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Memories bets on tourist boom in Myanmar
ONE of Myanmar's most well-known tycoons, and dubbed "Mr Clean" for his business dealings, Serge Pun finds magic in creating something from nothing.
"I love the challenge of building something from scratch, like taking a barren tract of land, and sculpting it into a sprawling golf course or a beautiful residential estate," said the executive chairman of SGX-listed Memories Group Ltd. "I consider myself something of an earth sculptor."
The real estate mogul is no stranger to adversity. Born in Yangon into a middle-class Chinese family, Mr Pun fled Myanmar after General Ne Win's socialist coup in 1962 for China, only to land smack in the middle of Mao Zedong's Cultural Revolution months later.
Following the closure of schools in Beijing, the 12-year-old was separated from his family, drafted into a Red Guard work unit, and sent - with thousands of other children - to work the fields in rural Yunnan. "Those years in China were really hard - there was very little to live on, and we had to learn how to survive," he recalled.
When a brief window of opportunity opened in 1973 for Mr Pun to leave China, he beat a hasty exit to Hong Kong, where he found himself with only HK$5 in his pocket. To get by, Mr Pun began working various odd jobs, including delivering ship supplies and selling air sanitisers door to door.
His fortunes finally took a turn for the better some months down the road, when he found employment at a property consulting firm run by a German entrepreneur.
Fast-forward a decade to 1983, and Serge Pun & Associates Ltd (SPA) - focusing on real estate brokerage and development - was founded in Hong Kong. Mr Pun eventually returned to his country of birth - in 1991 - to establish SPA.
"Nothing in life comes easy," the 65-year-old pointed out. "It's not about how smart or well-educated you are, or how many social connections you have, or the cash in your bank account. Don't kid yourself that success will just fall into your lap - you need to work hard and put in the hours," he added.
Today, Mr Pun's sprawling business empire focuses on six key industries - real estate, financial services, consumer, healthcare, automotive and tourism.
SPA's primary businesses are held through three flagship holding companies - First Myanmar Investment Co Ltd, established in 1992, was the first company to list on the Yangon Stock Exchange in 2016; diversified conglomerate Yoma Strategic Holdings Ltd listed on SGX mainboard in 2006, while Myanmar tourism services provider Memories Group completed its Catalist listing in January this year via a reverse takeover of SHC Capital Asia Ltd.
Memories Group, with a current market capitalisation of over S$60 million, operates an integrated tourism platform that comprises the three core businesses of experiences, services and hotels.
The experiences segment consists of Balloons Over Bagan - one of Myanmar's most iconic tourist attractions and the largest commercial hot-air balloon business operating out of Bagan and Inle Lake region - and Bagan Land. The latter is a proposed hospitality development that allows visitors to explore the ancient city of Bagan, famous for its gold-leaved stupas and spires.
Its services segment - under Asia Holidays Travel & Tours Co Ltd - customises tourism services and manages travel logistics for travel agents and individuals. It also organises meetings, excursions, conferences and exhibitions. Its hotels arm consists of Hpa-An Lodge, as well as Pun Hlaing Lodge - a 46-room urban resort located in Yangon's Pun Hlaing Estate.
The group has also made a slew of acquisitions over the last few months. In March, it acquired Burma Boating, which offers premium cruise experiences on luxury yachts in southern Myanmar's Mergui Archipelago, noted for its unspoiled beauty.
In May, Memories Group purchased the 26-key Kayah Resort in Loikaw, Kayah State, which has been repositioned as an upscale resort under the group's four-star Keinnara brand. In July, it also acquired the development rights of three islands - Bo Ywe Island, Nga Mann Island and Kyun Pila Island - along with Awei Pila, a five-star beachfront hotel on Kyun Pila Island.
That same month, the group also purchased a three-star, 72-room business and leisure hotel - Suggati Mawlamyaing in Mon State - which is scheduled to begin operations by year-end.
