Myanmar, Republic of the Union of: Interview with Mr. Billy Harkin

Mr. Billy Harkin

Chairman (Energize Myanmar)

Mr. Billy Harkin

Thank you very much for taking this time to meet with us. Myanmar's government aims to achieve national electricity coverage by 2030. However, today only one third of the people in the country have access to an electricity supply. What do you think are priorities to achieve full national coverage as soon as possible?

Actually, according to the most recent numbers, 39% of the 54m people now have access to an electricity supply.  To be precise, “100% electrification” is very different from “national coverage” and the definitions are important. We can do one hundred percent electrification in a month, for about ten million dollars, by giving everyone a solar lantern, with only a couple of USB Ports to be able to run a small light for a while and charge a phone.  What we are saying though is that every building in Myanmar should have affordable, reliable, adequate amount of, 24/7 electricity. In the end, electricity is an engineering solution.

Of the various components involved in power – generation, transmission and distribution - what do you think are the most crucial problems now for Myanmar?

I compare this to a three-legged steel stool; it doesn't matter which of those legs you break off, the thing is going to fall down.

Let me explain. It doesn't matter, for example, if we triple Myanmar’s generation, because we cannot get triple the power to the buildings that need it. If we prioritize fixing the transmission lines but we don't do the generation or the distribution, it doesn't matter. So, we cannot simply focus our attention on one thing, as if fixing one thing first would be so terribly focused and strategic. We need to fix all three legs of the stool.

When it comes to ‘energy mix’, no country on planet Earth has ever done it. Every country writes their strategy backwards, usually 10-15 years afterward. Usually countries simply pursue the most obvious path. It's like Norway, which is 98% hydro, because they've got fjords.

So what's the next step in a practical way?

Well, to have 20 gigawatt more by 2030 is a target and an aspiration. A plan would be an explanation of how we are going to have a certain number of power stations, of this type in these locations, funded like this and operated like that.

And is the country getting closer to doing that?

For individual power stations, and individual projects, yes, but there are only 52 power stations in Myanmar delivering 18 terawatts totally, and Thailand's got 200 power stations. In Myanmar's national plan, for 54-55 million people, the 20-gigawatt target means having only half as much electricity as Thailand within 12 years. Today, Myanmar has 1/5th as much electricity per person as Thailand. So, to be blunt, Myanmar is so far only aiming to be half as good as their neighbors are now, in 12 years. What we, at Energize, would like to aim for is 36 gigawatts in 12 years, which would put Myanmar on a par with its Asian neighbors.

Business people here complain that the 12-point government plan is not clear. Apparently, there is a similar issue with the national plan for electricity?

If you've got the aspirations and target, you just have to have an actionable plan. Who's going build what? When? Where? Now, we are doing this plan as a company. We have said we believe the national target will at some point be changed to 36-gigawatt. The private sector in Thailand is a great example because 20 years ago Thailand had the same electrification level as Myanmar, and then Thailand decided to privatize and open up the sector. In addition to 5 times higher GDP, they now have 5 times as much GDP as Myanmar. There is a very real causal connection between electrification growth and GDP growth.

Myanmar needs to get to real 100% electrification as soon as possible. And it's more serious than money and business. In Yangon six people die every week crossing the road because it is too dark for drivers to see them. Another terrible fact – 120 people fall down holes and die every day in Myanmar because it is too dark for them to see and be safe. Plus 85% of all cooking is done with solid fuel, cow dung and charcoal. As a result, respiratory disease is actually the number one disease in Myanmar.

You also have an interest in the health problems cause by access to clean water?

All of our CSR activity is concentrated on water; clean delivery and management and education and trying to improve quality of life with good water management.

Energize Myanmar was founded to become the leading private company in terms of energy production and supply in Myanmar. How and why did you get started here?

Well, we did not plan on that from the beginning. I have been coming to Myanmar for 21 years because I met a Myanmar Lady Doctor in Scotland 22 years ago. When I asked her where she was from and she said Myanmar, I did not even know where it was. I came to Kawthaung which was called Victoria Point after Queen Victoria. I came here and fell in love with the people. I asked an old lady that I met, “Why are you so happy when you are so poor?” She laughed and said “No, no, you don't understand. We are only poor in money, we are not poor in love, or family, or spirituality, so we are not really poor at all.” That hit me like a bomb. To an average Myanmar person wealth is not a question of money, it's a holistic question. Also, women have had equal rights for 1000 years in Myanmar. There is no word for feminism in Myanmar because it doesn’t make sense. When I try to explain, they ask me “So you're saying in rich countries, in developed countries, men and women are not equal?”

