OUTLOOK FOR INDOCHINA
For
the last ten years Indochina in general, and Vietnam in particular, have
held perennial "flavor of the month" status for foreign investors.
For Laos, Cambodia and Burma, foreign interest remains strong. For Vietnam,
investors are scratching their heads and wondering where it all went wrong.
Indochina remains a minefield for foreign investors. They are advised
to tread carefully, invest only cash that can afford to be gambled, have
the latest business intelligence on local conditions, politics, personalities,
and policies, and do their homework. Again, and again, and again.
Burma (Myanmar)
Myanmar is the country that the world loves to hate. At least the
Western world. With its strutting generals and abysmal human rights, boycotted
by many multi-national companies, shunned by Western tourists, Burma is
an investors' nightmare.
Or is it?
Asian companies believe it's where the gold can be found and are
rushing in to establish operations before the West realizes what it's lost.
If you can afford the luxury of moral scruples, skip to the next
country. Burma is for those who want to profit, not stand on principles.
In fact, we are extremely bullish on Burma, if for no other reason
than many of our regional subscribers are making dollars there faster than
they can spend them. The investment policies are friendly, inflation workable,
graft has its limits and is clearly defined, and there is a growing middle
class that needs everything. Burma is like Thailand was in 1960.
The economy will have ups and downs due to pressure from Washington,
but overall the outlook for the next 2-3 years is rosy.
Cambodia
Of the four countries in Indochina, Cambodia is our favorite. For
a start, the world feels really guilty about what happened when Pol Pot
used its seven million people in a bizarre experiment to redefine the meaning
of economics.
Cambodia is awash with aid money, and foreign aid workers who have
lots of cash to spend. It's a favorite stopover for World Bank and IMF officials
who seem quite relaxed at pouring millions of dollars into the country.
New bridges, roads, airports, hospitals, schools are sprouting all over
the place.
Security in Cambodia is a relative term. If compared to other countries,
it can be terrifying. But compared to a year ago, major improvements can
be seen. The Khmer Rouge has been defeated, more or less. Banditry is sort
of under control. Soldiers and police don't shoot at civilians so often.
No Westerner has been killed by lawlessness for the last eight months. It's
even possible to drive down Phnom Penh's main street at night without being
hijacked.
Cambodia's currency is stable. Inflation is well down at 6%. The
locals do have money to spend, especially in the capital. Tourism is flourishing.
Hong Kong investors are building textile factories at the rate of one a
week. Property prices have doubled in the past year. Bribery is not only
bearable, it is strongly recommended. We're is even more bullish on Cambodia
than Burma.
Laos
Population-wise, Laos is tiny. It has only 4 million people, the
majority of whom are dirt poor. But, like its neighbor, Laos is rich in
natural resources - timber, gold, and hydroelectricity. Tourism is booming,
especially since Laos positioned itself as a land bridge between the booming
economics of south east Asia and southern China. This strategic position
in economic terms should not be underestimated.
Politically, Laos remains a communist state. But its Marxism is
much less doctrinaire than that found in Hanoi. For the investor, that means
that the welcome mat is out, policies are usually well-thought-out yet flexible,
and it's not too difficult to obtain decisions from the right people. Even
graft is not too much of a problem, since Laotian officials really believe
in the development of their country. Projects are generally approved on
the likely benefits to Laos as a whole and not by some crooked official's
pocket as in Vietnam.
Laos is a pleasant place to do business. An investor will not make
a lot of money there, but neither will he get too many gray hairs. The economy
is good, the currency stable, inflation under control, tourism is up and
security generally quite good, the odd ambush between Vientiane and Luang
Prabang notwithstanding.
Vietnam
Of all the Indochinese countries, Vietnam in 1997 could well be
the least interesting in which to invest. It is the least investor-friendly,
graft has reached mind-boggling proportions, local officials view foreigners
with money as milch cows, Hanoi has adopted a decidedly anti-foreign bent
in its pronouncements, tourism is stagnant, taxation is akin to state extortion,
crime is up, property is grossly and arbitrarily over-valued, and conditions
in which to make a dollar get more difficult by the day.
Vietnam is not a country to invest in with a faint heart or limited
capital. Any investment there is a gamble. Many companies have lost their
shirts. The two best-known examples for 1996 involved the US$5 million state
theft of 40 containers of mining equipment from Westralian Sands, and the
trumped-up tax evasion charges against Peregrine Capital Vietnam.
Investment in Vietnam is worth it, in the very long term. In the
meantime, wait until all the old Marxist revolutionaries have dropped dead,
the army has been removed from politics, and a new generation of post-Cold
War leaders have taken over. Then there might be, just might be, a chance
to make a few dollars. Until that happens, investors are urged to be patient,
and extremely cautions.
Taipan's favored source
We decided to let you in on one of our best-kept secrets. We wanted
to tell you who our sources and contacts are in Indochina.
There are many publications on Vietnam, and only a few on Laos,
Cambodia and Burma. Virtually all, with one or two exceptions, are puppets
of the governments of those countries. Generally, they are slick, glossy
magazines that give the investor a "feel" for the area.
Unfortunately, because of their associations with the various governments,
they are unable to objectively discuss the problems that investors are increasingly
exposed to. If they do, their distribution rights are canceled and their
staff could well find themselves in jail at worst, or immersed in exit difficulties
at best.
There is one publication that refuses to be censored by anyone.
It carries no advertising, it has its own people in Indochina who anonymously
report on the business scene, it spurns government assistance. Business
News IndoChina has been the bane of Indochinese bureaucrats since it first
started publishing in 1990.
Available by subscription only, it walks investors through the
bureaucratic greed that is Vietnam, introduces them to the right generals
in Burma, and takes them by the hand in Cambodia and Laos. In addition,
its research library is free to subscribers and its fax-alert service is
sent free to those subscribers who want advance notice of contracts up for
tender.
The FAX, please
What we like best about Business News IndoChina is the FAX ALERT
service - which provides advance notice of any major contract awarded on
projects for tender.
We even managed to hammer out a special deal for you: Taipan members
can subscribe to Business News IndoChina at the special rate of US$395 for
12 issues (20% off the regular price). For more information, fax to Business
News IndoChina's Hong Kong headquarters: fax (852)2856-1184). Or simply
send your check to, G.P.O. Box 9794, Hong Kong.