A DEARTH of effective local financing solutions, as well as prohibitive foreign investment laws is preventing international hotel developers and operators from cashing in on Myanmar’s tourism potential as it continues to undergo political reform.
Speakers at the recent Hotel Investment Conference Asia Pacific (HICAP) UPDATE breakout session on Myanmar revealed that hotels in the country’s capital and main international gateway, Yangon, were now running at 60-70 per cent average occupancy.
Ram Nurani, general manager, Parkroyal Yangon said: “In the last 20 months alone, we’ve seen occupancy rates grow by 20 per cent, as tourists are now visiting the country outside of the peak October to March season.”
In spite of these encouraging numbers, international hotel chains are still wary about taking the plunge into Myanmar. Global and regional hotel players make up less than 10 per cent of the country’s current room inventory.
According to Sukhdeep Singh, managing director, Myanmar Hotels International, the Myanmar banking system had to be liberalised if the country was to bolster hotel development.
“Ideally, local banks should be granted an international licence to remit money abroad. This facility does not exist at the moment, and Myanmar stands to become more attractive to developers and investors if current laws on outward remittances are relaxed,” he explained.
Jonathan Kyaw Thaung, CEO, Capital 8 Singapore added: “The (Myanmar) government has yet to issue full banking licences to foreign banks, and hence, foreign investors face a distinct lack of financing options. Moreover, domestic banks charge exorbitant lending rates which make investing in (Myanmar) less worthwhile.”
Speaking to TTG Asia e-Daily on the sidelines, Baron Ah Moo, CEO, Kalan Real Estate was of the opinion that Myanmar would require a new legal framework for foreign investors should it wish to nurture its hotel sector.
“The government has to enact bankruptcy laws to shield foreign investors if they go under. This will help mitigate the high level of risk involved in investing in Myanmar,” he said.