So I was struck by the culture. Then, several years ago when President U Thein Sein was going to Norway, Dr. Moe accompanied him. He was traveling with a group of the top Ministers at that time and I joined them for the London part of the trip, where I learned another important lesson. I had assumed that they would have a much more centralized, socialist viewpoint of the economy. Instead, I found that these guys were very strategic, way more knowledgeable than I ever expected, especially coming from a closed country. They are open to challenges, debates, discussions. I found that enormously interesting: the level of awareness, and knowledge and openness and the strategic smarts. In the west people assume that Myanmar is backward thinking and has no clue about the real world. But thankfully that isn’t true. There are still a lot of huge gaps in experience in Myanmar. The question was how to go from a central socialist economic system to an open market economy. Myanmar is wrestling with that and it's a huge challenge. In Myanmar they say that they never shut the door to the world, the world shut the door on them and handed China a near monopoly in Myanmar for a long time.  Myanmar was delighted when the west opened the doors again because now it had more choices. They can negotiate better deals, better prices, better terms. In my estimation, sanctions actually held Myanmar back. Lifting sanctions also triggered Myanmar to jump into privatization.

On an early trip after that visit, we thought that telecommunications was interesting. In my view the only thing that trumps electricity is access to information. The military government had decided that they were going to privatize that telecommunications sector first and that they would invite tenders for four licenses. Myanmar has done that spectacularly well: the fastest growth of a telecom network anywhere in the world in the history of telecommunications: from 6% to 85% in 3 years. Not only that, but everybody thought that Myanmar was too poor to use digital, that they would never have 3G or 4G. Yet now 85% of the people who have phones now have smart phones.  

This has changed so much socially. I think this is the case study of how to rapidly increase your telecommunication density in the country. Myanmar is the leader in the world for this transformation. Usually if you look at other countries, they have chopped the licenses up into smaller pieces and the funders are not happy, the telecoms are not happy, the customers are not happy, but the government's happy, because they are getting big licensing revenues. In contrast,

Myanmar got it beautifully, absolutely correct. Everybody's happy, growth is fantastic, service is really good, and prices are ok.

There are several lessons to draw from this. First, Myanmar can do top-quality things that no other country can do. The privatization of the first ministry, after 60 years of having the doors closed, everybody agrees was an unsurpassed success. The challenge is that there are very different issues around privatization of the power sector. With phone cards, the customer walks into the shop and pays in advance. In electricity, you generate electricity and then sell it to the government. You don't have direct sales to the customer, and you don't get paid in advance.

I wanted to ask you about hydro-power projects that you are involved with?

Our first major project is a 152 MW hydro power station called Middle Paunglaung.. It’s 50 km east of the capital and it's 152 MW of what they call installed capacity. Our hope is to generate enough electricity to provide for another half a million homes and businesses. So it's pretty significant. But that said, of the 20 GW-national target it represents just 3%, so we've got a lot of work to do.

How are you going to reach this target, from 3% to one-third?

Our second project doubles Myanmar’s total current electricity. It's called Project EMPower. This is called an LNG-to-Power, which means that we put LNG into new highly efficient gas systems and produce electricity and send most of it to Yangon and the national grid. This is done around the world in various locations, but not yet in Myanmar.

What are the challenges to this project?

It is more difficult to organize the maritime logistics. Not everybody has 14 meters of depth at the shore to allow the ship to come to shore. The major issues are the depth of water and the shelter because during cyclones ships have to disconnect and wait out at sea.

LNG is the safest form of power generation in the world. Safer, even, than nuclear. There has never been a death in the transportation of LNG handling, not one. A lot of people think it's over-regulated and that that is making it more expensive than it has to be. It is super highly regulated, so it's super safe.

In the world for the last 135 years the energy sector was dominated by oil and now it's not. The countries that own the gas are very different politically and culturally from the countries that own the oil. My expectation is that the world is going to become a more peaceful place and we are going to see an awful lot less fighting about gas, because usually America doesn't want to fight Australia and Canada.

I would like to ask you what your prediction is in terms of foreign energy companies in Myanmar?

They are all here. In the early days there was a bigger mismatch between what Myanmar requires and what the world was willing to engage with.  A lot of companies came and sometimes

Myanmar wasn't ready but very often the companies were not ready. These days I believe Myanmar is much more ready but many foreign companies are still unwilling to come. So I actually think just now Myanmar is not the limiting factor to foreign direct investment.

I do believe that the foreign investment law, the electric law, the repatriation of profits and funds... everything points toward opportunities. Myanmar is genuinely ready for business. For me Myanmar is readier for business and more embracing of business than the business community is yet of Myanmar. And what we try to do is encourage them to come. Myanmar is bordered by five countries and is the size of France and the UK put together. And Myanmar will have border relationships with each of those five countries. The border areas have always held particular challenges for the political leadership but the country has been able to gradually overcome them and develop a peace process. So please come and invest in Myanmar, don't let that hold you back.

From your personal experience, how would you explain to international businesspeople that this is the right time to come to do business in Myanmar?

I'd say if you would make a comparison between the California Gold Rush and investing in Thailand 25 years ago, this is investing in Thailand 25 years ago; this is not the California gold rush. People that came here 5 or 7 years ago thought that it was the California Gold Rush and they all came and thought they would just buy a shovel and go home rich. Then they discovered that never happened for most people in California and it's not going to happen for you here. But it is like coming to see Thailand 20-25 years ago. As you know, business people take decisions based on their assessment of risk and people have different appetites for risk and opportunity. For me the biggest losers are the ones that could do well here and more importantly contribute to Myanmar but they don’t have the appetite. The country will have ups and downs but it isn't going backwards. Those that have come have spent billions and they have completely changed lives. Not only did they make money, they absolutely changed millions of lives in Myanmar. Come and build power stations in Myanmar. Come and help us sort out electricity.

