Nov.08 -- Melvyn Pun, chief executive officer and executive director of Yoma Strategic Holdings, a family-owned investment holding company and one of Myanmar's leading conglomerates with interests in investment, banking, real estate and more, discusses the ruling party's expected victory in the weekend election, the implications for businesses, and the government's efforts to support the economy amid the coronavirus pandemic. Pun speaks on "Bloomberg Markets: Asia."
- It looks like Aung San Suu Kyi's party will win, but it'll be more of the same, won't it? And, you know, many who had predicted just a few years ago that Myanmar would have a vibrant and fast-growing economy have been disappointed. What's gone wrong?
MELVYN PUN: Well, you know we've had a very successful day yesterday, smooth election in the midst of COVID. And surprisingly to all of us, I think, there was very high voter turnout, which I think gives this government a very strong mandate to further reform. I think the last few years has been difficult. I think a lot of investors have felt that things have been slower than expected, but we've got to remember that the NLD government really came from the wilderness.
And, you know, Aung San Suu Kyi herself was under house arrest for many years. So when she won the election last time, five years ago, it was at a time when she didn't really know much about the government administration. This time round, I think she has a much better handle on the government administration. There are very clear roadmaps on economic reform, and actually the government has not gotten enough credit for the roadmap that they've put in place, which I think lays a great foundation for the next few years.
- So Melvyn, you know, what needs to be done? What reforms need to be enacted to get Myanmar back on to the economic -- to the economic growth path?
MELVYN PUN: Well, you know, I think the nice thing is there are some very simple low-hanging fruits. I think infrastructure buildout is one. You know, Myanmar has been -- have been lacking power, has been lacking a lot of infrastructure needs, which has caused manufacturers to be reluctant to divert their construct -- their manufacturing here. We're seeing some of that being reversed.
You know, we had a very successful solar tender, which is contrary to many people's expectation. And we're also going to have a lot more power capacity that will come in this year. So I think we're seeing manufacturers, from China and other places, move into Myanmar, and you're seeing, you know, factory owners are getting more excited.
But beyond that, I think the financial sector, you know, we've had tremendous financial reform, financial sector reform. The central bank is much stronger than before. And you've seen a lot more foreign banks coming in to open branches. On the technology side, you know, fintech has been a great theme. E-wallet, fintech business, have really grown substantially over the last few years. And you're seeing the impact of that. You're seeing a lot more money movement move from informal channel to a formal channel.
During this COVID period, you're seeing a lot more people having access to formal financial market, whether that is banks, fintech, or you know, microfinance, et cetera. And I think that will unlock a lot of the blockage that we've seen in the last 5 to 10 years.
- OK, Melvyn. Tell me about your company, Yoma, and your different holdings. For instance, you run KFC restaurants there in the country. You've got your fingers in many different pies. How bad has COVID-19 been on that country?
MELVYN PUN: You know, we've actually been quite lucky. You know, we had our first COVID case at the end of March, and since then, the government actually has taken this very seriously. So we've closed the border, and we took very strong action. So we had a small, a short period of stay-home notice, and you know, by June, July, August, I think we were basically back to normal.
As a company, you know, we're in real estate sales, we're in real estate development. And real estate sales has been hitting record highs in July and August. You know, if you look at our car sales, that was a record level. Our mobile money business has never had a higher volume than July and August. So I think coming -- we came out of the first wave of COVID in a pretty decent shape. We now have a second wave that has hit us in September, and we're starting to come out of that as well.
So I think overall, of course, I think all countries are hit by COVID, but you know, we remain one of the fastest growing countries in the world. I think we're still-- ABB's still projecting a positive growth of maybe 1% or 2%. And heading into next year, I think there are some very obvious things that are going to happen. You know, there's some infrastructure constructions that have been approved, and actually have started.
And we see a huge amount of pent-up demand. We were quite surprised by even things like domestic tourism coming out of the first wave of COVID. We saw a huge number of people coming into our hotels and using the facilities. So I think it bodes well for the next year.
- Melvyn, you sound quite optimistic there. Worth noting you did have to leave Myanmar due to political instability. Now you're back, and you are showing all this strength. But in terms of some of the concerns that overseas investors might have about investing in Myanmar, how does that kind of turn around in some of these concerns about political stability, or about reputational risks?
MELVYN PUN: Yeah, so, look, Myanmar is certainly not for everyone. I think it's very clear that there are regulatory risk. Laws are still changing regularly. And for all the criticism that NLD has taken, it's really about things not moving fast enough. I think directionally, we've seen an economy that's a lot more open, regulation that's a lot more clear. And actually, transparency is a huge part of what we see now. You know, there's a lot less, these thoughts about corruption, and certainly at the government official level, things are a lot cleaner. So I think those are positive things, but we still need to make a lot more progress. We're starting from a very low base. Myanmar is --
- Sorry, Melvyn, I just wanted to quickly ask you as well whether or not you think the change at the White House, the Biden win here, perhaps helps investment more broadly too, and whether or not there would be a stronger relationship between Myanmar and the US.
MELVYN PUN: I think, actually, Myanmar has received very good support from the US, and from many other countries. I think, you know, where there's China from the Belt and Road Initiatives, , or Japan, which is one of the largest investors, or regional countries. US, historically, that has not been a direct investor in a very large volume.
But we do see that we are seeing benefits from the regionalization of a lot of the supply chain. The US-China trade war has helped a lot of -- has pushed a lot of people to move their manufacturing facilities into Southeast Asia, and Myanmar's certainly part of that. I see a continuation of support across all the Western countries, and certainly a more consistent and stable kind of global environment would bode well for Myanmar.