26 Sept 2014
Hong Kong set to be Second Largest Myanmar Investor in 2014
US$6.45 billion hospitality and garment spend sees Hong Kong topped only by mainland investment.
Hong Kong has emerged as the second largest investor in Myanmar after mainland China. According to figures from Myanmar's Directorate of Investment and Company Administration (DICA), Hong Kong accounted for 17.6% of the total foreign direct investment (FDI) in the country in the six months up to June 2014, with the total sum invested said to be US$6.45 billion.
Even prior to Myanmar's emergence from its years of isolation from the global community, China was already a significant investor in the country. Since 2011 and the opening up of the country, China has remained the largest player, although a number of other countries – notably Japan, Korea and Singapore – have all made substantial financial commitments. Hong Kong, though, has proved particularly successful in this regard, with its investment said to be higher than those of Korea and Thailand combined.
Perhaps predictably, Hong Kong's investments in the country initially focussed on the clothing sector. Giordano and Bossini, two Hong Kong fashion brands, have, respectively, 99 and 19 shops in Myanmar, all targetting the country's burgeoning number of middle-class consumers.
Aside from clothing retailing, Hong Kong companies are also investing in textile manufacturing in the country. Rising labour costs on the mainland and the appreciation of the renminbi have led 12 Hong businesses to establish garment production facilities in the Thilawa Special Economic Zone (SEZ), Myanmar's first dedicated industrial park. The new facilities should come on line as of May 2015.
Part of the attraction for the Hong Kong companies is said to be the geographical advantages of the SEZ. The complex is some 50 minutes drive from Yangon, the country's largest city, and is also adjacent to the Myanmar International Terminals Thilawa (MITT), a multipurpose port. This facility is owned and operated by Hong Kong's Hutchison Port Holdings Ltd, with the company looking to expand its capacity while continuing to refine its facilities.
Aside from the clothing industry, Hong Kong's hospitality sector has also been swift to grasp the possibilities Myanmar offers. At the forefront of this has been the development of the Sule Shangri-La in Yangon, a luxury hotel owned and managed by Hong Kong-based Shangri-La International Hotel Management.
In 2017, the company plans to open its second Myanmar hotel, located on the banks of the Kandawgyi Lake, a popular tourist destination set in a national park in Yangon. The Lakeside Shangri-La, as it will be known, will have 350 guestrooms and suites, as well as three restaurants, two bars, meeting and convention facilities and an outdoor swimming pool.
The Shangri-La group is also developing Sule Square, a new complex in Yangon's central business district. Scheduled for completion in early 2016, the project is being billed as a modern commercial development, complete with 17 floors measuring 2,000 square metres. It will be also home to a multi-level retail and restaurant offering. Citymart, Myanmar's leading supermarket chain, has already signed up as an anchor tenant.
Aside from Shangri-La, a number of other Hong Kong hotel developers are also turning their attention to Myanmar. Hong Kong and Shanghai Hotels Ltd (HSH), for instance, is working alongside Yoma Strategic Holdings (a Singapore-based property and construction group) to convert the historic Myanmar Railway Company headquarters building into a five-star Peninsula Yangon Hotel. The building dates from the 1880s and is one of the oldest colonial buildings in Yangon.
Much of the investment in the country's hospitality sector has been buoyed by the Myanmar government's commitment to attracting three million overseas tourists a year from 2015.
Nguyen Quoc Uy, Ho Chi Minh City Office