A Fireside Chat with Serge Pun Building Myanmar

Session Context & Strategic Framing

• The session, originally planned as a Young Leaders Club (YLC) interview with Serge Poon on his personal journey, was expanded to a broader public due to high interest in Myanmar's economic outlook.
• Mike Milken introduced the session by contrasting investment behaviors across nations, noting that high borrowing costs (e.g., 12% in India) often drive aggression, while near-zero rates (e.g., in Japan) can lead to risk aversion despite ample liquidity.
• Milken cited the Japanese pension fund's sale of $800 billion in government bonds to invest globally in high-yield bonds and stocks as evidence that governments are actively seeking investment outlets when domestic markets lack opportunity.
• Milken highlighted the "Milken Institute" philosophy of using financial incentives (e.g., the sulfur credit market for acid rain) to solve systemic problems, applying this logic to nation-building in emerging markets.

Geopolitical & Regulatory Developments in Myanmar

• US President Obama lifted sanctions on Myanmar, a move Poon described as a "new page" in development that extinguishes the cloud over American business investment.
• The General System of Preferences (GSP) designation will allow Myanmar to export to the US as a preferred nation with minimal to zero taxes, boosting the manufacturing and export sectors.
• Sanctions removal is general, though the US retains restrictions on arms and government debt classified as threats to national security.
• The lifting of sanctions was influenced by the wishes of State Councilor Aung San Suu Kyi, following her meeting with President Obama in the Oval Office.

Serge Poon's Personal History & Career Trajectory

• Early Life & Displacement: Poon was 12 when the 1962 military coup forced his ultra-leftist family to flee to China; they were later stranded during the Cultural Revolution and subjected to 4.5 years of hard labor in farms.
• Exile with Five Dollars: In 1972, following Nixon's visit to China, Poon's family was allowed to leave but was permitted only 5 Hong Kong dollars in currency, forcing them to leave with negligible assets.
• Return to Myanmar: In December 1989, Poon returned to Myanmar out of curiosity after a 26-year ban on former exiles; he had no initial intention to do business.
• Founding Moment: A meeting with General David Abel (the only Christian in the cabinet and a Sandhurst graduate) sparked Poon's nationalist urge to help rebuild the country, specifically starting with the dilapidated St. Paul's school.
• Organic Growth Model: Poon started a hotel in 1991 with 7 employees; by 2003, the group grew to 4,500 staff and 30 subsidiaries, including security (850 staff) and laundry chains, born from unmet market needs rather than a rigid master plan.
• Banking License: In 1993, Poon was awarded one of nine private bank licenses, eventually becoming the second-largest private bank in Myanmar with 40 branches before the 2003 crisis.

Crisis Management & Ethical Stance

• 2003 Financial Crisis Restrictions: Following Poon's public criticism of the government's handling of the crisis, regulators froze deposit-taking and lending activities for his bank but allowed it to retain its 41 branches and staff without rescinding the license.
• Survival Strategy: To survive the "de facto Western Union" period where only domestic remittances were permitted, Poon modernized systems using satellite technology.
• Operational Scale During Crisis: The bank processed 35,000 daily remittance transactions at $1 per fee, generating sufficient revenue to survive nine years with zero loans or deposits.
• Anti-Corruption Policy: Poon adopted a strict policy of paying no bribes in 1991, driven by the pragmatic decision that avoiding legal entanglement was preferable to short-term gain, citing the jailing of South Korean leaders as a cautionary tale.
• Cost of Integrity: This policy nearly destroyed the company during the "dark years" of 2005–2010, causing key executives to leave, but the company survived the 2010 political shift and election.
• Post-Crisis Recovery: By August 2012, when the full license was resumed, the bank had zero deposits and had lost market share, but it climbed back to the number four rank within three years.

Future Outlook & Investment Advice

• Five-Year Horizon: Poon is "extremely optimistic" for Myanmar's next 4.5 years, predicting a period of positive growth driven by the current government's focus on nation-building, rule of law, and anti-corruption.
• Political Risk Timing: He warns that significant criticism and challenges may arise around the next election cycle, potentially involving the scoring of the National League for Democracy's (NLD) performance.
• Infrastructure "Trunk" vs. "Branches": Poon advises investors to focus on "trunk" infrastructure (connectivity, roads, waterways linking Yangon, Mandalay, and regional borders to ports like Chao Phu) rather than "branches" (isolated projects), as the trunk is required to support future economic leaves.
• Long-Term Commitment: He cautions against short-term players, noting that returns in Myanmar will not be immediate, and advocates for larger investments in foundational infrastructure.
• Government Mindset: The current administration is described as prioritizing projects for the people rather than ministry self-interest, moving away from "trophy projects" that lack viability.
• Regional Connectivity: Poon supports India's use of Myanmar's Rakhine state to access its northeastern provinces, viewing this as mutually beneficial for both nations.
• Special Economic Zones (SEZs): The new government is rectifying SEZs awarded hastily by the previous regime to ensure sustainability, shifting focus from political accolades to economic viability.
• Rohingya Issue: Poon declined to comment in detail due to sensitivity but noted the government's priority on the issue, including the appointment of a 21-member committee and a Kofi Annan-led commission to address the Rakhine crisis.
• Compliance Challenges: Addressing audience concerns, Poon noted the difficulty in finding non-OFAC listed partners, though he acknowledged specific successes in the port sector.