With every step Myanmar (Burma) takes towards political reform, western bankers are closer to moving into a new emerging market. When they do, they might want to look at the experience of other countries in the region that have made the same transition.
Until a year ago, Myanmar was a pariah in the world economy: a repressive regime, holding political prisoners including Aung San Suu Kyi and cruel to its citizens, in particular ethnic minorities. Then came an election hardly a model of democracy but a start then Suu Kyis release, then a promise of a civilian leadership, and most recently a freeing of political prisoners.
Now Hillary Clinton has visited and upgraded diplomatic relations, the EU has ended travel restrictions and crucially Suu Kyi has stopped calling for a tourist boycott.
So, the direction is clear, and it seems it wont be long until US and European banks are allowed to do business in the country perhaps not directly with the big state-owned oil-and-gas players at first, but certainly with the nascent private sector.
In working out how this will play out, its instructive to look at two other Asian countries: Indonesia and Vietnam.
The Indonesian example is useful because it shows what happens when a country moves from a military-led dictatorship to a democracy. Lesson one: it isnt easy. In fact, for years its horrible. Lesson two: it can work out fine. That doesnt mean ushering in the pro-democracy figurehead with open arms Indonesias president is a retired army general but the compromises along the way can be managed and the economy can grow mightily.
The Vietnamese example is illustrative because it tells you how little a country has to move for the west to decide its OK to engage with it. There are no free elections in one-party, Communist Vietnam, nor the slightest hint there ever will be, just like in China.
Vietnam is not noticeably any nicer to its citizens today than it ever was, yet it has attracted bounteous FDI, portfolio flows, and foreign commercial and investment banks. In other words, a country only has to open up a bit for it to become officially OK to be pitching for business there, and once that happens, its open season.
One problem, however, for international, western banks is theyre late to the party. It has never bothered Chinese, Thai or any Asian banks that the rest of the world doesnt like Myanmars generals. Its in Asean, and therefore theyve always done business with it.
Still, the trade flows between Myanmar and the rest of Asia represent an opportunity for commercial bank involvement, and one can envisage a path towards a more active stock market (remember, Vietnams only started in 2000, with just two stocks) and a privatization programme of the big oil, gas and even teak enterprises.
Whats next? There will be a by-election in April, in which Suu Kyis National League for Democracy will participate, and after that the US will make a decision on the sanctions it has had in place since 1988, which among other things freeze assets and curb money transfers.
The UK and EU will be watching closely too. If it goes well, its not too hard to picture branches of HSBC, Standard Chartered and Citi on the historic street corners of central Yangon before too long.