Tag Archives: myanmar business

Yangon’s friendly shark and his secrets to cuisine success

Published in Mizzima Weekly on 20 February 2016

U Ye Htut Win (aka Sharky)
U Ye Htut Win (aka Sharky)

For 16 years, Sharky’s has satisfied Yangonite’s cravings for delectable cheeses, breads, gelato and cured meats, to name but a few of its luxurious offerings. During the decades Myanmar spent as an isolated, pariah state under international sanctions, such items would have been virtually unobtainable. However few would have complained: Myanmar’s population happily consumes more rice than anywhere else in the world and expats and repats were thin on the ground until the country’s reform process began in 2011. Yet the namesake of this foodie institution wasn’t deterred by starting out with a small client base; if anything it was a plus, as mass production has never been part of his game plan.

U Ye Htut Win (aka Sharky) views the world in terms of an 80:20 split – the 80 percent being “the big boys playing the industrialised game and then there’s us, the artisans, who look beyond short-term profits.”

‘Everyone wins’

However Sharky’s is no social enterprise and Sharky makes no apologies for the fact that his wholly organic goods don’t come cheap.

“From the beginning Sharky’s has always been labelled as expensive. That’s how it is – and I take it. But what I say is that at least I know why it’s expensive. I take care of my staff, I treat my animals well – everyone wins. Our profit margins aren’t gigantic. They are healthy – and that’s how it should be because this is a business and we have to pay our bills. Producing food on my terms is costly, but there is a reason why we do things the way we do. ”

Sharky told Mizzima Weekly that when he returned to Myanmar in 1996 after a life lived in many different parts of the world as the son of a diplomat, he was driven by a desire to “prove what can be done in a third world country with a first world vision and concept.”

Focus on local supply

Eighty-five percent of Sharky’s products are locally sourced and the entire supply chain is controlled by Sharky’s to ensure the high quality standards it prides itself on.

Take Sharky’s roast chicken, which differs substantially from its mass produced counterparts.

“People tend to only talk about how a chicken is bred. The slaughter part is gruesome, but you have to think about it,” he said.

Sharky's newest establishment on Pansodan Road
Sharky’s newest establishment on Pansodan Road

Sharky explained that his chickens stop being fed two days prior to being killed: they consume a liquid diet of probiotics to clean out the gut. Even if an intestine is ruptured by mistake, the risk of salmonella is slim. This practice is in stark contrast with mainstream poultry production in Myanmar.

“Because chickens are sold by weight, they are usually stuffed with feed and their stomachs are full of shit,” Sharky said.

That’s not be good for the consumer: nor are the incorrect bleeding techniques that often lead to contamination. Sharky’s drains the animal’s blood by slitting the throat as per halal and kosher methods. Most others don’t bother: a chicken may be struck from behind, causing its lungs to explode. Others die prematurely due to cramped conditions or illness, after which they are sold to market buyers. Sharky explained that any of these factors can result in chicken – a white meat – taking on a pinkish appearance even after it’s been cooked.

“It’s a warning sign that consumers should be aware of,” he said.

Sharky’s takes the extra precaution of dry plucking, as the more common method of a ‘hot water bath’ can lead to skin contamination via dirty water.

“Our methods are time and labour intensive, but in return the risk factors are eliminated,” he said.

Why staff and suppliers matter

The other component in Sharky’s quality control is heavily investing in its 230-strong team of staff, whether it be a pig farmer or a cashier. The average retention rate is 10 years, which is rather extraordinary in the hospitality industry – and in Yangon to boot.

“The reason why [my staff] stay is because I look after them as family members. We provide maternity leave, support for their children’s education and a catering food service from breakfast to dinner. We spend years investing in artisan training. The problems begin with constant turnover: your skill force gets diluted, which means that standard operating procedures aren’t followed. And if you comprise on that, your days are numbered,” he said.

Unsurprisingly, Sharky’s labour costs are double the norm of anyone in the business, he added.

Sharky’s also spends a great deal on top-notch cooking equipment: the most expensive of which is a rotisserie that cost 25,000 Euros and was imported from France. Sharky’s European hand-slicing cutters cost 15,000 Euros apiece.

