Bienvenido a Cuba!

December 31, 2013 5:32 PM

cuba rum

It all started as I was grabbing coffee with a close friend of mine. After a very successful, but exhausting year in Mongolia, I was looking for a holiday location where I could unwind. The prerequisites were that there be limited phone or internet access to avoid roping me back into work. I wanted a place that I could truly escape to and that business could not find me. I was worried that it would take some far-away land to achieve this goal—an African safari—or some deserted Pacific island. I had already spent the morning spinning the globe around on Google Earth—nothing piqued my interest.

Then my friend suggested the obvious; “How about Cuba—the forbidden fruit of American travelers? Your cell phone won’t work, the internet is impossible to access and business won’t come and find you—heck, business cannot even legally exist in Cuba.”

“…But won’t that take months to get the visas in order? I need to leave immediately as I’m due in Mongolia, during the first week in January,” I replied.

“Don’t worry. I’ll get your visas sorted out. Let’s just say that I know people… (wink, wink) Besides, I’ve been there many times in the past decade. It’s finally starting to wake up and shake off communism. You need to see it now, so that you have perspective on it in a year or three when Americans can start investing there.”

cuba nice

Is This The Real Cuba?

48 hours later, my girlfriend and I were on a plane to Cuba with a visa for the “purposes of attending worship services….to interact with the people of Cuba….to the purpose of friendship and worship.” Those of you, who know me well, will appreciate the irony and incongruity of me getting a visa to do missionary work—then again, the last half century of Cuban history is full of incongruent ironies.

old cuba 1

Is This The Real Cuba? (About A Mile From The First Location--Not For Tourists)

Having lived in Miami for the past decade, I have met plenty of Cubans and heard the disheartening tales of Cuba and the Castro brothers. I expected to find the world’s largest tropical gulag. Instead, I found a cheerful country, full of warm friendly people, some of whom seem to genuinely admire the government—despite its arcane rules and habitual dysfunction. I also found many who were illegally saving their money in US Dollars and plotting their escape from Cuba.

I expected to find an island mired in misery with chronic scarcity of basic goods. Instead, I found a place that was remarkably devoid of extreme poverty—a true anomaly in Latin America. Given the inevitable failings of a purely socialist state, I expected much worse. If you remove the top few percent of wealthy Argentines, the average Cuban is roughly on par with the average Argentine in terms of standard of living and Cuba’s infrastructure is a good deal ahead of Argentina’s—something I certainly did not expect to find.

cuba food

Great Food!!

I expected that men in green army uniforms would harass us as we went about life—typical of military dictatorships with a suspicion of America (we have spent the last half century trying to topple the government). Instead, the police presence was less than that of Manhattan and the military is effectively out of sight. The only government representatives that we met were in Museums—they were both helpful and amazingly patient as I fumbled for words in Spanish.

In many ways, it was an island of contrasts and unexpected surprises. My friend with the visas, was also correct, Cuba is beginning to open up and transition to a market economy. While there is no business to be done by Americans (yet), I spent my week in Cuba trying to cut the Gordian Knot of misconceptions, misinformation and failed economic plans that have characterized Cuba’s last half century of economic dysfunction. I expected to see another failed socialist state, impossible to revive—a Zimbabwe off the coast of Florida. Instead, I was both surprised and impressed by the country and its potential as a future investment destination.

Over the next few pieces, I will take you through my week in Cuba—the misconceptions, the obvious failings and occasional successes of state-planned socialism. This collage of stories was the result of dozens of conversations with ordinary people that I met during my vacation—hotel employees, barkeepers, waiters and especially taxi drivers (who tend to have the best pulse on the economy in every transitioning economy). These people ranged from life-long communist ideologues to those who truly despised the government; however, the majority of the people I met, were simply divorced from politics, frustrated with socialism, but appreciative of the occasional benefits that it brought. I stayed true to my mission of escapism. I did not speak with any senior government officials and I did not engage in any business. Rather, I ate, drank and travelled myself ragged, through dozens of cities and over a thousand kilometers of back roads. Let’s just say, that I’m not the type of vacationer who sits on the beach…

cuba kid with dog

Bienvenido a Cuba!!!



