International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, will give $80 million to subsidiaries of Hong Kong-based hotel owner and operator Shangri-La Asia Ltd to expand the latter’s hospitality business in Myanmar.
The Washington-based lender said the loan will “improve the country’s business and travel infrastructure” by providing international-standard rooms and conference facilities, boosting Myanmar’s tourism sector, contributing to its economic diversification and sustainable growth, and creating jobs.
IFC’s investment will be used to complete the renovation at the Traders Hotel Yangon, majority-owned by Shangri-La, and also increase its capacity from 270 to 485 rooms.
IFC’s investment will also be used to complete construction of the Shangri-La Residences Yangon, a 240- apartment building, the lender said.
Both projects are expected to be finished in 2014, and are expected to meet the acute demand for hotel rooms and serviced apartments from business travellers and expatriate workers.
International arrivals in Myanmar have increased by about 30 percent a year since the economy opened, surpassing one million for the first time in 2012.
“This investment continues our relationship with IFC towards developing the hospitality industry in a challenging country environment in Southeast Asia,” said Madhu Rao, chief financial officer of Shangri-La, which is 50-percent owned by Kerry Group Ltd, a conglomerate based in Hong Kong that is controlled by Malaysian tycoon Robert Kuok.
“The projects’ key locations in the central business area of the country’s most populated city Yangon, along with Shangri-La’s quality, will set a benchmark and raise the quality of services available locally.”
IFC said it will work closely with Shangri-La to ensure that international environmental, health, and safety standards are adhered to at the sites.
The lender said the renovation and construction projects are providing jobs for more than 1,000 local workers. About 600 permanent employees – of whom about one-third are expected to be women – have been hired and trained in hospitality to operate the properties.
“At a time of growing economic interest in Myanmar, it is crucial to increase access to much needed business-enabling infrastructure to attract more investors and travellers, as well as helping place Myanmar on a par with other commercial hubs in the region,” said Vipul Prakash, IFC Director for Manufacturing, Agribusiness and Services, Asia Pacific region.
“The operation of international standard hotels and serviced apartments will help generate jobs and provide supply chain linkages to local farmers and suppliers, thus boosting the tourism sector and contributing to economic diversification and sustainable growth.”
Since the lapse of sanctions, IFC, together with the World Bank, has been extensively involved in reforms and investments in Myanmar. In FY13, IFC’s investments climbed to an all-time high of nearly $25 billion.