The group targets growth by augmenting its asset base and increasing income streams through the acquisition of good properties.
"We want to boost our bottom line in the shortest possible time frame. This means M&A will be a major tool, and our preferred strategy of expansion in the near term," Mr Pun said.
To this end, the group's listed status has been a boon. "Because of our listing on SGX, we've been approached by many local tourism operators offering their assets in exchange for a stake in Memories Group, which in turn offers them wider exposure and professional management expertise," Mr Pun said. "It's a win-win situation for everyone."
Meanwhile, the outlook for the country's tourist arrivals remains bright. According to official statistics, Myanmar's travel and tourism sector contributed about US$1.97 billion in 2017 to the nation's GDP, compared to US$3.2 million in 2011. This more than 600-fold increase over the years proves that tourism is a large growth driver for the country, Mr Pun noted.
According to the Ministry of Hotels and Tourism, the country was estimated to have received six million tourists in 2016, with this figure forecast to rise to 7.5 million by 2020.
Recognising this, the Myanmar government has developed a Tourism Master Plan 2013-2020 that sets out various strategies to develop and manage the industry on a sustainable basis. This is to ensure that the current natural environment is preserved, while it gears up to list Bagan as a Unesco World Heritage Site.
Essentially, the country's uninterrupted coastline of 1,930km along the Bay of Bengal and the Andaman Sea, together with its treasure trove of archaeological and natural attractions, puts it in good stead.
"This makes Myanmar a perfect fit for the prevailing trend of personalised, authentic and experience-driven travel, with the younger, more sophisticated and affluent travellers willing to spend more for once-in-a-lifetime experiences," Mr Pun noted. "This is an industry that you don't have to bet too much on. It will definitely grow, and the potential is enormous."
Nonetheless, Myanmar - described by some as Asia's final frontier economy - faces significant challenges.
"Apart from upgrading the country's infrastructure to accommodate the growth of tourism, another issue is to consolidate the democratic process that we've fought so hard to achieve, and continue maintaining the needed rule of law," Mr Pun said.
Over the past year, Myanmar's human-rights record has been dented by the Rohingya crisis, as well as the recent jailing of two Reuters journalists investigating the killing of Rohingya villagers by security forces in the western Rakhine State.
In early October, the World Bank downgraded its growth projection for Myanmar's economy to 6.2 per cent from an earlier forecast of 6.8 per cent for the fiscal year ending March 31, 2019, citing factors such as floods, inflation and the Rohingya crisis. Nonetheless, over the medium term, domestic growth is expected to gather pace on the back of several investment-friendly laws that have been passed, it added.
"It's quite evident that, with regards to Myanmar, the world is divided into two camps - the first talks a lot about human rights and lofty democracy ideals, and they want to punish Myanmar with a big stick," Mr Pun said.
"The second comprises nations who recognise that, regardless whether Myanmar has done right or wrong, and despite its faults, the country is in an embryonic stage of democracy and growth, finally opening up after decades of isolation and military rule. And this camp believes that engagement, rather than hammering or browbeating, is the most constructive approach."
While the first camp is dominated by a number of strident voices, it is the second group - with its pragmatic focus - that is critical to the country's future, he added.
Overall, Mr Pun is sanguine about the nation's prospects. "I'm not fearful that Myanmar might go belly up - far from it. Myanmar is not a country or state that has lost its direction - we know where we need to go, and we will continue along that road," he said. "The only issue is the speed by which we arrive at our goals."
And essentially, it is this upbeat spirit that defines Mr Pun. "Optimism is totally indispensable in life," he emphasised.
"I have yet to see any pessimistic person achieve real success. This is because he would be ready to give up any measure of a win - without being aware of it, and even though it was already in his grasp - because of his negative attitude."
- This is an excerpt from SGX's Kopi-C: The Company Brew, a regular column featuring C-level executives of SGX-listed companies. Previous editions can be found on SGX's website www.sgx.com/research