June 7th, 2012
02:12 PM GMT
Yangon, Myanmar (CNN) - Myanmar has been closed off to most of the world for the last 50 years. But as its government continues down a road of reform, Myanmar is emerging as the missing link between China and India, with investors wondering if it’s time to re-enter the country.
A half century of military rule meant economic isolation for Myanmar, which saw it sink from being one of the most prosperous countries in Asia to one of the poorest. But economic reforms are happening in tandem with political reforms and the new civilian government is keen to prove to the world that the country is open for business and is no longer such a risky investment.
A recent oil and gas conference in the city of Yangon attracted potential investors from around the world. As sanctions are being eased as a reward for political reforms, more people are looking to make money here.
David La Prade heads up USR Drilling Services, a U.S. company that struck a deal to supply a local company with oil detection and drilling technologies. He believes the benefits outweigh the risks.
“You come in early, you may stub your toe, make mistakes,” he told CNN’s Paula Hancocks. “All potential new frontiers are full of business landmines, but you've got to come in early to have that opportunity.”
Investment conditions are definitely improving. A new investment law has been drafted, setting out tax exemptions and reliefs, land-use terms, and giving potential investors a clearer legal infrastructure to work within. The central bank also launched a managed float of its currency, the kyat, in April. In the past the official rate was more than 100 times stronger than the multiple black market rates, which made official business costly.
But the increased investor interest is not necessarily translating into an instant influx of investment.
“Lots of business delegations are coming to Myanmar but not putting money on the table - for good reason - they're waiting to see what happens in the next few months,” said Tony Picon, of global real estate firm Colliers International.
The United States, the European Union and others are easing long-standing sanctions on the country, allowing their citizens to directly invest in Myanmar.
The country’s tourist industry struck PR gold when U.S. Secretary of State Hillary Clinton visited last December, and was filmed at Myanmar's most sacred Buddhist pagoda and most popular attraction, the 2,500-year-old Shwedagon Pagoda. It’s now attracting more visitors than ever.
“Hillary was coming before us,” said Israeli tourist Gladys Blank. “I figured if it was good enough for her, then it was good enough for us.”
Myanmar's immigration department says the number of tourists coming to the country has almost doubled in four years. The only problem is that the increased number of visitors has highlighted a serious shortage of hotel rooms in Yangon.
“It's becoming a big issue, the government is worried and even the hoteliers are concerned that it actually will rebound and will hurt the tourism industry,” said Picon. “Business people will pay, the tourism industry is the one that will be affected.”
But all these changes have done little to affect the daily lives of many Myanmar citizens. More than 30% of the people here live in poverty, according to the CIA World Factbook. The benefits of the country opening up politically and economically could take years to trickle down to those who need help most.
About Global Exchange
Global Exchange explores how emerging markets are impacting and influencing the global financial community, at a time when business is a vital driver of the international news agenda.
Global Exchange is presented live from Abu Dhabi by emerging markets editor, John Defterios, who will be joined by CNN correspondents from around the world.
Global Exchange also includes the “GX20,” a global hotlist of some of the world’s biggest economic thinkers. The GX20 will be drawn from the key emerging markets, from across China, Russia, India and South Africa, contributing to the show and this blog.
Watch on CNN International Sunday to Thursday:
Follow the show on Twitter @CNNGlobalEx and use the #CNNGlobalEx hashtag to join the conversation.