on Asia and development issues.

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