After nearly 50 years of military rule, the opening of Myanmar’s borders was met with a flurry of development, as many took the chance to seize the development opportunities that existed. While the original excitement that many jumped head first into has cooled somewhat, there’s still much activity going on within the country. A nation that has been deprived of development and connection to the outside world for so long has led to the country needing almost every type of infrastructure to be built. From roads to power, everything is in need of construction. Answering the call to these needs and the first boots on the ground into underdeveloped areas are project logistics teams.
We recently spoke with two specialists in the project logistics industry about their experiences and advice working in Myanmar. Mr. John Hamilton, CEA Myanmar Country Manager and Mr. Andreas Grob, Rhenus Managing Director Myanmar, both spoke about their experiences in one of the last frontiers in the world.
Taking the First Step
Emerging after decades of military regime rule, the awakening of Myanmar has only just begun. In just a few short years, the regime has relinquished its tight grip on the country by first opening its borders, leading to the country’s first national vote. Giving back more and more power to a democratically elected government is changing the face of Myanmar forever. While we’re currently in the midst of the transferring of power to a new government, the roads that have been traversed to taking these first steps towards a more open nation have been monumentally important for the development of the country.
Speaking of roads, they are a good starting point for the numerous amounts of work that needs to be improved upon in Myanmar. Especially from a project cargo perspective, adequate roads are crucial for getting heavy equipment from place to place. Barges along rivers are currently the most efficient form of moving heavy cargo. Mr. Hamilton said, “There’s a 14-ton limit on most roads and bridges that were constructed many years ago and you can’t move much if any of the heavy cargo on them. Much of the heavy cargo goes to Yangon which thankfully isn’t too far from the coast, but moving heavy cargo inland by road is much more difficult. Every location has to be looked at on an individual basis and road surveys have to be done; you’ve got to go into every single detail and try to cover every base. If you don’t do that, you’re going to end up with problems.”
Building from Scratch
Beyond roads, there’s a wide range of new and ongoing projects. These projects include the development of power plants, dams, ports, telecommunications, and oil & gas infrastructure, just to name a few. “It’s quite amazing to see how this development affects Myanmar,” says Mr. Grob. “The sudden increase in project activities and service expectations by foreign investors and contractors is a big challenge for the people working here; it’s a learning process for all involved. They are however very open to listening to advice from foreign experts and implementing recommended changes. In terms of projects, there’s a big demand for really everything and it’s an exciting time to be here. This is what being a project forwarder is all about. Going to these places and overcoming the challenges is at the heart of what we do. Whilst for the telecom industry it has been relatively easy to jump from 0 to 100 in a short period, other business sectors will take more time to develop. Potential Western investors – compared to their Asian peers – generally also take a more conservative approach to Myanmar in view of the still uncertain and changing legal frame work in various areas.”
Being in Southeast Asia, most people would think that Myanmar would be a cheap country to operate in, but this is far from reality. As Mr. Grob said, “The cost of doing business is actually quite high here. I think people that have traveled to the country can attest to this and can see the challenges we face. At least 80% of goods are imported and that makes everything more expensive. Whilst office / accommodation costs in Yangon lately have come down somewhat, they are still high compared to other major Asian economic centers. Costs for semi- experienced and seasoned employees are still rising due to the shortage of such people. There’s a big demand for services, but it’s just not yet available locally. Experience is at a premium as well. If you’re moving a heavy lift truck, modular / hydraulic trailer or a big crane then you need people that can handle them, and there’s a very limited number of local people and companies that can operate these. Regard to safety in the past has been low. Government rules / regulations and procedures are being amended / updated. When we go in and quote projects there’s lots of little things like this we have to consider.”
Mr. Hamilton echoed many of Mr. Grob’s remarks about the pricing in Myanmar and added on saying, “When a country needs everything the biggest obstacle is cash flow. Myanmar currently relies heavily on outside investment and aide, which isn’t covering all their needs. The government doesn’t have the capacity to handle investment into the infrastructure they need. While they’re working hard towards the goal of sustaining themselves, it will of course take many years, but the help of outside investors is helping increase the speed at which they reach this goal.”
Powering a Country
Far and away the greatest need facing Myanmar’s development is access to reliable power. A great majority of the projects currently revolve around some form of power project. There’s a push in the government now by environmentalists to use renewable energy, but it’s a challenge to both supply cheap power and appease people’s view on clean energy. However, it’s not just about building a power plant; it’s about building the grid and the infrastructure behind it. Creating the power is just the beginning; the need for the grid itself is still there, and getting this electricity reliably to the people and businesses that require it is imperative.
Without reliable power most businesses and factories currently have to run on a backup power source, which is neither cheap or a viable approach to operating any facility, but it’s the reality they currently face when power blackouts are the norm multiple times a day. The model of industrial parks are a path Myanmar is building towards, but current investors are up to their own to supply the electricity, water, and everything else needed that would normally be provided at an industrial park. Getting basic needs up to more reliable standards would ease investors’ worries and make it easier to attract investors looking to set up shop in a turnkey operation.
Building Towards a Brighter Future
The amount of change that has happened in just the past few years for Myanmar has been ground breaking. From having almost no outside interactions, to having foreign investment from all corners of the earth pouring into this country is helping lead to monumental changes throughout the country. All of these challenges currently facing the development of the country are growing pains that any country would go through under these circumstances. Building the infrastructure to help an entire nation grow is no small undertaking.
Mr. Hamilton said, “The government communication is improving, but to really get anything done still you need to do it on a face-to-face basis. It’s not just sending an email or seeing something online, they’re working towards that but it takes time. We’re facing challenge after challenge, but things are improving. I see what the government is working towards and we’re hopeful for the future.”
“I think what is good and what we’re hopeful about is the new government,” said Mr. Grob. “It will take time of course – they have to tackle so many issues. The middle and long term development in the project market looks positive. More and more foreign investors will be coming in and spending on upcoming projects is increasing. Handling project cargo is challenging, but we’re all up for the challenge.”