Take investor excitement over Burma with a pinch of salt

Investors may be getting ahead of themselves in the rush to invest in Burma.

Ever since the military regime in Burma, or Myanmar, began to liberalise the economy and the political system three years ago, investors have been looking forward to the emergence of a new Asian tiger.

Burma boasts raw materials galore, including oil and gas and soft commodities. It has a large population, an emerging middle class, low labour costs and rapid growth: GDP rose 6.5% in the year to April 2013. By 2017, it will also have a stock market.

But while the three-year reform programme is promising, "the situation is nevertheless fragile and success is far from guaranteed", says Jason Hollands of Bestinvest. Progress has been glacial. Burma remains "among the very worst countries to do business", says The Economist.

With corruption endemic, starting a business and enforcing contracts are harder in Burma than in South Sudan. Reformers in government "are few in number" and slow progress "may show how weakly the bureaucrats below them have committed to real change".

A shortage of trained professionals is making it difficult to implement "reform-minded international agreements". Official data are also very unreliable. So take the investor excitement over Burma with "large pinches of salt".

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