Preserving Yangon’s architecture

Sharky’s latest investment is a downtown outlet that has delighted many fans – though perhaps no one more than Sharky himself. He discovered the space after being invited by his good friend, the owner of Rangoon Tea House, to provide comments on his newly opened restaurant’s cuisine, which is adjacent to Sharky’s Pansodan Street premises.

The 120-year-old building was originally a high-end department store and boasts high ceilings supported by Scottish beams and Lancashire steel. However during the aggressive nationalisation that occurred during the 1960s, the venue became a Chinese restaurant. Sharky first saw it as dirty and dark, with the Manchester bricks plastered over and a mezzanine design. Yet he immediately realised its potential.

“It was love at first sight,” he said.

He signed a long-term lease two weeks later to prevent the building’s impending demolition. However it took over a year to restore the premises to its former glory and save it from demolition from money-hungry construction companies.

“There was a sign out the front saying it was designated for destruction – the owners wanted to get rid of it and build something new.”

He pointed to a brash bank building opposite the street that was once a beautiful building as an example of the consequences of a collective failure to recognize Yangon’s ‘X-factor’.

Sharky enlisted support from Thant Myint-U of Yangon Heritage Trust and YCDC’s elected township official, who collectively convinced the owners that the building should be preserved.

“We proved that the building was sound and shouldn’t be demolished – and not only that, it should be value-added,” he told Mizzima Weekly.

Companies with vision

He expressed solidarity with Gekko, Union Bar and River Gallery, who “are showing how private enterprises are entering the market with a vision.”

“I believe that for Yangon to compete with other regional cities as a tourist destination, it has to preserve the value it already has.”

His vision is a downtown Yangon that tourists happily linger in – as opposed to what he sees as the current pattern of spending a day in the commercial capital to visit Shwedagon Pagoda before heading off to the more popular destinations of Mandalay, Bagan and Inle Lake.

When asked whether the year-long renovation process spilled into millions of dollars, Sharky declined to comment, saying only that “we spent a lot and it will take years to see the returns.”

‘Living food museum’

Sharky’s is also in the process of setting up a two-acre artisan factory in the outskirts of Yangon, which will cost an estimated US$2-3 million. On a practical level, the factory will improve cost efficiency by centralising the company’s logistics – and at the same time it will serve as a school for future Sharky’s employees.

Sharky returned to Myanmar in 1996 to “prove what can be done in a third world country with a first world vision and concept.”
Sharky returned to Myanmar in 1996 to “prove what can be done in a third world country with a first world vision and concept.”

“McDonalds has its university – Sharky’s will have its own to train and mould our workers. It will be another showpiece of what can be done in a third world country. The factory won’t just be a factory – it will be an atelier, an artisan workshop.”

Sharky plans to sustain the million-dollar factory by making it a destination unto itself – he describes the concept as a “living food museum”. The first phase will feature bread-making and it is scheduled to open to visitors in October.

Sharky has three investment partners: his elder brother Kyaw Htut Win, his sister-in-law Nant Shwe Zin and British expat Jane Brook, who he said was chosen because she was a long-term Sharky’s follower and “understood how we grew and sustained ourselves.”

Investors regularly rock up

While Sharky acknowledges that new investment partners will be necessary down the track – which include future plans to list on the Yangon Stock Exchange – for the moment he is more than content with the current set-up.

“We get offers from investment firms on a monthly basis and I turn most down,” he said with a light-hearted laugh.

“For the moment we don’t want more investors. I want to retain my creative freedom. Once you have new investors it changes the dynamics – they’ll want a profit ratio and to do that they will cut out certain departments that aren’t producing enough revenue.”

‘Fail again and fail better’

Sharky prides himself on being a self-taught butcher, baker and farmer – the only mentor he ever had was a Swiss cheese-maker.

He attributes his success to being curious, obsessed and willing to fail. His advice to the next generation of entrepreneurs is to embrace failure.

“Fail again and fail better. It’s the best teacher. Every entrepreneur has failed in one way or another before achieving something. You have to be a fighter. You have to be a shark.”

Why sharks win

When asked whether he still considers himself a shark, the 56-year-old paused and said: “I am not quite a shark. I am an alpha male; a dominant male – sharks are dominant predators in the sea.”

