General Electric Co.’s GE +3.47% Southeast Asia chief executive expects revenue in Myanmar to reach up to $500 million in the next few years, as one of the world’s largest corporations expands in one of the riskiest markets for foreign investment. “This country is emerging after such a long period of time, and there’s a huge pent-up demand for infrastructure,” Stuart Dean, CEO of GE ASEAN, said in an interview. “I could easily see orders of $250 million to $500 million annually in five or six years if things move in the right direction in terms of reform and government.”
Since the U.S. government eased sanctions on the Southeast Asian country in July, GE has leased two aircraft to flagship carrier Myanma Airways and signed multimillion-dollar deals to provide advanced medical equipment to hospitals and gas turbine generators to a power plant in Yangon, the former capital. GE is also advising Myanmar’s government on expanding power generation in a country where less than half of households have electricity, and gearing up to open an office.
The corporate giant’s push into the once-closed Southeast Asian nation is emblematic of its strategy of securing a toehold early in emerging markets from Vietnam to Indonesia. As Western economies have slowed, companies including GE have increasingly turned to emerging markets for growth.
Myanmar is one of the world’s last untapped markets, with more than 50 million consumers with growing appetites for everything from consumer goods to air travel. It has attracted more than a dozen companies, among them MasterCard Inc., MA -0.45% Visa Inc., V -1.01% Coca-Cola Co., KO +0.51% PepsiCo Inc. PEP +0.07% and Samsonite International 1910.HK +1.22% SA. Accounting firm KPMG has opened an office and competitor Deloitte Touche Tohmatsu Ltd. is also entering the country.
But concerns about corruption, poor infrastructure and inadequate labor abound, and western companies are finding that doing business in Myanmar is far from predictable.
GE planned to open its two-person office in Yangon by the end of 2012, but ran into trouble complying with a requirement to deposit money in a state-owned bank. GE found it couldn’t do business with these banks because the banks or executives there were blacklisted by the U.S. government for alleged ties to the former military regime.
GE received an exception from Myanmar’s government to deposit money elsewhere, and is now aiming to open its office in the first quarter, said Mr. Dean.
GE’s projection of $250 million to $500 million in annual revenue in Myanmar would put the country on par with Vietnam, where GE supplies power and health care equipment. In full-year 2011, GE reported $147.3 billion in revenue. The company reports full-year 2012 earnings on Friday.
Myanmar “can be significant” for GE, said Mr. Dean. But like many countries that are still developing, “it’s two steps forward, one step back. It takes a lot of patience and you have to take a long-term view.”
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