(All Pictures By Mili Martinez)

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Myanmar Part II

October 19, 2012 9:01 PM

My friend Chris Mayer continued his journey through Myanmar. If you missed Part I, click here. If you want to visit the Capital & Crisis website, please click here.


“This is a market of 65 million people where everyone is basically at the starting line. There is no other market like this.”

-- Masaki Takahara, managing director of Jetro (a Japanese trade organization), on Myanmar


If there is one word to capture the potential for tourism in Myanmar, that word would be “Bagan.” (Pronounced “Bah-gahn.”)
Bagan is an ancient city, the home of medieval kings who ruled what is today Myanmar beginning back in the ninth century. In the 13th century, Kublai Khan’s Mongols swept through and that was the end of that.
But during its glory days, Bagan was the site of a pagoda building boom that lasted for centuries. Devout Buddhists as they were, the medieval kings believed building pagodas atoned for their sins. They must have been a sinful lot.
(This reminds me of a snatch of dialogue from George Orwell’s Burmese Days:

“‘Ko Po Kyin,’ she said, ‘you have done very much evil in your life.’

“U Po Kyin waved his hand. ‘What does it matter? My pagodas will atone for everything. There is plenty of time.’”)

The result of the building boom is a place the likes of which exists nowhere else on earth.

myanmar 10

“The plains of Bagan — like nowhere else on Earth”

I took this shot from one of the pagodas, the steep steps of which you can climb up and command stunning views. There are thousands and thousands of pagodas, monasteries and temples in Bagan.
I searched my pictures for the best one, but none of them does the place justice. For as far as the eyes can see in any direction, there are stupas poking out from the surrounding forested plains. It’s a fantastic vista, one of the best I’ve seen in my travels. Someday, this will be a must-see on the tourist trail in this region, right alongside the great temples of Angkor Wat in Cambodia.

myanmar 11

“Bagan — a snapshot of an Asia frozen in time”

Along with my friend Lawrence Mackhoul of Leopard Capital, we took off from Yangon to Bagan to have a look around. One day, we set out late in the afternoon to watch the sunset over the pagodas, which we heard was the thing to do.

We did not find many tourists out and about. In fact, it was locals who sat on a pagoda with us watching the sun go down. One teenager asked if he could take a picture with me. Of course, I agreed. A buddy of his snapped the photo of the two of us -- my 6-foot-2-inch frame towering over him. It was as if that moment broke the ice. After that, Lawrence and I sat for six or seven more photos as locals huddled around us. We became part of the attraction.

It was a charming episode, and I am sure it will all be different in another year or two when the busloads of tourists arrive. Take a look at this chart from CLSA, which shows tourist arrivals in various Southeast Asian countries:

myanmar 12

Even Laos (not shown) has three times more tourists visit annually than Myanmar. With attractions like Bagan, I can’t see how this won’t all change.

But there is much more to see in Myanmar beyond Bagan. We also visited Mandalay, a city of a million people north of Yangon on the banks of the muddy Irrawaddy River. This is the main commercial hub for Upper Burma. We hooked up with my friend Doug Clayton, the head leopard at Leopard Capital, and visited several local businesses.

This was an eye-opening tour in itself: a weaving shop where men and women worked at hand-powered looms, another shop where women made embroidered cloth and men hacked away at various carvings and furniture pieces.

My favorite was a gold leaf shop, where we saw young men hammer away at gold pieces for hours and hours to make superthin gold leaf. Nearby, women sat and shaped the gold leaf by hand into little squares. These little squares once were money. They were small and easy to carry and divide. Today, Myanmarese use them to decorate statues and the like. But gold is still a preferred method of savings in Myanmar. Few use banks. As in most such markets, gold and real estate are kings.

myanmar 13

“Women shaping gold leaf”

Mandalay itself is not particularly glamorous, despite how the name might resonate with you. It’s dirty, crowded, hot and humid. There were lots of motorcycles -- in contrast to Yangon, where they are banned -- and the city reminded me somewhat of Saigon.