But really – a predator?

“Yes in one way I am, because you have to be. But nowadays I’m a friendly shark. When I was young I was so ambitious and was competing against all the odds to progress from being a worker to the owner [a feat he achieved and the company he named Sharky’s]. I was a foreigner in Geneva and didn’t master the language like most people. So I used everything I had: attitude, hard work, a little bit of luck and the right mentors. You have to have that fire – without it you won’t succeed.”

Aviation sector’s downward spiral

Published in the October edition of Myanmar: All That Matters

Mandalay International Airport. Photo: Sherpa Hossainy
Passengers board a flight at Mandalay International Airport. Photo: Sherpa Hossainy

Myanmar’s economy is on the rise and tourism is at its highest point in decades, but that alone has done little to help the country’s struggling aviation industry, which experts worry is being hampered by low safety standards and oversaturation in the market brought on by new carriers.

In 2010, just 791,000 tourists came to Myanmar. The Ministry of Hotels and Tourism is targeting as many as 5 million tourists by the end of this year after posting a record 3.5 million tourists and US$1.14 billion dollars in revenue last year. The rise in arrivals and the privatization of the aviation sector has spurred an influx of six new airlines – which now stands at a total of nine – in a country of only a few million fliers.

Realizing the market potential of Southeast Asia’s largest country, Myanmar’s civil aviation authorities have for years sought to upgrade its severely outdated airports, but a lack of regulation in addition to a profit-first mentality adopted by most airlines has resulted in airlines and authorities skirting international safety standards.

As a result, Myanmar’s air accident rate was nine times higher than the global average in 2013, U Win Swe Tun, director general of Myanmar’s Department of Civil Aviation (DCA), told Reuters.

Mandalay's airport terminal. Photo: Sherpa Hossainy
Mandalay’s airport terminal. Photo: Sherpa Hossainy

Htoo Group’s Air Bagan,which is owned by tycoon U TayZa, was ranked in January by AirlineRatings.com as one of the world’s most dangerous airlines following a number of incidences in recent years, including a fatal crash that killed two people at Heho Airport in Shan state on December 25, 2012.

But they are not the only ones. Many of Myanmar’s magnate-owned airlines have been the subject of minor accidents including Myanma Airlines, Air KBZ and KMA Group chairman U Khin Maung Aye’s Golden Myanmar Airlines.

“There are concerns over safety standards of some airlines operating within Burma. The [Foreign Commonwealth Office] can’t offer advice on the safety of individual airlines,” the British government’s overseas protection agency, the Foreign Commonwealth Office, states on its website.

To make matters worse, many of Myanmar’s 69 airports lack the capacity to follow international practices that would otherwise bolster the industry as the government spends just $12 million a year on maintenance. Among the issues that befall the airports include the absence of modern safety equipment, poor runway conditions, untrained staff and in some cases, air traffic controllers, who still perform their duties on paper.

“Yangon airport has a lot of constraints – the space is inadequate and the building and facilities are old,” said Air KBZ’s U Khin Maung Myint, deputy managing director of Air KBZ.

Air KBZ has a fleet of eight carriers, while most domestic airlines have two or three. It ranked second behind after national carrier Myanmar National Airways in passenger numbers last year. He said that foreigners now make up 46% of Air KBZ’s customers – a dramatic increase since the reform process began in 2011.

Beginning of the end

With the number of new airliners hitting a critical mass last year, profits in the local aviation industry have plummeted and many airlines have already been forced to consolidate their operations by installing code sharing arrangements with other airlines or closing down routes altogether. Golden Myanmar Airlines started operations in 2012 with 15 destinations – including international ones – but by 2015 it had reduced its route to just three destinations.

All routes between Yangon and Chiang Mai have been suspended, whereas 12 months ago at least four airlines, including Thailand’s Nok Air serviced the route.

“People tend to think that the aviation industry is a good move economically, but the reality is that scheduled carriers have a very thin profit margin,” said U KhinMaungMyint.

Bagan Airport. Photo: Sherpa Hossainy
Bagan Airport. Photo: Sherpa Hossainy

In mid-August, Air Bagan announced on its Facebook page that it was suspending all flights until repairs were carried out on its fleet of three aircraft.

