Ford to Sell Cars and Pickup Trucks in Burma
By Erika Kinetz 1 March 2013
RANGOON — Ford Motor Co. has signed a deal to distribute cars and pickup trucks in Burma, the head of Ford’s local partner said.
The automaker’s first showroom in the country’s largest city, Rangoon, could open as early as May, Khin Tun, the director of Capital Automotive, said Thursday.
Ford spokesman Neal McCarthy said the company is “gearing up for market entry” and has a local distributor, but declined to discuss details.
American brands PepsiCo, Coca-Cola, GE, Caterpillar and Danish brewer Carlsberg have all signed distribution deals in Burma, as rapid political and economic reforms transform the country from pariah state to investor darling.
Though lingering uncertainties about the stability of Burma’s transformation and fears that the US could reinstate sanctions have discouraged many Western companies from making large, long-term investments, the deals show how Burma’s economic landscape is starting to change. Much of the old economic order still prevails, but a few industries once monopolized by military and crony businesses are beginning to open to new players.
Businessmen who have avoided the taint of Western sanctions are snapping up deals with foreign partners and some of the old “cronies,” long disparaged for their links to the country’s repressive military leaders, are now trying to rebrand themselves to attract some of the rush of foreign capital.
Vehicle imports, for example, used to be so tightly controlled—and highly prized—that the government was able to cover much of the construction cost of its new capital city, Naypyidaw—which rose from scrubland and rice paddies about seven years ago—by paying “crony” businessmen with permits to import vehicles, rather than with cash.
Burma loosened vehicle import restrictions in late 2011, transforming the streets of the country’s commercial capital, Rangoon, from quiet lanes to gridlock. Old Japanese cars still dominate the streets here.
Carlsberg’s joint venture with Myanmar Golden Star Breweries to distribute and eventually produce beer here, announced earlier this month, is remarkable because it marks the entry of a foreign player into a sector dominated by military-owned companies. The deal also shows how far Burma has come since 1996, when Carlsberg abandoned plans to work with Golden Star because of pressure from human rights activists, according to Vriens & Partners, a consulting company with offices in Rangoon.
Ford’s Burma distributor, Capital Automotive, is a unit of the Capital Diamond Star Group, whose managing director, Ko Ko Gyi, has managed to build a successful conglomerate with interests ranging from trading and distribution to construction and real estate, without running afoul of US sanctions.
This is his second big win with a US company. Diamond Star Co., another group company, became the sole importer and distributor for PepsiCo’s Pepsi-Cola, 7-Up and Mirinda brands in Burma in August.