Pun to Give Rivals a Run for Their Money
By Simon Roughneen 19 August 2013
YANGON — As founder of Myanmar’s only listed business and head of a commercial network spanning more than 30 companies, Serge Pun is more used to winning than losing.
That habit is well-attested to by the swanky surrounds of the family-run Pun Hlaing Country Club—a 660-acre golf and residential retreat complete with hospital and shopping mall—across the Hlaing River from the honking traffic and, in places, rain-sodden squalor of downtown Yangon.
However, in late June the Chinese-Myanmar entrepreneur found himself on the losing side after Norway’s Telenor and Qatar’s Ooredoo won two keenly contested mobile network licenses.
He was the local focal point of a three-pronged bid, along with Irish-owned telecoms company Digicel and billionaire speculator-cum-philanthropist George Soros. The pitch was thought to be among the frontrunners for the high-risk but likely lucrative mobile provider gigs, in a country where only between 4 percent and 9 percent of the population is connected to the network.
While congratulating the two winners, Mr. Pun suggested that the deep pockets of the oil- and gas-rich wealth funds backing both Telenor and Ooredoo might have decided the outcome.
“I’ve a feeling they bid a lot for the license fee, which ensured them pole position, but congratulations to them,” he said with a smile, speaking from an office decorated with reminders of the Cultural Revolution in China, when he spent around a decade in a hard-labor camp—an experience he described in retrospect as “a blessing.”
“It probably molded a lot of how I see things,” he recalled, pointing to a series of paintings that he said allegorize the destruction wrought by those 1960s upheavals.
But back to the present, and the future. With Myanmar still a telecoms black spot, Mr. Pun believes there will still be plenty of opportunities in the sector, which needs around US$45-50 billion in investment through to 2030, according to US-based global consulting firm McKinsey.
“We still intend to play a very significant role in the telco industry,” he said, citing the “huge number of tower sites, as many as 5,000,” where he believes the network providers can quickly erect towers.
And while there will certainly be rewards for high-stakes investors who can successfully navigate the risks inherent in Myanmar’s untapped telecoms market, this is also one sector in which that burned-out notion of “trickle-down” economics surely applies.
Mobile phones have changed lives and livelihoods in poor countries in Africa and South Asia, said Mr. Pun, who believes that the sector will also be critical to Myanmar’s future development prospects.
“Telecommunications play a totally essential part in economic development. This goes down to the very poor farmers as you will see in India and Bangladesh, where it helps farmers know prices and know the market,” he said.
But before the mobile network is improved and ahead of any pervasive economic take-off, the Myanmar government will have to enact a series of much-needed economic reforms—facilitating the creation of an independent central bank and a stock market, for example.
Mr. Pun pointed out that such legislative gaps mean that—hyperventilating headlines about Myanmar’s boom-times aside—the country’s economic reforms are really just starting.
“Before last November, and the foreign investment law, you hardly saw any economic or financial reform,” he said, coughing gingerly between staccato pulls on a cigar.
“That’s why, when these skeptics say that two years have gone by, and people are not seeing fruits of this reform, I feel that is distorted, as the reforms made so far are political and social.”
And those changes—such as freeing up of a long-stifled press, holding free and fair by-elections, seeing robust exchanges in a mostly elected (albeit military-shadowed) legislature—have already had an impact at all levels of society, fueling Mr. Pun’s optimism that, in time, the same will happen to the economy.
“We can now say anything we want, read anything we want—that’s evidence of a reform measure trickling down. If you are talking about labor law, it is trickling down: Workers have new rights and new protections,” he said—though at the time of writing, Myanmar’s newfound media freedoms were stalling amid a standoff between the Ministry of Information and the interim Press Council over a publishing bill that journalists feel is redolent of old military-era curbs, and activists protesting land grabs in high-profile cases such as the Chinese-run Letpadaung mine were being sent to jail.
As for the economy, while broadly optimistic about Myanmar’s economic future, Mr. Pun conceded that there are “bottlenecks” that for now will hinder any Asian Tiger-type takeoff.
Criticizing what he sees as the short-term profiteering mindset prevalent in Myanmar, he cautioned that speculation-driven land prices in the country are too high and admonished that people should not “try to make a profit on the land.”
That bottleneck, as Mr. Pun sees it, could undermine Myanmar’s potential, if the government does not rein in land prices. While he believes that 1 million manufacturing jobs could be created in Myanmar in the near future—“We’re talking about 1,000 factories with 1,000 jobs in each”—he worried that “it is not feasible for an industrialist to start a manufacturing plant under such prices.”
Land prices are also driving up the cost of scarce office and hotel space in Yangon, with the dearth of rooms threatening to hold up a possible tourist boom. The Ministry of Hotels and Tourism hopes to attract over 7 million visitors per annum by 2020, up from around 1 million at present.
Myanmar currently has fewer than 30,000 hotel rooms in the entire country, but Mr. Pun believes that new developments should in time offset that deficit, although he hopes it can be done without the destruction of Yangon’s famed old colonial buildings, many of which are now disused, mildewed relics of military-era neglect and mismanagement.
He said he hopes ground will be broken after the rainy season at a landmark new development in downtown Yangon, a project that he said will fuse tinted-glass progress with the vintage postcard aura that permeates Yangon’s downtown.
The now tatty-looking red-brick railway building will be the hub for a modern five-star hotel—what Mr. Pun hopes will be a seamless blend of the new and the old.
This story first appeared in the August 2013 print issue of The Irrawaddy magazine.