“We find that business remains tough in Myanmar. There’s no question that it’s an irrational market. Everybody just follows everybody – there’s no real scheduling going on,” said Trevor Jensen, CEO of FMI Air, which is owned by Serge Pun and launched scheduled flights in May 2015.

Despite the growing number of foreign tourists flying throughout Myanmar, mergers and acquisitions are both necessary for the sector to once again become profitable, said FMI Air’s Mr. Jensen.

“Myanmar has 2.2 million passengers per year and nine domestic airlines. In Australia, there are 57 million passengers and four airlines. Having too many airlines means the customer loses out because if airlines aren’t making money they can’t provide a quality service,” he said.

He added that the majority of foreign fliers are mostly wealthy or on business, while the low-income segment has yet to make an impact in the otherwise expensive Myanmar market place.

There is some light on the horizon though, with several carriers, including Myanmar National Airways, Air Mandalay, FMI Air and Myanmar Airways International purchasing new aircraft – the latter inked a deal to lease 10 Boeings from GE Capital Aviation Services in February, with the first delivered in June.

The need for action

With the airlines struggling to survive, Myanmar faces another major challenge as it appears little will be done to repair most of its badly outdated airports despite promises that the government would handle the situation.

Onboard an FMI Air flight. Photo: Jessica Mudditt
Onboard an FMI Air flight. Photo: Jessica Mudditt

In late 2013, DCA announced that it would privatize at least 30 of Myanmar’s airports, however,that program has been delayed until at least the end of 2015 as it is necessary to focus on developing and upgrading airport projects in Mandalay and Yangon, said U Win Swe Tun.

In the meantime, FMI Air is trying to offer its customers a better flying experience by providing lounges at each airport it flies to. So far it has lounges in Yangon and Nay Pyi Taw and is in talks with Mandalay’s new management.

“The airport in Sittwe [Rakhine State] is nothing more than a shed really – there’s nothing we can do there. So we’ve bought  a really nice property in the centre of town which we’ll open as a lounge, ticket sales office and coffee shop and we’ll provide a shuttle service to the airport,” said Mark Turner, director of customer experience at FMI Air.

The recent announcement that $1.4 billion Hanthawaddy International Airport project in Bago has been delayed again, this time to 2022, has disappointed many.

The idea of constructing the country’s biggest airport was first conceived in the nineties but put on ice until 2004. When discussions resumed in 2013, officials said it would be ready by 2016. However talks with the original tender winner, a Singapore-led consortium,and DCA stalled in early 2014. DCA has since pushed back the opening date from December 2019 to 2022, with state media reporting on August 28 that there have been hold-ups in obtaining Official Development Assistance (ODA) loans to spend on the $1.4 billion project.

DCA’s deputy director confirmed that more time is needed to complete negotiations about securing ODA. There have been murmurs that some feel that the location of Bago, which is 80 kilometers from Yangon, is off-putting to some.

“People often say that Bago is too far from Yangon, but with improved infrastructure, such as the planned elevated road, or a high speed train, it will be convenient,” U Khin Maung Myint said.

He was also upbeat about the delay.

“There’s a lot of mumbling during the planning stage: but when it comes to construction, things will move quickly.”

Light at the end of the tunnel

Still, not all of Myanmar’s airport projects have failed. Yangon’s domestic terminal will double in size and is expected to be completed by mid-2016, while a consortium called Pioneer Aerodrome Services, which is a subsidiary of Stephen Law’s conglomerate Asia World, was selected in August 2013 to expand the international airport’s capacity from 2.7 million to 6 million passengers a year by 2015.

Mandalay International Airport is also slated for an upgrade and will become the country’s foremost cargo hub when the upgrade is completed next year, said U Ne Win of DCA.

FMI Air cabin crew
FMI Air cabin crew

He said that safety standards are also likely to improve when ASEAN’s ‘Open Sky Policy’ comes into effect later this year, establishing a regional safety authority that is modeled on the EU’s Aviation Safety Authority.

“We are still having discussions on most issues. It took the EU nearly 20 years to develop its single market. We are at the inception stage, so we need some time,” he said.

