Myanmar is ripe for growth, but hazards await the unwary

Two years ago a Western business would be mad to try to set up in the country. Peter Popham says change is in the air

Not since Deng Xiaoping used the words "get rich" and "glorious" in the same sentence has Asia offered such a juicy business opportunity as Myanmar (as the world is slowly adjusting to calling Burma) presents today. For the first time in half a century, everyone who matters – the Burmese government, Aung San Suu Kyi, the EU, the US – is united in believing that foreign trade and investment are a good idea.

"Two years ago," says John Murton, the head of the Foreign Office's East Asia and Pacific Department, "I would have said to would-be investors either you couldn't or you shouldn't."

But today, after dazzling political and diplomatic progress that this month has seen ASSK (as the Foreign Office refers to her) touring the US with a minister in President Thein Sein's office in tow, urging the complete lifting of sanctions, the picture is transformed.

Or is it? As potential investors learnt at a "Myanmar Investment and Trade Summit" organised in London last week by City and Financial Conferences, the opportunities are huge, but so are the obstacles, while a huge number of foreign business leaders seek to get stuck in.

A country swimming in resources of every sort, from oil and gas to jade and timber and gold, with an impoverished but literate population, at the crossroads of China, India and South-east Asia, with a glorious coastline of white sand which has only a single resort on it, Myanmar's potential has long been obvious to anybody familiar with Thailand, Malaysia or Indonesia.

Hazel Hector, a trade envoy at the British embassy in Rangoon, listed the key areas of opportunity as energy – gas and oil, both offshore and on; power – "there is a serious lack of capacity even in Rangoon – much of the city is regularly swathed in darkness"; finance and banking; education; and infrastructure.

But each poses as many challenges as it extends opportunities. Take banking: it was only five months ago that Myanmar's currency was finally unified, the farcical official rate of 6 kyats to the US dollar abandoned and the real, black market rate of around 800 kyats to the dollar accepted as the only valid one.

It was a vital step, but only the first of many that will need to be taken. As Sir Thomas Harris, the vice-chairman of Standard Chartered Bank, told the seminar: "Around two-thirds of the economy is black market. This is a cash economy … Only two-thirds of firms have bank accounts.

"Corruption is a massive problem. Any western company doing business there has to be seriously concerned about its reputation."

Several speakers emphasised the only way to find out what is possible is to go there. As JCB director Philip Bouverat put it: "If we don't get our towels on the sunbeds before the Germans, French and Italians, the Burmese will buy from them."

The fact that Britain tyrannised the country, driving the king and his consort into exile and brutally crushing resistance to colonial rule, might seem a fatal drawback, but as was pointed out, the Burmese attitude to Britain is generally benevolent. The steady support for the democracy movement by successive British ambassadors, Suu Kyi's marriage to a Brit, and her own long residence in Oxford, have clearly helped to erase the bad memories.

But in the frenzy, with 800 separate foreign business missions putting a toe in the water, temptations abound. "We are well liked," said the former trade minister Lord Davies, "but no company must make the mistake of dropping their standards."

The temptations will be there, given the levels of corruption and with "a legal system in chaos", as one speaker put it. But if Britain does have a good name, the challenge will be to build on that rather than pile in with the often vain hope of making a fast buck.

Corporate and social responsibility may be exotic concepts in a country shut away from the world for 50 years, but Aung San Suu Kyi knows their meaning: in Britain in the spring she repeatedly called for "democracy-friendly and human rights-friendly investment". And after the general elections due in 2015, she and her party could well be in power.

Questioned about doing business with cronies of the military regime, she remarked: "There are cronies and cronies" – but even some huge firms end up in bed with the wrong ones. Lord Davies recalled how Suu Kyi had castigated Coca-Cola for doing just that.

Most of the speakers were looking at the country through binoculars from the more familiar territories of Hong Kong or Singapore, while many in the audience were Myanmar virgins. But at least one speaker had a real success story to tell. Stephen Curtis, the sales and marketing director of Cussons, a Manchester-based firm manufacturing educational and research equipment, has been travelling to the country for the past 15 years, and recently supplied Yangon Technical University with a hi-tech, custom-built tank for hydrodynamic research, to help the Burmese design and build some of the many new ships they now require.

Two things about Mr Curtis's success were telling. One was that it was in the field of education: never targeted for sanctions, suppliers of educational equipment have been able to build relationships while everyone else was stuck outside.

But one other aspect was at least as significant: the importance of personal relationships. This deal came off thanks to the enthusiastic personal support of the university's rector, "a famous guy" in Myanmar, Mr Curtis said, whose hobby is repairing the gilded umbrellas known as hti, auspicious objects to Burmese Buddhists, that are attached to the tops of pagodas.

For business people accustomed to doing business by BlackBerry and email, Myanmar is a trip down memory lane. Face-to-face contact is important all over Asia, but nowhere more so than Myanmar, where telephones are often unreliable and, at least until recently, often bugged. Long sessions drinking at tiny tables in tea shops are de rigueur.