The people who build power stations are all here but the people who fund power stations are not. In Myanmar, the national target of 20 GW will require a 30-billion-dollar investment, on average. We need another 8 billion for transmission another 8 billion for distribution. On average, Myanmar needs 40 billion for the current national target. The World Bank offered 1 billion in the next 10 years. So, Myanmar is just 39 billion short. If we could just figure out that 39 billion, all of the engineering companies are ready.

Myanmar is having to trying to get G-to-G with the ASEAN+3 because ASEAN+3 always does business with each other. They don't discuss politics, religion or border issues. Those 3 things. Every western country meanwhile seems to consider those issues to be priority for doing businesses in Myanmar.

If you look at it, there are only two places in the world like this: Turkey and Myanmar. Those two countries have connections between critical parts of the world. Turkey connects Asia and Europe. Turkey is completely unique in that regard. In this part of world, that's Myanmar. Myanmar is the gateway and land border to 40% of the world population and the largest two populations on earth.

From a business point of view, how does that make Myanmar think and behave and operate and take decisions? In ASEAN there are ten countries. Two are Christian, three are Muslim and five are Buddhist. And of the five that are Buddhist, two of them are communist. Myanmar is a Buddhist country, which is the majority in ASEAN, as with China, Korea and Japan. The people of Myanmar thus communicate more effectively with their ASEAN+3 neighbors. I have been coming here for 21 years and most of our company employees are Myanmar people. I come from a different background as well, but I know that we need mutual respect. Any decent human being feels that way. I think that western organizations need to keep that in mind.

Could you explain some of the challenges of managing a local office and how you've faced those challenges, because this is something that a lot of people struggle with.

The gap between me and the way I think and perceive and see things and communicate things with our Myanmar people in the office, as well, was fascinating to me. Irish people like to think they can talk and we think we can communicate with people. I find myself so many times thinking… “I have no idea what's going on.” or “How they can possibly have that opinion about this thing?” I have ended up causing more trouble by trying to change things than by just adapting.  

Another issue that I had at the beginning was with people freely expressing their opinions. I would ask people for their opinions and they would just agree with me. So I would say, “No, no, I want your opinion - you are the transmission guy, you're the power engineering guy, I need opinions on this.” And they would continue to agree with me. So then I said, “I don't care what your opinion is, and whether you agree or disagree, but I am going to sanction you if you don't have an opinion and you don't have the guts to express it.” And one of them said “Well, I don't think we should be doing this...” And I thanked him and we laughed.  Once we started laughing, then we could talk.

I also explain to people coming to Myanmar to do business for the first time, don't think if you treat people respectfully, give them a good and interesting job, and pay them higher than the market wage, they'll stay with you. You must do one more thing; you must help them to develop. People prioritize personal development because they know that they need it in order to progress and achieve higher positions in the future. So if the national average of the country is 20 and you pay them 50, they want to clearly see the path toward earning 600. They know that they need to learn better English, more skills, different business practices. I've never seen people so hungry for personal development and willing to do whatever it takes to get there. They are incredible. And if something happens, like last night we had to work until 5 in morning, we had 12 people willing to do that with us.

We also try to foster a family environment. Every Christmas we dress as Santa and give presents to the kids in the local Buddhist run orphanage. Most of our staff is Buddhist but they are excited and happy to do it.  But what you see there is the mix of all those cultures - Christian, Buddhist, no-religion, and everybody is happy. It is a pity how the international media has portrayed this situation. For them, Myanmar is just Buddhists killing Muslims and Muslims killing Buddhists. The reality is that you've got a Protestant church, a Catholic church, a synagogue, a mosque, and a pagoda all in one place and everybody lives and works in the same place. Myanmar people live side by side, of any religion, any tradition, rich or poor, there is usually not a problem and yet that portrayed situation gets all the attention.

But let’s talk about the real drivers of the economy. Ninety-five percent of all jobs, 95% of all exports, 95% of all GDP is generated by SMEs. It's not the government, it's not the big companies - the biggest creator of jobs in any economy is SMEs. Why are SMEs not able to pay more than 120$ a month to these people? Because they are not trading enough with the world, and they are not adding enough value to these products. Because I come from Ireland and spent half my life in Scotland, the question became, how can we get European SMEs interacting with Myanmar SMEs?

A lot of people of Europe, America, and Australia think if Myanmar doesn't open up to do things the way we want there is going to be no progression with this country. I would argue that Myanmar has been progressing. For me the more direct investment Myanmar can attract, and the quicker, the better. That doesn't load the country with so much debt that it ends up like Ireland did 10 years ago. Myanmar has been very sensible and currently has limits of 20% of GDP for foreign borrowing on official GDP of 68 billion a year. Many say that real GDP may be up to three times more, because of the cash economy and that long border with 5 countries.

What is your final message for the readers of HBR?

Come and do business in Myanmar; build power stations, help sort out electricity for this country. As quickly as possible. Just do it.