What is more, slight upgrades in domestic airline services have also begun to take hold over the past year as some are now offer online flight bookings, while the country’s first airfare aggregate website launched in June.

Flymya.com founder Mike Than Tun Win said that 95% of purchases are made by foreigners, which signals that there is a market eager to explore new growth in Myanmar’s aviation sector and that greater competition will raise service standards and offer more to what could only be described as disillusioned consumers.

“Airlines services offered in Myanmar are very similar and the routes are the same, therefore airline prices do not vary significantly. However, travelers do tend to want to look for the lowest price possible,” he said.

Digging deep – An interview with Ophir Energy

Published in Mizzima Weekly on 23 July 2015

Ophir's senior adviser in Myanmar, Andrew Chapman
Ophir’s senior adviser in Myanmar, Andrew Chapman

Ophir Energy plc is an upstream oil and gas exploration company which is listed on the London Stock Exchange and is headquartered in London, with operational offices in Australia, Tanzania, Equatorial Guinea, Gabon and Kenya. Ophir Energy was awarded the AD-03 offshore block in Myanmar’s Rakhine Basin and signed a Production Sharing Contract (PSC) with Myanmar’s Ministry of Energy in December 2014. Andrew Chapman is Ophir Energy’s senior advisor in Myanmar and he talks to Mizzima Weekly’s Jessica Mudditt about the company’s progress to date.

What do you attribute Ophir’s Energy’s success in being awarded a coveted production sharing contract?

Our success is due to a number of factors: our track record in deep water gas plays – [exploration activities elsewhere in the world] and our industry-leading deepwater drilling time and costs – we’ve always been very competitive as compared with other operators. We also have a very strong commitment to ensuring that local communities benefit from our investment. We decided to partner with the local Myanmar company Parami Energy Group, which has strong social and environmental engagements, which is aligned with Ophir’s values.

How would you describe the tender process itself?

The entire tender process from our perspective was excellent. It was carried out in a very transparent and efficient manner and compared favourably with other jurisdictions. The process was very smooth and it was undertaken without any suggestion of impropriety on any level. We were very happy with the speed in which it was carried out, which from start to finish was 12 months.

Please provide an update on Ophir Energy’s activities in Myanmar.

Last week we completed our 3D seismic data acquisition programme. It went without incident and was finished on time and under budget, so we’re very happy. The survey was carried out by [Norway-based] Dolphin Geophysical across the entire 10,000 square kilometre block. The results from the survey will tell us what’s possibly there, but we don’t know at this stage of course. The next step will be the interpretation of the data that’s been collected and that’s a process that will take several months. The data will be sent to either Perth or London for interpretation.

What are Ophir’s Energy medium and long-term goals in Myanmar?

The entrance of Ophir Energy in Myanmar two years ago was its first step in a Southeast Asian footprint. We see our investment in this particular block as a platform from which we hope to build up interests in additional acreage in Myanmar over time.

How is Ophir Energy ensuring that its presence in Myanmar is a positive one?

Ophir regards the local communities where we operate as valuable stakeholders and we treat them responsibly, with sensitivity and respect. Contributing towards the development of the economic and social conditions of these local communities is a key commitment of ours.

We will be funding the doctoral studies of a Myanmar geologist at Oxford University, who will begin her studies in October. Ultimately the idea is that what she will learn will benefit the country.

We are also evaluating a number of corporate social responsibility (CSR) projects in Rakhine State, as our block is located in offshore Rakhine State. The CSR component of Ophir’s activities is a very important one and will be ongoing; whether that means further scholarships or CSR-related projects.

To what extent, if any, has the drop in global oil prices affected Ophir’s enthusiasm for exploration in Myanmar?

The drop in global oil prices is of course affecting Ophir; as it as affecting all oil and gas companies. However our commitment and undertaking to Myanmar remains strong and intact. We have to ride through the storm – as everybody does – and take whatever measures we can to make sure that our costs are managed properly.

Are there any inherent challenges in doing business in Myanmar?

Naturally, each country and region has its own specific challenges. However Myanmar has undertaken a series of remarkable reforms over the last five years which have made doing business here significantly easier than it was previously.

For more information, visit www.ophir-energy.com