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Bracing for competition
IF your father were a tycoon and founder of numerous thriving businesses, it would seem a no-brainer to join him at the helm. But that prospect was not a straightforward decision for Melvyn Pun, son of Serge Pun and chief executive of Yoma Strategic Holdings.
With his stellar career of 12 years at Goldman Sachs Hong Kong where he had risen to the level of managing director and head of Asia ex-Japan corporate solutions group, the younger Mr Pun was initially reluctant to join his entrepreneur father. Over a period of less than 10 years, the elder Myanmar-born Mr Pun established a sprawling network of companies in Myanmar, under Serge Pun & Associates (SPA), with interests in real estate and agribusiness, among others.
Yoma Strategic is the Singapore-listed vehicle. It has a market capitalisation of roughly S$1 billion as at mid-September. It has been consistently proftable and offers shareholders, which include Aberdeen Asset Management and the Capital Group (as at end-July), a proxy for Myanmar's budding economy.
Says Mr Melvyn Pun: "I always had in my mind that I didn't want to be in my father's shadow. I wanted to learn from him, but I felt it would be diffcult to have my own legacy under his company. I also felt there was a big world out there. Working for my father wasn't an easy choice. In any job there is an exit, or retirement. In a family company you never really leave, even as you grow old. It stays with you. It's different.''
But the younger Mr Pun, 39, is making his mark. He joined SPA in 2013. In 2015 he became executive director and chief executive of Yoma. Under his watch, the conglomerate has further honed its focus on its core businesses of real estate, automotive and heavy equipment, and consumer, tapping into the needs of Myanmar's growing economy.
The common refrain in his approach to business is this: The company, its partners and staff must take the long view on projects. And, corruption is a distinct red line.
"In the last fve years, the company grew extremely quickly as the economy took off with Myanmar's (democratic reforms). Initially it was reactive, driven by people coming to us and expressing interest in working with us. People say we're at the right place at the right time. It's true, but we waited a long time for the right time. For 20 years no one was really excited about Myanmar or investing. Suddenly the floodgates opened and we got very busy.''
Myanmar is one of a few emerging markets that are attracting attention. It is regarded as greenfeld investment territory, blessed with a youthful population and natural resources. It also boasts a strategic location, poised to beneft from the growth trajectory of India and China.
The country, formerly called Burma, had been under military rule for more than four decades. Economic and political reforms began in 2011, including anti-corruption laws, and last year, an investment law to facilitate foreign and domestic investments in new areas to help diversify the economy.
Building for long term
Thanks to an early presence in Myanmar, the SPA group and Yoma have had no shortage of business approaches. After all, Mr Serge Pun, renowned for his business acumen and strong work ethic, is seen as one of a few go-to partners for investments in the country.
For Yoma, the challenge, says Mr Melvyn Pun, is to narrow down the group's focus. "We had a rough sense of what we wanted to do, building businesses that were long term,'' he says of the post-2010 period when Myanmar was on the cusp of reforms. "We avoided businesses that were short term – buying and selling goods and moving on weren't our goals. We looked for partners who were reputable with a strong brand and a reputation for building international businesses. But those were still pretty loose criteria. We ended up being in 30 to 40 businesses.
"Two to three years ago we started maturing in terms of understanding that there is a huge demand in Myanmar which will be there for a long time. We became a lot more disciplined. We still engage in a lot of discussion, but pull the trigger on very few (projects).''
Yoma's shift towards a greater focus on strategic businesses was borne of a realisation that even as a minority partner in a venture, the frm was expected to drive the business. The frm has since decided on the core businesses of real estate, automotive and heavy equipment, and consumer. He expects each of those businesses to be eventually as large as the Yoma group itself is today.
Mr Pun's eye is on the near term – that is, the next two to three years – when he expects a rush among foreign investors to plant roots in Myanmar. "I have a strong feeling that even though Myanmar seems less competitive now, in two to three years, many people will come in. The competition will be stiff. We have to build suffcient capacity and a competency barrier so that we are extremely strong when competitors come in.
"We've said this openly to our people and partners: Unless we are confdent that we can be a true leader in the relevant market or industry, I don't think we want to be in the business. We have a short window of maybe two years to build our competency ... Our growth rate should be very high, otherwise people should not invest with us.''
He believes Yoma has laid the groundwork to become a "strong blue chip'' company in Myanmar. One key differentiating factor, he says, is the frm's culture which empowers staff to speak up and influence decisions. This is unusual in a culture steeped in tradition, where respect for authority is ingrained, and employees typically view bosses with deference. "Our view is unless you empower the executives, why hire the best people? You are paying them too much if you don't enable them to make decisions.''
The KFC business is an example, he says, of a young, vibrant culture. "KFC is a relatively new business for us. We've grown fast and our reputation is quite good. I think we'll be successful because of the people and culture we've developed, which is unusual in a country that's very conservative and where people defer to the leader and authority.
"The youngsters who work for us are very vibrant and energetic. You can feel it when you speak to them. A lot of our innovations, the menu, how we serve, come from local staff. We want to perpetuate that culture down to the lowest level.''
Mr Pun himself was born and raised in Hong Kong, but returned to Myanmar frequently in his youth for holidays. He is a Hong Kong national. "My grandmother was there and my father's siblings. The Pun family has always been in Myanmar. Culturally we felt it was home and we wanted to grow roots there.''
When he screens for potential hires for Myanmar businesses, he looks for a quality he calls "love of country''. "Maybe love of country is too strong a word. But I want someone who is excited about the country, who wants to build and add to it for the long term. Of course I want experience and technical expertise. But maybe even more important is the ability to work with our people.
"I have come across many cases where the technical competence is very high and they seem to love the country. But when they're on the ground, they can't get along with people. Partly that's because mutual respect is lacking; this happens often with returning Burmese. You have experience, studied and worked overseas. You go back and think you are ... better. And very quickly you get rejected. You may have good ideas but if you're not accepted then you're not going to implement very much.''
Mr Pun is bullish about the prospects for Myanmar. "There is no doubt in my mind that Myanmar will grow a lot in the next fve years; the growth will be multi-decade. I see it as a 20 to 30-year period where we want to catch up with our neighbours. Myanmar used to be a wealthy country, very prominent and viewed with envy. We don't want to be the poor neighbour; we want to get back to that prominent space.
"I anticipate an increasing level of international engagement and investment. Three to fve years from now things will start moving at a fast pace.'' Yoma, he says, will "ride with the tide''. "If we can execute on being a leader in the industries we're in, it will naturally flow to fnancials, market share and to market value.'' W