Tourism developers in Myanmar look to the Mergui Archipelago

Deep in the south of Myanmar, the Mergui Archipelago is almost off the map. Mostly uninhabited, the islands are home to around 2000 people, mostly Moken, known as “sea gypsies”, many of whom are skilled divers and fishermen living a semi-nomadic lifestyle. Some of the roughly 800 limestone and granite islands are just rocks jutting out of the sea, while others are clad with untouched forest and fringed by white sandy beaches. With its natural beauty, this Andaman Sea archipelago is attracting attention and could be the next frontier in Myanmar tourism.

Attractive

Although the Myanmar Tourism Master Plan 2013-20 (MTMP) makes no reference to developing Mergui, with its coastal plans focussed on the Indian Ocean coast, the authorities are nevertheless considering whether to allow developers to build as many as 30 new resorts on the island chain. If they give their backing to the proposals, it will mark a huge step forward for the region’s fledgling tourism industry.

Until 20 years ago, the area was completely off limits to foreigners, and even now every international visitor is required to have a special permit, which costs about $100 per person, depending on the length of the trip and the location, and takes at least two weeks to secure. The necessity for permits reduces flexibility for tour operators and makes it difficult to allow changes to bookings or sell products “last minute”.

There is currently just one hotel in the archipelago, Myanmar Andaman Resort, a rustic facility with 22 chalets on Macleod Island (many of the islands retain the names given to them by the British). For the Mergui area as a whole, including the mainland, the Ministry of Hotels and Tourism (MHT) reports that there were five hotels, motels and guest houses offering a total of 196 rooms at the end of 2014, which is more than double the number in 2013. By contrast, Ngapali, the country’s premier beach destination, around 400 km north-west of Yangon, had a total of 23 hotels and 826 rooms at the end of 2014, according to the MHT.

Sailing

For now, most visitors to Mergui arrive on sailing holidays, spending a few days aboard a yacht travelling around the archipelago, swimming, diving and soaking up the sun. Joining a group tour makes it easier to manage the red tape associated with a visit to the area. Sailing is also one of the best ways for tourists to appreciate the natural beauty of the archipelago. The islands are so sparsely populated that it is possible to sail for days without meeting anyone else.

Burma Boating, which started its third season in Mergui in 2015, expects as many as 600 people to join its sailing trips in the archipelago in 2016, Adrian Zdrada, sales director at Burma Boating, told OBG. In the company’s first season, he estimates that this number stood at about 80, with most customers coming from Europe and the US, with a few Australians.

On The List

 At a high-level tourism conference in Naypyitaw in early 2015 the MHT declared the islands, “on the list” of locations to be developed for tourism, according to Zdrada, who was in the audience and managed Myanmar Andaman Resort before joining Burma Boating. However, there have not been any announcements of incentives specifically for investments in the Mergui. “The situation is going in the right direction, but the part that is missing is a very clear message that the government wants to make Mergui a major tourist destination, that it will be developed in a sustainable way,” Zdrada told OBG.

Initial steps have been taken. In 2012 Myeik Public Corporation was set up to invest in new resorts in the Mergui, which is also known as Myeik in Myanmar. After initially proposing four developments, it is now focussing on a $4m project on Kadan Island, the largest in the archipelago and a 45-minute boat ride to the mainland and the town of Myeik, the commercial centre for the region. Work started in March 2015 and the company hopes to welcome its first visitors in 2018.

Ambitious

The most ambitious plans come from property developer Zochwell Group, which wants to build a $1.2bn marina, luxury hotel and casino complex on Victoria Island, only two nautical miles from the mainland. Further ahead, Zochwell intends to build a bridge linking the island to Kawthaung. It also plans to upgrade the local airport.

The LuxDream project, if given the go-ahead, will be developed under a build-operate-transfer agreement with the Tanintharyi Regional Government. Zochwell Salon Development, the company undertaking the project, is awaiting approval from the Myanmar Investment Commission, with the first phase, involving the marina and the 120-room hotel, expected to take around three years to complete. “We want to create the next Phuket, the maritime tourism hub of Myanmar and the Mergui,” Gareth Chin, chief executive of Zochwell Group, told OBG. “We expect 60% of our tourists to be domestic and 40% international. Myanmar has a huge population of 51m and, in time to come, the middle class will increase in numbers and form the mass of our visitors,” he added.

Eco-Sensitive

The authorities are being urged to introduce strict environmental guidelines for developers and investors in the archipelago. Environmental groups are concerned about the impact on an area which remains pristine and home to a sensitive ecosystem. Burma Boating hopes that legal protections currently given to Lampi Island and the seas around it, can be extended so the entire archipelago is recognised as a marine national park. Mergui’s isolation means there is next-to-no infrastructure to support large-scale construction. All materials would need to be transported across the sea from the mainland and work would only be possible during the dry season as the islands are all but cut off during the monsoon.

Logistics

Zdrada told OBG that building new resorts will require deep pockets, not only to complete construction, but also to cover the cost of operations. New investors will also need to consider power and energy sources, with solar one option (see Energy chapter). Transport for both guests and supplies, communications (especially in case of an emergency) and potable water are other key issues for discussion. The bigger the hotel, the greater the need and the higher the cost, particularly given the short season.

Experience also shows how challenging it can be to get a project off the ground. While the Htoo Group, a local holding company working in the sector, has been given permission to develop a number of resorts in the archipelago, no work has yet taken place.

Holiday companies operating in the area require licences, which cost $4000 for two years. Boats sailing around the islands also require an MHT guide on board, although as a sign of how times have changed, in recent years the guides are no longer provided by the military or armed forces.

Weather The Weather

The weather is another significant factor for potential investors. The best time of year to visit Mergui is between November and April. The sea and the wind start picking up in May, when there is also a risk of hurricanes. The monsoon rains arrive in July and last until October. At sea, the swells can reach as high as three metres. The resort closes and boats stop sailing during this time. “The dream is to make this the new beach destination,” Achim Munz, a resident representative of the Hanns Seidel Foundation, a German political foundation, told OBG. “The biggest problem will be the weather. The whole of Myanmar is plagued by the rainy season. In Ngapali many of the resorts close for months and Mergui is even more remote and out in the open sea,” he said.

Access

The nearest domestic airport is at Kawthaung, which is currently served by Yangon-based Air KBZ and Mandalay-based Mann Yandanaporn Airlines. The flights, which stop in Dawei and Myeik, take three hours and cost about $200 for foreign travellers. Most tourists, especially those coming to sail, currently choose to enter Myanmar via the Thai border crossing at Ranong, which has direct flights and express bus services to Bangkok, and good road connections to Phuket. Zdrada estimates about half those joining Burma Boating trips enter the country this way. Those arriving through Ranong have to take a boat across the river to Myanmar after clearing Thai immigration, and unless they apply for a visa ahead of time, their entry permit will allow them only to travel in the archipelago, limiting the options for onward travel.

While Mergui has attracted interest from foreign tourists, the potential from the local market may be more subdued. As well as the expense involved pricing out many domestic travellers, the archipelago may not offer the type of exciting atmosphere people from Myanmar want, Daw Su Su Hlaing, managing director of Ayarwaddy Travel and Tours, told OBG. Those who can afford it will go to Phuket or Koh Samui.

Mergui may have significant potential as a beach destination, but the mass tourism that has spurred the development of neighbouring Thai resorts looks unlikely to unfold in the archipelago. Its future is thus more likely to remain a niche destination appealing to those with the means to get “away from it all”.

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The Report: Myanmar 2016

Tourism chapter from The Report: Myanmar 2016

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