Outside the city of Mandalay, though, you find yourself again swept back into the old Asia of storybooks. The lush green landscapes, quiet rice paddies and bright pagodas. A lone white egret stirs as a horse-drawn cart clatters down a dirt path...

Then, you are free to wander around landscapes like this:

myanmar 14

“A walk through the old Asia of storybooks”

It’s cheap to travel outside of Yangon. We stayed at the Mandalay City Hotel, which is not far from the palace in the center of town, for $56 per night. It was decent and clean. What I remember most is getting a 5 a.m. wake-up call from the local muezzin, whose call to prayer seemed to be blaring out of the next building.

From Mandalay, we went to Thandwe, which is a seaport on Myanmar’s west coast. We wanted to visit Ngapali Beach, which we heard is the country’s best. Myanmar has over a thousand miles of pristine beaches. The famous Thai beaches, such as those at Phuket, share the same peninsula and even, by a quirk of national border drawing, the same side of that peninsula facing the Andaman Sea.

It struck us how the Thandwe airport was right on the water -- prime real estate! Only in a nonmarket environment could someone put an airport there. Anyway, we must’ve visited every resort in Ngapali trying to get a sense for how far Myanmar has to go. Most were pretty nice. We tried to imagine how it might develop.

We stayed at Sandoway Resort, which as far as we could tell, was the best of the lot. We had a fabulous room for only $140 per night, which included a kingly breakfast of fresh fruit, fresh-baked croissants (“These are better than what you get in Paris!” Lawrence remarked) and more. This was a world-class resort. The landscaping was immaculate. The service was excellent. And the white sand beaches were virtually deserted.

The local rum was only $2 a glass. Not a bad way to end the trip.

myanmar 15

“Your editor, enjoying the local rum… and wondering what it all means.”

We would end our trip in Ngapali, as our money was running out. Since we had to pay cash for everything in country -- and there are no ATMs and credit cards count for so much plastic -- we had to juggle what we brought. We would both leave Ngapali with less than $100 to our names. (Given the propensity of the locals to reject anything but near-mint currency, for a while we were wondering what we would do if we ran out of money. We would start hawking stuff, we figured. “I’ll give you this camera if you take us to the airport...”)

In closing, it was a great trip. The country has a lot to offer, and tourism is an easy winner here. There is much to see and enjoy. I saw only a fraction. There are still the Himalayas to the north, hundreds of islands in the Myeik Archipelago further south, river cruises on the Irrawaddy, the floating markets at Inle Lake and much more.

The trip affirmed my bullishness on Myanmar and my wish to find some way to capitalize on the transformational changes taking place.

I’ll have more on Myanmar in your next letter.

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Myanmar Part I

October 14, 2012 2:02 PM

For the better part of a year, I have been trying to find some free time to go and visit Myanmar. My good friend Chris Mayer seems to have beat me to it and in the first of what I hope will be many entries (keep writing Chris!!) posted some initial thoughts on his Capital & Crisis website.


"The heat rolled from the earth like the breath of an oven. The flowers, oppressive to the eyes, blazed with not a petal stirring, in a debauch of sun. The glare sent a weariness through one's bones... The evil time of day was beginning, the time, as the Burmese say, 'when feet are silent.'" -- George Orwell, Burmese Days

Dear Capital & Crisis Reader,

I read Orwell's Burmese Days on the plane ride over here. The heat is almost its own character in the novel. Orwell's vocabulary gets a workout describing its oppressiveness.

He knows of what he writes. Orwell was a colonial policeman for a time in British Burma. In my first day in Burma (now Myanmar), I learned to respect the sun. For example, I was going to walk to the famous Shwedagon Pagoda in the morning. But a friend told me I was crazy. "Remember you have to take off your shoes and walk barefoot," she said. "It can get uncomfortable in the heat. Go in the evening and see the sunset and the lights afterward. Or go at 5 a.m. and see the sunrise."

