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.

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“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.

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“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:

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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.

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“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:

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“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.

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“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.

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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.

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

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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...

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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...

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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...

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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.

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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.

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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.

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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...

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

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

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...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.

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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

...like 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

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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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Mongolia Road Trip Part I

August 22, 2012 4:14 PM


I've now spent the majority of the last two years of my life in Mongolia, yet I haven't really ventured much outside of the capital of Ulaanbaatar. Last weekend, some good friends of mine took a roadtrip and I naturally decided to tag along. Here's the photologue of our trip. I hope you enjoy it as much as I enjoyed living it....

Hustai

We started at Hustai National park, an hour drive from Ulaanbaatar. Hustai is famous as it has the world's largest population of Przewalskii Horses, the native horses of the Mongolian steppes and is one of the only places in the world where you can see these horses in the wild.

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The Przewalskii Horse, the native horse of the Mongolian Steppe.

KharKhoren

After that, we continued west to Kharkorin, the ancient capital of the Mongolian Empire in the thirteenth and fourteenth centuries. Above, you can see the ancient walls of the Erdene Zuu monastery that were built over the ruins of Kharkorin in 1585. It's amazing to consider that this location was the capital of much of the world for over 100 years, yet few non-Mongolians have ever visited here.

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Gate in the walls.

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Erdene Zuu Monastery inside the walls.

Kharkorin stupa

A stupa inside the Monastery grounds.

Mongolian Trip River

Of course, the whole countryside is full of amazing scenery with huge open expanses of grasslands, mountains, livestock and families tending their animals...

Mongolia Trip open area

Mongolia trip landscape 1

Mongolian Road Trip Part 2

mongolian road trip part 3

mongolian road trip part 4

Part II will be published next week. All pictures were taken by Mili Martinez.

 

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