iBankCoin
Tokyo based, expat Cape Bretoner. Learning to live in a de-leveraging world. Better suited to the crusades. CFA & FRM charter holder. Disclaimer: @Firehorsecaper reminds investors to always perform their own due diligence on any investment, and to consult their own financial adviser or representative when warranted. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.
Joined Jun 23, 2015
86 Blog Posts

Summers in Rangoon: Jade – Heaven’s Stone

Much of the press on Myanmar has been on the most recent election. 90 parties were in the running, 88 D. Trump’s and 2 real contenders with the ruling USDP (Union Solidarity & Development Party) handily unseated by Aung San Suu Kyi’s NLD (National League for Democracy) party. ¬†Yangon (formerly Rangoon) remains the centre of power. Myanmar (formerly Burma) is the largest country in SE Asia (1.6x CA) with a population of 60 million (France has 66mm for reference). While the population of Myanmar is 68% Burman (incl. Suu Kyi, the new leader) there are 100 distinct ethnic groups within Myanmar. It is like a Benetton commercial, except with more tears.

This post is not about the Myanmar elections but about what developed nations like the USA could do to further the plight of this poor country (#149/186 on the UN list of poorest countries), namely lifting long standing trade sanctions. Per capita GDP in Myanmar is $1,200 with 15mm making only $1.25 a day. Trenton, NJ’s (“Trenton Makes and the World Takes”) per capita GDP is $17,400 ($48/day).

As China finally gets real progress underway on “One Belt, One Road” (OBOR, 21st Century Silk Road), an initiative all should get up the curve on (trade flows, fx, infrastructure, commodities), the US would be well served by having an ear to the ground . The Greater Mekong Subregion (GMS), which includes Myanmar, Thailand, Cambodia, Laos, Viet Nam and the Yunnan Province – PRC has a population of > 325mm. The East-West corridor of the OBOR project runs a full 1,450 km from Myanmar to Viet Nam.

Myanmar is the 6th largest producer of rice with over 20mm acres in production. Agriculture makes up 36% of Myanmar’s $64bln economy.

A full 90% of the fine Jade on planet Earth originates from Myanmar (Kachin Province in the North). The strongest bid has always been from China where > $10bln worth of Jade was imported in the last year. Jade, with a 2014 value estimated at $31bln (16mm kg) makes up almost 50% of Myanmar’s GDP (tax receipts a scant 2% of production). Burmese Jadeite export to China has been a lucrative trade since the 3rd century AD. The November 22, 2015 landslide at a typical Myanmar jade mine which took the lives of >100 souls was a stark reminder of the typical harsh conditions.

The time to try and influence a more equitable sharing of the jade mining spoils is now. Some recent market intel estimates that upwards of 2/3 of global high-end earth moving equipment is deployed in Myanmar jade mines (financed by Chinese interests). As one would guess, the “efficiency” gains are considerable, mines with a former life of 3 years have been compressed to a couple of months.¬†They will make a movie about it someday. We should try and write an alternate ending.

As a frontier market, Myanmar is not green lighted by many global institutional investors yet. Accredited investors on the private lending side can achieve 15% returns in US$ on 2-3 year term deals, documented under Singapore Law. Telecom is a hot sector (highest growth rates globally, incl. Africa) as is Yangon real estate. JCG

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2 comments

  1. iw40

    I enjoyed both of your posts. I have traveled extensively in the region, most recently in 2012 when we saw Daw Aung Sang Su Ky speaking in Kalaw. We took a lot of photos, she was quite close.

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  2. firehorsecaper

    iw40; Glad to hear. US seems to be softening their stance on trade which is great news for Myanmar.

    http://www.mmtimes.com/index.php/business/18018-the-united-states-reconsiders-myanmar-for-special-trade-preferences.html

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