I went to see the sunset. In that 15-minute walk, a mere stroll, I was sweating through my shirt as if I had run 3 miles. It was still so incredibly humid, I can barely describe it. But the visit was well worth it. The towering golden stupa dominates the city. As the sun sets, the colors change around it. The mix of color and light, and the surrounding scene of worshippers and tourists from all over Asia, as well as the hundreds of smaller stupas at its base, make for a photographer's dream.



Earlier in the day, sweating through rattling taxi rides without air conditioning, I met with the country's largest private oil tycoon and its largest property development company. After a few days in Yangon, I visited Mandalay, Bagan and Ngapali. I'll more on the investment scene here in a future letter. For now, some impressions on the city that was once Rangoon.

I took a taxi to downtown Yangon, near the river. I wanted to walk around the old part of the city, famous for its crumbling colonial architecture. In the 50 years of military rule, there has been practically no development here at all. It is a city trapped in time, a kind of Havana of the East.


Motorcycles are banned in Yangon, which gives the city a very different feel than other Asian cities, where seas of motorcycles clog the streets.


I couldn't walk too far without working up a good sweat. So I tucked into a bookstall on the street and picked up a copy of Sir James George Scott's Burma: A Handbook of Practical Information. It was a reprint of the 1921 edition by a small Bangkok press. Scott was one of those rugged Victorian adventurers of the British Empire -- tireless, brave, resourceful. He was a journalist who traveled throughout Burma. Scott learned to speak Burmese and donned native dress. His books are still read today, as he was meticulous in his research and descriptions of Burma, its people and cultures. Scott also introduced football (or soccer) to the Burmese, which today remains a national favorite.

I would enjoy dipping into Scott's book as I traveled through Myanmar, reading his take on places and people. (He also gives sound advice: "The sun should be treated with constant respect and covered head.") Scott spends considerable space on the commercial activities of the Burmese. There are headings for ruby mining, boring for oil, the extraction of jade, tea plantations, opium growing, teak exports, rice cultivation, finance and more.

The population of Rangoon in 1921 was about 340,000 and it was a busy port thanks to access to the sea as well as 900 miles of navigable river to the north. Today, Yangon has a population of 4 million and remains a busy port.

I also wanted to visit the Strand Hotel, the famous old colonial haunt where Somerset Maugham and Rudyard Kipling stayed and drank. I stopped in for a drink at the bar, to cool down after walking around hot Yangon and to soak up the atmosphere of the grand hotel.

I have to say, my first impressions of Yangon were not what I expected. After 50 years of military rule, I was expecting worse. (This is not to excuse the many crimes of the thuggish generals and their cronies. It, instead, is a tribute to the resourcefulness of the people.) The Burmese are poor, no doubt. But it is not a desperate poverty. Yangon gives at least the surface appearance of normality. I saw plenty of seemingly prosperous little shops. I was not approached by any beggars, as one is when in India.

The place has its charms. There are no McDonald’s or Wal-Marts -- thankfully. I met an expat that moved here recently after a stint in Saigon. She told me that it was the little things you miss. There isn't a good coffee shop in Yangon, she said, and finding a good cup of coffee is difficult. There isn't the night life you find in a typical big city. The number of good restaurants is relatively small.

But all this will change pretty soon. That's the opportunity, of course. There is already a pressing need for hotels, which are expensive and not so readily available at the upper end. There is already a shortage of apartments, too. As business opens up, as the investment dollars flow in and as the cranes go up, the old Yangon will change forever.

I was glad to get an early look.

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A Whole Lotta Coal....

