Ayala Corp., the Philippines’ oldest conglomerate, is placing a $237.5 million bet on Myanmar as it seeks to double the share of profit from its overseas business in the next three to five years.

“Here is a country that’s going through a tremendous transition opening itself up,” Ayala Corp. Chairman and CEO Jaime Augusto Zobel told Bloomberg Television’s Haslinda Amin in Singapore. On Thursday, his company announced it will acquire a 20% stake in Yoma Strategic Holdings Ltd. and affiliate First Myanmar Investment Public Co.

Myanmar offers an alternative destination for manufacturers relocating from China to avoid U.S. tariffs, helped by a young working population, Yoma Chairman Serge Pun said in the interview. Myanmar, like the Philippines, has a “thirst for infrastructure” and a growing consumer market that both conglomerates want to serve, Zobel said.

Ayala wants 10%-15% of profit to come from overseas in the medium term and an “overweight” on opportunities in Myanmar is part of its regional strategy, Zobel said. The partnership could lead to more ventures in Asia, the Ayala and Yoma executives said.

“If scale comes to take place in specific industries between the Philippines and Myanmar, why not take that scale and build on it in the rest of Asia,” Zobel said.

Ayala shares rose 1.5% at the close of trading in Manila on Friday, while Yoma was up 1.3% in Singapore.

Other Highlights

  • Economic growth can accelerate above 7% once it completes infrastructure projects along the China-Myanmar economic corridor, Pun said.
  • Myanmar’s government must do more to attract foreign investment as it faces competition from Vietnam, Cambodia, Laos and Bangladesh in luring Chinese manufacturers, Pun said.
  • While ASEAN will continue to build on its relations with the U.S., “all of us have to engage with China economically,” Zobel said.
  • Myanmar and the Philippines are both nations that are benefiting from the U.S.-China trade war, the men said
  • The trade war has prompted manufacturers to turn to Myanmar because it has a larger labor pool, Pun said. The Philippines, meanwhile, has benefited from the reformatting of supply chains, Zobel said
  • “We’re getting manufacturers coming into the country that in the past have not considered the Philippines,” Zobel said. He added that while the Philippines has strong ties to the U.S., it can’t ignore China’s economic influence