Courtesy of The Financial Times, a report on Myanmar’s investment potential:

Opposition leader Aung San Suu Kyi’s landslide victory in parliamentary by-elections in Myanmar has effectively fired a starting gun around the investment world.

The result would give her National League for Democracy party 6 per cent of the seats in parliament should legal and other difficulties be overcome. This ushers in the prospect of western nations suspending or dropping sanctions that have prevented or limited outside investment.

Hot on the heels of the election, this month the Asian Development Bank has upgraded growth forecasts for Myanmar from 5.5 per cent to 6 per cent. The country has also commenced a managed free float of its currency, the kyat, taken the first steps to setting up a stock exchange.

It also played host to UK prime minister David Cameron, the first western leader to visit the country since sanctions were imposed in the late 1990s.

The sheer level of foreign interest in Myanmar would be hard to overstate. Anecdotal reports say hotels are full and while investment is off the menu for most foreign investors, there are no limitations on research.

Julian Mayo, co-chief investment officer at London-based Charlemagne Capital, was in Myanmar’s former capital Yangon just before the elections on a brokerage research trip. He and fellow overseas investors visited a noodle factory and two property developments and had a meeting with a government representative. The country has changed dramatically since he first visited in 1985, says Mr Mayo, but not enough to convince him the time is right to invest, “even if sanctions are lifted tomorrow”.

But the country’s long-term prospects are exciting, he says. It has a border with both China and India, the region’s two economic powerhouses. Its population of 50m is not far off Thailand’s 69m and far exceeds Malaysia’s 29m. It used to be a major rice exporter, which implies that it could be again, and it is rich in oil, gas and other resources.

Given the lack of direct access by foreign investors, Mark Mobius, executive chairman of Templeton Emerging Markets Group, says the best approach is to look at foreign companies “that have exposure to Myanmar in their operations”. He cites Thai oil companies as a good example.

But others say there are few companies able to offer meaningful exposure.

“We did look for companies for which Myanmar accounted for more than 10 per cent of sales, and there’s nothing,” says Mr Mayo. He says the only company offering this sort of exposure is Yoma Strategic Holdings, which is listed in Singapore and invests mainly in Burmese real estate.

Mr Mayo says Yoma was “basically dormant” until Hillary Clinton’s visit to Myanmar in December, since when “it has gone through the roof”. The share price is up more than 700 per cent over the past year, according to Bloomberg, with most of the rise dating from Ms Clinton’s visit.

Another potential way to share in Myanmar’s economic growth is through private equity funds, once foreign investment is permitted.

Templeton is already investigating this route, says Mr Mobius. “We’re looking at a number of deals, but nothing is finalised at this stage.”

Leopard Capital, a Hong Kong-based frontier market private equity specialist, is further ahead, currently working on what Douglas Clayton, founder and chief executive, thinks will be one of the first private equity funds focused on Myanmar.

If economic liberalisation and global relations continue to improve as fast as they have been doing, Mr Clayton expects to launch the fund before the end of the year, and aims to raise $100m to invest.

Based on his experience in nearby Vietnam, Dominic Scriven, who co-founded Dragon Capital in 1994, advises caution.

“The most common mistake people make is to invest quickly without doing due diligence,” he says. As Vietnam opened up, foreigners compounded these errors by investing in too many start-ups run by individuals with no track record, and by investing with foreigners rather than locals.

“We had our ups and downs, but I would say the key thing we did was to really go local,” Mr Scriven says.

He advises potential investors to spend time studying the risks. “We’re going to look at the risk factors – nobody should expect to get rich quick.”