October 12, 2012 12:18 AM

Back in early September, I took a trip to the South Gobi in Mongolia. I went to look at Erdenes Tavan Tolgoi (ETT), which owns the largest coking coal deposit in the world (now ramping up) incidentally named Tavan Tolgoi. While in the Gobi, I also got to get a good look at Mongolian Mining Corp's (975: HK) Ukhaa Khudag mine also ramping up, yet a few years further along. While there are no great investment inspirations from the trip, I am simply overawed with the size of these projects. When you go and look at them, you see the width of the coal seams and realize that they will be mining here for decades. Then you realize just how much cash these projects will pump into the Mongolian economy for years to come. With that, let's go look at some pictures...


Any time that you go to the Gobi, half of the battle is just getting there. To call it remote is an understatement. Besides our pilot (coming towards the "terminal") and a few investors, there isn't much else to see...


Until you suddenly come across the minesite itself. This is a view from the lip of the Tavan Tolgoi pit. Note the beehive of trucks and shovels moving around transporting coal. Then remember that each of these trucks is the size of a McMansion. That's a big hole, and they're just getting started...




Remember again, that truck is about 100 feet away from me. It's the size of a house. Then look at how big the pit is. That's a whole lotta coal.


Off in the distance, you can see the mine dumps for the "little TT" mine which is publicly traded on the Mongolian Stock Exchange with the TTL ticker. When they were deciding licenses, TTL got a little piece of the action.


After going to Tavan Tolgoi, we went to see MMC's operation. MMC produced 7.1 million tons of coal worth $540 million in 2011. This year, production should ramp up to 10 million tons of run rate capacity. In addition, the company is adding a washing plant (blue, red and yellow) above which will increase the value of the coal that is sold.


A wash plant serves to remove dirt, rocks and other waste materials from the coal. This improves the overall quality and lowers transport costs as you aren't transporting waste material. Naturally, this substantially improves the overall value per ton of the coal. Note that the yellow module was being built as I was there.

The coal enters the plant by conveyer...

tt8 is then seperated from waste from the rock through a combination of crushing, screening and gravity...


... and in the final phase, fine waste is removed using water...


...side view

In summary, it's loud, it's wet but it makes the coal a whole lot more valuable--especially when you consider that it has to travel 250 kilometers by truck to the Chinese border.


This is a picture of the Ukhaa Khudag mine pit. If TT's pit is big, this is many times bigger. There's a whole lot more coal to come...

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Mongolia Road Trip Part II

August 29, 2012 6:18 PM

Please see Part I for the first 2 days of our trip.

As we travelled around, we got to visit dozens of small cities that I would never have had a chance to ever visit. When you pass by rapidly, they really don't look like much...

Mongolia Trip City

...but once you stop and look around, you find all sorts of interesting sites to check out and people to see...

Mongolian darts this young boy trying his luck out at darts....

Mongolia Trip YAk

or this herd of yaks enjoying the last few days of summer...

Soviet Debris

....of course there is Soviet era debris all over the place. One can only guess at what this factory once produced, or why some technocrat decided that this valley should have one factory and little else.

Mongolia Trip Canyon

Mongolia Lake with Ger

Mongolia Trip Lake 2

Fortunately, there is plenty of great scenery to distract you from the rotting industrial carcasses.

Mongolia Trip Lake with Ger

Finally we reached our home for the night....

Mongolia Trip Lake

.... beautiful Terhiin Tsagaan Nuur (White Lake) next to the Horgo Volcano

Mongolia Trip Snow

It wouldn't be mid-August in Mongolia without waking up and being reminded that winter is only a few short weeks away...

Mongolia Trip Marmot Sales

Before heading back to Ulaanbaatar, I had one last mission--to try a local delicacy served up by these vendors...

Mongolia trip marmot

....marmot (tarvag in Mongolian)....

mongolia trip marmot cutting

...fortunately, my friends are experts at carving it up. What does it taste like? It isn't bad. It tastes like marmot, I guess... Then, I drank a huge glass of vodka, to ward off the bubonic plague that they sometimes carry....

mongolia trip rainbow

On the way back to Ulaanbaatar, we were treated to one final treat--a rainbow on the horizon. It's only fitting that summer lasts for a few short weeks here in Mongolia.... a full year of this would spoil us all.


All photos by Mili Martinez

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