Thailand: gateway to Myanmar and the Mekong sub-region

1. AustCham Thailand 2012 Conference Thailand: gateway to Myanmar and the Mekong sub-region ManopSangiambutHead of International Banking BusinessSiam Commercial Bank 13 November 2012 This copy is issued for internal discussion only -Reproduction is strictly prohibited-

2. Reform seems irreversible… for now • Strong political will with various reform steps in the right direction • Geo-political re-alignments send strong signals and ensure policy back paddling will be less likely • The new Foreign Investment Law sets the stage for further opening-up to foreign investors

3. Abundant business opportunities Myanmar needs everything from basic consumer products to large-scale infrastructure Macro • ADB expects 6.0% GDP in 2012 and 6.3% in 2013 • IMF expects 6.0% GDP in 2012 driven by commodity exports and higher investment, supported by robust credit growth • Top 10 products • Mobile phone • Automobile • Motorcycle • Housing • Shopping mall • Satellite dishes • Hotel • Tourism • Publication • Advertising • Source: Myanmar Marketing Alliance Industry with immediate demand • Hotel/real estate • Retails/trading • Construction and materials • Food processing & agriculture industrialisation Key infrastructure • Power plants • Telecom • Road, ports, and airports

4. But the road ahead is not paved with roses Political Business • Weak institutional capacity within the government • General election in 2015 will be the real test • Ethnic conflict cannot be overlooked • High land prices while measures to cool down prices are not robust • Heavily under-supply of electricity in foreseeable future • Lack of logistic infrastructure • Difficulties with outward remittance • Banking sector is under developed

5. Invest now or wait? Now is a land-grab period… • Preliminary check list for “invest now” • Services or products in heavily-undersupplied segments • Land lease from government or industrial estates with relatively lower cost • Relatively short investment lead time • Do not rely on extensive supply chain and logistics • Infrastructure projects/concessions from government • Finding the right local partner is important

6. A number of large scale projects already kick-started Source: Local press

7. Three special economic zones propel long-term growth Kyauk Phyu • Country support: China • Features: Gas pipeline and rail link to China • Industry focus: • Deep sea port • Refinery • Oil & gas Thilawa • Country support: Japan • Features: Closet proximity to Yangon and will likely be the first to start • Total area: 24 sq.km. (5,930 acres) • Industry focus: Mixed Dawei • Country support: Thailand • Features: Link with Thailand’s eastern seaboard • Total area: 250 sq.km. (61,775 acres) • Industry focus: • Oil & gas • Petrochemical • Steel mills • Logistics • Pulp & paper • Fertilizer

8. Getting to know Myanmar tycoons Source: Irrawaddy Magazine

9. Thai businesses in Myanmar can also be your partners Source: SCB EIC

10. Banking and financial sector reform • Kyat has stabilised though recently with upward pressure • Myanmar Payment Union started operation • More banking products have been allowed (eg. forex, L/C) • Insurance licenses being granted So far Future • Central bank law promulgation • Foreign-local JV bank will likely be allowed next year • Branches may be allowed for Asean banks by 2015 Facts & figures • 19 local private banks and 4 state-owned banks • Combined asset of US$ 2bn

11. Thailand as a natural hub for the Mekong sub-region Greater Mekong Sub-region (GMS) economic corridors and Road Network 2015 - 2020 Source: ADB

12. China plays an important role in the region • Chinese economy is under transition… no hard landing is expected • China’s “Going Out” policy has been driven by rising domestic costs and stronger Rmb as well as new market entry • China’s west region development benefits the Mekong sub-region development • China supports key infrastructure including rail, power, telco, and agriculture in the region